UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

 

Date of Report (Date of earliest event reported) April 6, 2021

 

AST SpaceMobile, Inc.

(Exact name of registrant as specified in its charter)

 

Delaware   001-39040   84-2027232

(State or other jurisdiction

of incorporation)

 

(Commission

File Number)

 

(IRS Employer

Identification No.)

 

Midland Intl. Air & Space Port

2901 Enterprise Lane

Midland, Texas

  79706
(Address of principal executive offices)   (Zip Code)

 

(432) 276-3966

Registrant’s telephone number, including area code

 

New Providence Acquisition Corp.

10900 Research Blvd

Ste 160C PMB 1081

Austin, TX 78759

(Former name or former address, if changed since last report.)

 

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

[  ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

[  ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

[  ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

[  ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class   Trading Symbol(s)   Name of each exchange on which registered
Class A common stock, par value $0.0001 per share   ASTS   The Nasdaq Stock Market LLC
Warrants exercisable for one share of Class A common stock at an exercise price of $11.50   ASTSW   The Nasdaq Stock Market LLC

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging growth company [X]

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [  ]

 

 

 

 
 

 

Introductory Note

 

As used in this Current Report on Form 8-K, unless otherwise stated or the context clearly indicates otherwise, the terms the “Company,” “Registrant,” “we,” “us” and “our” refer to the entity formerly named New Providence Acquisition Corp., after giving effect to the Business Combination (as defined below), and as renamed AST SpaceMobile, Inc.

 

On April 6, 2021 (the “Closing Date”), New Providence Acquisition Corp., a Delaware corporation (“NPA”), completed the previously announced business combination pursuant to that certain Equity Purchase Agreement, dated as of December 15, 2020 (the “Equity Purchase Agreement”), by and among NPA, AST & Science LLC, a Delaware limited liability company (“AST”), the existing equityholders of AST (the “Existing AST Equityholders”), New Providence Acquisition Management LLC, a Delaware limited liability company (“Sponsor”), and Abel Avellan (“Avellan”) or in his capacity as Existing AST Equityholder Representative (the “Existing AST Equityholder Representative”). As contemplated by the Equity Purchase Agreement and described in the section titled “Proposal No. 1 — The Business Combination Proposal” beginning on page 106 of the definitive proxy statement (the “Proxy Statement”), filed by NPA on March 12, 2021 with the Securities and Exchange Commission (the “SEC”), on the Closing Date the following occurred: (a) NPA was appointed as the managing member of AST and AST became a subsidiary of NPA; (b) NPA changed its name to “AST SpaceMobile, Inc.”; (c) immediately prior to the closing of the Business Combination, all then-outstanding shares of Class B common stock, par value $0.0001 per share, of NPA (“NPA Class B Common Stock”) held by Sponsor (the “Sponsor Stock”) converted into shares of Class A common stock, par value $0.0001 per share, of NPA (“NPA Class A Common Stock”) immediately prior to the Business Combination; (d) each share of NPA Class A Common Stock, including those converted as described in (c) above, was converted into one share of Class A common stock, par value $0.0001 per share, of the Company (“Class A Common Stock”), and each warrant of NPA (an “NPA Warrant”) was converted into one warrant of the Company (a “Warrant”); (e) AST restructured its capitalization, appointed the Company as its managing member and issued to the Company 51,729,704 units of ownership interest in AST (the “AST Common Units”), which entitle the holder to the distributions, allocations, and other rights under the Fifth Amended and Restated Limited Liability Company Operating Agreement of AST (the “A&R Operating Agreement”), in exchange for which AST received approximately $227.0 million remaining in NPA’s trust account following (i) the $4.8 million payment of deferred underwriting commissions (ii) $0.2 million million of redemptions made in connection with NPA’s special meeting of stockholders relating to the transactions contemplated by the Equity Purchase Agreement (the “Special Meeting”) and NPA’s annual meeting of stockholders to approve, among other things, a charter amendment to extend the date by which it had to complete an initial business combination and (iii) the repayment of a $0.6 million related party loan between AST and NPA; (f) AST issued to the Company warrants to purchase up to 17,600,000 AST Common Units; (g); certain investors (the “PIPE Investors”) purchased 23,000,000 shares of Class A Common Stock; (h) the Company issued 51,636,922 shares of Class B common stock, par value $0.0001 per share, of the Company, which carries one vote per share but no economic rights (“Class B Common Stock”) to the Existing AST Equityholders (other than Avellan); and (i) the Company issued 78,163,078 shares of Class C common stock, par value $0.0001 per share, of the Company, which carries ten votes per share but no economic rights (“Class C Common Stock”) to Avellan (the transactions referred to in clauses (a) through (i), collectively, the “Business Combination”).

 

As a result of the Business Combination, the Company is organized in an “Up-C” structure in which substantially all of the operating assets of AST’s business are held by AST, and the Company’s only assets are its equity interests in AST.

 

As of the open of trading on April 7, 2021, the Class A Common Stock and Warrants of AST SpaceMobile, Inc., formerly those of NPA, began trading on The Nasdaq Capital Market (“Nasdaq”) as “ASTS” and “ASTSW,” respectively.

 

Certain terms used in this Current Report on Form 8-K have the same meaning as set forth in the Proxy Statement. This Current Report on Form 8-K contains summaries of the material terms of various agreements executed in connection with the transactions described herein. The summaries of these agreements are subject to, and are qualified in their entirety by, reference to these agreements, which are filed as exhibits hereto and incorporated herein by reference.

 

 
 

 

Immediately following the Business Combination, the Company’s ownership was as follows:

 

  NPA’s former public stockholders own 12.7% of the Company’s outstanding common stock, all of which is Class A Common Stock, and represents approximately 2.6% of the voting power of the Company;
     
  The PIPE Investors own approximately 12.7% of the Company’s outstanding common stock, all of which is Class A Common Stock, and represents approximately 2.6% of the voting power of the Company;
     
  The Sponsor and Existing AST Equityholders, including Avellan, own 77.8% of the Company’s outstanding common stock, consisting of the Sponsor’s 5,710,000 shares of Class A Common Stock, the Existing AST Equityholders’ 51,636,922 shares of Class B Common Stock and Avellan’s 78,163,078 shares of Class C Common Stock, which collectively represent approximately 95.5% of the voting power of the Company.

 

Item 1.01. Entry into a Material Definitive Agreement.

 

Stockholders’ Agreement

 

On April 6, 2021, in connection with the completion of the Business Combination and as contemplated by the Equity Purchase Agreement, the Company, the AST Equityholders and Sponsor entered into a stockholders’ agreement (the “Stockholders’ Agreement”). The material terms of the Stockholders’ Agreement are described in the section of the Proxy Statement beginning on page 126 titled “Proposal No. 1 — The Business Combination Proposal — Related Agreements — Stockholders’ Agreement.” Such description is qualified in its entirety by the full text of the Stockholders’ Agreement, which is included as Exhibit 10.1 to this Current Report on Form 8-K (this “Report”) and is incorporated herein by reference.

 

Sponsor Voting Agreement

 

On April 6, 2021, in connection with the completion of the Business Combination and as contemplated by the Equity Purchase Agreement, the Company and Sponsor entered into a sponsor voting agreement (the “Sponsor Voting Agreement”). The material terms of the Sponsor Voting Agreement are described in the section of the Proxy Statement beginning on page 128 titled “Proposal No. 1 — The Business Combination Proposal — Related Agreements — Sponsor Voting Agreement.” Such description is qualified in its entirety by the full text of the Stockholders’ Agreement, which is included as Exhibit 10.2 to this Report and is incorporated herein by reference.

 

Registration Rights Agreement

 

On April 6, 2021, in connection with the completion of the Business Combination and as contemplated by the Equity Purchase Agreement, the Company, the Existing AST Equityholders and Sponsor entered into a registration rights agreement (the “Registration Rights Agreement”). The material terms of the Registration Rights Agreement are described in the section of the Proxy Statement beginning on page 128 titled “Proposal No. 1 — The Business Combination Proposal — Related Agreements —Registration Rights Agreement.” Such description is qualified in its entirety by the text of the Registration Rights Agreement, which is included as Exhibit 10.3 to this Report and is incorporated herein by reference.

 

Tax Receivable Agreement

 

On April 6, 2021, in connection with the completion of the Business Combination and as contemplated by the Equity Purchase Agreement, AST, the Existing AST Equityholders and Thomas Severson, as the TRA Holder Representative, entered into a tax receivable agreement (the “Tax Receivable Agreement”). The material terms of the Tax Receivable Agreement are described in the section of the Proxy Statement beginning on page 124 titled “Proposal No. 1 — The Business Combination Proposal — Related Agreements — Tax Receivable Agreement.” Such description is qualified in its entirety by the text of the Tax Receivable Agreement, which is included as Exhibit 10.4 to this Report and is incorporated herein by reference.

 

 
 

 

A&R Operating Agreement

 

On April 6, 2021, in connection with the completion of the Business Combination and as contemplated by the Equity Purchase Agreement, the Company, AST and each of the Existing AST Equityholders entered into the A&R Operating Agreement, which, among other things, (i) restructured the capitalization of AST, and (ii) appointed the Company as the managing member of AST. As consideration for issuing AST Common Units to the Company, the Company contributed $456 million in gross proceeds to AST and became the managing member of AST. As a result of the recapitalization of AST, Mr. Avellan owns 78,163,078 AST Common Units and the Existing AST Equityholders (other than Mr. Avellan) own 51,636,922 AST Common Units. The material terms of the A&R Operating Agreement are described in the section of the Proxy Statement beginning on page 122 titled “Proposal No. 1 — The Business Combination Proposal — Related Agreements — A&R Operating Agreement of AST.” Such description is qualified in its entirety by the text of the A&R Operating Agreement, which is included as Exhibit 10.5 to this Report and is incorporated herein by reference.

 

Indemnification Agreements

 

In connection with the closing of the Business Combination, the Company entered into indemnification agreements with each of its directors and executive officers. Each indemnification agreement provides for indemnification and advancement by the Company of certain expenses and costs relating to claims, suits or proceedings arising from service to the Company or, at its request, service to other entities, as officers or directors to the maximum extent permitted by applicable law. The foregoing description of the indemnification agreements does not purport to be complete and is qualified in its entirety by the terms and conditions of the indemnification agreements, a form of which is attached hereto as Exhibit 10.10 and is incorporated herein by reference.

 

Item 2.01. Completion of Acquisition or Disposition of Assets.

 

The information set forth in the “Introductory Note” above is incorporated into this Item 2.01 by reference. On April 1, 2021, the Business Combination was approved by the stockholders of NPA at the Special Meeting. The Business Combination was completed on April 6, 2021.

 

Consideration to NPA’s Stockholders in the Business Combination

 

In connection with the Business Combination, holders of 8,460 shares of NPA Class A Common Stock exercised their right to redeem those shares for cash at an approximate price of $10.09 per share, for an aggregate of approximately $85,348, which was paid to such holders on the Closing Date. In addition, in connection with NPA’s annual meeting of stockholders held on March 12, 2021 to approve, among other things, an amendment to its charter, holders of 11,836 shares of NPA Class A Common Stock exercised their right to redeem those shares for cash at an approximate price of $10.09 per share, for an aggregate of approximately $119,406.

 

Upon completion of the Business Combination, 5,750,000 shares of NPA Class B Common Stock held by Sponsor and other former holders of NPA Class B Common Stock converted into shares of NPA Class A Common Stock immediately prior to the Business Combination, which then converted into shares of Class A Common Stock at the closing of the Business Combination.

 

Consideration Payable to the Existing AST Equityholders in the Business Combination

 

The consideration paid to the Existing AST Equityholders in connection with the Business Combination consisted of: (i) 51,636,922 shares of Class B Common Stock issued to the Existing AST Equityholders (other than Avellan) and (ii) 78,163,078 shares of Class C Common Stock issued to Avellan.

 

The material terms and conditions of the Equity Purchase Agreement are described in the section entitled “Proposal No. 1 — The Business Combination Proposal” beginning on page 106 of the Proxy Statement, which are incorporated herein by reference.

 

Company Securities Outstanding Following the Business Combination

 

On the Closing Date, all of NPA’s outstanding units separated into their component parts of one share of NPA Class A Common Stock and one half of one NPA Warrant. Immediately after the Business Combination, there were 51,729,704 shares of Class A Common Stock, Warrants to purchase 17,600,000 shares of Class A Common Stock (including 6,100,000 private placement warrants), 51,636,922 shares of Class B Common Stock and 78,163,078 shares of Class C Common Stock issued and outstanding. On the Closing Date, there were 129,800,000 AST Common Units outstanding (excluding AST Common Units held by the Company).

 

 
 

 

FORM 10 INFORMATION

 

Forward-Looking Statements

 

Some of the information contained in this Current Report on Form 8-K, or incorporated herein by reference, contains forward-looking statements. When contained in this Current Report on Form 8-K, and incorporated herein by reference, the words “estimates,” “projected,” “expects,” “anticipates,” “forecasts,” “plans,” “intends,” “believes,” “seeks,” “may,” “will,” “should,” “future,” “propose” and variations of these words or similar expressions (or the negative versions of such words or expressions) are intended to identify forward-looking statements. These forward-looking statements are not guarantees of future performance, conditions or results, and involve a number of known and unknown risks, uncertainties, assumptions and other important factors, many of which are outside the Company’s management’s control, that could cause actual results or outcomes to differ materially from those discussed in the forward-looking statements. These forward-looking statements are based on information available as of the date of this Current Report on Form 8-K, and current expectations, forecasts and assumptions, and involve a number of judgments, risks and uncertainties. Accordingly, forward-looking statements should not be relied upon as representing our views as of any subsequent date, and the Company does not undertake any obligation to update forward-looking statements to reflect events or circumstances after the date they were made, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.

 

As a result of a number of known and unknown risks and uncertainties, the Company’s actual results or performance may be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to:

 

  expectations regarding the Company’s strategies and future financial performance, including the Company’s future business plans or objectives, expected functionality of the SpaceMobile Service, anticipated timing and level of deployment of satellites, anticipated demand and acceptance of mobile satellite services, prospective performance and commercial opportunities and competitors, the timing of obtaining regulatory approvals, ability to finance its research and development activities, commercial partnership acquisition and retention, products and services, pricing, marketing plans, operating expenses, market trends, revenues, liquidity, cash flows and uses of cash, capital expenditures, and the Company’s ability to invest in growth initiatives;
     
  the inability to maintain the listing of the shares of the Class A Common Stock and Warrants of the Company on the NASDAQ;
     
  costs related to being a public company;
     
  the outcome of any legal proceedings that have been or may be instituted against the Company and others as a result of the Business Combination;
     
  the ability to recognize the anticipated benefits of the Business Combination;
     
  limited liquidity and trading of the Company’s securities;
     
  geopolitical risk and changes in applicable laws or regulations;
     
  operational risk;
     
  the possibility that the COVID-19 pandemic, or another major disease, disrupts the Company’s business;
     
  litigation and regulatory enforcement risks, including the diversion of management time and attention and the additional costs and demands on the Company’s resources;
     
  the possibility that the Company may be adversely affected by other economic, business, and/or competitive factors; and
     
  other risks and uncertainties indicated in the Proxy Statement, including those set forth under the section entitled “Risk Factors.”

 

Should one or more of these risks or uncertainties materialize, or should any of the underlying assumptions prove incorrect, actual results may vary in material respects from those expressed or implied by these forward-looking statements. You should not place undue reliance on these forward-looking statements.

 

 
 

 

Business

 

The information set forth in the section entitled “Other Information about AST” beginning on page 171 of the Proxy Statement is incorporated herein by reference.

 

Risk Factors

 

The information set forth in the section entitled “Risk Factors” beginning on page 50 of the Proxy Statement is incorporated herein by reference.

 

Selected Consolidated Historical Financial and Other Information

 

The following table sets forth selected consolidated historical financial information derived from AST’s audited financial statements as of and for the years ended December 31, 2020 and 2019. The following summary financial information should be read in conjunction with the financial statements filed herewith as Exhibit 99.1.

 

    As of December 31,  
(dollars in thousands)   2020     2019  
Balance Sheet Data:                
Cash and cash equivalents   $ 42,777     $ 26,498  
Total property and equipment, net     37,070       3,782  
Total assets     99,645       35,948  
Total liabilities     19,658       6,199  
Total members’ equity     79,987       29,749  

 

    For the Year Ended December 31,  
(dollars in thousands)   2020     2019  
Statement of Operations Data:                
Revenues   $ 5,967     $ 1,414  
Cost of sales     (3,025 )     (954 )
Gross Profit     2,942       460  
Operating Expenses                
Engineering Services     13,081       4,668  
Research and Development     1,011       1,062  
General and Administrative     12,320       5,404  
Depreciation and Amortization     887       388  
Total Operating Expenses     27,299       11,522  
Net Loss   $ (24,405 )   $ (11,141 )

 

 
 

 

Unaudited Pro Forma Condensed Combined Financial Information

 

The information set forth in Exhibit 99.2 to this Current Report on Form 8-K, which includes the unaudited pro forma condensed combined financial information of the Company and AST is incorporated herein by reference.

 

Management’s Discussion and Analysis of Financial Condition and Results of Operations and Quantitative and Qualitative Disclosures About Market Risk

 

The Management’s Discussion and Analysis of Financial Condition and Results of Operations for the years ended December 31, 2020 and 2019 is filed herewith as Exhibit 99.3 and incorporated herein by reference.

 

Facilities

 

The information set forth in the section entitled “Other Information about AST — Facilities” on page 179 of the Proxy Statement is incorporated herein by reference.

 

Security Ownership of Certain Beneficial Owners and Management

 

Following the Business Combination, AST is a subsidiary of the Company. In its capacity as managing member of AST, the Company will operate and control all of AST’s business and affairs and will consolidate AST’s financial results into the Company’s financial statements.

 

The following table sets forth information regarding the beneficial ownership of the Company’s Common Stock as of the Closing Date by:

 

  each person known to be the beneficial owner of more than 5% of the Company’s outstanding ordinary shares;
     
  each director and each of the Company’s named executive officers; and
     
  all current executive officers and directors as a group.

 

The information below is based on an aggregate of 51,729,704 shares of Class A Common Stock, 51,636,922 shares of Class B Common Stock and 78,163,078 shares of Class C Common Stock issued and outstanding as of the Closing Date. Beneficial ownership is determined according to the rules of the SEC, which generally provide that a person has beneficial ownership of a security if she, he or it possesses sole or shared voting or investment power over that security, including options and warrants that are currently exercisable or exercisable within 60 days. Voting power represents the combined voting power of shares of Class A Common Stock, Class B Common Stock and Class C Common Stock owned beneficially by such person. On all matters to be voted upon, holders of shares of Class A Common Stock, Class B Common Stock and Class C Common Stock will vote together as a single class on all matters submitted to the stockholders for their vote or approval. Holders of Class A Common Stock and Class B Common Stock are entitled to one vote per share on all matters submitted to the stockholders for their vote or approval. Prior to the Sunset Date (as defined in the Stockholders’ Agreement), the holders of Class C Common Stock are entitled to the lesser of (i) 10 votes per share and (ii) (x) (A) 88.31% minus (B) the total voting power of the outstanding stock of the Company (other than Class C Common Stock) owned or controlled by Avellan and his permitted transferees, divided by (y) the number of shares of Class C Common Stock then outstanding on all matters submitted to stockholders for their vote or approval. From and after the Sunset Date, holders of Class C Common Stock will be entitled to one vote per share.

 

 
 

 

Unless otherwise indicated, we believe that all persons named in the table below have sole voting and investment power with respect to all shares of Common Stock beneficially owned by the individuals below:

 

    Class A
Common Stock
    Class B
Common Stock
    Class C
Common Stock
   

Combined Voting Power (%)(2)

 

Name and Address of Beneficial Owner(1)

  Number     %     Number     %     Number     %        
Five Percent Holders:                                                        
New Providence Management LLC(3)     11,810,000       20.4 %                             1.3 %
Rakuten Mobile, Inc.(4)     2,500,000       4.8 %     28,520,155       55.2 %                 3.5 %
Invesat LLC (5)     200,000       *       9,932,541       19.2 %                 1.1 %
Vodafone Ventures Limited (6)     1,000,000       1.9 %     9,044,454       17.5 %                 1.1 %
ATC TRS II LLC (7)     2,500,000       4.8 %     2,170,657       4.2 %                 *  
Directors and Executive Officers:                                                        
Abel Avellan                             78,163,078       100 %     88.3 %
Thomas Severson                 1,595,165       3.1 %                 *  
Brian Heller                                          
Rulfo Hernandez                                          
Tareq Amin                                          
Adriana Cisneros(5)     200,000       *       9,932,541       19.2 %                 1.1 %
Alexander Coleman(3)     11,810,000       20.4 %                             1.3 %
Luke Ibbetson                                          
Edward Knapp                                          
Hiroshi Mikitani(4)     2,500,000       4.8 %     28,520,155       55.2 %                 3.5 %
Ronald Rubin                                          
Richard Sarnoff                                          
Julio A. Torres                                          
All directors and executive officers, as a group (13 individuals)     14,510,000       28.0 %     38,611,861       74.8 %     78,163,078       100 %     94.2 %

 

 

  * less than 1%

 

  (1) Unless otherwise noted, the business address of each of those listed in the table above is c/o AST SpaceMobile, Inc., Midland Intl. Air & Space Port, 2901 Enterprise Lane, Midland, Texas 79706.
     
  (2) Percentage of combined voting power represents voting power with respect to all shares of Class A common stock, Class B Common Stock and Class C common stock, voting together as a single class. Holders of Class A Common Stock and Class B Common Stock are entitled to one vote per share on all matters submitted to the stockholders for their vote or approval. Until the Sunset Date, holders of Class C Common Stock are entitled to the lesser of (i) 10 votes per share and (ii) (x) (A) 88.31% minus (B) the total voting power of the outstanding stock of the Company (other than Class C Common Stock) owned or controlled by Avellan and his permitted transferees, divided by (y) the number of shares of Class C Common Stock then outstanding on all matters submitted to stockholders for their vote or approval. From and after the Sunset Date, holders of Class C Common Stock will be entitled to one vote per share.
     
  (3) Includes 6,100,000 shares of Class A Common Stock underlying the private placement warrants held of record by the Sponsor that will become exercisable on May 6, 2021. The business address of each of Sponsor and Mr. Coleman is 10900 Research Blvd, Ste 160C, PMB 1081, Austin, Texas 78759. Mr. Coleman is a director of the Sponsor and as such has voting and investment discretion with respect to the Class A Common Stock held of record by the Sponsor and may be deemed to have shared beneficial ownership of the Class A Common Stock held directly by the Sponsor.
     
  (4)  Includes 2,500,000 shares of Class A Common Stock held by Rakuten Mobile, Inc. (“Rakuten”) and 28,520,155 shares of Class B Common Stock held by Rakuten Mobile USA Service Inc. (“Rakuten USA”). The business address of each of Mr. Mikitani Rakuten and Rakuten USA is 1-14-1 Tamagawa, Setagaya-ku, Tokyo 158-0094 Japan. Mr. Mikitani is the founder, Chairman and Chief Executive Officer of Rakuten, which is the parent company of Rakuten USA, and as such has voting and investment discretion with respect to the shares of Common Stock held of record by Rakuten and Rakuten USA and may be deemed to have shared beneficial ownership of the shares of Common Stock held directly by Rakuten and Rakuten USA.
     
  (5) The business address of each of Ms. Cisneros and Invesat LLC (“Invesat”) is c/o Invesat LLC, 121 Alhambra Cir, Coral Gables, Florida 33134. Ms. Cisneros is the president of Invesat and as such has voting and investment discretion with respect to the shares of Common Stock held of record by Invesat and may be deemed to have beneficial ownership of the Common Stock held directly by Invesat.
     
  (6) The business address of Vodafone Ventures Limited is c/o Vodafone Group Services Limited, One Kingdom Street, Paddington Central, London W2 6BY, UK.
     
  (7) The business address of ATC TRS II LLC is 116 Huntington Avenue, 11th floor, Boston, MA 02116.

 

 
 

 

Directors and Executive Officers

 

Information with respect to the Company’s directors and executive officers immediately after the closing is set forth in the section entitled “SpaceMobile Management After the Business Combination” beginning on page 201 in the Proxy Statement and Item 5.02 of this Current Report on Form 8-K and is incorporated herein by reference.

 

Each of Abel Avellan, Tareq Amin, Adriana Cisneros, Alexander Coleman, Luke Ibbetson, Edward Knapp, Hiroshi Mikitani, Ronald Rubin, Richard Sarnoff, Thomas Severson and Julio A. Torres were elected to serve as directors of the Company. Mr. Avellan was appointed as Chairman of the board of directors, and Mr. Torres was appointed as lead independent director. The size of the board is thirteen members, with two director seats vacant. Biographical information for these individuals is set forth in the section entitled “SpaceMobile Management After the Business Combination” beginning on page 201 in the Proxy Statement and is incorporated herein by reference. In accordance with the Second Amended and Restated Certificate of Incorporation of the Company (the “A&R Certificate of Incorporation”), each director will have a term that expires at the Company’s annual meeting of stockholders in 2021 or until their respective successors are duly elected and qualified, or until their earlier resignation, removal or death.

 

The Board appointed Alexander Coleman, Ronald Rubin and Julio A. Torres to serve on the Audit Committee, with Mr. Torres serving as its chairman. The Board appointed Adriana Cisneros, Alexander Coleman and Julio A. Torres to serve on the Compensation Committee, with Mr. Coleman serving as its chairman. The Board appointed Adriana Cisneros, Richard Sarnoff and Julio A. Torres to serve on the Nominating and Corporate Governance Committee, with Mr. Sarnoff serving as its chairman. Information with respect to the Company’s Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee is set forth in the section entitled “SpaceMobile Management After the Business Combination — Corporate Governance” beginning on page 203 of the Proxy Statement and is incorporated herein by reference.

 

In connection with the completion of the Business Combination, Abel Avellan was appointed to serve as the Company’s Chief Executive Officer and Thomas Severson was appointed to serve as Chief Financial Officer. Biographical information for these individuals is set forth in the section entitled “SpaceMobile Management After the Business Combination” beginning on page 201 of the Proxy Statement and is incorporated by reference herein.

 

On April 6, 2021, Brian Heller was appointed to serve as the Company’s Executive Vice President, General Counsel and Secretary. Mr. Heller has over twenty years of public company experience. Mr. Heller joined AST as its Executive Vice President, General Counsel and Secretary in February 2021. Prior to joining AST, he served as General Counsel of Castle Brands Inc., a publicly-traded spirits company, from October 2008 until its sale to Pernod Ricard in October 2019, and as Senior Vice President - Business and Legal Affairs of Ladenburg Thalmann Financial Services, a publicly-traded financial services company, from April 2007 until its sale to a portfolio company of Reverence Capital Partners in May 2020. He joined Ladenburg from AOL Latin America, where he served as Associate General Counsel. Previously, Mr. Heller was a Partner in the Corporate and Intellectual Property Departments at the Steel Hector & Davis law firm (now Squire Patton Boggs) in Miami, Florida. Earlier in his career, he served as a law clerk to the Honorable James Lawrence King of the United States District Court for the Southern District of Florida. Mr. Heller received his J.D., cum laude, from Georgetown University Law Center, where he was Articles Editor of the Georgetown Law Journal, and his bachelor of science degree from Northwestern University.

 

On April 6, 2021, Rulfo Hernandez was appointed to serve as the Company’s Chief Accounting Officer. Mr. Hernandez joined AST in February 2021 serving as Chief Accounting Officer. Prior to joining AST, Mr. Hernandez worked at Opko Health Inc., serving as its Chief Accounting Officer and Treasurer from July 2020 to February 2021 and as Controller from May 2014 to July 2020. Prior to joining Opko Health Inc. Mr. Hernandez served in various roles at Pricewaterhousecoopers LLP from January 2002 to May 2014. Mr. Hernandez received a Master’s degree from H. Wayne Huizenenga School of Business and Entrepreneurship and his bachelor’s degree from Andrés Bello Catholic University.

 

Executive Compensation

 

The information set forth in the section entitled “Executive and Director Compensation of AST” beginning on page 208 of the Proxy Statement, which includes the executive compensation information of AST is incorporated herein by reference.

 

Director Compensation

 

The information set forth in the section entitled “Executive and Director Compensation of AST” beginning on page 208 of the Proxy Statement, which includes the director compensation information of AST is incorporated herein by reference.

 

Certain Relationships and Related Transactions

 

The information set forth in the sections entitled “Certain Relationships and Related Party Transactions NPA’s Related Party Transactions” beginning on page 220 and “Certain Relationships and Related Party Transactions AST’s Related Party Transactions” beginning on page 222 are incorporated herein by reference.

 

 
 

 

Director Independence

 

At the closing of the Business Combination, the board of directors of the Company adopted Nasdaq listing standards to assess director independence. The board of directors has determined that each of Adriana Cisneros, Alexander Coleman, Ronald Rubin and Julio A. Torres qualifies as “independent” under the listing requirements of Nasdaq. Each of Ronald Rubin and Julio A. Torres is also an “audit committee financial expert” under the rules of the Securities and Exchange Commission.

 

Legal Proceedings

 

The information set forth in the section entitled “Other Information about AST—Legal Proceedings” on page 179 of the Proxy Statement is incorporated herein by reference.

 

Market Price of and Dividends on the Registrant’s Common Equity and Related Stockholder Matters

 

Prior to the Closing Date, the Company’s publicly traded units, common stock and warrants were listed on Nasdaq under the symbols “NPAUU,” “NPA,” and “NPAWW,” respectively. Upon the Closing, the Company’s Class A Common Stock and warrants were listed on Nasdaq under the symbols “ASTS” and “ASTSW,” respectively. The Company’s publicly traded units automatically separated into their component securities upon the closing of the Business Combination, and as a result, no longer trade as a separate security and were delisted from Nasdaq.

 

As of April 6, 2021, following the completion of the Business Combination, there were 28 holders of record of Class A Common Stock and two holders of record of Warrants. However, because many of the shares of Class A Common Stock and the Warrants are held by brokers and other institutions on behalf of stockholders, the Company believes there are substantially more beneficial holders of Class A Common Stock and Warrants than record holders.

 

The information set forth in the section entitled “Price Range of Securities and Dividends—NPA” on page 247 of the Proxy Statement is incorporated herein by reference.

 

Market Information and Holders of the Company

 

As of April 6, 2021, following the completion of the Business Combination, there were 11,500,000 Warrants and 136,333,767 AST Common Units (excluding AST Common Units held by the Company), which are convertible into Class A Common Stock, outstanding. The Company has reserved a total of 10,800,000 shares of Class A Common Stock for issuance pursuant to the 2020 Incentive Award Plan, subject to certain adjustments set forth therein.

 

Dividends of the Company

 

NPA has never paid any cash dividends on NPA’s Class A Common Stock. The payment of cash dividends in the future will be dependent upon revenues and earnings, if any, capital requirements and general financial condition subsequent to completion of the Business Combination. The payment of any cash dividends subsequent to the Business Combination will be within the discretion of the Company’s board of directors and the board of directors will consider whether or not to institute a dividend policy. The board of directors currently anticipates the Company will retain all earnings of the Company, if any, for use in the Company’s business and operations and, accordingly, the board of directors does not anticipate declaring any dividends in the foreseeable future.

 

Description of Registrant’s Securities

 

Pursuant to the A&R Certificate of Incorporation, there are 1,225,000,000 shares authorized, of which 800,000,000 shares will be shares of Class A Common Stock, 200,000,000 shares will be shares of Class B Common Stock 125,000,000 shares will be shares of Class C Common Stock, and 100,000,000 shares will be shares of preferred stock, par value $0.0001 per share.

 

The information set forth in the section entitled “Description of SpaceMobile Securities” beginning on page 239 of the Proxy Statement is incorporated herein by reference.

 

 
 

 

Indemnification of Directors and Officers

 

In connection with the closing of the Business Combination, the Company entered into indemnification agreements with each of its directors and executive officers. Each indemnification agreement provides for indemnification and advancement by the Company of certain expenses and costs relating to claims, suits or proceedings arising from service to the Company or, at its request, service to other entities, as officers or directors to the maximum extent permitted by applicable law. The foregoing description of the indemnification agreements does not purport to be complete and is qualified in its entirety by the terms and conditions of the indemnification agreements, a form of which is attached hereto as Exhibit 10.10 and is incorporated herein by reference.

 

Further information about the indemnification of the Company’s directors and officers is set forth in the section entitled “Description of SpaceMobile Securities — Limitations on Liability and Indemnification of Officers and Directors” of the Proxy Statement and is incorporated herein by reference.

 

Financial Statements, Supplementary Data and Exhibits

 

The information set forth under Item 9.01 of this Current Report on Form 8-K is incorporated herein by reference.

 

Item 3.01 Notice of Delisting or Failure to Satisfy a Continued Listing Rule or Standard; Transfer of Listing.

 

On the Closing Date, all of NPA’s outstanding units separated into their component parts of one share of Class A Common Stock and one half of one Warrant to purchase one share of Class A Common Stock and NPA’s units ceased trading on Nasdaq.

 

Item 3.02 Unregistered Sales of Equity Securities.

 

On April 6, 2021, in connection with the completion of the Business Combination and as contemplated by the Equity Purchase Agreement and the Subscription Agreements, the Company made the following sales of unregistered securities, as further described in the disclosure set forth under the Introductory Note above:

 

  23,000,000 shares of Class A common stock to the PIPE Investors for aggregate consideration of $230.0 million;
     
  51,636,922 shares of Class B Common Stock to the Existing AST Equityholders (other than Avellan) for aggregate consideration of $5,164.00; and
     
  78,163,078 shares of Class C Common Stock to Avellan for aggregate consideration of $7,817.00.

 

The AST Common Units are redeemable for shares of Class A Common Stock at the Company’s election. Up to 136,333,767 shares of Class A Common Stock are issuable upon the redemption of the AST Common Units. The Company issued the foregoing securities in transactions not involving an underwriter and not requiring registration under Section 5 of the Securities Act of 1933, as amended, in reliance on the exemption afforded by Section 4(a)(2) thereof.

 

Item 3.03 Material Modification to Rights of Security Holders

 

On the Closing Date, in connection with the completion of the Business Combination, the Company’s Certificate of Incorporation and Bylaws were amended and restated. Pursuant to the A&R Certificate of Incorporation, there are 1,225,000,000 shares authorized, of which 800,000,000 shares are shares of Class A Common Stock, par value $0.0001 per share, 200,000,000 shares are shares of Class B Common Stock, par value $0.0001 per share, 125,000,000 shares are shares of Class C Common Stock, par value $0.0001 per share, and 100,000,000 shares are shares of preferred stock, par value $0.0001 per share. The disclosure set forth in the sections titled “Description of NPA Securities” and “Description of SpaceMobile Securities” in the Proxy Statement is incorporated herein by reference.

 

The foregoing description of the A&R Certificate of Incorporation and Bylaws of the Company does not purport to be complete and is qualified in its entirety by the terms of the A&R Certificate of Incorporation and Bylaws of the Company, which are attached hereto as Exhibits 3.1 and 3.2, respectively, and are incorporated herein by reference.

 

The material terms of each of the A&R Certificate of Incorporation and the Bylaws and the general effect upon the rights of holders of the Company’s capital stock are included in the Proxy Statement under the sections titled “Proposal No. 1 — The Business Combination Proposal — Related Agreements — A&R Certificate of Incorporation,” “Proposal No. 1 — The Business Combination Proposal — Related Agreements — Anti-Takeover Effects of the A&R Certificate of Incorporation and the SpaceMobile Bylaws” and “Description of SpaceMobile Securities” beginning on pages 118, 120 and 239 of the Proxy Statement, respectively, which are incorporated herein by reference.

 

 
 

 

Item 5.01. Changes in Control of Registrant.

 

The information set forth under in the sections titled “Proposal No. 1 — The Business Combination Proposal” beginning on page 106 of the Proxy Statement and “Introductory Note” and Item 2.01 in this Current Report on Form 8-K is incorporated herein by reference.

 

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

 

Election of Directors and Appointment of Officers

 

On April 1, 2021 each of Abel Avellan, Tareq Amin, Adriana Cisneros, Alexander Coleman, Luke Ibbetson, Edward Knapp, Hiroshi Mikitani, Ronald Rubin, Richard Sarnoff, Thomas Severson and Julio A. Torres were elected as directors of the Company, with Abel Avellan appointed as chairman of the board, in each case, effective upon the completion of the Business Combination. Biographical information with respect to such directors is set forth in the section entitled “SpaceMobile Management After the Business Combination” beginning on page 201 of the Proxy Statement and is incorporated herein by reference.

 

On April 6, 2021, Abel Avellan and Thomas Severson were appointed to serve as the Company’s Chief Executive Officer and Chief Financial Officer, respectively, in each case, effective upon the combination of the Business Combination. Biographical information with respect to such executive officers is set forth in the section entitled “SpaceMobile Management After the Business Combination” beginning on page 201 of the Proxy Statement is incorporated herein by reference.

 

On April 6, 2021, Brian Heller was appointed to serve as the Company’s Executive Vice President, General Counsel and Secretary. Mr. Heller has over twenty years of public company experience. Mr. Heller joined AST as its Executive Vice President, General Counsel and Secretary in February 2021. Prior to joining AST, he served as General Counsel of Castle Brands Inc., a publicly-traded spirits company, from October 2008 until its sale to Pernod Ricard in October 2019, and as Senior Vice President - Business and Legal Affairs of Ladenburg Thalmann Financial Services, a publicly-traded financial services company, from April 2007 until its sale to a portfolio company of Reverence Capital Partners in May 2020. He joined Ladenburg from AOL Latin America, where he served as Associate General Counsel. Previously, Mr. Heller was a Partner in the Corporate and Intellectual Property Departments at the Steel Hector & Davis law firm (now Squire Patton Boggs) in Miami, Florida. Earlier in his career, he served as a law clerk to the Honorable James Lawrence King of the United States District Court for the Southern District of Florida. Mr. Heller received his J.D., cum laude, from Georgetown University Law Center, where he was Articles Editor of the Georgetown Law Journal, and his bachelor of science degree from Northwestern University.

 

On April 6, 2021, Rulfo Hernandez was appointed to serve as the Company’s Chief Accounting Officer. Mr. Hernandez joined AST in February 2021 serving as Chief Accounting Officer. Prior to joining AST, Mr. Hernandez worked at Opko Health Inc., serving as its Chief Accounting Officer and Treasurer from July 2020 to February 2021 and as Controller from May 2014 to July 2020. Prior to joining Opko Health Inc. Mr. Hernandez served in various roles at Pricewaterhousecoopers LLP from January 2002 to May 2014. Mr. Hernandez received a Master’s degree from H. Wayne Huizenenga School of Business and Entrepreneurship and his bachelor’s degree from Andrés Bello Catholic University.

 

Departure of Directors and Certain Officers

 

Effective upon the Closing Date, each of Timothy Gannon, Daniel Ginsberg and Rick Mazer resigned as directors of the Company, and Abel Avellan replaced Alexander Coleman as chairman of the board of directors, although Mr. Coleman will continue as a director of the Company. Effective upon the Closing Date, each of Gary P. Smith and James Bradley resigned as executive officers of the Company.

 

2020 Incentive Award Plan

 

On April 1, 2021, the AST SpaceMobile, Inc. 2020 Incentive Award Plan (the “2020 Incentive Award Plan”) became effective. The 2020 Incentive Award Plan was approved by NPA’s stockholders at the Special Meeting on April 1, 2021. The purpose of the 2020 Incentive Award Plan is to promote the success and enhance the value of the Company and AST by attracting, retaining and motivating selected employees, consultants and directors of the Company and AST. The 2020 Incentive Award Plan provides for grants of stock-based compensation awards, including without limitation, non-qualified stock options, incentive stock options, stock appreciation rights, or SARs, restricted stock awards, restricted stock unit awards, incentive unit awards other stock or cash based awards and dividend equivalent awards. Employees, officers and consultants of the Company or any parent or affiliate, including AST, or any non-employee director of the Company’s board of directors are eligible to receive awards under the 2020 Incentive Award Plan. The 2020 Incentive Award Plan is administered by the compensation committee of the Company’s board of directors, referred to herein as the “plan administrator”. The plan administrator has the authority to take all actions and make all determinations under the 2020 Incentive Award Plan, to interpret the 2020 Incentive Award Plan and award agreements and to adopt, amend and repeal rules for the administration of the 2020 Incentive Award Plan as it deems advisable. The plan administrator also has the authority to grant awards, to determine which eligible service providers receive awards, and to set the terms and conditions of all awards under the 2020 Incentive Award Plan, including any vesting and vesting acceleration provisions, subject to the conditions and limitations in the 2020 Incentive Award Plan.

 

The Company has reserved a total of 10,800,000 shares of Class A Company Common Stock for issuance pursuant to the 2020 Incentive Award Plan and the maximum number of shares that may be issued pursuant to the exercise of incentive stock options granted under the 2020 Incentive Award Plan is 10,800,000, in each case, subject to certain adjustments set forth therein.

 

The information set forth in the section entitled “Proposal No. 5 — The Incentive Plan Proposal” beginning on page 153 of the Proxy Statement is incorporated herein by reference. The foregoing description of the 2020 Incentive Award Plan and the information incorporated by reference in the preceding sentence does not purport to be complete and is qualified in its entirety by the terms and conditions of the 2020 Incentive Award Plan, which is incorporated by reference to this Current Report on Form 8-K as Exhibit 10.6.

 

 
 

 

2020 Employee Stock Purchase Plan

 

The AST SpaceMobile, Inc. 2020 Employee Stock Plan (the “ESPP”) was approved by NPA’s stockholders at the Special Meeting. The purpose of the ESPP is to assist the Company’s eligible employees in acquiring a stock ownership interest in the Company and to help the Company’s eligible employees provide for their future security and to encourage them to remain in the Company’s employment. The ESPP will be comprised of two distinct components in order to provide increased flexibility to grant options to purchase shares under the ESPP to U.S. and to non-U.S. employees. Specifically, the ESPP authorizes (i) the grant of options to U.S. employees that are intended to qualify for favorable U.S. federal tax treatment under Section 423 of the Code (the “Section 423 Component”), and (ii) the grant of options that are not intended to be tax-qualified under Section 423 of the Code to facilitate participation for employees located outside of the U.S. who do not benefit from favorable U.S. federal tax treatment and to provide flexibility to comply with non-U.S. law and other considerations (the “Non-Section 423 Component”). Where permitted under local law and custom, we expect that the Non-Section 423 Component will generally be operated and administered on terms and conditions similar to the Section 423 Component. The ESPP will be administered by the compensation committee of the Company’s board of directors.

 

The Company has reserved a total of 2,000,000 shares of Class A Company Common Stock for issuance pursuant to the ESPP, subject to certain adjustments set forth therein.

 

The information set forth in the section entitled “Proposal No. 6 — The ESPP Proposal” beginning on page 158 of the Proxy Statement is incorporated herein by reference. The foregoing description of the ESPP and the information incorporated by reference in the preceding sentence does not purport to be complete and is qualified in its entirety by the terms and conditions of the ESPP, which is incorporated by reference to this Current Report on Form 8-K as Exhibit 10.9.

 

Compensatory Arrangements for Directors

 

In connection with the completion of the Business Combination, the Company’s board of directors also approved a compensation program for the Company’s non-employee directors who are determined not to be affiliated with Invesat LLC, Vodafone Ventures Limited, ATC TRS II LLC and/or Rakuten Mobile USA Service Inc. (the “Director Compensation Program”). The material terms of the Director Compensation Program are described in the section of the Proxy Statement beginning on page 212 entitled “Executive and Director Compensation of AST—Post-Business Combination Director Compensation Program.” The foregoing description of the Director Compensation Program and the information incorporated by reference in the preceding sentence does not purport to be complete and is qualified in its entirety by the terms and conditions of the Director Compensation Program, which is attached hereto as Exhibit 10.11.

 

Compensatory Arrangements for Executive Officers

 

On April 6, 2021, in connection with the completion of the Business Combination, the Company assumed the offer letters that AST entered into with certain of its executive officers: Abel Avellan and Thomas Severson. Pursuant to the offer letters, each of Messrs. Avellan and Severson receives an annual base salary and is eligible to participate in AST’s customary health, welfare and fringe benefit plans. Mr. Avellan has agreed that following the Business Combination, he will not initially draw a salary from the Company. In addition, Messrs. Avellan and Severson have entered into AST’s form Nondisclosure, Confidentiality, Assignment and Noncompetition Agreement containing certain restrictive covenants, including non-compete and non-solicitation restrictions for a period of one year following a termination or cessation of employment for any reason.

 

Additionally, in connection with the completion of the Business Combination, the AST board of directors paid Mr. Severson a discretionary transaction bonus in the amount of $350,000 in recognition of his efforts towards the completion of the Business Combination.

 

AST entered into an offer letter dated December 23, 2020 with Mr. Hernandez, the Company’s Chief Accounting Officer. Pursuant to the offer letter, Mr. Hernandez receives an annual base salary of $250,000. In addition, subject to the approval of the Company’s Board of Directors and his continuing employment through the grant date, Mr. Hernandez is eligible to receive an equity award equal to 203,020 shares of the Company's common stock. Mr. Hernandez is also eligible to participate in AST’s customary health, welfare and fringe benefit plans. In addition, Mr. Hernandez entered into AST’s form Nondisclosure, Confidentiality, Assignment and Noncompetition Agreement containing certain restrictive covenants, including non-compete and non-solicitation restrictions for a period of one year following a termination or cessation of employment for any reason.

 

The information set forth in the section entitled “Executive and Director Compensation of AST” beginning on page 208 of the Proxy Statement and “Compensation of Executive Officers and Directors After the Business Combination” beginning on page 215 of the Proxy Statement are each incorporated herein by reference. The offer letters for Messrs. Avellan, Severson and Hernandez are attached as Exhibits 10.12, 10.13 and 10.14 hereto, respectively.

 

 
 

 

Item 5.06. Change in Shell Company Status.

 

As a result of the Business Combination, NPA ceased being a shell company. The material terms of the Business Combination are described in the section entitled “Proposal No. 1 — The Business Combination Proposal” beginning on page 106 of the Proxy Statement, in the information set forth under “Introductory Note” and in the information set forth under Item 2.01 in this Current Report on Form 8-K, each of which is incorporated herein by reference.

 

Item 8.01. Other Events.

 

AST is currently manufacturing, procuring and assembling the satellite componentry required for its BlueWalker 3 (“BW3”) test satellite. During 2021, AST will be assembling and testing the BW3 satellite at its facilities. BW3 currently is targeted to launch late in the fourth quarter of 2021. However, the exact timing of such launch is contingent on a number of factors, including satisfactory and timely completion of construction and testing of BW3 and the availability of an appropriate launch window and vehicle from our launch provider. The launch of BW3 was scheduled to coincide with the launch of a primary payload from an unrelated entity. The primary payload from such unrelated entity is delayed, which may in turn delay the launch window for BW3. If AST is required to identify another launch vehicle and/or launch provider, AST may incur delays in such launch and may incur additional costs.

 

Item 9.01. Financial Statement and Exhibits.

 

The Securities and Exchange Commission has recently informally indicated that they may potentially require former special purpose acquisition companies, such as the Company, to classify their warrants as fair value liabilities. This treatment has not been reflected in the Company's historical financial statements or unaudited pro forma condensed combined financial information incorporated by reference herein.

 

(a) Financial statements of businesses acquired

 

The financial statements of the Company included in the Company’s annual report on Form 10-K filed on March 1, 2021 are incorporated herein by reference.

 

The financial statements of AST as of December 31, 2020 and 2019 and for the years ended December 31, 2020 and 2019 set forth in Exhibit 99.1 to this Current Report on Form 8-K, are incorporated herein by reference.

 

(b) Pro Forma Financial Information

 

The information set forth in Exhibit 99.2 to this Current Report on Form 8-K, which includes the unaudited pro forma condensed combined financial information of the Company as of and for the year ended December 31, 2020, is incorporated herein by reference.

 

 
 

 

(d) Exhibits.

 

Exhibit No.   Document
2.1*   Equity Purchase Agreement, dated as of December 15, 2020, by and among AST & Science LLC, New Providence Acquisition Corp., New Providence Management LLC, the AST Existing Equityholder Representative and the AST Existing Equityholders listed on Annex A thereto (incorporated by reference from NPA’s Form 8-K dated December 15, 2020)
3.1   Second Amended and Restated Certificate of Incorporation of AST SpaceMobile, Inc.
3.2   Bylaws of AST SpaceMobile, Inc.
4.1   Specimen Common Stock Certificate of AST SpaceMobile, Inc.
4.2   Specimen Warrant Certificate of AST SpaceMobile, Inc.
4.3   Warrant Agreement, dated September 13, 2019, between New Providence Acquisition Corp. and Continental Stock Transfer & Trust Company, as warrant agent (incorporated by reference from NPA’s Form 8-K dated September 16, 2019)
10.1*   Stockholders’ Agreement, dated as of April 6, 2021, by and among AST SpaceMobile, Inc., Abel Avellan, Invesat LLC, Vodafone Ventures Limited, Rakuten Mobile USA Service Inc., ATC TRS II LLC and New Providence Management LLC
10.2*   Sponsor Voting Agreement, dated as of April 6, 2021, by and among AST SpaceMobile, Inc. and New Providence Management LLC
10.3*   Registration Rights Agreement, dated as of April 6, 2021, by and among AST SpaceMobile, Inc., Abel Avellan, Invesat LLC, Vodafone Ventures Limited, Rakuten Mobile USA Service Inc., ATC TRS II LLC and New Providence Management LLC
10.4*   Tax Receivable Agreement, dated as of April 6, 2021, by and among AST SpaceMobile, Inc., AST & Science, LLC, Thomas Severson, as TRA Holder Representative, and the TRA Holders named therein
10.5*   Fifth Amended and Restated Operating Agreement of AST & Science, LLC
10.6†   AST SpaceMobile, Inc. 2020 Incentive Award Plan
10.7†   AST SpaceMobile, Inc. 2020 Incentive Award Plan – Form of Stock Option Agreement
10.8†   AST SpaceMobile, Inc. 2020 Incentive Award Plan – Form of Restricted Stock Unit Agreement
10.9†   AST SpaceMobile, Inc. 2020 Employee Stock Purchase Plan
10.10†   Form of Director and Officer Indemnification Agreement
10.11†   Non-Employee Director Compensation Policy
10.12†   Offer Letter between AST & Science, LLC and Abel Avellan
10.13†   Offer Letter between AST & Science, LLC and Thomas Severson
10.14†   Offer Letter between AST & Science, LLC and Rulfo Hernandez
10.15*   Amended and Restated Series B Preferred Shares Purchase Agreement, dated as of February 4, 2020, by and among AST & Science, LLC, Vodafone Ventures Limited, ATC TRS II LLC and Rakuten Mobile Singapore PTE. LTD.
10.16*   Letter Agreement, dated as of December 15, 2020, by and between AST & Science, LLC and Vodafone Ventures Limited
10.17*   Letter Agreement, dated as of December 15, 2020, by and between AST & Science, LLC and ATC TRS II LLC, as predecessor in interest to ATC TRS IV LLC
10.18*   Amended and Restated Commercial Agreement, dated as of December 15, 2020, by and between AST & Science, LLC and Rakuten Mobile Singapore Pte. Ltd.
10.19*   Patent and Know-How License Agreement, dated June 21, 2019, by and between SRS Space Limited and AST & Science, LLC
10.20*   Launch Services Contract, dated July 17, 2020, by and between AST & Science, LLC and Joint Stock Company “GK Launch Services”
10.21*   Design and Manufacturing Agreement, dated September 23, 2020, by and between Dialog Semiconductor Operations Services Limited and AST & Science LLC
10.22*   Sublease Agreement, dated November 13, 2018, by and between the Midland Development Corporation and AST & Science, LLC
21.1   List of subsidiaries
99.1   Audited consolidated financial statements of AST as of December 31, 2020 and 2019 and for the years ended December 31, 2020, 2019 and 2018
99.2   Unaudited pro forma condensed combined financial information of the Company as of and for the year ended December 31, 2020
99.3   Management’s Discussion and Analysis of Financial Condition and Results of Operations for AST for the years ended December 31, 2020 and 2019

 

* Certain schedules and exhibits to this Exhibit have been omitted pursuant to Item 601(a)(5) or Item 601(b)(10)(iv), as applicable, of Regulation S-K. The Registrant agrees to furnish supplemental copies of all omitted exhibits and schedules to the Securities and Exchange Commission upon its request.

 

Indicates a management contract or compensatory plan.

 

 
 

 

SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

Dated: April 12, 2021

 

  AST SPACEMOBILE, INC.
     
  By: /s/ Abel Avellan
  Name: Abel Avellan
  Title: Chief Executive Officer

 

 

 

Exhibit 3.1

 

SECOND AMENDED AND RESTATED CERTIFICATE OF INCORPORATION

 

of

 

NEW PROVIDENCE ACQUISITION CORP.

 

(Pursuant to Section 242 and 245 of

the General Corporation Law of the State of Delaware)

 

April 6, 2020

 

New Providence Acquisition Corp., a corporation organized and existing under the laws of the State of Delaware (the “Corporation”), hereby certifies as follows:

 

1. The Corporation was incorporated under the name New Providence Acquisition Corp. by the filing of its original certificate of incorporation of the Corporation with the Secretary of State of the State of Delaware on May 28, 2019 (as subsequently amended and restated prior to the date hereof, the “Original Certificate”).

 

2. This Second Amended and Restated Certificate of Incorporation (this “Amended Certificate of Incorporation”) amends, integrates and restates in its entirety the Corporation’s certificate of incorporation as currently in effect as follows, and has been duly adopted in accordance with the provisions of Sections 228, 242 and 245 of the General Corporation Law of the State of Delaware (as from time to time in effect, the “General Corporation Law”).

 

3. The text of the certificate of incorporation of the Corporation, as heretofore amended, is hereby amended and restated by this Amended Certificate of Incorporation to read in its entirety as set forth in EXHIBIT A attached hereto.

 

IN WITNESS WHEREOF, New Providence Acquisition Corp. has caused this Amended Certificate of Incorporation to be signed by a duly authorized officer of the Corporation, on April 6, 2021.

 

 

NEW PROVIDENCE ACQUISITION CORP.,

a Delaware corporation

   
  By: /s/ Gary Smith
  Name: Gary Smith
  Title: Chief Executive Officer

 

 

 

 

EXHIBIT A

 

SECOND AMENDED AND RESTATED CERTIFICATE OF INCORPORATION

 

OF

 

AST SPACEMOBILE, INC.

 

1. Name. The name of the corporation is AST SpaceMobile, Inc. (the “Corporation”).

 

2. Address; Registered Office and Agent. The address of the Corporation’s registered office in the State of Delaware is 251 Little Falls Drive, in the City of Wilmington, County of New Castle, State of Delaware, 19808, and the name of the Corporation’s registered agent at such address is Corporation Service Company.

 

3. Purpose. The purpose of the Corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of the State of Delaware (the “General Corporation Law”) as it now exists or may hereafter be amended and supplemented.

 

4. Number of Shares.

 

4.1 The total number of shares of all classes of stock that the Corporation shall have authority to issue is 1,225,000,000 shares, consisting of:

 

(a) 800,000,000 shares of Class A common stock, with the par value of $0.0001 per share (the “Class A Common Stock”),

 

(b) 200,000,000 shares of Class B common stock, with the par value of $0.0001 per share (the “Class B Common Stock”),

 

(c) 125,000,000 shares of Class C common stock, with the par value of $0.0001 per share (the “Class C Common Stock”, and together with the Class A Common Stock, and Class B Common Stock, the “Common Stock”), and

 

(d) 100,000,000 shares of preferred stock, with the par value of $0.0001 per share (the “Preferred Stock”).

 

Upon the filing of this Amended Certificate of Incorporation (the “Effective Time”), each share of class B common stock, par value $0.0001 per share of the Corporation issued and outstanding immediately prior to the Effective Time shall, automatically without any further action by the Corporation or any stockholder, be reclassified into one fully paid and nonassessable share of Class A Common Stock.

 

 

 

 

4.2 Subject to the rights of the holders of any one or more series of Preferred Stock then-outstanding, the number of authorized shares of any class of the Common Stock or the Preferred Stock may be increased or decreased, in each case by the affirmative vote of the holders of a majority of the total voting power of the outstanding shares of capital stock of the Corporation entitled to vote thereon, voting together as a single class, irrespective of the provisions of Section 242(b)(2) of the General Corporation Law, and no vote of the holders of any class of the Common Stock or the Preferred Stock voting separately as a class will be required therefor. Notwithstanding the immediately preceding sentence, the number of authorized shares of any particular class may not be decreased below the number of shares of such class then outstanding, plus:

 

(a) in the case of Class A Common Stock, the number of shares of Class A Common Stock issuable (x) assuming the exchange of all outstanding common units of the OpCo (the “Common Units”) for Class A Common Stock, as a result of Redemptions pursuant to the applicable provisions of Article 11 of the OpCo Operating Agreement (including for this purpose any Common Units issuable upon the exercise of any options, warrants or similar rights to acquire Common Units) and (y) in connection with the exercise of all outstanding options, warrants, exchange rights (other than Redemptions pursuant to clause (x)), conversion rights or similar rights for Class A Common Stock;

 

(b) in the case of Class B Common Stock, the number of shares of Class B Common Stock issuable in connection with the exercise of all outstanding options, warrants, exchange rights, conversion rights or similar rights for Class B Common Stock; and

 

(c) in the case of Class C Common Stock, the number of shares of Class C Common Stock issuable in connection with the exercise of all outstanding options, warrants, exchange rights, conversion rights or similar rights for Class C Common Stock.

 

5. Classes of Shares. The designation, relative rights, power and preferences, qualifications, restrictions and limitations of the shares of each class of stock are as follows.

 

5.1 Common Stock.

 

(a) Voting Rights.

 

(i) (A) Each share of Class A Common Stock will entitle the record holder thereof to one vote on all matters on which stockholders generally are entitled to vote, (B) each share of Class B Common Stock will entitle the record holder thereof to one vote on all matters on which stockholders generally are entitled to vote and (C) until the Sunset Date, each share of Class C Common Stock will entitle the record holder thereof to a number of votes on all matters on which stockholders generally are entitled to vote equal to the lesser of (x) ten (10) votes and (y) the Class C Share Voting Amount, except that, in each case, to the fullest extent permitted by law, holders of shares of each class of Common Stock, as such, will have no voting power with respect to, and will not be entitled to vote on, any amendment to this Amended Certificate of Incorporation (including any certificate of designations relating to any series of Preferred Stock) that relates solely to the terms of any outstanding Preferred Stock if the holders of such Preferred Stock are entitled to vote as a separate class thereon under this Amended Certificate of Incorporation (including any certificate of designations relating to any series of Preferred Stock) or under the General Corporation Law. From and after the Sunset Date, each share of Class C Common Stock will entitle the record holder thereof to one vote on all matters on which the stockholders are generally entitled to vote.

 

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(ii) Except as otherwise required in this Amended Certificate of Incorporation or by applicable law, the holders of Common Stock will vote together as a single class on all matters (or, if any holders of Preferred Stock are entitled to vote together with the holders of Common Stock, as a single class with the holders of Preferred Stock).

 

(b) Dividends; Stock Splits or Combinations.

 

(i) Subject to applicable law and the rights, if any, of the holders of any outstanding series of Preferred Stock or any class or series of stock having a preference senior to or the right to participate with the Class A Common Stock with respect to the payment of dividends, dividends of cash or property may be declared and paid on the Class A Common Stock out of the assets of the Corporation that are by law available therefor, at the times and in the amounts as the Board in its discretion may determine.

 

(ii) Except as provided in Section 5.1(b)(iii) with respect to stock dividends, dividends of cash or property may not be declared or paid on the Class B Common Stock or Class C Common Stock.

 

(iii) In no event will any stock dividend, stock split, reverse stock split, combination of stock, reclassification or recapitalization (each, a “Stock Adjustment”) be declared or made on any class of Common Stock unless a corresponding Stock Adjustment for all other classes of Common Stock at the time outstanding is made in the same proportion and the same manner (unless the holders of shares representing a majority of the voting power of any such other class of Common Stock (voting separately as a single class) waive such requirement in advance and in writing, in which event no such Stock Adjustment need be made for such other class of Common Stock). Notwithstanding the foregoing, the Corporation shall be entitled to (A) declare a stock dividend on the Class A Common Stock only in the event that such stock dividend is made in connection with the issuance of Common Units by OpCo to the Corporation in exchange for additional capital contributions made by the Corporation to OpCo and (B) declare a stock split or stock dividend in connection with the repurchase of shares of Class A Common Stock such that after giving effect to such repurchase and subsequent stock split or stock dividend there shall be outstanding an equal number of shares of Class A Common Stock as were outstanding prior to such repurchase and subsequent stock split or stock dividend, in each case (A) and (B), without any corresponding Stock Adjustment to the other classes of Common Stock. Stock dividends with respect to each class of Common Stock may only be paid with shares of stock of the same class of Common Stock.

 

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(c) Liquidation. In the event of any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Corporation, after payment or provision for payment of the debts and other liabilities of the Corporation and of the preferential and other amounts, if any, to which the holders of Preferred Stock are entitled, if any, the holders of all outstanding shares of Common Stock will be entitled to receive, pari passu, an amount per share equal to the par value thereof, and thereafter the holders of all outstanding shares of Class A Common Stock will be entitled to receive the remaining assets of the Corporation available for distribution ratably in proportion to the number of shares of Class A Common Stock held by such holders. The holders of shares of Class B Common Stock and Class C Common Stock, as such, will not be entitled to receive, with respect to such shares, any assets of the Corporation in excess of the par value thereof, in the event of any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Corporation.

 

(d) Restriction on Issuance of Class B Common Stock and Class C Common Stock. (i) No shares of Class B Common Stock may be issued by the Corporation except to a holder of Common Units, such that after such issuance of Class B Common Stock such holder of Common Units holds an identical number of Common Units, as applicable, and shares of Class B Common Stock. (ii) No shares of Class C Common Stock may be issued by the Corporation except to a holder of Common Units who is a Key Holder, such that after such issuance of Class C Common Stock such Key Holder holds an identical number of Common Units, as applicable, and shares of Class C Common Stock.

 

(e) Restriction on Transfer of Class B Common Stock and Class C Common Stock. A holder of Class B Common Stock or Class C Common Stock may transfer or assign shares of Class B Common Stock or Class C Common Stock (or any legal or beneficial interest in such shares) (directly or indirectly, including by operation of law) only to a Permitted Transferee of such holder, and only if such holder also simultaneously transfers an equal number of such holder’s Common Units to such Permitted Transferee in compliance with the OpCo Operating Agreement. Any purported transfer of shares of Class B Common Stock and/or Class C Common Stock in violation of the preceding sentence shall be null and void and shall not be recognized by the Corporation, the Corporation’s transfer agent (the “Transfer Agent”) or the Secretary of the Corporation.

 

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5.2 Preferred Stock. Shares of Preferred Stock may be issued from time to time in one or more series of any number of shares, provided that the aggregate number of shares issued and not retired of any and all such series shall not exceed the total number of shares of Preferred Stock hereinabove authorized, and with such powers, including voting powers, if any, and the designations, preferences and relative, participating, optional or other special rights, if any, and any qualifications, limitations or restrictions thereof, all as shall hereafter be stated and expressed in the resolution or resolutions providing for the designation and issue of such shares of Preferred Stock from time to time adopted by the Board. The powers, including voting powers, if any, preferences and relative, participating, optional and other special rights of each series of Preferred Stock, and the qualifications, limitations or restrictions thereof, if any, may differ from those of any and all other series at any time outstanding. Each series of shares of Preferred Stock: (i) may have such voting rights or powers, full or limited, if any; (ii) may be subject to redemption at such time or times and at such prices, if any; (iii) may be entitled to receive dividends (which may be cumulative or non-cumulative) at such rate or rates, on such conditions and at such times, and payable in preference to, or in such relation to, the dividends payable on any other class or classes or series of stock, if any; (iv) may have such rights upon the voluntary or involuntary liquidation, winding up or dissolution of, upon any distribution of the assets of, or in the event of any merger, sale or consolidation of, the Corporation, if any; (v) may be made convertible into or exchangeable for, shares of any other class or classes or of any other series of the same or any other class or classes of stock of the Corporation (or any other securities of the Corporation or any other Person) at such price or prices or at such rates of exchange and with such adjustments, if any; (vi) may be entitled to the benefit of a sinking fund to be applied to the purchase or redemption of shares of such series in such amount or amounts, if any; (vii) may be entitled to the benefit of conditions and restrictions upon the creation of indebtedness of the Corporation or any subsidiary, upon the issue of any additional shares (including additional shares of such series or of any other series) and upon the payment of dividends or the making of other distributions on, and the purchase, redemption or other acquisition by the Corporation or any subsidiary of, any outstanding shares of the Corporation, if any; (viii) may be subject to restrictions on transfer or registration of transfer, or on the amount of shares that may be owned by any Person or group of Persons; and (ix) may have such other relative, participating, optional or other special rights, qualifications, limitations or restrictions thereof, if any; all as shall be stated in said resolution or resolutions of the Board providing for the designation and issue of such shares of Preferred Stock.

 

6. Certain Provisions Related to Redemption Rights.

 

6.1 Reservation of Shares of Class A Common Stock for Redemptions. The Corporation will at all times reserve and keep available out of its authorized and unissued shares of Class A Common Stock, for the purposes of effecting any exchanges pursuant to the applicable provisions of Article 11 of the OpCo Operating Agreement, the number of shares of Class A Common Stock that are issuable in connection with the exchange of all outstanding Common Units as a result of any Redemption or Direct Exchange pursuant to the applicable provisions of Article 11 of the OpCo Operating Agreement (including for this purpose any Common Units issuable upon the exercise of any options, warrants or similar rights to acquire Common Units), as applicable (without regard to any restrictions on Redemption contained therein and assuming no Redemptions for cash). The Corporation covenants that all the shares of Class A Common Stock that are issued upon any such Redemption or exchange of such Common Units will, upon issuance, be validly issued, fully paid and non-assessable.

 

6.2 Retirement of Class B Common Stock. In the event that (a) a share of Class A Common Stock is issued as a result of any Redemption or Direct Exchange of a Common Unit held by an AST Equityholder (other than a Key Holder) and outstanding as of the effective date of the OpCo Operating Agreement, pursuant to the applicable provisions of Article 11 of the OpCo Operating Agreement or (b) a Redemption by Cash Settlement is effected with respect to any Common Unit held by an AST Equityholder (other than a Key Holder) and outstanding as of the effective date of the OpCo Operating Agreement, pursuant to the applicable provisions of Article 11 of the OpCo Operating Agreement, a share of Class B Common Stock chosen by the Corporation in its sole discretion will automatically and without further action on the part of the Corporation or the holder thereof be transferred to the Corporation for no consideration and thereupon the Corporation shall promptly take all necessary action to cause such share to be retired, and such share thereafter may not be reissued by the Corporation.

 

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6.3 Retirement of Class C Common Stock. In the event that (a) a share of Class A Common Stock issued as a result of any Redemption or Direct Exchange of a Common Unit held by a Key Holder and outstanding as of the effective date of the OpCo Operating Agreement, pursuant to the applicable provisions of Article 11 of the OpCo Operating Agreement is subsequently transferred to any Person that is not a Key Holder, or (b) a Redemption by Cash Settlement is effected with respect to any Common Unit held by a Key Holder and outstanding as of the effective date of the OpCo Operating Agreement, pursuant to the applicable provisions of Article 11 of the OpCo Operating Agreement, a share of Class C Common Stock chosen by the Corporation in its sole discretion will automatically and without further action on the part of the Corporation or the holder thereof be transferred to the Corporation for no consideration and thereupon the Corporation shall promptly take all necessary action to cause such share to be retired, and such share thereafter may not be reissued by the Corporation.

 

6.4 Taxes. The issuance of shares of Class A Common Stock pursuant to the applicable provisions of Article 11 of the OpCo Operating Agreement will be made without charge to the applicable holder of Common Units receiving such shares in redemption or exchange for Common Units for any transfer taxes, stamp taxes or duties or other similar tax in respect of the issuance.

 

7. Board of Directors; Committees.

 

7.1 Number of Directors.

 

(a) The business and affairs of the Corporation shall be managed by, or under the direction of, the Board. Unless and except to the extent that the by-laws of the Corporation (as such By-laws may be amended from time to time, the “By-laws”) shall so require, the election of the directors of the Corporation (the “Directors”) need not be by written ballot. Except as otherwise provided for or fixed pursuant to the provisions of Section 5.2 of this Amended Certificate of Incorporation relating to the rights of the holders of any series of Preferred Stock to elect additional Directors, the total authorized number of Directors constituting the entire Board shall not be less than five (5) and shall not be more than nineteen (19), with the then-authorized number of Directors being fixed from time to time by the Board within such range (subject to the Stockholder’s Agreement if then in effect), which number shall initially be thirteen (13).

 

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(b) During any period when the holders of any series of Preferred Stock have the right to elect additional Directors as provided for or fixed pursuant to the provisions of Section 5.2 (“Preferred Stock Directors”), upon the commencement, and for the duration, of the period during which such right continues: (i) the then-total authorized number of Directors shall automatically be increased by such specified number of Preferred Stock Directors, and the holders of the related Preferred Stock shall be entitled to elect the Preferred Stock Directors pursuant to the provisions of the certificate of designation for the series of Preferred Stock, and (ii) each such Preferred Stock Director shall serve until such Preferred Stock Director’s successor shall have been duly elected and qualified, or until such Preferred Stock Director’s right to hold such office terminates pursuant to such provisions, whichever occurs earlier, subject to his or her earlier death, disqualification, resignation or removal. Except as otherwise provided by the Board in the resolution or resolutions establishing such series, whenever the holders of any series of Preferred Stock having such right to elect Preferred Stock Directors are divested of such right pursuant to the provisions of such stock, the terms of office of all such Preferred Stock Directors elected by the holders of such Preferred Stock, or elected to fill any vacancies resulting from the death, resignation, disqualification or removal of such Preferred Stock Directors, shall forthwith terminate and the total and authorized number of Directors shall automatically be reduced accordingly.

 

7.2 Vacancies and Newly Created Directorships. Subject to the rights of the holders of any one or more series of Preferred Stock then-outstanding and subject to obtaining any required stockholder votes or consents under the Stockholders’ Agreement (or complying with any stockholders’ designation rights under the Stockholders’ Agreement), newly created directorships resulting from any increase in the authorized number of Directors or any vacancies on the Board resulting from death, resignation, retirement, disqualification, removal from office or other cause shall be filled solely by the affirmative vote of the remaining Directors then in office, even if less than a quorum of the Board. Any Director so chosen shall hold office until the next election of the Directors in which such Director is included and until his or her successor shall be duly elected and qualified or until such Director’s earlier death, disqualification, resignation or removal. No decrease in the number of Directors shall shorten the term of any Director then in office.

 

7.3 Removal of Directors. Except for Preferred Stock Directors and subject to obtaining any required stockholder votes or consents under the Stockholders’ Agreement, any Director or the entire Board may be removed from office at any time, with or without cause and only by the affirmative vote of the holders of a majority of the total voting power of the outstanding shares of capital stock of the Corporation entitled to vote generally in the election of Directors, voting together as a single class.

 

7.4 Quorum. To the fullest extent permitted by the General Corporation Law and Stock Exchange Rules, until the Sunset Date, the presence of the Chairman shall be necessary in order for a quorum to be obtained at any meeting of the Board. Notwithstanding anything contained herein to the contrary, in the event that (i) the Chairman waives their required attendance at any meeting of the Board in writing prior to such meeting or (ii) the Chairman is unable to attend any emergency meeting of the Board, as determined by the Board in good faith, by reason of temporary disability or otherwise, the presence of the Chairman as required by this Section 7.4 shall not be necessary in order for such quorum to be obtained and the Board may appoint a Director as interim Chairman to preside over such meeting.

 

8. Meetings of Stockholders.

 

8.1 No Action by Written Consent. The stockholders of the Corporation may not effect any action by written consent.

 

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8.2 Special Meetings of Stockholders. Subject to any special rights of the holders of any series of Preferred Stock, and to the requirements of applicable law, special meetings of stockholders of the Corporation may be called only by or at the direction of (i) the Board, (ii) the Chairman or (iii) until the earlier of (x) the Sunset Date or (y) the date upon which the Corporation is no longer a “controlled company” under applicable Stock Exchange Rules, by the Secretary of the Corporation at the request of any holder of greater-than fifty percent (50%) of the total voting power of the outstanding shares of capital stock of the Corporation entitled to vote generally in the election of Directors, voting together as a single class. Any business transacted at any special meeting of stockholders shall be limited to matters relating to the purpose or purposes stated in the notice of meeting.

 

9. General Corporation Law; Section 203 and Business Combinations. The Corporation hereby expressly elects not to be governed by Section 203 of the General Corporation Law.

 

10. Limitation of Liability.

 

10.1 To the fullest extent permitted under the General Corporation Law, no Director shall be personally liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a Director.

 

10.2 Any amendment or repeal of this Article 10 shall not adversely affect any right or protection of a Director hereunder in respect of any act or omission occurring prior to the time of such amendment or repeal.

 

11. Indemnification. The Corporation shall have the power to provide rights to indemnification and advancement of expenses to its current and former officers, Directors, employees and agents and to any person who is or was serving at the request of the Corporation as a Director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise.

 

12. Adoption, Amendment or Repeal of By-laws.

 

(a) In furtherance and not in limitation of the powers conferred by law, subject to the Stockholders’ Agreement (for so long as it remains in effect), the Board is expressly authorized to make, alter, amend or repeal the By-laws subject to the power of the stockholders of the Corporation entitled to vote with respect thereto to make, alter, amend or repeal the By-laws.

 

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(b) The stockholders of the Corporation also shall have power to adopt, amend or repeal the By-laws; provided, however, that until the earlier of (x) Sunset Date and (y) the date upon which the Corporation is no longer a “controlled company” under applicable Stock Exchange Rules, such action by stockholders shall require, in addition to any other vote required by this Amended and Restated Certificate of Incorporation, the Stockholder’s Agreement or applicable law, the affirmative vote of the holders of at least seventy-five percent (75%) of the voting power of all the then-outstanding shares of voting stock of the Corporation with the power to vote generally in an election of Directors, voting together as a single class; provided further, the bylaws of the Corporation may require that actions of stockholders to amend, adopt or repeal specific bylaws may nevertheless require approval by a supermajority vote of stockholders in respect of certain provisions following the date described in clauses (x) and (y) of this sentence. Notwithstanding the foregoing, in any adoption, amendment or repeal of the By-laws of the Corporation may only be done in accordance with the Certificate of Incorporation, the Stockholders’ Agreement and the General Corporation Law.

 

13. Adoption, Amendment and Repeal of Certificate. Subject to the Stockholders’ Agreement (for so long as it remains in effect), the Corporation reserves the right to amend, alter, change or repeal any provision contained in this Amended Certificate of Incorporation, in the manner now or hereafter prescribed by the General Corporation Law, and all rights, preferences and privileges of whatsoever nature conferred upon stockholders, Directors or any other Persons whomsoever by and pursuant to this Amended Certificate of Incorporation in its present form or as hereafter amended, are granted and held subject to this reservation.

 

14. Severability. If any provision or provisions of this Amended Certificate of Incorporation shall be held to be invalid, illegal or unenforceable as applied to any circumstance for any reason whatsoever: (i) the validity, legality and enforceability of such provisions in any other circumstance and of the remaining provisions of this Amended Certificate of Incorporation (including, without limitation, each portion of any paragraph of this Amended Certificate of Incorporation containing any such provision held to be invalid, illegal or unenforceable that is not itself held to be invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby and (ii) to the fullest extent possible, the provisions of this Amended Certificate of Incorporation (including, without limitation, each such portion of any paragraph of this Amended Certificate of Incorporation containing any such provision held to be invalid, illegal or unenforceable) shall be construed so as to permit the Corporation to protect its Directors, officers, employees and agents from personal liability in respect of their good faith service to or for the benefit of the Corporation to the fullest extent permitted by law.

 

15. Definitions. As used in this Amended Certificate of Incorporation, unless the context otherwise requires or as set forth in another Article or Section of this Amended Certificate of Incorporation, the term:

 

(a) “Affiliate” means, with respect to any Person, any other Person directly or indirectly controlling, controlled by, or under common control with such Person; provided, that (i) neither the Corporation nor any of its subsidiaries will be deemed an Affiliate of any stockholder of the Corporation or any of such stockholders’ Affiliates and (ii) no stockholder of the Corporation will be deemed an Affiliate of any other stockholder of the Corporation, in each case, solely by reason of any investment in the Corporation or any rights conferred on such stockholder pursuant to the Stockholders’ Agreement (including any representatives of such stockholder serving on the Board).

 

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(b) “Amended Certificate of Incorporation” means this Second Amended and Restated Certificate of Incorporation.

 

(c) “AST Equityholders” has the meaning set forth in the Stockholders’ Agreement.

 

(d) “Board” means the board of directors of the Corporation.

 

(e) “By-laws” is defined in Section 7.1.

 

(f) “Cash Settlement” has the meaning set forth in the OpCo Operating Agreement.

 

(g) “Chairman” means the chairperson of the Board, which shall initially be Abel Avellan.

 

(h) “Class A Common Stock” is defined in Section 4.1.

 

(i) “Class B Common Stock” is defined in Section 4.1.

 

(j) “Class C Aggregate Voting Amount” means the number of votes equal to (x) eighty-eight and thirty-one hundredths percent (88.31)% of the total voting power of the outstanding voting stock of the Corporation (assuming, solely for this purpose, that the voting power of one share of Class C Common Stock is equal to 10 votes) (including, solely for this purpose, any shares of the Corporation’s voting stock issuable in connection with the exercise (assuming, solely for this purpose, full exercise and not net exercise) of all outstanding options, warrants, exchange rights, conversion rights or similar rights to receive voting stock of the Corporation, in each case owned or controlled, directly or indirectly, by the Key Holders, but excluding the number of shares of Class A Common Stock issuable or issued to and held by the Key Holders in connection with the exchange of Common Units, as a result of any Redemption pursuant to the applicable provisions of Article 11 of the OpCo Operating Agreement (such number of shares, the “Includible Shares”)), minus (y) the total voting power of the outstanding voting stock of the Corporation (other than Class C Common Stock) owned or controlled, directly or indirectly, by the Key Holders (including, solely for this purpose, the Includible Shares).

 

(k) “Class C Common Stock” is defined in Section 4.1.

 

(l) “Class C Share Voting Amount” means, as of any time, the (x) Class C Aggregate Voting Amount, divided by (y) the number of shares of Class C Common Stock then outstanding.

 

(m) “Common Stock” is defined in Section 4.1.

 

(n) “Common Unit” means a Common Unit of OpCo.

 

(o) “control” (including the terms “controlling” and “controlled”), with respect to the relationship between or among two or more Persons, means the possession, directly or indirectly, of the power to direct or cause the direction of the affairs or management of such subject Person, whether through the ownership of voting securities, as trustee or executor, by contract or otherwise.

 

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(p) “Corporation” is defined in the introductory paragraph.

 

(q) “Direct Exchange” has the meaning set forth in the OpCo Operating Agreement.

 

(r) “Director” is defined in Section 7.1.

 

(s) “General Corporation Law” is defined in the recitals.

 

(t) “Key Holders” means the “Avellan Holders” as defined in the Stockholders Agreement.

 

(u) “OpCo” means AST & Science LLC, a Delaware limited liability company, or any successor thereto.

 

(v) “OpCo Operating Agreement” means the Fifth Amended and Restated Limited Liability Company Operating Agreement of OpCo, dated as of April 6, 2021, as the same may be amended, restated, supplemented and/or otherwise modified, from time to time.

 

(w) “Permitted Transfer” has the meaning set forth in the OpCo Operating Agreement.

 

(x) “Person” means any individual, general partnership, limited partnership, limited liability company, corporation, trust, business trust, joint stock company, joint venture, unincorporated association, cooperative or association or any other legal entity or organization of whatever nature, and shall include any successor (by merger or otherwise) of such entity.

 

(y) “Preferred Stock” is defined in Section 4.1.

 

(z) “Preferred Stock Directors” is defined in Section 7.1.

 

(aa) “Redemption” has the meaning set forth in the OpCo Operating Agreement.

 

(bb) “Share Settlement” has the meaning set forth in the OpCo Operating Agreement.

 

(cc) “Stock Adjustment” is defined in Section 5.1(b)(iii).

 

(dd) “Stock Exchange Rules” means the rules and regulations for listed companies as in effect from time to time of the principal United States national securities exchange on which the Class A Common Stock is listed for trading, which as of the date hereof is The Nasdaq Stock Market LLC.

 

(ee) “Stockholders’ Agreement” means the Stockholders’ Agreement, dated as of April 6, 2021, by and among the Corporation and the other Persons party thereto or that may become parties thereto from time to time, as the same may be amended, restated, supplemented and/or otherwise modified, from time to time.

 

(ff) “Sunset Date” has the meaning set forth in the Stockholders’ Agreement.

 

[Remainder of page intentionally left blank.]

 

11

 

Exhibit 3.2

 

Bylaws of

 

AST SpaceMobile, Inc.

 

(a Delaware corporation)

 

 
 

 

TABLE OF CONTENTS

 

      Page
Article I - Corporate Offices 1
  1.1 Registered Office 1
  1.2 Other Offices 1
Article II - Meetings of Stockholders 1
  2.1 Place of Meetings 1
  2.2 Annual Meeting 1
  2.3 Special Meeting 1
  2.4 Advance Notice Procedures for Business Brought before a Meeting 1
  2.5 Advance Notice Procedures for Nominations of Directors 5
  2.6 Notice of Stockholders’ Meetings 8
  2.7 Manner of Giving Notice; Affidavit of Notice 8
  2.8 Quorum 8
  2.9 Adjourned Meeting; Notice 9
  2.10 Conduct of Business 9
  2.11 Voting 10
  2.12 Record Date for Stockholder Meetings and Other Purposes 10
  2.13 Proxies 10
  2.14 List of Stockholders Entitled to Vote 11
  2.15 Inspectors of Election 11
  2.16 Delivery to the Corporation 12
Article III - Directors 12
  3.1 Powers 12
  3.2 Number of Directors 12

 

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  3.3 Election, Qualification and Term of Office of Directors 12
  3.4 Resignation and Vacancies 12
  3.5 Place of Meetings; Meetings by Telephone 12
  3.6 Regular Meetings 13
  3.7 Special Meetings; Notice 13
  3.8 Quorum 13
  3.9 Action by Written Consent without a Meeting 14
  3.10 Fees and Compensation of Directors 14
  3.11 Lead Independent Director 14
Article IV - Committees 14
  4.1 Committees of Directors 14
  4.2 Committee Minutes 14
  4.3 Meetings and Actions of Committees 15
Article V - Officers 15
  5.1 Officers 15
  5.2 Appointment of Officers 15
  5.3 Subordinate Officers 15
  5.4 Removal and Resignation of Officers 16
  5.5 Vacancies in Offices 16
  5.6 Representation of Shares of Other Corporations 16
  5.7 Authority and Duties of Officers 16
  5.8 Compensation 16
Article VI - Records 16

 

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Article VII - General Matters 17
  7.1 Execution of Corporate Contracts and Instruments 17
  7.2 Stock Certificates 17
  7.3 Lost Certificates 17
  7.4 Shares Without Certificates 17
  7.5 Construction; Definitions 18
  7.6 Dividends 18
  7.7 Fiscal Year 18
  7.8 Seal 18
  7.9 Transfer of Stock 18
  7.10 Stock Transfer Agreements 18
  7.11 Registered Stockholders 18
  7.12 Waiver of Notice 19
Article VIII - Notice 19
Article IX - Indemnification 20
  9.1 Indemnification of Directors and Officers 20
  9.2 Indemnification of Others 20
  9.3 Prepayment of Expenses 20
  9.4 Determination; Claim 20
  9.5 Non-Exclusivity of Rights 21
  9.6 Insurance 21
  9.7 Other Indemnification 21
  9.8 Continuation of Indemnification 21
  9.9 Amendment or Repeal; Interpretation 21
Article X - Amendments 22
Article XI - Forum Selection 22
Article XII - Definitions 23

 

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Bylaws of

 

AST SpaceMobile, Inc.

 

 

 

Article I - Corporate Offices

1.1 Registered Office.

 

The address of the registered office of AST SpaceMobile, Inc. (the “Corporation”) in the State of Delaware, and the name of its registered agent at such address, shall be as set forth in the Corporation’s certificate of incorporation, as the same may be amended and/or restated from time to time (the “Certificate of Incorporation”).

 

1.2 Other Offices.

 

The Corporation may have additional offices at any place or places, within or outside the State of Delaware, as the Corporation’s Board may from time to time establish or as the business of the Corporation may require.

 

Article II - Meetings of Stockholders

 

2.1 Place of Meetings.

 

Meetings of stockholders shall be held at such place, if any, within or outside the State of Delaware, designated by the Board. The Board may, in its sole discretion, determine that a meeting of stockholders shall not be held at any place, but may instead be held solely by means of remote communication as authorized by Section 211(a)(2) of the General Corporation Law of the State of Delaware (the “DGCL”). In the absence of any such designation or determination, stockholders’ meetings shall be held at the Corporation’s principal executive office.

 

2.2 Annual Meeting.

 

The Board shall designate the date and time of the annual meeting. At the annual meeting, directors shall be elected and other proper business properly brought before the meeting in accordance with Section 2.4 may be transacted.

 

2.3 Special Meeting.

 

Special meetings of the stockholders may be called only by such Persons and only in such manner as set forth in the Certificate of Incorporation.

 

No business may be transacted at any special meeting of stockholders other than the business specified in the notice of such meeting.

 

2.4 Advance Notice Procedures for Business Brought before a Meeting.

 

(i) At an annual meeting of the stockholders, only such business shall be conducted as shall have been properly brought before the meeting. To be properly brought before an annual meeting, business must be (a) specified in a notice of meeting given by or at the direction of the Board, (b) if not specified in a notice of meeting, otherwise brought before the meeting by the Board or the chairperson of the meeting, or (c) otherwise properly brought before the meeting by a stockholder present in person who (A) (1) was a stockholder of the Corporation both at the time of giving the notice provided for in this Section 2.4 and at the time of the meeting, (2) is entitled to vote at the meeting and (3) has complied with this Section 2.4 or (B) properly made such proposal in accordance with Rule 14a-8 under the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder (as so amended and inclusive of such rules and regulations, the “Exchange Act”), which proposal has been included in the proxy statement for the annual meeting. The foregoing clause (c) shall be the exclusive means for a stockholder to propose business to be brought before an annual meeting of the stockholders. The only matters that may be brought before a special meeting are the matters specified in the Corporation’s notice of meeting given by or at the direction of the Person calling the meeting pursuant to the Certificate of Incorporation and Section 2.3 of these bylaws. For purposes of this Section 2.4 and Section 2.5 of these bylaws, as applicable, “present in person” shall mean that the stockholder proposing that the business be brought before the annual or special meeting of the Corporation, or, if the proposing stockholder is not an individual, a qualified representative of such proposing stockholder, appear at such annual meeting, and a “qualified representative” of such proposing stockholder shall be (A) any person who is authorized in writing by such stockholder to act for such stockholder as proxy at the meeting of stockholders and such person must produce such writing or electronic transmission, or a reliable reproduction of the writing or electronic transmission, at the meeting of stockholders or (B) if such proposing stockholder is (x) a general or limited partnership, any general partner or Person who functions as a general partner of the general or limited partnership or who controls the general or limited partnership, (y) a corporation or a limited liability company, any officer or Person who functions as an officer of the corporation or limited liability company or any officer, director, general partner or Person who functions as an officer, director or general partner of any entity ultimately in control of the corporation or limited liability company or (z) a trust, any trustee of such trust. This Section 2.4 shall apply to any business that may be brought before an annual or special meeting of stockholders other than nominations for election to the Board at an annual meeting, which shall be governed by Section 2.5 of these bylaws. Stockholders seeking to nominate persons for election to the Board must comply with Section 2.5 of these bylaws, and this Section 2.4 shall not be applicable to nominations for election to the Board except as expressly provided in Section 2.5 of these bylaws.

 

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(ii) Without qualification, for business to be properly brought before an annual meeting by a stockholder pursuant to Section 2.4(iii)(c), (a) the stockholder must provide Timely Notice (as defined below) thereof in writing and in proper form to the Secretary of the Corporation, (b) the stockholder must provide any updates or supplements to such notice at the times and in the forms required by this Section 2.4 and (c) the proposed business must constitute a proper matter for stockholder action. To be timely, a stockholder’s notice must be delivered to, or mailed and received at, the principal executive offices of the Corporation not less than ninety (90) days nor more than one hundred twenty (120) days prior to the one-year anniversary of the preceding year’s annual meeting (which, in the case of the first annual meeting of stockholders following the closing of the Corporation’s initial underwritten public offering of common stock, the preceding year’s annual meeting date shall be deemed to be June 5); provided, however, that if the date of the annual meeting is more than thirty (30) days before or more than sixty (60) days after such anniversary date, notice by the stockholder to be timely must be so delivered, or mailed and received, not later than the ninetieth (90th) day prior to such annual meeting or, if later, the tenth (10th) day following the day on which public disclosure of the date of such annual meeting was first made (such notice within such time periods, “Timely Notice”). In no event shall any adjournment or postponement of an annual meeting or the announcement thereof commence a new time period or extend a time period for the giving of Timely Notice as described above.

 

(iii) To be in proper form for purposes of this Section 2.4, a stockholder’s notice to the Secretary shall set forth:

 

(a) As to each Proposing Person (as defined below), (A) the name and address of such Proposing Person (including, if applicable, the name and address that appear on the Corporation’s books and records); and (B) the number of shares of each class or series of stock of the Corporation that are, directly or indirectly, owned of record or beneficially owned (within the meaning of Rule 13d-3 under the Exchange Act) by such Proposing Person, except that such Proposing Person shall in all events be deemed to beneficially own any shares of any class or series of stock of the Corporation as to which such Proposing Person has a right to acquire beneficial ownership at any time in the future (the disclosures to be made pursuant to the foregoing clauses (A) and (B) are referred to as “Stockholder Information”);

 

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(b) As to each Proposing Person, (A) the full notional amount of any securities that, directly or indirectly, underlie any “derivative security” (as such term is defined in Rule 16a-1(c) under the Exchange Act) that constitutes a “call equivalent position” (as such term is defined in Rule 16a-1(b) under the Exchange Act) (“Synthetic Equity Position”) and that is, directly or indirectly, held or maintained by such Proposing Person with respect to any shares of any class or series of stock of the Corporation; provided that, for the purposes of the definition of “Synthetic Equity Position,” the term “derivative security” shall also include any security or instrument that would not otherwise constitute a “derivative security” as a result of any feature that would make any conversion, exercise or similar right or privilege of such security or instrument becoming determinable only at some future date or upon the happening of a future occurrence, in which case the determination of the amount of securities into which such security or instrument would be convertible or exercisable shall be made assuming that such security or instrument is immediately convertible or exercisable at the time of such determination; and, provided, further, that any Proposing Person satisfying the requirements of Rule 13d-1(b)(1) under the Exchange Act (other than a Proposing Person that so satisfies Rule 13d-1(b)(1) under the Exchange Act solely by reason of Rule 13d-1(b)(1)(ii)(E)) shall not be deemed to hold or maintain the notional amount of any securities that underlie a Synthetic Equity Position held by such Proposing Person as a hedge with respect to a bona fide derivatives trade or position of such Proposing Person arising in the ordinary course of such Proposing Person’s business as a derivatives dealer, (B) any rights to dividends on the shares of any class or series of stock of the Corporation owned beneficially by such Proposing Person that are separated or separable from the underlying shares of the Corporation, (C) any material pending or threatened legal proceeding in which such Proposing Person is a party or material participant involving the Corporation or any of its officers or directors, or any Affiliate of the Corporation, (D) any other material relationship between such Proposing Person, on the one hand, and the Corporation or any Affiliate of the Corporation, on the other hand, (E) any direct or indirect material interest in any material contract or agreement of such Proposing Person with the Corporation or any Affiliate of the Corporation (including, in any such case, any employment agreement, collective bargaining agreement or consulting agreement), (F) any other information relating to such Proposing Person that would be required to be disclosed in a proxy statement or other filing required to be made in connection with solicitations of proxies or consents by such Proposing Person in support of the business proposed to be brought before the meeting pursuant to Section 14(a) of the Exchange Act (the disclosures to be made pursuant to the foregoing clauses (A) through (F) are referred to as “Disclosable Interests”); provided, however, that Disclosable Interests shall not include any such disclosures with respect to the ordinary course business activities of any broker, dealer, commercial bank, trust company or other nominee who is a Proposing Person solely as a result of being the stockholder directed to prepare and submit the notice required by these bylaws on behalf of a beneficial owner and (G) a representation whether any Proposing Person, intends or is part of a group which intends to deliver a proxy statement and/or form of proxy to holders of at least the percentage of the Corporation’s outstanding capital stock required to approve or adopt the proposal and/or otherwise to solicit proxies or votes from stockholders in support of such proposal; and

 

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(c) As to each item of business that the stockholder proposes to bring before the annual meeting, (A) a brief description of the business desired to be brought before the annual meeting, the reasons for conducting such business at the annual meeting and any material interest in such business of each Proposing Person, (B) the text of the proposal or business (including the text of any resolutions proposed for consideration ), (C) a reasonably detailed description of all agreements, arrangements and understandings (x) between or among any of the Proposing Persons or (y) between or among any Proposing Person and any other Person or entity (including their names) in connection with the proposal of such business by such stockholder and (D) any other information relating to such item of business that would be required to be disclosed in a proxy statement or other filing required to be made in connection with solicitations of proxies in support of the business proposed to be brought before the meeting pursuant to Section 14(a) of the Exchange Act; provided, however, that the disclosures required by this Section 2.4(iii) shall not include any disclosures with respect to any broker, dealer, commercial bank, trust company or other nominee who is a Proposing Person solely as a result of being the stockholder directed to prepare and submit the notice required by these bylaws on behalf of a beneficial owner.

 

(iv) For purposes of this Section 2.4, the term “Proposing Person” shall mean (a) the stockholder providing the notice of business proposed to be brought before an annual meeting, (b) the beneficial owner or beneficial owners, if different, on whose behalf the notice of the business proposed to be brought before the annual meeting is made, (c) any participant (as defined in paragraphs (a)(ii)–(vi) of Instruction 3 to Item 4 of Schedule 14A) with such stockholder in such solicitation or (d) any associate (within the meaning of Rule 12b-2 under the Exchange Act for the purposes of these bylaws) of such stockholder, beneficial owner or any other participant.

 

(v) A Proposing Person shall update and supplement its notice to the Corporation of its intent to propose business at an annual meeting, if necessary, so that the information provided or required to be provided in such notice pursuant to this Section 2.4 shall be true and correct as of the record date for notice of the meeting and as of the date that is ten (10) business days prior to the meeting or any adjournment or postponement thereof, and such update and supplement shall be delivered to, or mailed and received by, the Secretary at the principal executive offices of the Corporation not later than five (5) business days after the record date for notice of the meeting (in the case of the update and supplement required to be made as of such record date), and not later than eight (8) business days prior to the date for the meeting or, if practicable, any adjournment or postponement thereof (and, if not practicable, on the first practicable date prior to the date to which the meeting has been adjourned or postponed) (in the case of the update and supplement required to be made as of ten (10) business days prior to the meeting or any adjournment or postponement thereof). For the avoidance of doubt, the obligation to update and supplement as set forth in this paragraph or any other Section of these bylaws shall not limit the Corporation’s rights with respect to any deficiencies in any notice provided by a stockholder, extend any applicable deadlines hereunder or enable or be deemed to permit a stockholder who has previously submitted notice hereunder to amend or update any proposal or to submit any new proposal, including by changing or adding matters, business or resolutions proposed to be brought before a meeting of the stockholders.

 

(vi) Notwithstanding anything in these bylaws to the contrary, no business shall be conducted at an annual meeting that is not properly brought before the meeting in accordance with this Section 2.4. The presiding officer of the meeting shall, if the facts warrant, determine that the business was not properly brought before the meeting in accordance with this Section 2.4, and if he or she should so determine, he or she shall so declare to the meeting and any such business not properly brought before the meeting shall not be transacted.

 

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(vii) In addition to the requirements of this Section 2.4 with respect to any business proposed to be brought before an annual meeting, each Proposing Person shall comply with all applicable requirements of the Exchange Act with respect to any such business. Nothing in this Section 2.4 shall be deemed to affect the rights of stockholders to request inclusion of proposals in the Corporation’s proxy statement pursuant to Rule 14a-8 under the Exchange Act.

 

(viii) For purposes of these bylaws, “public disclosure” shall mean disclosure in a press release reported by a national news service or in a document publicly filed by the Corporation with the Securities and Exchange Commission pursuant to Sections 13, 14 or 15(d) of the Exchange Act.

 

2.5 Advance Notice Procedures for Nominations of Directors.

 

(i) Subject in all respects to the provisions of the Stockholders’ Agreement and Certificate of Incorporation, nominations of any person for election to the Board at an annual meeting or at a special meeting (but only if the election of directors is a matter specified in the notice of meeting given by or at the direction of the person calling such special meeting) may be made at such meeting only (a) by or at the direction of the Board, including by any committee or persons authorized to do so by the Board or these bylaws, or (b) by a stockholder present in person (as defined in Section 2.4) who (1) was a beneficial owner of shares of the Corporation both at the time of giving the notice provided for in this Section 2.5 and at the time of the meeting, (2) is entitled to vote at the meeting and (3) has complied with this Section 2.5 as to such notice and nomination. The foregoing clause (b) shall be the exclusive means for a stockholder to make any nomination of a person or persons for election to the Board at any annual meeting of stockholders other than in accordance with the provisions of the Stockholders’ Agreement and the Certificate of Incorporation.

 

(ii) Without qualification, for a stockholder to make any nomination of a person or persons for election to the Board at an annual meeting, the stockholder must (a) provide Timely Notice (as defined in Section 2.4(ii) of these bylaws) thereof in writing and in proper form to the Secretary of the Corporation, (b) provide the information, agreements and questionnaires with respect to such stockholder and its candidate for nomination as required by this Section 2.5, and (c) provide any updates or supplements to such notice at the times and in the forms required by this Section 2.5. In no event shall any adjournment or postponement of an annual meeting or the announcement thereof commence a new time period or extend a time period for the giving of a stockholder’s notice as described above.

 

(iii) To be in proper form for purposes of this Section 2.5, a stockholder’s notice to the Secretary shall set forth:

 

(a) As to each Nominating Person (as defined below), the Stockholder Information (as defined in Section 2.4(iii)(a) of these bylaws) except that for purposes of this Section 2.5, the term “Nominating Person” shall be substituted for the term “Proposing Person” in all places it appears in Section 2.4(iii)(a);

 

(b) As to each Nominating Person, any Disclosable Interests (as defined in Section 2.4(iii)(b), except that for purposes of this Section 2.5 the term “Nominating Person” shall be substituted for the term “Proposing Person” in all places it appears in Section 2.4(iii)(b) and the disclosure with respect to the business to be brought before the meeting in Section 2.4(iii)(c) shall be made with respect to nomination of each person for election as a director at the meeting) and a representation whether any Nominating Person intends or is part of a group which intends to deliver a proxy statement and/or form of proxy to holders of at least the percentage of the Corporation’s outstanding capital stock required to elect the nominee and/or otherwise to solicit proxies or votes from stockholders in support of such nomination; and

 

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(c) As to each candidate whom a Nominating Person proposes to nominate for election as a director, (A) all information with respect to such candidate for nomination that would be required to be set forth in a stockholder’s notice pursuant to this Section 2.5 if such candidate for nomination were a Nominating Person, (B) all information relating to such candidate for nomination that is required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors in a contested election pursuant to Section 14(a) under the Exchange Act (including such candidate’s written consent to being named in the Corporation’s proxy statement as a nominee and to serving as a director if elected), (C) a description of any direct or indirect material interest in any material contract or agreement between or among any Nominating Person, on the one hand, and each candidate for nomination or his or her respective associates or any other participants in such solicitation, on the other hand, including, without limitation, all information that would be required to be disclosed pursuant to Item 404 under Regulation S-K if such Nominating Person were the “registrant” for purposes of such rule and the candidate for nomination were a director or executive officer of such registrant (the disclosures to be made pursuant to the foregoing clauses (A) through (C) are referred to as “Nominee Information”), and (D) a completed and signed questionnaire, representation and agreement as provided in Section 2.5(iv).

 

(iv) For purposes of this Section 2.5, the term “Nominating Person” shall mean (a) the stockholder providing the notice of the nomination proposed to be made at the meeting, (b) the beneficial owner or beneficial owners, if different, on whose behalf the notice of the nomination proposed to be made at the meeting is made, (c) any other participant (as defined in paragraphs (a)(ii)–(vi) of Instruction 3 to Item 4 of Schedule 14A) in such solicitation and (d) any associate (within the meaning of Rule 12b-2 under the Exchange Act for the purposes of these bylaws) of such stockholder or beneficial owner or any other participant in such solicitation.

 

(v) A stockholder providing notice of any nomination proposed to be made at a meeting shall further update and supplement such notice, if necessary, so that the information provided or required to be provided in such notice pursuant to this Section 2.5 shall be true and correct as of the record date for notice of the meeting and as of the date that is ten (10) business days prior to the meeting or any adjournment or postponement thereof, and such update and supplement shall be delivered to, or mailed and received by, the Secretary at the principal executive offices of the Corporation not later than five (5) business days after the record date for notice of the meeting (in the case of the update and supplement required to be made as of such record date), and not later than eight (8) business days prior to the date for the meeting or, if practicable, any adjournment or postponement thereof (and, if not practicable, on the first practicable date prior to the date to which the meeting has been adjourned or postponed) (in the case of the update and supplement required to be made as of ten (10) business days prior to the meeting or any adjournment or postponement thereof). For the avoidance of doubt, the obligation to update and supplement as set forth in this paragraph or any other Section of these bylaws shall not limit the Corporation’s rights with respect to any deficiencies in any notice provided by a stockholder, extend any applicable deadlines hereunder or enable or be deemed to permit a stockholder who has previously submitted notice hereunder to amend or update any nomination or to submit any new nomination.

 

(vi) Notwithstanding anything in Section 2.5(ii) to the contrary, in the event that the number of directors to be elected to the Board at the annual meeting is increased effective after the time period for which nominations would otherwise be due under Section 2.5(ii) and there is no public announcement by the Corporation naming the nominees for the additional directorships at least one hundred (100) days prior to the first anniversary of the preceding year’s annual meeting, a stockholder’s notice required by this Section 2.5 shall also be considered timely, but only with respect to nominees for the additional directorships, if it shall be delivered to the Secretary at the principal executive offices of the Corporation not later than the close of business on the tenth (10th) day following the day on which such public announcement is first made by the Corporation.

 

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(vii) Only such business shall be conducted at a special meeting of stockholders as shall have been brought before the meeting pursuant to the Corporation’s notice of meeting. Nominations of persons for election to the Board may be made at a special meeting of stockholders at which directors are to be elected pursuant to the Corporation’s notice of meeting (1) by or at the direction of the Board or (2) provided that the Board has determined that directors shall be elected at such meeting, by any stockholder of the Corporation who is a stockholder of record at the time the notice provided for in this Section 2.5 is delivered to the Secretary of the Corporation, who is entitled to vote at the meeting and upon such election and who complies with the notice procedures set forth in this Section 2.5. In the event the Corporation calls a special meeting of stockholders for the purpose of electing one or more directors to the Board, any such stockholder entitled to vote in such election of directors may nominate a person or persons (as the case may be) for election to such position(s) as specified in the Corporation’s notice of meeting, if the stockholder’s notice required by Section 2.5(ii) shall be delivered to the Secretary at the principal executive offices of the Corporation not earlier than the close of business on the one hundred twentieth (120th) day prior to such special meeting and not later than the close of business on the later of the ninetieth (90th) day prior to such special meeting or the tenth (10th) day following the day on which the Corporation first makes a public announcement of the date of the special meeting at which directors are to be elected. In no event shall the public announcement of an adjournment or postponement of a special meeting commence a new time period (or extend any time period) for the giving of a stockholder’s notice as described above.

 

(viii) To be eligible to be a candidate for election as a director of the Corporation at an annual meeting, a candidate must be nominated in the manner prescribed in this Section 2.5 (or otherwise in accordance with the Stockholders’ Agreement or Certificate of Incorporation, as applicable) and the candidate for nomination, whether nominated by the Board or by a stockholder of record, must have previously delivered (in the case of a nomination by a stockholder pursuant to Section 2.5(i)(b), in accordance with the time period prescribed in this Section 2.5 for delivery of the stockholder notice of nomination), to the Secretary at the principal executive offices of the Corporation, (a) a completed written questionnaire (in the form provided by the Corporation) with respect to the background, qualifications, stock ownership and independence of such candidate for nomination, and such additional information with respect to such proposed nominee as would be required to be provided by the Corporation pursuant to Schedule 14A if such proposed nominee were a participant in the solicitation of proxies by the Corporation in connection with such annual or special meeting and (b) a written representation and agreement (in the form provided by the Corporation) that such candidate for nomination (A) is not, and will not become a party to, any agreement, arrangement or understanding with any Person or entity other than the Corporation with respect to any direct or indirect compensation or reimbursement for service as a director of the Corporation that has not been disclosed therein and (B) if elected as a director of the Corporation, will comply with all applicable corporate governance, conflict of interest, confidentiality, stock ownership and trading and other policies and guidelines of the Corporation applicable to all directors and in effect during such person’s term in office as a director (and, if requested by any candidate for nomination, the Secretary of the Corporation shall provide to such candidate for nomination all such policies and guidelines then in effect).

 

(ix) The Board may also require any proposed candidate for nomination as a Director to furnish such other information as may reasonably be requested by the Board in writing prior to the meeting of stockholders at which such candidate’s nomination is to be acted upon in order for the Board to determine the eligibility of such candidate for nomination to be an independent director of the Corporation in accordance with the Corporation’s corporate governance guidelines.

 

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(x) In addition to the requirements of this Section 2.5 with respect to any nomination proposed to be made at a meeting, each Nominating Person shall comply with all applicable requirements of the Exchange Act with respect to any such nominations.

 

(xi) No candidate shall be eligible for nomination as a director of the Corporation unless such candidate for nomination and the Nominating Person seeking to place such candidate’s name in nomination has complied with this Section 2.5, as applicable. The presiding officer at the meeting shall, if the facts warrant, determine that a nomination was not properly made in accordance with this Section 2.5, and if he or she should so determine, he or she shall so declare such determination to the meeting, the defective nomination shall be disregarded and any ballots cast for the candidate in question (but in the case of any form of ballot listing other qualified nominees, only the ballots cast for the nominee in question) shall be void and of no force or effect.

 

(xii) Notwithstanding anything in these bylaws to the contrary, no candidate for nomination shall be eligible to be seated as a director of the Corporation unless nominated and elected in accordance with this Section 2.5.

 

(xiii) Notwithstanding anything to the contrary contained in these bylaws, for as long as any party to the Stockholders’ Agreement has a right to designate or nominate a Director, the procedure for any such nomination shall be governed by the Stockholders’ Agreement and such party shall not be subject to the notice procedures set forth in these bylaws for the nomination of any person to serve as a Director at any annual meeting or special meeting of stockholders.

 

2.6 Notice of Stockholders’ Meetings.

 

Unless otherwise provided by law, the Certificate of Incorporation or these bylaws, the notice of any meeting of stockholders shall be sent or otherwise given in accordance with Section 2.7 of these bylaws not less than ten (10) nor more than sixty (60) days before the date of the meeting to each stockholder entitled to vote at such meeting. The notice shall specify the place, if any, date and hour of the meeting, the means of remote communication, if any, by which stockholders and proxy holders may be deemed to be present in person and vote at such meeting, and, in the case of a special meeting, the purpose or purposes for which the meeting is called.

 

2.7 Manner of Giving Notice; Affidavit of Notice.

 

Notice of any meeting of stockholders shall be deemed given:

 

(i) if mailed, when deposited in the U.S. mail, postage prepaid, directed to the stockholder at his or her address as it appears on the Corporation’s records; or

 

(ii) if electronically transmitted as provided in the DGCL.

 

An affidavit of the secretary or an assistant secretary of the Corporation or of the transfer agent or any other agent of the Corporation that the notice has been given by mail or by a form of electronic transmission, as applicable, shall, in the absence of fraud, be prima facie evidence of the facts stated therein.

 

2.8 Quorum.

 

Unless otherwise provided by law, the Certificate of Incorporation, the Stockholders’ Agreement or these bylaws, the holders of a majority in voting power of the stock issued and outstanding and entitled to vote, present in person, or by remote communication, if applicable, or represented by proxy, shall constitute a quorum for the transaction of business at all meetings of the stockholders. A quorum, once established at a meeting, shall not be broken by the withdrawal of enough votes to leave less than a quorum. If, however, a quorum is not present or represented at any meeting of the stockholders, then either (i) the chairperson of the meeting or (ii) a majority in voting power of the stockholders entitled to vote at the meeting, present in person, or by remote communication, if applicable, or represented by proxy, shall have the power to adjourn the meeting from time to time in the manner provided in Section 2.9 of these bylaws until a quorum is present or represented. At any recessed or adjourned meeting at which a quorum is present or represented, any business may be transacted that might have been transacted at the meeting as originally noticed.

 

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2.9 Adjourned Meeting; Notice.

 

When a meeting is adjourned to another time or place, if any, notice need not be given of the adjourned meeting if the time, place, if any, thereof, and the means of remote communications, if any, by which stockholders and proxy holders may be deemed to be present in person and vote at such adjourned meeting are announced at the meeting at which the adjournment is taken. At any adjourned meeting, the Corporation may transact any business which might have been transacted at the original meeting. If the adjournment is for more than thirty (30) days, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. If after the adjournment a new record date for determination of stockholders entitled to vote is fixed for the adjourned meeting, the Board shall fix as the record date for determining stockholders entitled to notice of such adjourned meeting the same or an earlier date as that fixed for determination of stockholders entitled to vote at the adjourned meeting, and shall give notice of the adjourned meeting to each stockholder of record as of the record date so fixed for notice of such adjourned meeting.

 

2.10 Conduct of Business.

 

The date and time of the opening and the closing of the polls for each matter upon which the stockholders will vote at a meeting shall be announced at the meeting by the person presiding over the meeting. The Board may adopt by resolution such rules and regulations for the conduct of the meeting of stockholders as it shall deem appropriate. Except to the extent inconsistent with such rules and regulations as adopted by the Board, the chairperson of any meeting of stockholders shall have the right and authority to convene and (for any or no reason) to recess and/or adjourn the meeting, to prescribe such rules, regulations and procedures and to do all such acts as, in the judgment of such chairperson, are appropriate for the proper conduct of the meeting. Such rules, regulations or procedures, whether adopted by the Board or prescribed by the chairperson of the meeting, may include, without limitation, the following: (i) the establishment of an agenda or order of business for the meeting; (ii) rules and procedures for maintaining order at the meeting and the safety of those present; (iii) limitations on attendance at or participation in the meeting to stockholders entitled to vote at the meeting, their duly authorized and constituted proxies or such other persons as the chairperson of the meeting shall determine; (iv) restrictions on entry to the meeting after the time fixed for the commencement thereof; and (v) limitations on the time allotted to questions or comments by participants. The presiding person at any meeting of stockholders, in addition to making any other determinations that may be appropriate to the conduct of the meeting (including, without limitation, determinations with respect to the administration and/or interpretation of any of the rules, regulations or procedures of the meeting, whether adopted by the Board or prescribed by the person presiding over the meeting), shall, if the facts warrant, determine and declare to the meeting that a matter of business was not properly brought before the meeting and if such presiding person should so determine, such presiding person shall so declare to the meeting and any such matter or business not properly brought before the meeting shall not be transacted or considered. Unless and to the extent determined by the Board or the chairperson of the meeting, meetings of stockholders shall not be required to be held in accordance with the rules of parliamentary procedure.

 

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2.11 Voting.

 

Each stockholder shall be entitled to a number of votes based on the number of and type of shares of capital stock held by such stockholder as provided in the Certificate of Incorporation, the Stockholders’ Agreement or as required under the DGCL.

 

Except as otherwise provided by the Certificate of Incorporation or the Stockholders’ Agreement, at all duly called or convened meetings of stockholders at which a quorum is present, for the election of directors, a plurality of the votes cast shall be sufficient to elect a director. Except as otherwise provided by the Certificate of Incorporation, these bylaws, the rules or regulations of any stock exchange applicable to the Corporation, or applicable law or pursuant to any regulation applicable to the Corporation or its securities, each other matter presented to the stockholders at a duly called or convened meeting at which a quorum is present shall be decided by the affirmative vote of the holders of a majority of the votes cast (excluding abstentions and broker non-votes) on such matter.

 

2.12 Record Date for Stockholder Meetings and Other Purposes.

 

In order that the Corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, the Board may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board, and which record date shall not be more than sixty (60) days nor less than ten (10) days before the date of such meeting. If the Board so fixes a date, such date shall also be the record date for determining the stockholders entitled to vote at such meeting unless the Board determines, at the time it fixes such record date, that a later date on or before the date of the meeting shall be the date for making such determination. If no record date is fixed by the Board, the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be the close of business on the next day preceding the day on which notice is first given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board may fix a new record date for the adjourned meeting; and in such case shall also fix as the record date for stockholders entitled to notice of such adjourned meeting the same or an earlier date as that fixed for determination of stockholders entitled to vote in accordance herewith at the adjourned meeting.

 

In order that the Corporation may determine the stockholders entitled to receive payment of any dividend or other distribution or allotment or any rights or the stockholders entitled to exercise any rights in respect of any change, conversion or exchange of capital stock, or for the purposes of any other lawful action, the Board may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted, and which record date shall be not more than sixty (60) days prior to such action. If no record date is fixed, the record date for determining stockholders for any such purpose shall be at the close of business on the day on which the Board adopts the resolution relating thereto.

 

2.13 Proxies.

 

Each stockholder entitled to vote at a meeting of stockholders may authorize another Person or Persons to act for such stockholder by proxy authorized by an instrument in writing or by a transmission permitted by law filed in accordance with the procedure established for the meeting, but, no such proxy shall be voted or acted upon after three (3) years from its date, unless the proxy provides for a longer period. The revocability of a proxy that states on its face that it is irrevocable shall be governed by the provisions of Section 212 of the DGCL. A proxy may be in the form of an electronic transmission which sets forth or is submitted with information from which it can be determined that the electronic transmission was authorized by the stockholder.

 

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2.14 List of Stockholders Entitled to Vote.

 

The Corporation shall prepare, at least ten (10) days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting (provided, however, that if the record date for determining the stockholders entitled to vote is less than ten (10) days before the date of the meeting, the list shall reflect the stockholders entitled to vote as of the tenth day before the meeting date), arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. The Corporation shall not be required to include electronic mail addresses or other electronic contact information on such list. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting for a period of at least ten (10) days prior to the meeting: (i) on a reasonably accessible electronic network, provided that the information required to gain access to such list is provided with the notice of the meeting, or (ii) during ordinary business hours, at the Corporation’s principal executive office. In the event that the Corporation determines to make the list available on an electronic network, the Corporation may take reasonable steps to ensure that such information is available only to stockholders of the Corporation. If the meeting is to be held at a place, then the list shall be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present. If the meeting is to be held solely by means of remote communication, then the list shall also be open to the examination of any stockholder during the whole time of the meeting on a reasonably accessible electronic network, and the information required to access such list shall be provided with the notice of the meeting. Such list shall presumptively determine the identity of the stockholders entitled to vote at the meeting and the number of shares held by each of them. Except as otherwise provided by law, the stock ledger shall be the only evidence as to who are the stockholders entitled to examine the list of stockholders required by this Section 2.14 or to vote in person or by proxy at any meeting of stockholders.

 

2.15 Inspectors of Election.

 

Before any meeting of stockholders, the Corporation shall appoint an inspector or inspectors of election to act at the meeting or its adjournment and make a written report thereof. The Corporation may designate one or more Persons as alternate inspectors to replace any inspector who fails to act. If any Person appointed as inspector or any alternate fails to appear or fails or refuses to act, then the chairperson of the meeting shall appoint a Person to fill that vacancy.

 

Such inspectors shall:

 

  (i) determine the number of shares outstanding and the voting power of each, the number of shares represented at the meeting and the validity of any proxies and ballots;
     
  (ii) count all votes or ballots;
     
  (iii) count and tabulate all votes;
     
  (iv) determine and retain for a reasonable period a record of the disposition of any challenges made to any determination by the inspector(s); and
     
  (v) certify its or their determination of the number of shares represented at the meeting and its or their count of all votes and ballots.

 

Each inspector, before entering upon the discharge of the duties of inspector, shall take and sign an oath faithfully to execute the duties of inspection with strict impartiality and according to the best of such inspector’s ability. Any report or certificate made by the inspectors of election is prima facie evidence of the facts stated therein. The inspectors of election may appoint such Persons to assist them in performing their duties as they determine.

 

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2.16 Delivery to the Corporation.

 

Whenever this Article II requires one or more persons (including a record or beneficial owner of stock) to deliver a document or information to the Corporation or any officer, employee or agent thereof (including any notice, request, questionnaire, revocation, representation or other document or agreement), such document or information shall be in writing exclusively (and not in an electronic transmission) and shall be delivered exclusively by hand (including, without limitation, overnight courier service) or by certified or registered mail, return receipt requested, and the Corporation shall not be required to accept delivery of any document not in such written form or so delivered. For the avoidance of doubt, the Corporation expressly opts out of Section 116 of the DGCL with respect to the delivery of information and documents to the Corporation required by this Article II.

 

Article III - Directors

 

3.1 Powers.

 

Except as otherwise provided by the Certificate of Incorporation, the Stockholders’ Agreement or the DGCL, the business and affairs of the Corporation shall be managed by or under the direction of the Board.

 

3.2 Number of Directors.

 

The total number of directors constituting the Board shall be determined in accordance with the Certificate of Incorporation and the Stockholders’ Agreement.

 

3.3 Election, Qualification and Term of Office of Directors.

 

The procedures for election of directors, as well as the terms and qualifications of directors, shall be as set forth in the Certificate of Incorporation and the Stockholders’ Agreement.

 

3.4 Resignation and Vacancies.

 

Subject to the terms of the Certificate of Incorporation and the Stockholders’ Agreement, any director may resign at any time upon notice given in writing or by electronic transmission to the Corporation. The resignation shall take effect at the time specified therein or upon the happening of an event specified therein, and if no time or event is specified, at the time of its receipt. When one or more directors so resigns and the resignation is effective at a future date or upon the happening of an event to occur on a future date, except as otherwise provided for in the Certificate of Incorporation or the Stockholders’ Agreement, a majority of the directors then in office, including those who have so resigned, shall have the power to fill such vacancy or vacancies, the vote thereon to take effect when such resignation or resignations shall become effective, and each director so chosen shall hold office as provided in this section in the filling of other vacancies.

 

Vacancies and newly created directorships resulting from any increase in the authorized number of directors shall be filled in accordance with the Certificate of Incorporation and the Stockholders’ Agreement.

 

3.5 Place of Meetings; Meetings by Telephone.

 

The Board may hold meetings, both regular and special, either within or outside the State of Delaware.

 

Unless otherwise restricted by the Certificate of Incorporation or these bylaws, members of the Board, or any committee of the Board or subcommittee of the Board, in each case, designated by the Board, may participate in a meeting of the Board, or any committee of the Board or subcommittee of the Board, by means of conference telephone or other communications equipment by means of which all persons participating in the meeting can hear each other, and such participation in a meeting pursuant to this bylaw shall constitute presence in person at the meeting.

 

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3.6 Regular Meetings.

 

Regular meetings of the Board may be held within or outside the State of Delaware without notice at such time and at such place as shall from time to time be determined by the Board.

 

3.7 Special Meetings; Notice.

 

Special meetings of the Board for any purpose or purposes may be called at any time by the chairperson of the Board or a majority of the total number of directors constituting the Board.

 

Notice of the time and place of special meetings shall be:

 

  (i) delivered personally by hand, by courier or by telephone;
     
  (ii) sent by United States first-class mail, postage prepaid;
     
  (iii) sent by facsimile or electronic mail; or
     
  (iv) sent by other means of electronic transmission,

 

directed to each director at that director’s address, telephone number, facsimile number or electronic mail address, or other address for electronic transmission, as the case may be, as shown on the Corporation’s records.

 

If the notice is (i) delivered personally by hand, by courier or by telephone, (ii) sent by facsimile or electronic mail, or (iii) sent by other means of electronic transmission, it shall be delivered or sent at least twenty-four (24) hours before the time of the holding of the meeting. If the notice is sent by U.S. mail, it shall be deposited in the U.S. mail at least four (4) days before the time of the holding of the meeting. The notice need not specify the place of the meeting (if the meeting is to be held at the Corporation’s principal executive office) nor the purpose of the meeting.

 

3.8 Quorum.

 

Subject to the Certificate of Incorporation and the Stockholders’ Agreement, at all meetings of the Board, a majority of the total number of directors shall constitute a quorum for the transaction of business; provided, that to the fullest extent permitted by the DGCL, the presence of the chairperson of the Board shall be necessary in order for a quorum to be obtained at any meeting of the Board. Notwithstanding anything contained herein to the contrary, in the event that (i) the chairperson of the Board waives his required attendance at any meeting of the Board in writing prior to such meeting or (ii) the chairperson of the Board is unable to attend any emergency meeting of the Board, as determined by the Board in good faith, by reason of temporary disability or otherwise, the presence of the chairperson of the Board shall not be necessary in order for such quorum to be obtained and the Board may appoint a Director as interim chairperson of the Board to preside over such meeting. The vote of a majority of the directors present at any meeting at which a quorum is present shall be the act of the Board, except as may be otherwise specifically provided by statute, the Certificate of Incorporation, the Stockholders’ Agreement or these bylaws. If a quorum is not present at any meeting of the Board, then a majority of the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum is present.

 

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3.9 Action by Written Consent without a Meeting.

 

Unless otherwise restricted by the Certificate of Incorporation, the Stockholders’ Agreement or these bylaws, any action required or permitted to be taken at any meeting of the Board or of any committee of the Board or subcommittee of the Board, may be taken without a meeting if all members of the Board or committee or subcommittee, as the case may be, consent thereto in writing or by electronic transmission. After such an action is taken by written consent without a meeting, the consent or consents relating thereto shall be filed with the minutes of the proceedings of the Board or any committee or subcommittee thereof in the same paper or electronic form as the minutes are maintained.

 

3.10 Fees and Compensation of Directors.

 

Unless otherwise restricted by the Certificate of Incorporation or these bylaws, the Board shall have the authority to fix the compensation, including fees and reimbursement of expenses, of directors for services to the Corporation in any capacity.

 

3.11 Lead Independent Director.

 

The independent directors on the Board shall annually designate one independent director to serve as the lead independent director of the Board (the “Lead Independent Director”) for a term of one year. The Lead Independent Director shall have and may exercise such powers as may, from time to time, be assigned to him or her by the Board or by the other independent directors in matters upon which only independent directors may act. The Lead Independent Director shall be “independent” pursuant to applicable Stock Exchange Rules and shall not be an officer or employee of the Corporation.

 

Article IV - Committees

 

4.1 Committees of Directors.

 

Subject to the terms of the Certificate of Incorporation and the Stockholders’ Agreement, the Board may designate one (1) or more committees of the Board or the Board, each committee of the Board to consist, of one (1) or more of the directors of the Corporation and each committee of the Board, if different than the Board, to consist of one (1) or more members of the Board. The Board may designate one (1) or more directors or members of the Board, as applicable, as alternate members of any committee of the Board, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not such member or members constitute a quorum, may unanimously appoint another member of the Board to act at the meeting in the place of any such absent or disqualified member. Any such committee, to the extent provided in the resolution of the Board or in these bylaws, shall have and may exercise all the powers and authority of the Board in the management of the business and affairs of the Corporation, and may authorize the seal of the Corporation to be affixed to all papers that may require it; but no such committee or subcommittee shall have the power or authority to (i) approve or adopt, or recommend to the stockholders, any action or matter expressly required by the DGCL to be submitted to stockholders for approval, or (ii) adopt, amend or repeal any bylaw of the Corporation. The presence of a majority of the members of any committee of the Board or subcommittee thereof shall be necessary in order for a quorum to be obtained.

 

4.2 Committee Minutes.

 

Each committee shall keep regular minutes of its meetings and report the same to the Board when required.

 

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4.3 Meetings and Actions of Committees.

 

Meetings and actions of committees shall be governed by, and held and taken in accordance with, the provisions of:

 

  (i) Section 3.5 (place of meetings and meetings by telephone);
     
  (ii) Section 3.6 (regular meetings);
     
  (iii) Section 3.7 (special meetings and notice);
     
  (iv) Section 3.9 (action without a meeting); and
     
  (v) Section 7.12 (waiver of notice),

 

with such changes in the context of those bylaws as are necessary to substitute the committee and its respective members for the Board and its members. However:

 

(i) the time of regular meetings of committees may be determined either by resolution of the Board or by resolution of the committee;

 

(ii) special meetings of committees may also be called by resolution of the Board or the chairperson of the applicable committee; and

 

the Board may adopt rules for the governance of any committee to override the provisions that would otherwise apply to the committee pursuant to this Section 4.3; provided that such rules do not violate the provisions of the Certificate of Incorporation or applicable law.

 

Article V - Officers

 

5.1 Officers.

 

The officers of the Corporation shall initially include a chief executive officer, a president and a secretary. The Corporation may also have, at the discretion of the Board, a chairperson of the Board, a vice chairperson of the Board, a chief financial officer, a treasurer, one (1) or more vice presidents, one (1) or more assistant vice presidents, one (1) or more assistant treasurers, one (1) or more assistant secretaries, and any such other officers as may be appointed in accordance with the provisions of these bylaws. Any number of offices may be held by the same person.

 

5.2 Appointment of Officers.

 

The Board or a duly authorized committee or subcommittee thereof shall appoint the officers of the Corporation, except such officers as may be appointed in accordance with the provisions of Section 5.3 of these bylaws.

 

5.3 Subordinate Officers.

 

The Board or a duly authorized committee or subcommittee thereof may appoint, or empower the chief executive officer or, in the absence of a chief executive officer, the president, to appoint, such other officers and agents as the business of the Corporation may require. Each of such officers and agents shall hold office for such period, have such authority, and perform such duties as are provided in these bylaws. As the Board or a duly authorized committee or subcommittee thereof may from time to time determine, or as determined by the officer upon whom such power of appointment has been conferred by the Board or a duly authorized committee or subcommittee thereof.

 

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5.4 Removal and Resignation of Officers.

 

Subject to the rights, if any, of an officer under any contract of employment, any officer may be removed, either with or without cause, by the Board or a duly authorized committee or subcommittee thereof or, except in the case of an officer chosen by the Board or a duly authorized committee or subcommittee thereof, by any officer upon whom such power of removal may be conferred by the Board or a duly authorized committee or subcommittee thereof.

 

Any officer may resign at any time by giving written notice to the Corporation. Any resignation shall take effect at the date of the receipt of that notice or at any later time specified in that notice. Unless otherwise specified in the notice of resignation, the acceptance of the resignation shall not be necessary to make it effective. Any resignation is without prejudice to the rights, if any, of the Corporation under any contract to which the officer is a party.

 

5.5 Vacancies in Offices.

 

Any vacancy occurring in any office of the Corporation shall be filled by the Board or a duly authorized committee or subcommittee thereof or as provided in Section 5.2.

 

5.6 Representation of Shares of Other Corporations.

 

The chief executive officer, the president, the chairperson of the Board, any vice president, the treasurer, the secretary or assistant secretary of this Corporation, or any other Person authorized by the Board, the chief executive officer, the president or a vice president, is authorized to vote, represent and exercise on behalf of this Corporation all rights incident to any and all shares or securities of any other corporation or entity standing in the name of this Corporation. The authority granted herein may be exercised either by such Person directly or by any other Person authorized to do so by proxy or power of attorney duly executed by such Person having the authority.

 

5.7 Authority and Duties of Officers.

 

All officers of the Corporation shall respectively have such authority and perform such duties in the management of the business of the Corporation as may be provided herein or designated from time to time by the Board and, to the extent not so provided, as generally pertain to their respective offices, subject to the control of the Board.

 

5.8 Compensation.

 

The compensation of the officers of the Corporation for their services as such shall be fixed from time to time by or at the direction of the Board. An officer of the Corporation shall not be prevented from receiving compensation by reason of the fact that he or she is also a director of the Corporation.

 

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Article VI - Records

 

A stock ledger consisting of one or more records in which the names of all of the Corporation’s stockholders of record, the address and number of shares registered in the name of each such stockholder, and all issuances and transfers of stock of the corporation are recorded in accordance with Section 224 of the DGCL shall be administered by or on behalf of the Corporation. Any records administered by or on behalf of the Corporation in the regular course of its business, including its stock ledger, books of account, and minute books, may be kept on, or by means of, or be in the form of, any information storage device, or method, or one or more electronic networks or databases (including one or more distributed electronic networks or databases), provided that the records so kept can be converted into clearly legible paper form within a reasonable time and, with respect to the stock ledger, that the records so kept (i) can be used to prepare the list of stockholders specified in Sections 219 and 220 of the DGCL, (ii) record the information specified in Sections 156, 159, 217(a) and 218 of the DGCL, and (iii) record transfers of stock as governed by Article 8 of the Delaware Uniform Commercial Code.

 

Article VII - General Matters

 

7.1 Execution of Corporate Contracts and Instruments.

 

The Board, except as otherwise provided in these bylaws, may authorize any officer or officers, or agent or agents, to enter into any contract or execute any instrument in the name of and on behalf of the Corporation; such authority may be general or confined to specific instances. Unless so authorized or ratified by the Board or within the agency power of an officer, no officer, agent or employee shall have any power or authority to bind the Corporation by any contract or engagement or to pledge its credit or to render it liable for any purpose or for any amount.

 

7.2 Stock Certificates.

 

The shares of the Corporation may be certificated or uncertificated, subject to the sole discretion of the Board and applicable law. Certificates for the shares of stock, if any, shall be in such form as is consistent with the Certificate of Incorporation and applicable law. Every holder of stock represented by a certificate shall be entitled to have a certificate signed by, or in the name of the Corporation by, any two officers authorized to sign stock certificates representing the number of shares registered in certificate form. The chief executive officer, chairperson of the Board, the president, vice president, the treasurer, any assistant treasurer, general counsel or deputy general counsel, the secretary or any assistant secretary of the Corporation shall be specifically authorized to sign stock certificates. Any or all of the signatures on the certificate may be a facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate has ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the Corporation with the same effect as if he or she were such officer, transfer agent or registrar at the date of issue.

 

7.3 Lost Certificates.

 

Except as provided in this Section 7.3, no new certificates for shares shall be issued to replace a previously issued certificate unless the latter is surrendered to the Corporation and cancelled at the same time. The Corporation may issue a new certificate of stock or uncertificated shares in the place of any certificate theretofore issued by it, alleged to have been lost, stolen or destroyed, and the Corporation may require the owner of the lost, stolen or destroyed certificate, or such owner’s legal representative, to give the Corporation a bond sufficient to indemnify it against any claim that may be made against it on account of the alleged loss, theft or destruction of any such certificate or the issuance of such new certificate or uncertificated shares.

 

7.4 Shares Without Certificates.

 

The Corporation shall adopt a system of issuance, recordation and transfer of its shares of stock by electronic or other means not involving the issuance of certificates, provided the use of such system by the Corporation is permitted in accordance with applicable law.

 

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7.5 Construction; Definitions.

 

Unless the context requires otherwise, the general provisions, rules of construction and definitions in the DGCL shall govern the construction of these bylaws. In connection herewith, to the extent there are conflicts among these bylaws, the Certificate of Incorporation or the Stockholders’ Agreement, priority shall first be given to the Certificate of Incorporation, second to the Stockholders’ Agreement and third to these bylaws, in each case except as otherwise required by the DGCL. Without limiting the generality of this provision, the singular number includes the plural and the plural number includes the singular.

 

7.6 Dividends.

 

The Board, subject to any restrictions contained in either (i) the DGCL, (ii) the Certificate of Incorporation or (iii) the Stockholder’s Agreement, may declare and pay dividends upon the shares of its capital stock. Dividends may be paid in cash, in property or in shares of the Corporation’s capital stock.

 

The Board may set apart out of any of the funds of the Corporation available for dividends a reserve or reserves for any proper purpose and may abolish any such reserve. Such purposes shall include but not be limited to equalizing dividends, repairing or maintaining any property of the Corporation, and meeting contingencies.

 

7.7 Fiscal Year.

 

The fiscal year of the Corporation shall be fixed by resolution of the Board and may be changed by the Board.

 

7.8 Seal.

 

The Corporation may adopt a corporate seal, which shall be adopted and which may be altered by the Board. The Corporation may use the corporate seal by causing it or a facsimile thereof to be impressed or affixed or in any other manner reproduced.

 

7.9 Transfer of Stock.

 

Shares of the Corporation shall be transferable in the manner prescribed by law and in these bylaws subject to any transfer restrictions contained in the Certificate of Incorporation and the Stockholders’ Agreement. Shares of stock of the Corporation shall be transferred on the books of the Corporation only by the holder of record thereof or by such holder’s attorney duly authorized in writing, upon surrender to the Corporation or a subsidiary of the Corporation pursuant to applicable provisions of the governing documents of such subsidiary of the Corporation, of the certificate or certificates representing such shares endorsed by the appropriate Person or Persons (or by delivery of duly executed instructions with respect to uncertificated shares), with such evidence of the authenticity of such endorsement or execution, transfer, authorization and other matters as the Corporation may reasonably require, and accompanied by all necessary stock transfer stamps. No transfer of stock shall be valid as against the Corporation for any purpose until it shall have been entered in the stock records of the Corporation by an entry showing the names of the Persons from and to whom it was transferred.

 

7.10 Stock Transfer Agreements.

 

The Corporation shall have the power to enter into and perform any agreement with any number of stockholders of any one or more classes or series of stock of the Corporation to restrict the transfer of shares of stock of the Corporation of any one or more classes owned by such stockholders in any manner not prohibited by the DGCL.

 

7.11 Registered Stockholders.

 

The Corporation:

 

(i) shall be entitled to recognize the exclusive right of a Person registered on its books as the owner of shares to receive dividends and to vote as such owner; and

 

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(ii) shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of another Person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of the State of Delaware.

 

7.12 Waiver of Notice.

 

Whenever notice is required to be given under any provision of the DGCL, the Certificate of Incorporation or these bylaws, a written waiver, signed by the Person entitled to notice, or a waiver by electronic transmission by the Person entitled to notice, whether before or after the time of the event for which notice is to be given, shall be deemed equivalent to notice. Attendance of a Person at a meeting shall constitute a waiver of notice of such meeting, except when the Person attends a meeting for the express purpose of objecting at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the stockholders needs to be specified in any written waiver of notice or any waiver by electronic transmission unless so required by the Certificate of Incorporation or these bylaws.

 

Article VIII - Notice

 

Without limiting the manner by which notice otherwise may be given effectively to stockholders, any notice to stockholders given by the Corporation under any provisions of the DGCL, the Certificate of Incorporation, or these bylaws may be given in writing directed to the stockholder’s mailing address (or by electronic transmission directed to the stockholder’s electronic mail address, as applicable) as it appears on the records of the Corporation and shall be given (1) if mailed, when the notice is deposited in the U.S. mail, postage prepaid, (2) if delivered by courier service, the earlier of when the notice is received or left at such stockholder’s address or (3) if given by electronic mail, when directed to such stockholder’s electronic mail address unless the stockholder has notified the Corporation in writing or by electronic transmission of an objection to receiving notice by electronic mail. A notice by electronic mail must include a prominent legend that the communication is an important notice regarding the Corporation.

 

Without limiting the manner by which notice otherwise may be given effectively to stockholders, any notice to stockholders given by the Corporation under any provision of the DGCL, the Certificate of Incorporation or these bylaws shall be effective if given by a form of electronic transmission consented to by the stockholder to whom the notice is given. Any such consent shall be revocable by the stockholder by written notice or electronic transmission to the Corporation. Notwithstanding the provisions of this paragraph, the Corporation may give a notice by electronic mail in accordance with the first paragraph of this section without obtaining the consent required by this paragraph.

 

Any notice given pursuant to the preceding paragraph shall be deemed given:

 

  (i) if by facsimile telecommunication, when directed to a number at which the stockholder has consented to receive notice;
     
  (ii) if by a posting on an electronic network together with separate notice to the stockholder of such specific posting, upon the later of (A) such posting and (B) the giving of such separate notice; and
     
  (iii) if by any other form of electronic transmission, when directed to the stockholder.

 

Notwithstanding the foregoing, a notice may not be given by an electronic transmission from and after the time that (1) the Corporation is unable to deliver by such electronic transmission two (2) consecutive notices given by the Corporation and (2) such inability becomes known to the Secretary or an Assistant Secretary of the Corporation or to the transfer agent, or other person responsible for the giving of notice, provided, however, the inadvertent failure to discover such inability shall not invalidate any meeting or other action.

 

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An affidavit of the Secretary or an Assistant Secretary or of the transfer agent or other agent of the Corporation that the notice has been given shall, in the absence of fraud, be prima facie evidence of the facts stated therein.

 

Article IX - Indemnification

 

9.1 Indemnification of Directors and Officers.

 

The Corporation shall indemnify and hold harmless, to the fullest extent permitted by the DGCL as it presently exists or may hereafter be amended, any director or officer of the Corporation who was or is made or is threatened to be made a party or is otherwise involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative (a “Proceeding”) by reason of the fact that he or she, or a person for whom he or she is the legal representative, is or was a director or officer of the Corporation or, while serving as a director or officer of the Corporation, is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation or of a partnership (a “covered person”), joint venture, trust, enterprise or non-profit entity, including service with respect to employee benefit plans, against all liability and loss suffered and expenses (including attorneys’ fees, judgments, fines ERISA excise taxes or penalties and amounts paid in settlement) reasonably incurred by such person in connection with any such Proceeding. Notwithstanding the preceding sentence, except as otherwise provided in Section 9.4, the Corporation shall be required to indemnify a person in connection with a Proceeding initiated by such person only if the Proceeding was authorized in the specific case by the Board.

 

9.2 Indemnification of Others.

 

The Corporation shall have the power to indemnify and hold harmless, to the fullest extent permitted by applicable law as it presently exists or may hereafter be amended, any employee or agent of the Corporation who was or is made or is threatened to be made a party or is otherwise involved in any Proceeding by reason of the fact that he or she, or a person for whom he or she is the legal representative, is or was an employee or agent of the Corporation or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation or of a partnership, joint venture, trust, enterprise or non-profit entity, including service with respect to employee benefit plans, against all liability and loss suffered and expenses reasonably incurred by such person in connection with any such Proceeding.

 

9.3 Prepayment of Expenses.

 

The Corporation shall to the fullest extent not prohibited by applicable law pay the expenses (including attorneys’ fees) incurred by any covered person, and may pay the expenses incurred by any employee or agent of the Corporation, in defending any Proceeding in advance of its final disposition; provided, however, that such payment of expenses in advance of the final disposition of the Proceeding shall be made only upon receipt of an undertaking by the person to repay all amounts advanced if it should be ultimately determined that the person is not entitled to be indemnified under this Article IX or otherwise.

 

9.4 Determination; Claim.

 

If a claim for indemnification (following the final disposition of such Proceeding) under this Article IX is not paid in full within sixty (60) days, or a claim for advancement of expenses under this Article IX is not paid in full within thirty (30) days, after a written claim therefor has been received by the Corporation the claimant may thereafter (but not before) file suit to recover the unpaid amount of such claim and, if successful in whole or in part, shall be entitled to be paid the expense of prosecuting such claim to the fullest extent permitted by law. In any such action the Corporation shall have the burden of proving that the claimant was not entitled to the requested indemnification or payment of expenses under applicable law.

 

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9.5 Non-Exclusivity of Rights.

 

The rights conferred on any person by this Article IX shall not be exclusive of any other rights which such person may have or hereafter acquire under any statute, provision of the Certificate of Incorporation, these bylaws, agreement, vote of stockholders or disinterested directors or otherwise.

 

9.6 Insurance.

 

The Corporation may purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust enterprise or non-profit entity against any liability asserted against him or her and incurred by him or her in any such capacity, or arising out of his or her status as such, whether or not the Corporation would have the power to indemnify him or her against such liability under the provisions of the DGCL.

 

9.7 Other Indemnification.

 

The Corporation’s obligation, if any, to indemnify or advance expenses to any person who was or is serving at its request as a director, officer, employee or agent of another corporation, partnership, joint venture, trust, enterprise or non-profit entity shall be reduced by any amount such person may collect as indemnification or advancement of expenses from such other corporation, partnership, joint venture, trust, enterprise or non-profit enterprise.

 

9.8 Continuation of Indemnification.

 

The rights to indemnification and to prepayment of expenses provided by, or granted pursuant to, this Article IX shall continue notwithstanding that the person has ceased to be a director or officer of the Corporation and shall inure to the benefit of the estate, heirs, executors, administrators, legatees and distributees of such person.

 

9.9 Amendment or Repeal; Interpretation.

 

The provisions of this Article IX shall constitute a contract between the Corporation, on the one hand, and, on the other hand, each individual who serves or has served as a director or officer of the Corporation (whether before or after the adoption of these bylaws), in consideration of such person’s performance of such services, and pursuant to this Article IX the Corporation intends to be legally bound to each such current or former director or officer of the Corporation. With respect to current and former directors and officers of the Corporation, the rights conferred under this Article IX are present contractual rights and such rights are fully vested, and shall be deemed to have vested fully, immediately upon adoption of theses bylaws. With respect to any directors or officers of the Corporation who commence service following adoption of these bylaws, the rights conferred under this provision shall be present contractual rights and such rights shall fully vest, and be deemed to have vested fully, immediately upon such director or officer commencing service as a director or officer of the Corporation. Any repeal or modification of the foregoing provisions of this Article IX shall not adversely affect any right or protection (i) hereunder of any person in respect of any act or omission occurring prior to the time of such repeal or modification or (ii) under any agreement providing for indemnification or advancement of expenses to an officer or director of the Corporation in effect prior to the time of such repeal or modification.

 

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Any reference to an officer of the Corporation in this Article IX shall be deemed to refer exclusively to the Chief Executive Officer, President, and Secretary, or other officer of the Corporation appointed by (x) the Board pursuant to Article V of these bylaws or (y) an officer to whom the Board has delegated the power to appoint officers pursuant to Article V of these bylaws, and any reference to an officer of any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise shall be deemed to refer exclusively to an officer appointed by the board of directors (or equivalent governing body) of such other entity pursuant to the certificate of incorporation and bylaws (or equivalent organizational documents) of such other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise. The fact that any person who is or was an employee of the Corporation or an employee of any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise has been given or has used the title of “Vice President” or any other title that could be construed to suggest or imply that such person is or may be an officer of the Corporation or of such other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise shall not result in such person being constituted as, or being deemed to be, an officer of the Corporation or of such other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise for purposes of this Article IX.

 

Article X - Amendments

 

The Board is expressly empowered to adopt, amend or repeal the bylaws of the Corporation, subject to the Stockholders’ Agreement (for so long as it remains in effect). The stockholders also shall have the power to adopt, amend or repeal the bylaws of the Corporation; provided, however, that, until the earlier of (x) Sunset Date or (y) the date upon which the Corporation is no longer a “controlled company” under applicable Stock Exchange Rules (as defined in the Certificate of Incorporation), such action by stockholders shall require, in addition to any other vote required by the Certificate of Incorporation, the Stockholder’s Agreement or applicable law, the affirmative vote of the holders of at least seventy-five percent (75%) of the voting power of all the then-outstanding shares of voting stock of the Corporation with the power to vote generally in an election of directors, voting together as a single class; provided further that, notwithstanding the foregoing, following the Sunset Date, any action by the stockholders to amend, modify or repeal any provisions of Article IX or this Article X of the bylaws of the Corporation shall require the affirmative vote of the holders of at least seventy-five percent (75%) of the voting power of all the then-outstanding shares of voting stock of the Corporation with the power to vote generally in an election of directors, voting together as a single class, in addition to any other vote required by the Certificate of Incorporation, the Stockholder’s Agreement or applicable law. Notwithstanding the foregoing, in any adoption, amendment or repeal of the bylaws of the Corporation may only be done in accordance with the Certificate of Incorporation, the Stockholders’ Agreement and the DGCL.

 

Article XI - Forum Selection

 

Unless the Corporation consents in writing to the selection of an alternative forum, (a) the Court of Chancery (the “Chancery Court”) of the State of Delaware (or, in the event that the Chancery Court does not have jurisdiction, the federal district court for the District of Delaware or other state courts of the State of Delaware) shall, to the fullest extent permitted by law, be the sole and exclusive forum for (i) any derivative action, suit or proceeding brought on behalf of the Corporation, (ii) any action, suit or proceeding asserting a claim of breach of a fiduciary duty owed by any director, officer or stockholder of the Corporation to the Corporation or to the Corporation’s stockholders, (iii) any action, suit or proceeding arising pursuant to any provision of the DGCL or the Certificate of Incorporation or these bylaws (as either may be amended from time to time) or (iv) any action, suit or proceeding asserting a claim against the Corporation governed by the internal affairs doctrine; and (b) subject to the preceding provisions of this Article XI, the federal district courts of the United States of America shall be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act of 1933, as amended. If any action the subject matter of which is within the scope of clause (a) of the immediately preceding sentence is filed in a court other than the courts in the State of Delaware (a “Foreign Action”) in the name of any stockholder, such stockholder shall be deemed to have consented to (x) the personal jurisdiction of the state and federal courts in the State of Delaware in connection with any action brought in any such court to enforce the provisions of clause (a) of the immediately preceding sentence and (y) having service of process made upon such stockholder in any such action by service upon such stockholder’s counsel in the Foreign Action as agent for such stockholder.

 

-22-
 

 

Any person or entity purchasing or otherwise acquiring any interest in any security of the Corporation shall be deemed to have notice of and consented to this Article XI. Notwithstanding the foregoing, the provisions of this Article XI shall not apply to suits brought to enforce any liability or duty created by the Securities Exchange Act of 1934, as amended, or any other claim for which the federal courts of the United States have exclusive jurisdiction.

 

If any provision or provisions of this Article XI shall be held to be invalid, illegal or unenforceable as applied to any circumstance for any reason whatsoever, (a) the validity, legality and enforceability of such provisions in any other circumstance and of the remaining provisions of this Article XI (including, without limitation, each portion of any paragraph of this Article XI containing any such provision held to be invalid, illegal or unenforceable that is not itself held to be invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby and (b) the application of such provision to other persons or entities and circumstances shall not in any way be affected or impaired thereby.

 

Article XII - Definitions

 

As used in these bylaws, unless the context otherwise requires, the term:

 

Affiliate” means, with respect to any Person, any other Person that controls, is controlled by, or is under common control with such Person. For the purposes of this definition, “control,” when used with respect to any Person, means the power to direct or cause the direction of the affairs or management of that Person, whether through the ownership of voting securities, as trustee (or the power to appoint a trustee), personal representative or executor, by contract, credit arrangement or otherwise and “controlled” and “controlling” have meanings correlative to the foregoing.

 

Board” means the board of directors of the Corporation.

 

An “electronic transmission” means any form of communication, not directly involving the physical transmission of paper, including the use of, or participation in, one or more electronic networks or databases (including one or more distributed electronic networks or databases), that creates a record that may be retained, retrieved and reviewed by a recipient thereof, and that may be directly reproduced in paper form by such a recipient through an automated process.

 

An “electronic mail” means an electronic transmission directed to a unique electronic mail address (which electronic mail shall be deemed to include any files attached thereto and any information hyperlinked to a website if such electronic mail includes the contact information of an officer or agent of the Corporation who is available to assist with accessing such files and information).

 

-23-
 

 

An “electronic mail address” means a destination, commonly expressed as a string of characters, consisting of a unique user name or mailbox (commonly referred to as the “local part” of the address) and a reference to an internet domain (commonly referred to as the “domain part” of the address), whether or not displayed, to which electronic mail can be sent or delivered.

 

Person” means any individual, general partnership, limited partnership, limited liability company, corporation, trust, business trust, joint stock company, joint venture, unincorporated association, cooperative or association or any other legal entity or organization of whatever nature, and shall include any successor (by merger or otherwise) of such entity.

 

Stock Exchange Rules” has the meaning set forth in the Certificate of Incorporation.

 

Stockholders’ Agreement” means the Stockholders’ Agreement, dated as of April 6, 2021, by and among the Corporation and the other parties thereto or that may become parties thereto from time to time, as it may be amended, supplemented or modified.

 

Sunset Date” has the meaning set forth in the Stockholders’ Agreement.

 

-24-

 

Exhibit 4.1

 

NUMBER SHARES
C- SEE REVERSE FOR CERTAIN DEFINITIONS
  CUSIP 00217D 100

 

AST SPACEMOBILE, INC.

 

INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE

CLASS A COMMON STOCK

 

This Certifies that ______________________is the owner of_______________________

 

FULLY PAID AND NON-ASSESSABLE SHARES OF THE PAR VALUE OF $0.0001 EACH OF THE CLASS A COMMON STOCK OF

 

AST SPACEMOBILE, INC.

(THE “COMPANY”)

 

transferable on the books of the Company in person or by duly authorized attorney upon surrender of this certificate properly endorsed.

 

This certificate is not valid unless countersigned by the Transfer Agent and registered by the Registrar.

 

Witness the seal of the Company and the facsimile signatures of its duly authorized officers.

 

Chief Executive Officer   [Corporate Seal] Delaware   Chief Financial Officer
         
         

 

 

 

 

AST SPACEMOBILE, INC.

 

The Company will furnish without charge to each stockholder who so requests the powers, designations, preferences and relative, participating, optional or other special rights of each class of stock or series thereof of the Company and the qualifications, limitations, or restrictions of such preferences and/or rights. This certificate and the shares represented thereby are issued and shall be held subject to all the provisions of the Certificate of Incorporation and all amendments thereto and resolutions of the Board of Directors providing for the issue of securities (copies of which may be obtained from the secretary of the Company), to all of which the holder of this certificate by acceptance hereof assents. The following abbreviations, when used in the inscription on the face of this certificate, shall be construed as though they were written out in full according to applicable laws or regulations:

 

TEN COM as tenants in common

UNIF GIFT

MIN ACT

  Custodian  
TEN ENT as tenants by the entireties     (Cust)   (Minor)
JT TEN as joint tenants with right of survivorship and not as tenants in common    

 

under Uniform Gifts to Minors Act

          (State)

 

Additional abbreviations may also be used though not in the above list.

 

For value received,                             hereby sells, assigns and transfers unto

 

(PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER(S) OF ASSIGNEE(S))

 

(PLEASE PRINT OR TYPEWRITE NAME(S) AND ADDRESS(ES), INCLUDING ZIP CODE, OF ASSIGNEE(S))

 

Shares of the capital stock represented by the within Certificate, and does hereby irrevocably constitute and appoint

 

Attorney to transfer the said stock on the books of the within named Company with full power of substitution in the premises.

 

Dated:      
      Shareholder

 

Notice: The signature(s) to this assignment must correspond with the name as written upon the face of the certificate in every particular, without alteration or enlargement or any change whatever.

 

Signature(s) Guaranteed:

 

By

   

 

 

 

 

THE SIGNATURE(S) MUST BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION (BANKS, STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM, PURSUANT TO S.E.C. RULE 17Ad-15 (OR ANY SUCCESSOR RULE).

 

 

 

Exhibit 4.2

 

[Form of Warrant Certificate]

 

[FACE]

 

Number

 

Warrants

 

THIS WARRANT SHALL BE VOID IF NOT EXERCISED PRIOR TO

THE EXPIRATION OF THE EXERCISE PERIOD PROVIDED FOR

IN THE WARRANT AGREEMENT DESCRIBED BELOW

 

AST SPACEMOBILE, INC.

Incorporated Under the Laws of the State of Delaware

 

CUSIP 00217D 118

 

Warrant Certificate

 

This Warrant Certificate certifies that                                , or registered assigns, is the registered holder of warrant(s) evidenced hereby (the “Warrants” and each, a “Warrant”) to purchase shares of Class A common stock, $0.0001 par value per share (“Common Stock”), of AST SpaceMobile, Inc., a Delaware corporation (the “Company”). Each Warrant entitles the holder, upon exercise during the period set forth in the Warrant Agreement referred to below, to receive from the Company that number of fully paid and non-assessable shares of Common Stock as set forth below, at the exercise price (the “Exercise Price”) as determined pursuant to the Warrant Agreement, payable in lawful money (or through “cashless exercise” as provided for in the Warrant Agreement) of the United States of America upon surrender of this Warrant Certificate and payment of the Exercise Price at the office or agency of the Warrant Agent referred to below, subject to the conditions set forth herein and in the Warrant Agreement. Defined terms used in this Warrant Certificate but not defined herein shall have the meanings given to them in the Warrant Agreement.

 

Each whole Warrant is initially exercisable for one fully paid and non-assessable share of Common Stock. No fractional shares will be issued upon exercise of any Warrant. If, upon the exercise of Warrants, a holder would be entitled to receive a fractional interest in a share of Common Stock, the Company will, upon exercise, round down to the nearest whole number the number of shares of Common Stock to be issued to the Warrant holder. The number of shares of Common Stock issuable upon exercise of the Warrants is subject to adjustment upon the occurrence of certain events set forth in the Warrant Agreement.

 

The initial Exercise Price per share of Common Stock for any Warrant is equal to $11.50 per share. The Exercise Price is subject to adjustment upon the occurrence of certain events set forth in the Warrant Agreement.

 

Subject to the conditions set forth in the Warrant Agreement, the Warrants may be exercised only during the Exercise Period and to the extent not exercised by the end of such Exercise Period, such Warrants shall become void.

 

Reference is hereby made to the further provisions of this Warrant Certificate set forth on the reverse hereof and such further provisions shall for all purposes have the same effect as though fully set forth at this place.

 

This Warrant Certificate shall not be valid unless countersigned by the Warrant Agent, as such term is used in the Warrant Agreement.

 

This Warrant Certificate shall be governed by and construed in accordance with the internal laws of the State of New York, without regard to conflicts of laws principles thereof.

 

  AST SPACEMOBILE, INC.
     
  By:                           
  Name:  
  Title:  

 

  CONTINENTAL STOCK TRANSFER & TRUST COMPANY, as Warrant Agent
     
  By:                         
  Name:  
  Title:  

 

 

 

 

[Form of Warrant Certificate]

 

[Reverse]

 

 

The Warrants evidenced by this Warrant Certificate are part of a duly authorized issue of Warrants entitling the holder on exercise to receive shares of Common Stock and are issued or to be issued pursuant to a Warrant Agreement dated as September 13, 2019 (the “Warrant Agreement”), duly executed and delivered by New Providence Acquisition Corp., as predecessor of the Company, to Continental Stock Transfer & Trust Company, a New York corporation, as warrant agent (the “Warrant Agent”), which Warrant Agreement is hereby incorporated by reference in and made a part of this instrument and is hereby referred to for a description of the rights, limitation of rights, obligations, duties and immunities thereunder of the Warrant Agent, the Company and the holders (the words “holders” or “holder” meaning the Registered Holders or Registered Holder, respectively) of the Warrants. A copy of the Warrant Agreement may be obtained by the holder hereof upon written request to the Company. Defined terms used in this Warrant Certificate but not defined herein shall have the meanings given to them in the Warrant Agreement.

 

Warrants may be exercised at any time during the Exercise Period set forth in the Warrant Agreement. The holder of Warrants evidenced by this Warrant Certificate may exercise them by surrendering this Warrant Certificate, with the form of election to purchase set forth hereon properly completed and executed, together with payment of the Exercise Price as specified in the Warrant Agreement (or through “cashless exercise” as provided for in the Warrant Agreement) at the principal corporate trust office of the Warrant Agent. In the event that upon any exercise of Warrants evidenced hereby the number of Warrants exercised shall be less than the total number of Warrants evidenced hereby, there shall be issued to the holder hereof or his, her or its assignee, a new Warrant Certificate evidencing the number of Warrants not exercised.

 

Notwithstanding anything else in this Warrant Certificate or the Warrant Agreement, no Warrant may be exercised unless at the time of exercise (i) a registration statement covering the shares of Common Stock to be issued upon exercise is effective under the Securities Act and (ii) a prospectus thereunder relating to the shares of Common Stock is current, except through “cashless exercise” as provided for in the Warrant Agreement.

 

The Warrant Agreement provides that upon the occurrence of certain events the number of shares of Common Stock issuable upon exercise of the Warrants set forth on the face hereof may, subject to certain conditions, be adjusted. If, upon exercise of a Warrant, the holder thereof would be entitled to receive a fractional interest in a share of Common Stock, the Company shall, upon exercise, round down to the nearest whole number of shares of Common Stock to be issued to the holder of the Warrant.

 

Warrant Certificates, when surrendered at the principal corporate trust office of the Warrant Agent by the Registered Holder thereof in person or by legal representative or attorney duly authorized in writing, may be exchanged, in the manner and subject to the limitations provided in the Warrant Agreement, but without payment of any service charge, for another Warrant Certificate or Warrant Certificates of like tenor evidencing in the aggregate a like number of Warrants.

 

Upon due presentation for registration of transfer of this Warrant Certificate at the office of the Warrant Agent a new Warrant Certificate or Warrant Certificates of like tenor and evidencing in the aggregate a like number of Warrants shall be issued to the transferee(s) in exchange for this Warrant Certificate, subject to the limitations provided in the Warrant Agreement, without charge except for any tax or other governmental charge imposed in connection therewith.

 

The Company and the Warrant Agent may deem and treat the Registered Holder(s) hereof as the absolute owner(s) of this Warrant Certificate (notwithstanding any notation of ownership or other writing hereon made by anyone), for the purpose of any exercise hereof, of any distribution to the holder(s) hereof, and for all other purposes, and neither the Company nor the Warrant Agent shall be affected by any notice to the contrary. Neither the Warrants nor this Warrant Certificate entitles any holder hereof to any rights of a stockholder of the Company.

 

 

 

 

Election to Purchase

 

(To Be Executed Upon Exercise of Warrant)

 

The undersigned hereby irrevocably elects to exercise the right, represented by this Warrant Certificate, to receive            shares of Common Stock and herewith tenders payment for such shares of Common Stock to the order of AST SpaceMobile, Inc. (the “Company”) in the amount of $         in accordance with the terms hereof. The undersigned requests that a certificate for such shares of Common Stock be registered in the name of             , whose address is             and that such shares of Common Stock be delivered to             whose address is         . If said number of shares of Common Stock is less than all of the shares of Common Stock purchasable hereunder, the undersigned requests that a new Warrant Certificate representing the remaining balance of such shares of Common Stock be registered in the name of             , whose address is             and that such Warrant Certificate be delivered to             , whose address is         .

 

In the event that the Warrant has been called for redemption by the Company pursuant to Section 6 of the Warrant Agreement and the Company has required cashless exercise pursuant to Section 6.3 of the Warrant Agreement, the number of shares of Common Stock that this Warrant is exercisable for shall be determined in accordance with subsection 3.3.1(b) and Section 6.3 of the Warrant Agreement.

 

In the event that the Warrant is a Private Placement Warrant or a Working Capital Warrant that is to be exercised on a “cashless” basis pursuant to subsection 3.3.1(c) of the Warrant Agreement, the number of shares of Common Stock that this Warrant is exercisable for shall be determined in accordance with subsection 3.3.1(c) of the Warrant Agreement.

 

In the event that the Warrant is to be exercised on a “cashless” basis pursuant to Section 7.4 of the Warrant Agreement, the number of shares of Common Stock that this Warrant is exercisable for shall be determined in accordance with Section 7.4 of the Warrant Agreement.

 

In the event that the Warrant may be exercised, to the extent allowed by the Warrant Agreement, through cashless exercise (i) the number of shares of Common Stock that this Warrant is exercisable for would be determined in accordance with the relevant section of the Warrant Agreement which allows for such cashless exercise and (ii) the holder hereof shall complete the following: The undersigned hereby irrevocably elects to exercise the right, represented by this Warrant Certificate, through the cashless exercise provisions of the Warrant Agreement, to receive shares of Common Stock. If said number of shares of Common Stock is less than all of the shares of Common Stock purchasable hereunder (after giving effect to the cashless exercise), the undersigned requests that a new Warrant Certificate representing the remaining balance of such shares of Common Stock be registered in the name of            , whose address is            and that such Warrant Certificate be delivered to             , whose address is             .

 

[Signature Page Follows]

 

 

 

 

Date:        , 20    
    (Signature)
     
     
     
     
    (Address)
     
     
    (Tax Identification Number)
     
Signature Guaranteed:    

 

THE SIGNATURE(S) SHOULD BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION (BANKS, STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM, PURSUANT TO S.E.C. RULE 17Ad-15 (OR ANY SUCCESSOR RULE)).

 

 

 

Exhibit 10.1

 

STOCKHOLDERS’ AGREEMENT

 

This Stockholders’ Agreement (this “Agreement”) is made as of April 6, 2021, by and among (i) AST SpaceMobile, Inc., a Delaware corporation (the “Company”); (ii) Abel Avellan (“Avellan”); (iii) Invesat LLC, a Delaware limited liability company (“Invesat”); (iv) Vodafone Ventures Limited, a private limited company incorporated under the Laws of England and Wales (“Vodafone”); (v) Rakuten Mobile USA Service Inc., a Delaware corporation (“Rakuten”); (vi) ATC TRS II LLC, a Delaware limited liability company (“American Tower” and, together with Vodafone, Invesat, Rakuten and Avellan, the “AST Equityholders”); and (vii) New Providence Management LLC, a Delaware limited liability company (“NPA Sponsor”, and, together with the AST Equityholders, the “Stockholder Parties”).

 

RECITALS

 

WHEREAS, the Company has entered into that certain Equity Purchase Agreement, dated as of December 15, 2020 (as it may be amended or supplemented from time to time, the “Purchase Agreement”), by and among (i) AST & Science LLC, a Delaware limited liability company (“OpCo”), (ii) the AST Equityholders, (iii) the other existing equityholders of the OpCo (other than the AST Equityholders) set forth on Annex A thereto, (iv) New Providence Acquisition Corp., a Delaware corporation and predecessor to the Company (“NPA”), (v) NPA Sponsor and (vi) Avellan as the Existing Equityholder Representative (as defined therein), pursuant to which the parties thereto have agreed to consummate the transactions contemplated by the Purchase Agreement (collectively, the “Transaction”);

 

WHEREAS, pursuant to the Purchase Agreement, among other things, (i) OpCo issued a number of OpCo Common Units (as defined below) to the Company in exchange for a contribution of cash from NPA, (ii) the Class B common stock of NPA, held by NPA Sponsor, converted into an equivalent number of shares of Class A Common Stock (as defined below) of the Company, and (iii) the Company issued Class B Common Stock and Class C Common Stock (each as defined below) to the AST Equityholders;

 

WHEREAS, in connection with the Transaction, the Company and the Stockholder Parties are party to a Registration Rights Agreement, dated as of the date hereof (as it may be amended, supplemented, restated and/or modified from time to time, the “Registration Rights Agreement”);

 

WHEREAS, in connection with the Transaction, the Company, NPA and NPA Sponsor are party to a Voting Agreement, dated as of the date hereof (as it may be amended, supplemented, restated and/or modified from time to time, the “NPA Sponsor Voting Agreement”);

 

WHEREAS, in connection with the Transaction, the Stockholder Parties have agreed to execute and deliver this Agreement;

 

WHEREAS, as of immediately following the closing of the Transaction (the “Closing”), each of the Stockholder Parties Beneficially Owns (as defined below) the respective number of shares of Class A common stock, par value $0.0001 per share (the “Class A Common Stock”), Class B common stock, par value $0.0001 per share (the “Class B Common Stock”), Class C common stock, par value $0.0001 per share (the “Class C Common Stock” and together with the Class A Common Stock and the Class B Common Stock, the “Common Stock”), of the Company, set forth on Annex A hereto);

 

 
 

 

WHEREAS, the Stockholder Parties in the aggregate Beneficially Own (as defined below) shares of Common Stock representing more than fifty percent (50%) of the outstanding voting power of the Company;

 

WHEREAS, the number of shares of Common Stock Beneficially Owned by each Stockholder Party may change from time to time, in accordance with the terms of (w) the Purchase Agreement, (x) the Amended and Restated Certificate of Incorporation of the Company, as it may be amended, supplemented and/or restated from time to time (the “Charter”), (y) the by-laws of the Company, as they may be amended, supplemented and/or restated from time to time (the “By-laws”) and (z) the Registration Rights Agreement, which changes shall be reported by each Stockholder Party in accordance with the applicable provisions of the Securities Exchange Act of 1934, as amended (the “Exchange Act”);

 

WHEREAS, each of the Stockholder Parties believes that it is in their respective best interests to qualify the Company as a “controlled company” under Listing Rule 5615(c) of The Nasdaq Stock Market LLC (“Nasdaq”); and

 

WHEREAS, the AST Equityholders desire to maintain a group and to enter into this Agreement to provide for voting agreements, pursuant to which all of the AST Equityholders’ shares of Common Stock will be voted together with respect to elections of the Company’s board of directors (the “Board”).

 

NOW THEREFORE, in consideration of the foregoing and of the promises and covenants contained herein, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

 

AGREEMENT

 

1. Definitions. Capitalized terms used herein but not defined in this Agreement shall have the meanings ascribed to them in the Purchase Agreement. In addition to the terms defined elsewhere in this Agreement, the following terms shall have the meanings indicated when used in this Agreement with initial capital letters:

 

Affiliate” shall have the meaning ascribed to such term in Rule 12b-2 of the General Rules and Regulations under the Exchange Act.

 

American Tower Holders” shall mean American Tower and its Permitted Transferees.

 

Avellan Holders” shall mean Avellan and his Permitted Transferees.

 

Board” shall mean the board of directors of the Company.

 

Closing Date” shall have the meaning given in the Purchase Agreement.

 

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Competitor” shall mean a Person engaged, directly or indirectly (including through any partnership, limited liability company, corporation, joint venture or similar arrangement (whether now existing or formed hereafter)), in the provision of connectivity to standard and non-standard handsets, sensors and Internet of things devices using satellites, high altitude systems or any other aerial systems but shall not include any financial investment firm or collective investment vehicle that, together with its Affiliates, holds less than twenty percent (20%) of the outstanding equity of any Competitor and does not, nor do any of its Affiliates, have a right to designate any members of the board of directors of any Competitor; and the Company acknowledges that neither Vodafone nor its Affiliates shall be deemed a Competitor for the purposes of this Agreement with respect to the current business lines of Vodafone and its Affiliates, and that UBS O’Connor LLC (and its affiliated entities or funds) shall not be deemed as Affiliates of NPA Sponsor for purposes of this definition of “Competitor”.

 

Confidential Information” shall mean all information (whether or not specifically identified as confidential), in any form or medium, that is disclosed to, or developed or learned by, the Company or any of its Subsidiaries, or a Stockholder Party, as the case may be, in the performance of duties for, or on behalf of, the Company or any of its Subsidiaries or that relates to the business, products, services or research of the Company or any of its Subsidiaries or any of their investors, partners, Affiliates, strategic alliance participants, officers, directors, employees or stockholders or their respective Affiliates, including, without limitation: (i) internal business information of the Company and its Subsidiaries (including, without limitation, information relating to strategic plans and practices, business, accounting, financial or marketing plans, practices or programs, training practices and programs, salaries, bonuses, incentive plans and other compensation and benefits information and accounting and business methods); (ii) identities of, individual requirements of, specific contractual arrangements with, and information about, the Company or any of its Subsidiaries, its Affiliates, their respective customers and their respective confidential information; (iii) any confidential or proprietary information of any third party that the Company or any Subsidiary of the Company has a duty to maintain confidentiality of, or use only for certain limited purposes; (iv) industry research compiled by, or on behalf of the Company or any of its Subsidiaries, including, without limitation, identities of potential target companies, management teams, and transaction sources identified by, or on behalf of, the Company or any of its Subsidiaries; (v) compilations of data and analyses, processes, methods, track and performance records, data and data bases relating thereto; and (vi) information related to the Company’s Intellectual Property and updates of any of the foregoing; provided that “Confidential Information” shall not include any information that a Stockholder Party can demonstrate has become generally known to and widely available for use other than as a result of the acts or omissions of such Stockholder Party or any Person over which such Stockholder Party has control to the extent such acts or omissions are not authorized by such Stockholder Party in the performance of such Person’s assigned duties for such Stockholder Party.

 

Invesat Holders” shall mean Invesat and its Permitted Transferees.

 

Law” shall mean any federal, state, local or foreign law, regulation or rule or any decree, judgment, permit or order.

 

Lock-up Period” shall mean the period beginning on the Closing Date and ending on the date that is the first (1st) anniversary of the Closing Date.

 

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Lock-up Shares” shall mean (i) the shares of Common Stock received by the Stockholder Parties in connection with the Transactions on the Closing Date, (ii) any shares of Common Stock received after the Closing Date by any Stockholder Party pursuant to a Redemption (as defined in the OpCo LLCA) of the OpCo Common Units held as of the Closing Date, and (iii) the PubCo Warrants held as of the Closing Date and any shares of Common Stock issued to Stockholder Parties upon exercise of any such warrants.

 

Necessary Action” shall mean, with respect to any party and a specified result, all actions (to the extent such actions are not prohibited by applicable Law, within such party’s control and do not directly conflict with any rights expressly granted to such party in this Agreement, the Purchase Agreement, the Registration Rights Agreement, the Charter or the By-laws) reasonably necessary and desirable within his, her or its control to cause such result, including, without limitation (i) calling special meetings of the Board and the stockholders of the Company, (ii) voting or providing a proxy with respect to the Voting Shares Beneficially Owned by such party, (iii) voting in favor of the adoption of stockholders’ resolutions and amendments to the Charter or the By-laws, (iv) requesting members of the Board (to the extent such members were elected, nominated or designated by the party obligated to undertake such action) to act (subject to any applicable fiduciary duties) in a certain manner or causing them to be removed in the event they do not act in such a manner and (v) making, or causing to be made, with governmental, administrative or regulatory authorities, all filings, registrations or similar actions that are required to achieve such a result.

 

NPA Sponsor Holders” shall mean NPA Sponsor and its Permitted Transferees.

 

OpCo Common Units” shall mean the “Common Units” of OpCo as defined in the OpCo LLCA.

 

OpCo LLCA” shall mean the Fifth Amended and Restated Limited Liability Company Operating Agreement of OpCo, dated as of April 6, 2021, as it may be amended, supplemented, restated and/or modified from time to time.

 

Permanently Incapacitated” shall mean, with respect to any Person, when a competent medical authority who is treating such Person has given a written opinion to the Company stating that such Person has become permanently incapable of carrying out his or her functions as an officer or member of the Board, as applicable.

 

Permitted Transferees” shall mean, with respect to any stockholder of the Company party to this Agreement: (i) the Company, OpCo, or any of their Subsidiaries; (ii) any Person approved in writing in advance by the Board, in its sole discretion; (iii) in the case of Invesat, Vodafone, Rakuten and NPA Sponsor, any of their controlled or controlling Affiliates (only for so long as such transferee remains a controlled or controlling Affiliate); and (iv) if the stockholder is a natural Person, any of such stockholder’s controlled Affiliates, or any trust or other estate planning vehicle that is under the control of such stockholder and for the sole benefit of such stockholder and/or such stockholder’s spouse, former spouse, ancestors and descendants (whether natural or adopted), parents and their descendants and any spouse of the foregoing Persons, in the case of each of clauses (i) through (iv), only if such transferee becomes a party to this Agreement; provided that, notwithstanding the foregoing, in no event will any Person that is a Competitor to the Company be a Permitted Transferee hereunder.

 

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Person” shall mean individual, corporation, limited liability company, partnership, joint venture, association, trust, unincorporated organization or any other entity, including a governmental authority.

 

Rakuten Holders” shall mean Rakuten and its Permitted Transferees.

 

Securities Act” shall mean the Securities Act of 1933, as amended.

 

Stockholder Designating Party” shall mean each of Avellan, Invesat, Vodafone, Rakuten, NPA Sponsor and American Tower.

 

Stockholder Shares” shall mean all securities of the Company registered in the name of, or Beneficially Owned by the Stockholder Parties, including any and all securities of the Company acquired and held in such capacity subsequent to the date hereof.

 

Subsidiary” shall mean, with respect to any Person, (i) any corporation of which more than fifty percent (50%) of the outstanding voting securities is, directly or indirectly, owned by such Person, and (ii) any partnership, limited liability company, joint venture or other entity of which more than fifty percent (50%) of the total equity interest is, directly or indirectly, owned by such Person or of which such Person or any Subsidiary is a general partner, manager, managing member or the equivalent.

 

Sunset Date” shall mean, the first date, following the Closing Date, on which either (i) the Avellan Holders Beneficially Own a number of shares of Class A Common Stock representing less than twenty percent (20%) of the number of shares of Class A Common Stock Beneficially Owned by the Avellan Holders immediately following the Closing Date (assuming, for this purpose, that all outstanding OpCo Common Units are and were exchanged at the applicable times of measurement by the AST Equityholders for shares of Class A Common Stock in accordance with the OpCo LLCA and without regard to the Lock-up or any other restriction on exchange) or (ii) Avellan dies or becomes Permanently Incapacitated.

 

Transfer” shall mean the (i) sale of, offer to sell, contract or agreement to sell, hypothecate, pledge, grant of any option to purchase or otherwise dispose of or agreement to dispose of, directly or indirectly, or establishment or increase of a put equivalent position or liquidation with respect to or decrease of a call equivalent position within the meaning of Section 16 of the Exchange Act with respect to, any security, (ii) entry into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of any security, whether any such transaction is to be settled by delivery of such securities, in cash or otherwise, or (iii) public announcement of any intention to effect any transaction specified in clause (i) or (ii).

 

Vodafone Holders” shall mean Vodafone and its Permitted Transferees.

 

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2. Agreement to Vote. During the term of this Agreement, each AST Equityholder shall vote or cause to be voted all securities of the Company that may be voted in the election of the Company’s directors registered in the name of, or beneficially owned (as such term is defined in Rule 13d-3 under the Exchange Act, including by the exercise or conversion of any security exercisable or convertible for shares of Common Stock, but excluding shares of stock underlying unexercised Options or warrants) (“Beneficially Owned” or “Beneficial Ownership”) by such AST Equityholder, including any and all securities of the Company acquired and held in such capacity subsequent to the date hereof (hereinafter referred to as the “Voting Shares”), in accordance with the provisions of this Agreement, including, without limitation, voting or causing to be voted all Voting Shares Beneficially Owned by such AST Equityholder so that the Board is comprised of the Persons designated pursuant to Section 3. Except as explicitly provided in this Agreement, each AST Equityholder is free to vote or cause to be voted all Voting Shares Beneficially Owned by such AST Equityholder. For the avoidance of doubt, nothing in this Section 2 shall require an AST Equityholder to exercise or convert any security exercisable or convertible for voting securities of the Company.

 

3. Board of Directors.

 

(a) Board Representation. The Board shall initially consist of thirteen (13) directors, with two (2) director seats being vacant immediately following the Closing, which seats Avellan may fill at any time. Subject to the terms and conditions of this Agreement, from and after the date of this Agreement, the Company and each Stockholder Party shall take all Necessary Action to cause, effective beginning immediately following the Closing Date, the Board to be comprised of eleven (11) directors who, initially, shall be the Persons identified on Exhibit 3(a). Avellan shall be the individual serving as the initial chairperson of the Board immediately following the Closing. From and after the Closing Date, until the earlier of Avellan’s retirement or resignation from the Board or the Sunset Date, each Stockholder Party shall take all Necessary Action to cause Avellan to be the chairperson of the Board. Notwithstanding the foregoing, on the first date after the Closing Date upon which the Avellan Holders cease collectively to own voting stock of the Company bearing at least fifty percent (50%) of the outstanding voting power of the Company, the size of the Board shall, if greater than eleven (11) members on such date, be reduced to eleven (11) members (of which, for the avoidance of doubt, Avellan shall have the right to nominate five (5) members in accordance with Section 3(b)(ii)(A)).

 

(b) Avellan Designees.

 

(i) Subject to Sections 3(b)(ii) and 3(h), the Avellan Holders, by a majority of shares held by them, shall have the right to nominate, and the Board and the AST Equityholders will appoint and vote for, seven (7) members of the Board (the “Avellan Designees” and each an “Avellan Designee”), five (5) of which are initially designated as set forth on Exhibit 3(a) hereto and all of which shall thereafter be designated by the Avellan Holders by a majority of shares held by them. For the avoidance of doubt, the Avellan Holders shall have the right to nominate the two (2) remaining Avellan Designees in accordance with this Section 3(b).

 

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(ii) In the event the Avellan Holders cease collectively, as of any date after the Closing Date, to own voting stock of the Company bearing at least: (A) fifty percent (50%) of the aggregate outstanding voting power of the Company, the Avellan Holders shall only be entitled to nominate five (5) members of the Board as of the date Avellan Holders cease to hold the aforementioned requisite securities of the Company; (B) forty percent (40%) of the aggregate outstanding voting power of the Company, the Avellan Holders shall only be entitled to nominate three (3) members of the Board as of the date the Avellan Holders cease to hold the aforementioned requisite securities of the Company; (C) thirty percent (30%) of the aggregate outstanding voting power of the Company, the Avellan Holders shall only be entitled to nominate two (2) members of the Board as of the date the Avellan Holders cease to hold the aforementioned requisite securities of the Company; (D) twenty percent (20%) of the aggregate outstanding voting power of the Company, the Avellan Holders shall only be entitled to nominate one (1) member of the Board as of the date the Avellan Holders cease to hold the aforementioned requisite securities of the Company; and (E) five percent (5%) of the aggregate outstanding voting power of the Company, the Avellan Holders shall no longer be entitled to nominate any members of the Board as of the date the Avellan Holders cease to hold the aforementioned requisite securities of the Company. The Stockholder Parties agree that, in the event the size of the Board is increased or decreased, the number of Avellan Designees that the Avellan Holders are entitled to appoint to the Board shall increase or decrease proportionately to the size of the Board.

 

(iii) Notwithstanding the foregoing, for so long as the Avellan Holders are entitled to nominate at least five (5) members of the Board, at least one (1) Avellan Designee must (x) qualify as an “independent director” under Nasdaq Rules and (y) qualify as an “audit committee financial expert” within the meaning of Regulation S-K of the Securities Act.

 

(c) Invesat Designee.

 

(i) Until the Invesat Fall-Away Date, the Invesat Holders, by a majority of shares held by them, shall have the right to nominate, and the Board and the AST Equityholders will appoint and vote for, one (1) member of the Board (the “Invesat Designee”), who is initially designated as set forth on Exhibit 3(a) hereto and shall thereafter be designated by the Invesat Holders. The Invesat Designee must at all times qualify as an “independent director” under Nasdaq Rules.

 

(ii) The “Invesat Fall-Away Date” shall be the first date following the Closing Date on which either of the following events occurs: (A) the Invesat Holders collectively do not hold at least five percent (5%) of the outstanding Class A Common Stock of the Company (assuming, for this purpose, that all outstanding OpCo Common Units are and were exchanged at the applicable times of measurement by the AST Equityholders for shares of Class A Common Stock in accordance with the OpCo LLCA and without regard to the Lock-up or any other restriction on exchange); or (B) Invesat’s designation rights have been terminated pursuant to Section 3(h).

 

(d) Vodafone Designee.

 

(i) Until the Vodafone Fall-Away Date, the Vodafone Holders, by a majority of shares held by them, shall have the right to nominate, and the Board and the AST Equityholders will appoint and vote for, one (1) member of the Board (the “Vodafone Designee”), who is initially designated as set forth on Exhibit 3(a) hereto and shall thereafter be designated by the Vodafone Holders.

 

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(ii) The “Vodafone Fall-Away Date” shall be the first date following the Closing Date on which either of the following events occurs: (A) the Vodafone Holders collectively hold neither (x) at least five percent (5%) of the outstanding Class A Common Stock of the Company nor (y) at least fifty percent (50%) of the outstanding Class A Common Stock of the Company held by the Vodafone Holders immediately following the Closing (assuming for purposes of clauses (x) and (y), that all outstanding OpCo Common Units are and were exchanged at the applicable time of measurement by the AST Equityholders for shares of Class A Common Stock in accordance with the OpCo LLCA and without regard to the Lock-up or any other restriction on exchange); or (B) Vodafone’s designation rights have been terminated pursuant to Section 3(h).

 

(e) Rakuten Designees.

 

(i) Until the First Rakuten Fall-Away Date, the Rakuten Holders, by a majority of shares held by them, shall have the right to nominate, and the Board and the AST Equityholders will appoint and vote for, one (1) member of the Board, being the “First Rakuten Designee”, who is initially designated as set forth on Exhibit 3(a) hereto and shall thereafter be designated by the Rakuten Holders. Until the Second Rakuten Fall-Away Date, the Rakuten Holders, by a majority of shares held by them, shall have the right to nominate, and the Board and the AST Equityholders will appoint and vote for, another member of the Board, being the “Second Rakuten Designee” (together with the First Rakuten Designee, the “Rakuten Designees”), who is initially designated as set forth on Exhibit 3(a) hereto and shall thereafter be designated by the Rakuten Holders.

 

(ii) The First Rakuten Fall-Away Date shall be the first date following the Closing Date on which either of the following events occurs: (1) the Rakuten Holders collectively hold neither (x) at least five percent (5%) of the outstanding Class A Common Stock of the Company nor (y) at least fifty percent (50%) of the outstanding Class A Common Stock of the Company held by the Rakuten Holders immediately following the Closing (assuming for purposes of clauses (x) and (y), that all outstanding OpCo Common Units are and were exchanged at the applicable time of measurement by the AST Equityholders for shares of Class A Common Stock in accordance with the OpCo LLCA and without regard to the Lock-up or any other restriction on exchange); or (2) Rakuten’s designation rights have been terminated pursuant to Section 3(h).

 

(iii) The Second Rakuten Fall-Away Date shall be the first date following the Closing Date on which either of the following events occurs: (1) the Rakuten Holders do not collectively hold at least ten percent (10%) of the outstanding Class A Common Stock of the Company (assuming for this purpose that all outstanding OpCo Common Units are and were exchanged at the applicable time of measurement by the AST Equityholders for shares of Class A Common Stock in accordance with the OpCo LLCA and without regard to the Lock-up or any other restriction on exchange); or (2) Rakuten’s designation rights have been terminated pursuant to Section 3(h).

 

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(f) NPA Designee.

 

(i) Until the NPA Fall-away Date, the NPA Sponsor Holders, by a majority of shares held by them, shall have the right to nominate, and the Board and the AST Equityholders will appoint and vote for, one (1) member of the Board (the “NPA Designee”), who is initially designated as set forth on Exhibit 3(a) hereto and shall thereafter be designated by the NPA Sponsor Holders. The NPA Designee must at all times (x) qualify as an “independent director” under Nasdaq Rules and (y) qualify as an “audit committee financial expert” within the meaning within the meaning of Regulation S-K of the Securities Act.

 

(ii) The “NPA Fall-Away Date” shall be the earlier to occur of (A) the date of the expiration of the NPA Designee’s term as director ending at the second annual meeting of stockholders of the Company following the Closing, or (B) the first date following the Closing upon which NPA Sponsor’s designation rights have been terminated pursuant to Section 3(h).

 

(g) American Tower Designee.

 

(i) Until the American Tower Fall-Away Date, the American Tower Holders, by a majority of shares held by them, shall have the right to nominate, and the Board and the AST Equityholders will appoint and vote for, one (1) member of the Board (the “American Tower Designee” and, together with the Avellan Designees, the Invesat Designee, the Vodafone Designee, the Rakuten Designees and the NPA Designee, the “Stockholder Designees”)), who is initially designated as set forth on Exhibit 3(a) hereto and shall thereafter be designated by the American Tower Holders.

 

(ii) The “American Tower Fall-Away Date” shall be the first date following the Closing Date on which either of the following events occurs: (A) the American Tower Holders collectively do not hold at least fifty percent (50%) of the outstanding Class A Common Stock of the Company held by the American Tower Holders immediately following the Closing (assuming for this purpose, that all outstanding OpCo Common Units are and were exchanged at the applicable time of measurement by the AST Equityholders for shares of Class A Common Stock in accordance with the OpCo LLCA and without regard to the Lock-up or any other restriction on exchange); or (B) American Tower’s designation rights have been terminated pursuant to Section 3(h).

 

(h) Additional Lapse of Designation Rights. Notwithstanding anything to the contrary set forth in this Agreement, the right of any Stockholder Designating Party to designate nominees for appointment to the Board as set forth in Section 3(b), Section 3(c), Section 3(d), Section 3(e), Section 3(f) or Section 3(g), shall terminate if at any time (A) such Stockholder Designating Party or any of its Affiliates becomes a Competitor of the Company, (B) such Stockholder Designating Party or any of its Affiliates commences any legal proceeding against the Company, its Subsidiaries or any other member of the Board of Directors; or (C) such Stockholder Designating Party or any of its Affiliates has the right (whether exercised or not) to designate or appoint a member of or observer to the board of directors (or similar governing body) of any Competitor.

 

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(i) Resignation; Removal; Vacancies. Any member of the Board designated pursuant to Section 3(b), Section 3(c), Section 3(d), Section 3(e), Section 3(f) or Section 3(g) may resign, or may be removed either (i) with or without cause solely at the direction of the Stockholder Designating Party who designated such member of the Board, or (ii) by the affirmative written vote or written consent of a majority of the remaining members of the Board upon death, disability, Permanent Incapacity or disqualification of such member of the Board. The Stockholder Designating Party who designated such resigned or removed director (or such Stockholder Designating Party’s successors or Permitted Transferees) shall have the exclusive right to designate a replacement for such member of the Board, which individual shall be appointed and approved pursuant to Section 3(b), Section 3(c), Section 3(d), Section 3(e), Section 3(f) or Section 3(g), as applicable, for so long as such Stockholder Designating Party is entitled to designate such nominee pursuant to such sections.

 

(j) Voting. Each of the Company and the AST Equityholders agrees not to take, directly or indirectly, any actions (including removing directors in a manner inconsistent with this Agreement) that would knowingly frustrate, obstruct or otherwise affect the provisions of this Agreement and the intention of the parties hereto with respect to the composition of the Board as herein stated. Each AST Equityholder, to the extent not prohibited by the Charter, shall vote all Voting Shares held by such AST Equityholder in such manner as may be necessary to elect and/or maintain in office as members of the Board those individuals designated in accordance with this Section 3 and to otherwise effect the intent of the provisions of this Agreement; provided that, notwithstanding the foregoing, each AST Equityholder agrees that, at all times, at least three (3) directors shall be independent and qualified to serve on the audit committee under Nasdaq Rules. Each AST Equityholder further agrees until the Sunset Date (i) to take all Necessary Action reasonably available within their power, including casting all votes to which such AST Equityholder is entitled in respect of its Voting Shares, whether at any annual or special meeting, by written consent or otherwise, so as to vote its Voting Shares on all matters submitted to the stockholders of the Company in accordance with the recommendation of the Board and (ii) not to grant, or enter into a binding agreement with respect to, any proxy to any Person in respect of such party’s equity securities of the Company that would prohibit such party from casting such votes in accordance with clause (i) of this Section 3(j).

 

(k) From and after the lapse or termination of a Board designation rights set forth in Section 3(b), Section 3(c), Section 3(d), Section 3(e), Section 3(f) or Section 3(g) in accordance with the terms of this Agreement, the Board seat that would have been designated pursuant to such designation right had such right not lapsed or terminated will be filled in accordance with the Charter and the By-laws.

 

4. Stockholder Designee Requirements.

 

(a) The Company’s and the Stockholder Parties’ obligations with respect to the Stockholder Designees pursuant to this Agreement shall in each case be subject to each Stockholder Designee’s satisfaction of all requirements set forth in this Section 4. Each of the Stockholder Designating Parties agrees that they shall designate only Stockholder Designees that satisfy, and shall cause each of the Stockholder Designees nominated by them to, at all times satisfy, the requirements set forth in this Section 4.

 

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(b) Each Stockholder Designee shall, at all times, (i) satisfy all requirements regarding service as a director of the Company under applicable Law and the listing rules of Nasdaq (the “Nasdaq Rules”), regardless of whether the Nasdaq Rules then apply to the Company, solely to the extent as has been or will be applicable to all other non-executive directors of the Company, and all other criteria and qualifications for service as a director applicable to all non-executive directors of the Company and (ii) satisfy any other requirements for director qualification adopted by the Board and generally applicable to non-employee directors of the Company.

 

(c) Each Stockholder Designating Party shall cause each Stockholder Designee designated by it: (i) to make himself or herself reasonably available for interviews; (ii) to consent to such reference and background checks or other investigations as the Board or Avellan may reasonably request in order to determine such Stockholder Designee meets the requirements to serve as a director of the Company, solely to the extent such checks or investigations have been or will be required from all other non-executive directors of the Company, and (iii) to provide to the Company a completed copy of the directors and officers questionnaire submitted by the Company to its other directors in the ordinary course of business.

 

(d) No Stockholder Designee (or any replacement thereof appointed by a Stockholder Designating Party) shall be eligible to serve as a director if he or she (x) has been involved in any of the events enumerated under Item 2(d) or (e) of Schedule 13D under the Exchange Act or Item 401(f), other than Item 401(f)(1), of Regulation S-K of the Securities Act, (y) has been or could be disqualified as a “Bad Actor” under Section 506 of Regulation D of the Securities Act or (z) is subject to any outstanding order, judgment, injunction, ruling, writ or decree of any governmental authority prohibiting service as a director of any public company. In the event that a Stockholder Designee no longer satisfies all the requirements set forth in (1) the immediately preceding sentence and (2) Section 4(b), such Stockholder Designee’s term of office shall immediately terminate in accordance with the Charter and the By-laws, and the vacancy resulting from the termination of such Stockholder Designee’s term of office may be filled as provided by this Agreement and the Charter and the By-laws. Each Stockholder Designating Party agrees that, in the event a Stockholder Designee designated by it no longer satisfies the requirements set forth in the immediately preceding sentence, it shall take all Necessary Action to remove or cause the removal of such Stockholder Designee from the Board.

 

(e) As a condition to a Stockholder Designee’s designation or election to the Board, pursuant to Section 3, such Stockholder Designee must provide to the Company:

 

(i) all information reasonably requested by the Company that is required to be or is customarily disclosed for directors, candidates for directors and their respective Affiliates and representatives in a proxy statement or other filings in accordance with applicable Law, the Nasdaq Rules or the Charter, the By-laws or other corporate governance guidelines;

 

(ii) all information reasonably requested by the Company in connection with assessing eligibility, independence and other criteria applicable to directors or satisfying compliance and legal or regulatory obligations, solely to the extent such information has been or will be required from all other non-executive directors of the Company; and

 

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(iii) an undertaking in writing by such Stockholder Designee:

 

(A) to be subject to, bound by and duly comply with a standard confidentiality agreement in a form acceptable to the Company, the code of conduct and other policies of the Company, in each case, solely to the extent applicable to all other non-executive directors of the Company; and

 

(B) at the request of the Board, to recuse himself or herself from any deliberations or discussions of the Board or any committee thereof regarding matters that, in the reasonable determination of the Board, present actual or potential conflicts of interest with the Company or other matters that, in the reasonable determination of the Board, present actual or potential conflicts of interest with the Company.

 

5. Required Approvals.

 

(a) Notwithstanding anything to the contrary contained in this Agreement, subject to Section 5(c), in addition to any vote or consent of the Board or the stockholders of the Company required by applicable Law, the Charter or the By-laws, the Board shall not permit the Company to, and the Company shall not permit any of its Subsidiaries to, take any of the following actions (whether directly or indirectly by amendment, merger, recapitalization, consolidation or otherwise) without the affirmative vote or written consent of the Avellan Holders (by a majority of shares held by them) acting in their capacity as stockholders of the Company:

 

(i) change the size of the Board;

 

(ii) establish any committee of the Board or change the composition or powers of any committees of the Board, except for any special committee that outside counsel advises is required or advisable in order for the members of the Board to faithfully discharge fiduciary duties;

 

(iii) engagement of any professional advisers, including, without limitation, investment bankers and financial advisers, of the Company, OpCo or any of their Subsidiaries (but not of the Board or of any committee thereof); or

 

(iv) materially change the nature or scope of the Company’s business or enter into or abandon a line of business.

 

(b) Notwithstanding anything to the contrary contained in this Agreement, but subject to Section 5(c), in addition to any vote or consent of the Board or the stockholders of the Company required by applicable Law, the Charter or the By-laws, the Board shall not permit the Company, and the Company shall not permit OpCo or any other Subsidiary of the Company, to amend the Charter, the By-laws, this Agreement, the Registration Rights Agreement, the Tax Receivable Agreement, the certificate of formation or limited liability company agreement of OpCo or any other organizational or governing document of the Company or OpCo or any other Subsidiary of the Company that has an adverse effect on the material rights specific to such Stockholder Party (whether directly or indirectly by amendment, merger, recapitalization, consolidation or otherwise) without the affirmative vote or written consent of such Stockholder Party in its capacity as a stockholder of the Company.

 

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(c) Notwithstanding anything to the contrary contained herein, the consent rights of a Stockholder Party set forth in Section 5(a) and Section 5(b), shall terminate:

 

(i) with respect to the Avellan Holders, on the Sunset Date;

 

(ii) with respect to the Invesat Holders, on the Invesat Fall-Away Date;

 

(iii) with respect to the Vodafone Holders, on the Vodafone Fall-Away Date;

 

(iv) with respect to the Rakuten Holders, on the Rakuten Fall-Away Date;

 

(v) with respect to the NPA Sponsor Holders, on the NPA Fall-Away Date; and

 

(vi) with respect to American Tower, on the American Tower Fall-Away Date.

 

6. Controlled Company.

 

(a) The Stockholder Parties agree and acknowledge that by virtue of the combined voting power of the Stockholder Parties of more than fifty percent (50%) of the total voting power of the shares of capital stock of the Company outstanding as of the Closing, the Company will, as of the Closing, qualify as a “controlled company” within the meaning of Nasdaq Listing Rule 5615(c).

 

(b) From and after the Closing, the Company agrees and acknowledges that, unless otherwise agreed by Avellan, it shall elect, to the extent permitted under the Nasdaq Rules, to be treated as a “controlled company” within the meaning of Nasdaq Listing Rule 5615(c).

 

7. Representations and Warranties of Each Stockholder Party. Each Stockholder Party on its own behalf hereby represents and warrants to the Company and each other Stockholder Party, severally and not jointly, with respect to such Stockholder Party and such Stockholder Party’s ownership of his, her or its Stockholder Shares set forth on Annex A, as of the Closing Date:

 

(a) Organization; Authority. If Stockholder Party is a legal entity, Stockholder Party (i) is duly incorporated or organized, validly existing and in good standing under the Laws of the jurisdiction of its incorporation or organization and (ii) has all requisite power and authority to enter into this Agreement and to perform its obligations hereunder. If Stockholder Party is a natural person, Stockholder Party has the legal capacity to enter into this Agreement and perform his or her obligations hereunder. If Stockholder Party is a legal entity, this Agreement has been duly authorized, executed and delivered by Stockholder Party. This Agreement constitutes a valid and binding obligation of Stockholder Party enforceable in accordance with its terms, except as enforcement may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors’ rights generally and by general principles of equity (regardless of whether considered in a proceeding in equity or at law).

 

13
 

 

(b) No Consent. Except as provided in this Agreement and for filing requirements under applicable securities laws, no consent, approval or authorization of, or designation, declaration or filing with, any governmental Authority or other Person on the part of Stockholder Party is required in connection with the execution, delivery and performance of this Agreement, except where the failure to obtain such consents, approvals, authorizations or to make such designations, declarations or filings would not materially interfere with a Stockholder Party’s ability to perform his, her or its obligations pursuant to this Agreement. If Stockholder Party is a natural person, no consent of such Stockholder Party’s spouse is necessary under any “community property” or other laws for the execution and delivery of this Agreement or the performance of Stockholder Party’s obligations hereunder. If Stockholder Party is a trust, no consent of any beneficiary is required for the execution and delivery of this Agreement or the consummation of the transactions contemplated hereby.

 

(c) No Conflicts; Litigation. Neither the execution and delivery of this Agreement, nor the consummation of the transactions contemplated hereby, nor compliance with the terms hereof, will (A) if such Stockholder Party is a legal entity, conflict with or violate any provision of the organizational documents of Stockholder Party, or (B) violate, conflict with or result in a breach of, or constitute a default (with or without notice or lapse of time or both) under any provision of, any trust agreement, loan or credit agreement, note, bond, mortgage, indenture, lease or other agreement, instrument, concession, franchise, license, notice or Law applicable to Stockholder Party or to Stockholder Party’s property or assets, except, in the case of clause (B), that would not reasonably be expected to impair, individually or in the aggregate, Stockholder Party’s ability to fulfill its obligations under this Agreement. As of the date of this Agreement, there is no Action pending or, to the knowledge of a Stockholder Party, threatened, against such Stockholder Party or any of Stockholder Party’s Affiliates or any of their respective assets or properties that would materially interfere with such Stockholder Party’s ability to perform his, her or its obligations pursuant to this Agreement or that would reasonably be expected to prevent, enjoin, alter or delay any of the transactions contemplated by this Agreement.

 

(d) Ownership of Shares. Stockholder Party Beneficially Owns his, her or its Stockholder Shares free and clear of all Liens. Except pursuant to this Agreement, the NPA Sponsor Voting Agreement, the Purchase Agreement, and the Registration Rights Agreement, there are no options, warrants or other rights, agreements, arrangements or commitments of any character to which Stockholder Party is a party relating to the pledge, acquisition, disposition, Transfer or voting of Stockholder Shares and there are no voting trusts or voting agreements with respect to the Stockholder Shares. Stockholder Party does not Beneficially Own (i) any shares of capital stock of the Company other than the Stockholder Shares set forth on Annex A and (ii) any options, warrants or other rights to acquire any additional shares of capital stock of the Company or any security exercisable for or convertible into shares of capital stock of the Company, other than as set forth on Annex A (collectively, “Options”).

 

14
 

 

8. Covenants of the Company.

 

(a) The Company shall: (i) take any and all action reasonably necessary to effect the provisions of this Agreement and the intention of the parties with respect to the terms of this Agreement and (ii) not take any action that would reasonably be expected to adversely frustrate, obstruct or otherwise affect the rights of the Stockholder Parties under this Agreement without the prior written consent of Avellan.

 

(b) The Company shall (i) purchase and maintain in effect at all times directors’ and officers’ liability insurance in an amount and pursuant to terms determined by the Board to be reasonable and customary, (ii) for long as any Avellan Designee nominated pursuant to this Agreement serves as a director on the Board, maintain such coverage with respect to such Avellan Designee, and (iii) cause the Charter and the By-laws to at all times provide for the indemnification, exculpation and advancement of expenses of all directors of the Company to the fullest extent permitted under applicable Law; provided, that upon removal or resignation of any Avellan Designee for any reason, the Company shall take all actions reasonably necessary to extend such directors’ and officers’ liability insurance coverage for a period of not less than six (6) years from any such event in respect of any act or omission occurring at or prior to such event.

 

(c) The Company shall pay all reasonable out-of-pocket expenses incurred by the members of the Board in connection with the performance of his or her duties as a director and in connection with his or her attendance at any meeting of the Board. The Company shall enter into customary indemnification agreements with each member of the Board and each officer of the Company from time to time.

 

9. Lock-up.

 

(a) Subject to Sections 9(b) and 9(c), each Stockholder Party agrees that, without the Company’s prior written consent, it, he or she shall not Transfer any Lock-up Shares until the end of the Lock-up Period (the “Lock-up”).

 

(b) Notwithstanding the provisions set forth in Section 9(a), any Stockholder Party or its Permitted Transferees may Transfer the Lock-up Shares during the Lock-up Period (i) to any of such Stockholder Party’s Permitted Transferees; or (ii) in connection with a liquidation, merger, stock exchange, reorganization, tender offer approved by the Board or a duly authorized committee thereof or other similar transaction which results in all of the Company’s stockholders having the right to exchange their shares of Common Stock for cash, securities or other property subsequent to the Closing Date.

 

(c) Notwithstanding the provisions set forth in Section 9(a), (i) any shares of Common Stock issued to any Stockholder Party upon exercise of any of such Stockholder Party’s warrants to purchase Common Stock of the Company shall be deemed to be Lock-up Shares Beneficially Owned by such Stockholder Party as of the Closing and such exercise shall not be deemed a Transfer for purposes of this Section 9 and (ii) neither the retirement of shares of Class B Common Stock pursuant to Section 6.3 of the Charter nor the retirement of Class C Common Stock pursuant to Section 6.4 of the Charter shall be deemed a Transfer for purposes of this Section 9.

 

15
 

 

(d) Notwithstanding anything contained herein to the contrary, if, following the Closing, the last sale price of the Class A Common Stock equals or exceeds twelve dollars ($12.00) per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) on the principal exchange on which such securities are then listed or quoted for any twenty (20) trading days within any thirty (30) trading-day period commencing at least one hundred fifty (150) days after the Closing, NPA Sponsor, together with its Permitted Transferees, may Transfer Lock-up Shares during the Lock-up Period in a cumulative aggregate amount of shares of Common Stock representing up to one-third (1/3) of the sum of the number of Lock-up Shares Beneficially Owned by NPA Sponsor and its Permitted Transferees and the number of Stockholder Shares underlying the unexercised PubCo Warrants held by NPA Sponsor, in each case, as of immediately following the Closing (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like).

 

(e) Notwithstanding anything contained herein to the contrary, the Lock-up Period shall expire, and each Stockholder Party, together with its Permitted Transferees, shall be entitled to Transfer all of the Lock-up Shares, immediately upon the date on which the Company completes a liquidation, merger, capital stock exchange, reorganization or other similar transaction that results in all of the Company’s stockholders having the right to exchange their shares of Common Stock of the Company for cash, securities or other property.

 

10. No Other Voting Trusts or Other Arrangement. Each AST Equityholder shall not, and shall not permit any entity under such AST Equityholder’s control to (a) deposit any Voting Shares or any interest in any Voting Shares in a voting trust, voting agreement or similar agreement, (b) grant any proxies, consent or power of attorney or other authorization or consent with respect to any of the Voting Shares or (c) subject any of the Voting Shares to any arrangement with respect to the voting of the Voting Shares, in each case, that conflicts with or prevents the implementation of this Agreement.

 

11. Additional Shares. Each AST Equityholder agrees that all securities of the Company that may vote in the election of the Company’s directors that such AST Equityholder purchases, acquires the right to vote or otherwise acquires Beneficial Ownership of (including by the exercise or conversion of any security exercisable or convertible for shares of Common Stock) after the execution of this Agreement shall be subject to the terms of this Agreement and shall constitute Voting Shares for all purposes of this Agreement.

 

12. No Agreement as Director or Officer. Each Stockholder Party is signing this Agreement solely in his, her or its capacity as a stockholder of the Company. No Stockholder Party makes any agreement or understanding in this Agreement in such Stockholder Party’s capacity as a director or officer of the Company or any of its Subsidiaries (if Stockholder Party holds such office). Nothing in this Agreement will limit or affect any actions or omissions taken by a Stockholder Party in his, her or its capacity as a director or officer of the Company, and no actions or omissions taken in such Stockholder Party’s capacity as a director or officer shall be deemed a breach of this Agreement. Nothing in this Agreement will be construed to prohibit, limit or restrict a Stockholder Party from exercising his or her fiduciary duties as an officer or director to the Company or its stockholders.

 

16
 

 

13. Confidentiality. Each Stockholder Party agrees, and agrees to cause its Affiliates, to keep confidential and not disclose, divulge, or use for any purpose (other than to monitor its investment in the Company) any Confidential Information; provided, however, that a Stockholder Party may disclose Confidential Information to (a) its attorneys, accountants, consultants, and other professionals to the extent necessary to obtain their services in connection with monitoring its investment in the Company, (b) to any Affiliate, partner, member, equityholder or wholly-owned Subsidiary of such Stockholder Party in the ordinary course of business; provided that such Stockholder Party informs such Person that such information is confidential and directs such Person to maintain the confidentiality of such information or (c) as may otherwise be required by law, regulation, rule, court order or subpoena or by obligations pursuant to any listing agreement with any securities exchange or securities quotation system, provided that such Stockholder Party promptly notifies the Company of such disclosure and takes reasonable steps to minimize the extent of any such required disclosure.

 

14. Specific Enforcement. It is agreed and understood that monetary damages would not adequately compensate an injured party for the breach of this Agreement by any party hereto and, accordingly, that this Agreement shall be specifically enforceable, in addition to any other remedy to which such injured party is entitled at law or in equity, and that any breach of this Agreement shall be the proper subject of a temporary or permanent injunction or restraining order. Further, each party hereto waives any claim or defense that there is an adequate remedy at law for such breach or threatened breach or an award of specific performance is not an appropriate remedy for any reason at law or equity and agrees that a party’s rights would be materially and adversely affected if the obligations of the other parties under this Agreement were not carried out in accordance with the terms and conditions hereof. Each party further agrees that no party shall be required to obtain, furnish or post any bond or similar instrument in connection with or as a condition to obtain any remedy referred to in this Section 14, and each party irrevocably waives any right it may have to require the obtaining, furnishing or posting of any such bond or similar instrument.

 

15. Termination.

 

(a) Following the Closing, with respect to each Stockholder Party, except as set forth in Section 15(b), (a) Sections 2 (Agreement to Vote), 3 (Board of Directors), 4 (Stockholder Designee Requirements) and 9 (Lock-up) of this Agreement shall terminate automatically (without any action by any party hereto) on the first date on which such Stockholder Party no longer has the right to designate a director to the Board under this Agreement; (b) Section 5 (Required Approvals) of this Agreement shall terminate automatically (without any action by any party hereto) on the first date on which the combined voting power of the Stockholder Parties no longer exceeds fifty percent (50%) of the total voting power of the Company then outstanding, (c) Section 6(b) (Controlled Company) shall survive until the Company is no longer considered a “controlled company” under Nasdaq Rule 5615(c) (or other applicable stock exchange rule) and (d) the remainder of this Agreement shall terminate automatically (without any action by any party hereto) as to each Stockholder Party when such Stockholder Party ceases to Beneficially Own any Stockholder Shares.

 

17
 

 

(b) Notwithstanding the foregoing, the obligations set forth in Section 13 (Confidentiality), Section 14 (Specific Enforcement), Section 15 (Termination), Section 16 (Amendments and Waivers), Section 18 (Assignment), Section 21 (Severability), Section 22 (Governing Law), Section 23 (Jurisdiction), and Section 24 (WAIVER OF JURY TRIAL) shall survive termination of this Agreement.

 

16. Amendments and Waivers. Any provision of this Agreement may be amended or waived if, but only if, such amendment or waiver is in writing and is signed by each Stockholder Party that (i) remains a party to this Agreement at such time and (ii) (x) in the case of any amendment to the rights of any Stockholder Party hereunder, has such right at the time of such amendment and (y) in the case of an amendment to any obligation of a Stockholder Party hereunder, remains subject to such obligation at the time of such amendment. No failure or delay by any party in exercising any right, power or privilege hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by Law.

 

17. Stock Splits, Stock Dividends, etc. In the event of any stock split, stock dividend, recapitalization, reorganization or the like, any securities issued with respect to Voting Shares held by AST Equityholders shall become Voting Shares for purposes of this Agreement (and any securities issued with respect to Lock-up Shares held by Stockholder Parties shall become Lock-up Shares for purposes of this Agreement). During the term of this Agreement, all dividends and distributions payable in cash with respect to the Voting Shares shall be paid, as applicable, to each of the undersigned AST Equityholders and all dividends and distributions payable in Common Stock or other equity or securities convertible into equity with respect to the Voting Shares shall be paid, as applicable, to each of the undersigned AST Equityholders, but all dividends and distributions payable in Common Stock or other equity or securities convertible into equity shall become Voting Shares (and all dividends and distributions on Lock-up Shares payable in Common Stock or other equity or securities convertible into equity shall become Lock-up Shares) for purposes of this Agreement.

 

18. Assignment.

 

(a) Neither this Agreement nor any of the rights, duties, interests or obligations of the Company hereunder shall be assigned or delegated by the Company in whole or in part.

 

(b) No Stockholder Party may assign or delegate such Stockholder Party’s rights, duties or obligations under this Agreement, in whole or in part, except in connection with a Transfer of Stockholder Shares by such Stockholder Party to a Permitted Transferee in accordance with the terms of the Registration Rights Agreement and this Section 18.

 

(c) This Agreement and the provisions hereof shall, subject to Section 18(b), inure to the benefit of, shall be enforceable by and shall be binding upon the respective assigns and successors in interest of each Stockholder Party, as applicable, including with respect to any of such Stockholder Party’s Stockholder Shares that are transferred to a Permitted Transferee in accordance with the terms of this Agreement and the Registration Rights Agreement.

 

18
 

 

(d) No assignment in accordance with this Section 18 by any party hereto (including pursuant to a Transfer of any Stockholder Party’s Stockholder Shares) of such party’s rights, duties and obligations hereunder shall be binding upon or obligate the Company or any other party hereto unless and until each of the other parties hereto shall have received (i) written notice of such assignment as provided in Section 26 and (ii) the executed written agreement of the assignee, in a form reasonably satisfactory to Avellan, to be bound by the terms and provisions of this Agreement (which may be accomplished by an addendum or certificate of joinder to this Agreement) as fully as if it were an initial signatory hereto. Each Stockholder Party shall not permit the Transfer of any such Stockholder Party’s Stockholder Shares to a Permitted Transferee unless and until the Person to whom such securities are to be transferred has executed a written agreement as provided in clause (ii) of the preceding sentence.

 

(e) Any transfer or assignment made other than as provided in this Section 18 shall be null and void.

 

(f) Notwithstanding anything herein to the contrary, for purposes of determining the number of shares of capital stock of the Company held by each Stockholder Party, the aggregate number of shares so held by such Stockholder Party shall include any shares of capital stock of the Company transferred or assigned to a Permitted Transferee in accordance with the provisions of this Section 18; provided, that any such Permitted Transferee has executed a written agreement agreeing to be bound by the terms and provisions of this Agreement as contemplated by Section 18(d) above, including agreeing to vote or cause to be voted the Voting Shares Beneficially Owned by such Permitted Transferee as required of the applicable transferring AST Equityholder.

 

19. Permitted Transferees. In the event any Permitted Transferee to whom any securities of the Company are transferred hereunder ceases to be a Permitted Transferee, such Person shall as promptly as practicable following the date upon which he, she or it ceases to be a Permitted Transferee, Transfer such Company securities to the stockholder from whom such securities were originally received or acquired.

 

20. Other Rights. Except as provided by this Agreement, each Stockholder Party shall retain the full rights of a holder of shares of capital stock of the Company with respect to the Stockholder Shares, including the right to vote the Stockholder Shares subject to this Agreement.

 

21. Severability. In the event that any provision of this Agreement shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

 

22. Governing Law. This Agreement, the rights and duties of the parties hereto, any disputes (whether in contract, tort or statute), and the legal relations between the parties arising hereunder shall be governed by and interpreted and enforced in accordance with the Laws of the State of Delaware without reference to its conflicts of laws provisions.

 

23. Jurisdiction. Any suit, action or proceeding seeking to enforce any provision of, or based on any matter arising out of or in connection with, this Agreement shall be brought against any of the parties in the Court of Chancery of the State of Delaware (the “Chancery Court”) (or, in the event that the Chancery Court does not have jurisdiction, the federal district court for the District of Delaware or other state courts of the State of Delaware) and each of the parties hereby consents to the exclusive jurisdiction of such courts (and of the appropriate appellate courts) in any such suit, action or proceeding and waives any objection to venue laid therein. Process in any such suit, action or proceeding may be served on any party anywhere in the world, whether within or without the jurisdiction of any such courts.

 

19
 

 

24. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT.

 

25. Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original and all of which together shall constitute one instrument.

 

26. Notices. Any notices provided pursuant to this Agreement shall be in writing and given by (i) deposit in the United States mail, addressed to the party to be notified, postage prepaid and registered or certified with return receipt requested, (ii) delivery in person or by courier service providing evidence of delivery, or (iii) transmission by electronic mail. Notices provided pursuant to this Agreement shall be provided, (x) if to the Company, in accordance with the terms of the Purchase Agreement, (y) if to any other party hereto, to the address or email address, as applicable, of such party set forth on Annex A hereto, or (z) to any other address or email address, as a party designates in writing to the other parties in accordance with this Section 26.

 

27. Entire Agreement. This Agreement constitutes the full and entire understanding and agreement among the parties, and supersedes any prior agreement or understanding among the parties, with regard to the subject matter hereof, and no party shall be liable or bound to any other party in any manner by any warranties, representations or covenants except as specifically set forth herein.

 

28. Effectiveness. Notwithstanding anything contained in this Agreement to the contrary, this Agreement shall be effective upon the Closing. If the Purchase Agreement is terminated in accordance with its terms, this Agreement shall terminate concurrently therewith and shall be of no further force and effect.

 

[Remainder of page intentionally left blank; signature pages follow]

 

20
 

 

IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the date first above written.

 

  COMPANY:
     
  AST SpaceMobile, Inc.
  a Delaware corporation
     
  By: /s/ Tom Severson
  Name:  Tom Severson
  Title: Chief Operating Officer and Chief Financial Officer

 

[Signature Page to Stockholders’ Agreement]

 

 
 

 

  STOCKHOLDER PARTIES:
   
  Abel Avellan
   
  /s/ Abel Avellan
  Abel Avellan

 

[Signature Page to Stockholders’ Agreement]

 

 
 

 

  Invesat LLC
  a Delaware limited liability company
     
  By: /s/ Adriana Cisneros
  Name:  Adriana Cisneros
  Title: President

 

 [Signature Page to Stockholders’ Agreement]

 

 
 

 

  Vodafone Ventures Limited
  a private limited company organized under the Laws of England and Wales
     
  By: /s/ Edward Verner
  Name:  Edward Verner
  Title: Authorized Signatory

 

[Signature Page to Stockholders’ Agreement]

 

 
 

 

  Rakuten Mobile USA Service Inc.,
  a Delaware Corporation
     
  By: /s/ Kaname Sueyoshi
  Name:  Kaname Sueyoshi
  Title: Authorized Signatory

 

[Signature Page to Stockholders’ Agreement]

 

 
 

 

 

ATC TRS II LLC

a Delaware limited liability company

     
  By: /s/ Edmund DiSanto
  Name:  Edmund DiSanto
  Title: EVP, Chief Administration Officer and General Counsel

 

[Signature Page to Stockholders’ Agreement]

 

 
 

 

  New Providence Management LLC
  a Delaware limited liability company
     
  By: /s/ Alexander Coleman
  Name:  Alexander Coleman
  Title: Co-Chief Executive Officer

 

[Signature Page to Stockholders’ Agreement]

 

 
 

 

Annex A

 

Stockholder Shares

 

Holder   Address   Shares of Common Stock   Warrants   Options   Other Equity Securities/Rights to Acquire Equity Securities
Abel Avellan  

  Class C Common Stock: 78,163,078       78,163,078 AST
Common Units
                     
Invesat LLC  

 

Class A Common Stock:

200,000

Class B Common Stock:

9,932,541

    319,033 AST Incentive Equity Options   9,932,541 AST
Common Units
                     
Tom Severson  

 

Class B Common Stock:

1,595,165

    1,566,162 AST Incentive Equity Options   1,595,165 AST
Common Units
                     
Vodafone Ventures Limited  

Vodafone Group Services Limited

Attn: Vodafone Group General Counsel & Company Secretary

One Kingdom Street, Paddington Central,

London W2 6BY

 

Class A Common Stock:

1,000,000

Class B Common Stock:

9,044,454

      9,044,454 AST
Common Units
                     
ATC TRS II LLC  

116 Huntington Avenue – 11th floor

Boston, MA 02116

 

Class A Common Stock:

2,500,000

Class B Common Stock:

2,170,657

      2,170,657 AST
Common Units
                     
Rakuten Mobile Service USA Inc.  

Attn: Mitsuru Koyama

1-14-1 Tamagawa, Setagaya-ku

Tokyo 158-0094 Japan

 

Class A Common Stock:

2,500,000

Class B Common Stock:

28,520,155

      28,520,155 AST
Common Units
                     
Samsung Next Fund LLC  

665 Clyde Avenue

Mountain View, CA 94043

Attention: Raymond Liao

 

Class B Common Stock:

361,769

      361,769 AST
Common Units
                     
Oscar S. Garcia  

540 Brickell Key Drive #109

Miami, FL 33134

with a copy to:

c/o InterFlight Global Corporation

Miami Center

201 S. Biscayne Blvd, 28th Floor

Miami, FL 33131

 

Class B Common Stock:

12,181

    16,822 AST Incentive Equity Options   12,181 AST
Common Units

 

 
 

 

Exhibit 3(a)

Initial Board Designees

 

  1. The Avellan Designees shall initially be:

 

  Abel Avellan, who shall serve as the initial chairperson of the Board
     
  Tom Severson
     
  Richard Sarnoff
     
  Julio Torres
     
  Ronald Rubin

 

  2. The Invesat Designee shall initially be Adriana Cisneros.
     
  3. The First Rakuten Designee shall initially be Mickey Mikitani.
     
  4. The Second Rakuten Designee shall initially be Tareq Amen.
     
  5. The Vodafone Designee shall initially be Luke Ibbetson.
     
  6. The NPA Designee shall initially be Alex Coleman.
     
  7. The American Tower Designee shall initially be Ed Knapp.

 

 

 

 

Exhibit 10.2

 

VOTING AGREEMENT

 

This Voting Agreement (this “Agreement”) is made as of April 6, 2021, by and among AST SpaceMobile, Inc., a Delaware corporation (the “Company”) and New Providence Management LLC, a Delaware limited liability company (the “NPA Sponsor” or the “Voting Party”).

 

RECITALS

 

WHEREAS, the Company has entered into that certain Equity Purchase Agreement, dated as of December 15, 2020 (as it may be amended or supplemented from time to time, the “Purchase Agreement”), by and among (i) AST & Science LLC, a Delaware limited liability company (“OpCo”), (ii) Abel Avellan (“Avellan”); (iii) Invesat LLC, a Delaware limited liability company (“Invesat”); (iv) Vodafone Ventures Limited, a private limited company incorporated under the Laws of England and Wales (“Vodafone”); (v) Rakuten Mobile Singapore PTE. LTD, a Singapore private limited company (“Rakuten”), (vi) ATC TRS II LLC, a Delaware limited liability company (“American Tower”); (vii) Tom Severson; (viii) Samsung Next Fund LLC; (ix) New Providence Acquisition Corp., a Delaware corporation and predecessor to the Company (“NPA”); and (x) New Providence Management LLC, a Delaware limited liability company (“Sponsor”), pursuant to which the parties thereto have agreed to consummate the transactions contemplated by the Purchase Agreement (collectively, the “Transaction”);

 

WHEREAS, pursuant to the Purchase Agreement, among other things, the Class B common stock of NPA, held by the Voting Party, converted into an equivalent number of shares of Class A Common Stock (as defined below) of the Company;

 

WHEREAS, in connection with the Transaction, the Company and the Voting Party are party to a Registration Rights Agreement, dated as of the date hereof (as it may be amended, supplemented, restated and/or modified from time to time, the “Registration Rights Agreement”);

 

WHEREAS, in connection with the Transaction, the Voting Party has agreed to execute and deliver this Agreement;

 

WHEREAS, as of immediately following the closing of the Transaction (the “Closing”), the Voting Party Beneficially Owns (as defined below) the number of shares of Class A common stock, par value $0.0001 per share (the “Class A Common Stock”) of the Company as set forth on Annex A hereto;

 

WHEREAS, the number of shares of Common Stock Beneficially Owned by the Voting Party may change from time to time, in accordance with the terms of (w) the Purchase Agreement, (x) the Amended and Restated Certificate of Incorporation of the Company, as it may be amended, supplemented and/or restated from time to time (the “Charter”), (y) the by-laws of the Company, as they may be amended, supplemented and/or restated from time to time (the “By-laws”) and (z) the Registration Rights Agreement, which changes shall be reported by the Voting Party in accordance with the applicable provisions of the Securities Exchange Act of 1934, as amended (the “Exchange Act”); and

 

1
 

 

WHEREAS, the parties hereto desire to enter into this Agreement to provide for voting agreements, pursuant to which the Voting Party’s shares of Common Stock will be voted with respect to elections of the Company’s board of directors (the “Board”).

 

NOW THEREFORE, in consideration of the foregoing and of the promises and covenants contained herein, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

 

AGREEMENT

 

1. Definitions. Capitalized terms used herein but not defined in this Agreement shall have the meanings ascribed to them in the Purchase Agreement. In addition to the terms defined elsewhere in this Agreement, the following terms shall have the meanings indicated when used in this Agreement with initial capital letters:

 

AST Equityholders” shall mean Avellan, Invesat, Vodafone, Rakuten and American Tower.

 

Board” shall mean the board of directors of the Company.

 

Common Stock” shall mean the Company’s Class A Common Stock, Class B common stock, par value $0.0001 per share, and Class C common stock, par value $0.0001 per share.

 

Law” shall mean any federal, state, local or foreign law, regulation or rule or any decree, judgment, permit or order.

 

Lock-up” shall have the meaning set forth in the Stockholders Agreement.

 

Necessary Action” shall mean, with respect to any party and a specified result, all actions (to the extent such actions are not prohibited by applicable Law, within such party’s control and do not directly conflict with any rights expressly granted to such party in this Agreement, the Purchase Agreement, the Registration Rights Agreement, the Charter or the By-laws) reasonably necessary and desirable within its control to cause such result, including, without limitation (i) calling special meetings of the Board and the stockholders of the Company, (ii) voting or providing a proxy with respect to the Voting Shares beneficially owned by such party, (iii) voting in favor of the adoption of stockholders’ resolutions and amendments to the Charter or the By-laws, (iv) requesting members of the Board (to the extent such members were elected, nominated or designated by the party obligated to undertake such action) to act (subject to any applicable fiduciary duties) in a certain manner or causing them to be removed in the event they do not act in such a manner and (v) making, or causing to be made, with governmental, administrative or regulatory authorities, all filings, registrations or similar actions that are required to achieve such a result.

 

OpCo Common Units” shall mean the “Common Units” of OpCo as defined in the OpCo LLCA.

 

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OpCo LLCA” shall mean the Fifth Amended and Restated Limited Liability Company Operating Agreement of OpCo, dated as of April 6, 2021, as it may be amended, supplemented, restated and/or modified from time to time.

 

Person” shall mean individual, corporation, limited liability company, partnership, joint venture, association, trust, unincorporated organization or any other entity, including a governmental authority.

 

Stockholders Agreement” shall mean the Stockholders Agreement, dated as of April 6, 2021, by and among the Company, the Voting Party and the AST Equityholders, as it may be amended, supplemented, restated and/or modified from time to time.

 

Sunset Date” shall mean, the first date, following the Closing Date, on which either (i) the Avellan Holders Beneficially Own a number of shares of Class A Common Stock representing less than twenty percent (20%) of the number of shares of Class A Common Stock Beneficially Owned by the Avellan Holders immediately following the Closing Date (assuming, for this purpose, that all outstanding OpCo Common Units are and were exchanged at the applicable times of measurement by the AST Equityholders for shares of Class A Common Stock in accordance with the OpCo LLCA and without regard to the Lock-Up or any other restriction on exchange) or (ii) Avellan dies or becomes Permanently Incapacitated.

 

2. Agreement to Vote. During the term of this Agreement, the Voting Party shall vote or cause to be voted all securities of the Company that may be voted in the election of the Company’s directors registered in the name of, or beneficially owned (as such term is defined in Rule 13d-3 under the Exchange Act, including by the exercise or conversion of any security exercisable or convertible for shares of Common Stock, but excluding shares of stock underlying unexercised options or warrants) (“Beneficially Owned” or “Beneficial Ownership”) by the Voting Party, including any and all securities of the Company acquired and held in such capacity subsequent to the date hereof (hereinafter referred to as the “Voting Shares”), in accordance with the provisions of this Agreement, including, without limitation, voting or causing to be voted all Voting Shares Beneficially Owned by the Voting Party so that the Board is comprised of the Persons designated pursuant to the Stockholders Agreement. Except as explicitly provided in this Agreement, the Voting Party is free to vote or cause to be voted all Voting Shares Beneficially Owned by the Voting Party. For the avoidance of doubt, nothing in this Section 2 shall require the Voting Party to exercise or convert any security exercisable or convertible for voting securities of the Company.

 

3. Voting. The Voting Party agrees not to take, directly or indirectly, any actions (including removing directors in a manner inconsistent with this Agreement) that would knowingly frustrate, obstruct or otherwise affect the provisions of this Agreement and the intention of the parties hereto with respect to the composition of the Board as herein stated. The Voting Party, to the extent not prohibited by the Charter, shall vote all Voting Shares held by the Voting Party in such manner as may be necessary to elect and/or maintain in office as members of the Board those individuals designated in accordance with Section 3 of the Stockholders Agreement and to otherwise effect the intent of the provisions of this Agreement or the Stockholders Agreement; provided that, notwithstanding the foregoing, the parties agree that, at all times, at least three (3) directors shall be independent and qualified to serve on the audit committee under Nasdaq Rules. The Voting Party further agrees until the Sunset Date (i) to take all Necessary Action reasonably available within its power, including casting all votes to which the Voting Party is entitled in respect of its Voting Shares, whether at any annual or special meeting, by written consent or otherwise, so as to vote its Voting Shares on all matters submitted to the stockholders of the Company in accordance with the recommendation of the Board and (ii) not to grant, or enter into a binding agreement with respect to, any proxy to any Person in respect of such party’s equity securities of the Company that would prohibit such party from casting such votes in accordance with clause (i) of this Section 3.

 

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4. No Other Voting Trusts or Other Arrangement. The Voting Party shall not, and shall not permit any entity under the Voting Party’s control to (a) deposit any Voting Shares or any interest in any Voting Shares in a voting trust, voting agreement or similar agreement, (b) grant any proxies, consent or power of attorney or other authorization or consent with respect to any of the Voting Shares or (c) subject any of the Voting Shares to any arrangement with respect to the voting of the Voting Shares, in each case, that conflicts with or prevents the implementation of this Agreement.

 

5. Additional Shares. The Voting Party agrees that all securities of the Company that may vote in the election of the Company’s directors that the Voting Party purchases, acquires the right to vote or otherwise acquires Beneficial Ownership of (including by the exercise or conversion of any security exercisable or convertible for shares of Common Stock) after the execution of this Agreement shall be subject to the terms of this Agreement and shall constitute Voting Shares for all purposes of this Agreement.

 

6. No Agreement as Director or Officer. The Voting Party is signing this Agreement solely in its capacity as a stockholder of the Company. The Voting Party makes no agreement or understanding in this Agreement in such Voting Party’s or any of its representatives’ capacity as a director or officer of the Company or any of its Subsidiaries (if Voting Party holds such office). Nothing in this Agreement will limit or affect any actions or omissions taken by the Voting Party or any of its representatives in his, her or its capacity as a director or officer of the Company, and no actions or omissions taken in such Voting Party’s or any of its representatives’ capacity as a director or officer shall be deemed a breach of this Agreement. Nothing in this Agreement will be construed to prohibit, limit or restrict the Voting Party or any of its representatives from exercising its, his or her fiduciary duties as an officer or director to the Company or its stockholders.

 

7. Termination. This Agreement shall terminate automatically (without any action by any party hereto) on the first date on which the Voting Party no longer has the right to designate a director to the Board under the Stockholder Agreement.

 

8. Stock Splits, Stock Dividends, etc.. In the event of any stock split, stock dividend, recapitalization, reorganization or the like, any securities issued with respect to Voting Shares held by the Voting Party shall become Voting Shares for purposes of this Agreement. During the term of this Agreement, all dividends and distributions payable in cash with respect to the Voting Shares shall be paid to the Voting Party and all dividends and distributions payable in Common Stock or other equity or securities convertible into equity with respect to the Voting Shares shall be paid, as applicable, to the Voting Party, but all dividends and distributions payable in Common Stock or other equity or securities convertible into equity shall become Voting Shares for purposes of this Agreement.

 

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9. Governing Law. This Agreement, the rights and duties of the parties hereto, any disputes (whether in contract, tort or statute), and the legal relations between the parties arising hereunder shall be governed by and interpreted and enforced in accordance with the Laws of the State of Delaware without reference to its conflicts of laws provisions.

 

10. Jurisdiction. Any suit, action or proceeding seeking to enforce any provision of, or based on any matter arising out of or in connection with, this Agreement shall be brought against any of the parties in the Court of Chancery of the State of Delaware (the “Chancery Court”) (or, in the event that the Chancery Court does not have jurisdiction, the federal district court for the District of Delaware or other state courts of the State of Delaware) and each of the parties hereby consents to the exclusive jurisdiction of such courts (and of the appropriate appellate courts) in any such suit, action or proceeding and waives any objection to venue laid therein. Process in any such suit, action or proceeding may be served on any party anywhere in the world, whether within or without the jurisdiction of any such courts.

 

11. Representations and Warranties. The representations and warranties of the Voting Party set forth in Section 7 of the Stockholders’ Agreement are true and correct in all respects and apply to this Agreement mutatis mutandis.

 

12. Transfers. Notwithstanding anything to the contrary set forth in this Agreement or the Stockholders’ Agreement, the Voting Party may transfer any shares of Common Stock beneficially owned by it to any of (i) Alexander Coleman, (ii) Gary P Smith, (iii) James Bradley, and (iv) UBS O’Connor LLC or any funds, investment vehicles or accounts managed by it or its affiliates, for so long as they own an equity interest in the Voting Party (collectively, the “Voting Party Equityholders”); provided that, such Voting Party Equityholder executes a written agreement of the assignee, in a form reasonably satisfactory to the Company, to be bound by the terms and provisions of this Agreement and the Stockholders’ Agreement (including, without limitation, Section 9 of the Stockholders’ Agreement (Lock-up), which may be accomplished by addendum or certificate of joinder to this Agreement and the Stockholders’ Agreement (as applicable). The requirements of Section 19 of the Stockholders Agreement shall not apply to transfers of Common Stock made to the Voting Party Equityholders.

 

13. Miscellaneous. The provisions of Section 13 (Specific Enforcement), Section 15 (Amendments and Waivers), Section 17 (Assignment), Section 18 (Permitted Transferees) Section 19 (Other Rights), Section 20 (Severability), Section 23 (WAIVER OF JURY TRIAL), Section 24 (Counterparts), Section 25 (Notices), Section 26 (Entire Agreement), Section 27 (Effectiveness), of the Stockholders Agreement are hereby incorporated into, and shall apply to, this Agreement, mutatis mutandis.

 

[Remainder of page intentionally left blank; signature pages follow]

 

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IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the date first above written.

 

  COMPANY:
  AST SpaceMobile, Inc.
  a Delaware corporation
   
  By: /s/ Thomas Severson
  Name: Thomas Severson
  Title: Chief Financial Officer and Chief Operating Officer

 

[Signature Page to Voting Agreement]

 

 
 

 

  VOTING PARTY:
   
  New Providence Management LLC
  a Delaware limited liability company
   
  By: /s/ Alexander Coleman
  Name: Alexander Coleman
  Title: Co-Chief Executive Officer

 

[Signature Page to Voting Agreement]

 

 
 

 

Annex A

 

Voting Shares

 

Holder   Address   Shares of Class A Common Stock   Warrants   Options   Other Equity Securities/Rights to Acquire Equity Securities
New Providence Management LLC   10900 Research Blvd, Ste. 160C PMB 1081, Austin, TX 78759   5,710,000      

 

 

 

Exhibit 10.3

 

REGISTRATION RIGHTS AGREEMENT

 

THIS REGISTRATION RIGHTS AGREEMENT (this “Agreement”), dated as of April 6, 2021, is made and entered into by and among: (i) New Providence Acquisition Corp., a Delaware corporation (“NPA”); (ii) New Providence Management LLC, a Delaware limited liability company (the “Sponsor”); and (iii) the Persons identified as AST Equityholders on the signature pages hereto (collectively, the “AST Equityholders” and together with the Sponsor and any person or entity who hereafter becomes a party to this Agreement pursuant to Section 5.2 of this Agreement, a “Holder” and collectively the “Holders”).

 

RECITALS

 

WHEREAS, NPA has entered into that certain Equity Purchase Agreement, dated as of December 15, 2020 (as the same may be amended, restated, amended and restated, supplemented or otherwise modified from time to time, the “Purchase Agreement”), by and among NPA, Sponsor, AST & Science LLC (“AST”), certain of the AST Equityholders and the Existing Equityholder representatives (as defined therein), pursuant to which and subject to the terms and conditions contained therein (i) the Company will reclassify the Existing Company Units (as defined in the Purchase Agreement) held by the AST Equityholders into new Common Units (as defined in the Purchase Agreement) and (ii) NPA will contribute to AST the Closing Date Contribution Amount (as defined in the Purchase Agreement) and, in consideration thereof, AST will issue to NPA 51,729,704 common units in AST (the “Common Units”) (collectively, the “Transactions”);

 

WHEREAS, concurrently with the consummation of the Transactions, NPA will be renamed “AST SpaceMobile Inc.” (NPA, following the consummation of the Transactions, the “Company”);

 

WHEREAS, pursuant to the amended and restated its certificate of incorporation of the Company (such amended and restated certificate of incorporation, as the same may be amended, restated, amended and restated, supplemented or otherwise modified form time, the “Company Certificate of Incorporation”), the Company is authorized to issue the following classes of stock: (A) Class A Common Stock, par value $0.0001 per share (the “Class A Common Stock”), (B) Class B Common Stock, par value $0.0001 per share, and (C) Class C Common Stock, par value $0.0001 per share;

 

WHEREAS, following the consummation of the Transactions, AST has provided the AST Equityholders with a redemption right pursuant to which the AST Equityholders may redeem their Common Units for cash or, at the Company’s option, exchange Common Units for an equal number of shares of Class A Common Stock upon the terms and subject to the conditions set forth in the Fifth Amended and Restated Limited Liability Company Operating Agreement of AST (as the same may be amended, restated, amended and restated, supplemented or otherwise modified from time to time, the “AST LLC Agreement”) and the Company Certificate of Incorporation; and

 

WHEREAS, in connection with the consummation of the transactions described above, the Company and the Holders desire to enter into this Agreement, pursuant to which the Company shall grant the Holders certain registration rights with respect to the Registrable Securities (as defined below) on the terms and conditions set forth in this Agreement.

 

NOW, THEREFORE, in consideration of the representations, covenants and agreements contained herein, and certain other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, hereby agree as follows:

 

 

 

 

Article I
DEFINITIONS

 

1.1 Definitions. The terms defined in this Article I shall, for all purposes of this Agreement, have the respective meanings set forth below:

 

Additional Registrable Security” shall mean (i) any shares of Class A Common Stock issued by the Company to a Holder in connection with the redemption by a Holder of Common Units owned by any Holder and (ii) any other equity security of the Company or any of its subsidiaries issued or issuable with respect to any securities referenced in clause (i) above by way of a stock dividend or stock split or in connection with a recapitalization, merger, consolidation, spin-off, reorganization or similar transaction.

 

Adverse Disclosure” shall mean any public disclosure of material non-public information, which disclosure, in the good faith judgment of the Chief Executive Officer of the Company or the Board, after consultation with counsel to the Company, (i) would be required to be made in any Registration Statement or Prospectus in order for the applicable Registration Statement or Prospectus not to contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements contained therein (in the case of any prospectus and any preliminary prospectus, in the light of the circumstances under which they were made) not misleading, (ii) would not be required to be made at such time if the Registration Statement were not being filed, declared effective or used, as the case may be, and (iii) the Company has a bona fide business purpose for not making such information public.

 

Action” shall mean any claim, action, suit, audit, examination, assessment, arbitration, mediation or inquiry, or any proceeding or investigation, by or before any Governmental Authority.

 

Agreement” shall have the meaning given in the Preamble hereto.

 

AST Equityholders” shall have the meaning given in the Preamble hereto.

 

AST LLC Agreement” shall have the meaning given in the Recitals hereto.

 

Board” shall mean the board of directors of the Company.

 

Block Trade” shall have the meaning given in Section 2.4.1.

 

Class A Common Stock” shall have the meaning given in the Recitals hereto.

 

Closing” shall have the meaning given in the Purchase Agreement.

 

Closing Date” shall have the meaning given in the Purchase Agreement.

 

Commission” shall mean the Securities and Exchange Commission.

 

Common Units” shall have the meaning given in the Recitals hereto.

 

Company” shall have the meaning given in the Preamble hereto and includes the Company’s successors by recapitalization, merger, consolidation, spin-off, reorganization or similar transaction.

 

Company Certificate of Incorporation” shall have the meaning given in the Recitals hereto.

 

Demanding Holder” shall have the meaning given in Section 2.1.5.

 

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Exchange Act” shall mean the Securities Exchange Act of 1934, as it may be amended from time to time.

 

FINRA” shall mean the Financial Industry Regulatory Authority Inc.

 

Form S-1 Shelf” shall have the meaning given in Section 2.1.1.

 

Form S-3 Shelf” shall have the meaning given in Section 2.1.1.

 

Governmental Authority” shall mean any federal, state, provincial, municipal, local or foreign government, governmental authority, regulatory or administrative agency (which for the purposes of this Agreement shall include FINRA and the Commission), governmental commission, department, board, bureau, agency or instrumentality, court or tribunal.

 

Governmental Order” shall mean any order, judgment, injunction, decree, writ, stipulation, determination or award, in each case, entered by or with any Governmental Authority.

 

Holder Information” shall have the meaning given in Section 4.1.2.

 

Holders” shall have the meaning given in the Preamble hereto, for so long as such person or entity holds any Registrable Securities.

 

Initial Registrable Security” shall mean (i) any outstanding shares of Class A Common Stock held by a Holder immediately following the Closing, (ii) any shares of Class A Common Stock that may be acquired by Holders upon the exercise of a warrant or other right to acquire Class A Common Stock held by a Holder immediately following the Closing, (iii) any outstanding shares of Class A Common Stock or warrants to purchase shares of Class A Common Stock (including any shares of Class A Common Stock issued or issuable upon the exercise of any such warrant) of the Company acquired by a Holder following the date hereof to the extent that such securities are “restricted securities” (as defined in Rule 144) or are otherwise held by an “affiliate” (as defined in Rule 144) of the Company, and (iv) any other equity security of the Company or any of its subsidiaries issued or issuable with respect to any securities referenced in clause (i), (ii) or (iii) above by way of a stock dividend or stock split or in connection with a recapitalization, merger, consolidation, spin-off, reorganization or similar transaction.

 

Issuer Shelf Registration Statement” shall have the meaning given in Section 2.1.2.

 

Law” shall mean any statute, law, ordinance, rule, regulation or Governmental Order, in each case, of any Governmental Authority.

 

Lock-up Period” shall have the meaning given in the Stockholders Agreement.

 

Maximum Number of Securities” shall have the meaning given in Section 2.1.6.

 

Minimum Block Threshold” shall have the meaning given in Section 2.4.1.

 

Minimum Takedown Threshold” shall have the meaning given in Section 2.1.5.

 

Misstatement” shall mean an untrue statement of a material fact or an omission to state a material fact required to be stated in a Registration Statement or Prospectus or necessary to make the statements in a Registration Statement or Prospectus (in the case of a Prospectus, in the light of the circumstances under which they were made) not misleading.

 

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Permitted Transferees” shall mean any person or entity to whom a Holder of Registrable Securities is permitted to transfer such Registrable Securities prior to the expiration of the Lock-up Period pursuant to the Stockholders Agreement.

 

Piggyback Registration” shall have the meaning given in Section 2.2.1.

 

Primary Shares” shall have the meaning given in Section 2.1.2.

 

Prospectus” shall mean the prospectus included in any Registration Statement, as supplemented by any and all prospectus supplements and as amended by any and all post-effective amendments and including all material incorporated by reference in such prospectus.

 

Purchase Agreement” shall have the meaning given in the Recitals hereto.

 

Registrable Security” shall mean collectively the Initial Registrable Securities and the Additional Registrable Securities; provided, however, that, as to any particular Registrable Security, such securities shall cease to be Registrable Securities upon the earliest to occur of: (i) a Registration Statement with respect to the sale of such securities shall have become effective under the Securities Act and such securities shall have been sold, transferred, disposed of or exchanged in accordance with such Registration Statement by the applicable Holder; (ii) such securities shall have been otherwise transferred, new certificates for such securities not bearing a legend restricting further transfer shall have been delivered by the Company and subsequent public distribution of such securities shall not require registration under the Securities Act; (iii) such securities shall have ceased to be outstanding; (iv) such securities may be sold without registration pursuant to Rule 144 or any successor rule promulgated under the Securities Act (but without the requirement to comply with any volume limitations); and (v) such securities have been sold to, or through, a broker, dealer or underwriter in a public distribution or other public securities transaction. For the avoidance of doubt, while Common Units may constitute Registrable Securities, under no circumstances shall the Company be obligated to register Common Units, and only shares of Class A Common Stock issuable upon redemption or exchange of Common Units will be registered.

 

Registration” shall mean a registration, including any related Shelf Takedown, effected by preparing and filing a registration statement, prospectus or similar document in compliance with the requirements of the Securities Act, and the applicable rules and regulations promulgated thereunder, and such registration statement becoming effective.

 

Registration Expenses” shall mean the expenses of a Registration, including, without limitation, the following:

 

(A) all registration and filing fees (including fees with respect to filings required to be made with FINRA) and any national securities exchange on which the Class A Common Stock is then listed;

 

(B) fees and expenses of compliance with securities or blue sky laws (including reasonable fees and disbursements of outside counsel for the Underwriters in connection with blue sky qualifications of Registrable Securities);

 

(C) printing, messenger, telephone and delivery expenses;

 

(D) reasonable fees and disbursements of counsel for the Company;

 

(E) reasonable fees and disbursements of all independent registered public accountants of the Company incurred specifically in connection with such Registration; and

 

(F) reasonable fees and expenses of one legal counsel selected by the majority-in-interest of the Demanding Holders in an Underwritten Offering.

 

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Registration Statement” shall mean any registration statement that covers Registrable Securities pursuant to the provisions of this Agreement, including any Shelf, and, in each case, including the Prospectus included in such registration statement, amendments (including post-effective amendments) and supplements to such registration statement, and all exhibits to and all material incorporated by reference in such registration statement.

 

Requesting Holders” shall have the meaning given in Section 2.1.6.

 

Restricted Shares” shall mean shares of Class A Common Stock issued under an Issuer Shelf Registration Statement which if sold by the holder thereof would constitute “restricted securities” as defined under Rule 144 when acquired by a transferee.

 

Rule 144” shall mean Rule 144 promulgated under the Securities Act, as amended from time to time, or any similar successor rule thereto that may be promulgated by the Commission.

 

Rule 415” shall mean Rule 415 promulgated under the Securities Act, as amended from time to time, or any similar successor rule thereto that may be promulgated by the Commission.

 

Securities Act” shall mean the Securities Act of 1933, as amended from time to time.

 

Shelf” shall mean the Form S-1 Shelf, the Form S-3 Shelf, any Issuer Shelf Registration Statement or any Subsequent Shelf Registration, as the case may be.

 

Shelf Registration” shall mean a registration of securities pursuant to a registration statement filed with the Commission in accordance with and pursuant to Rule 415 promulgated under the Securities Act (or any successor rule then in effect).

 

Shelf Takedown” shall mean an Underwritten Shelf Takedown or any proposed transfer or sale using a Registration Statement, including a Piggyback Registration.

 

Sponsor” shall have the meaning given in the Preamble hereto.

 

Stockholders Agreement” shall mean the Stockholders Agreement of the Company, dated as of April 6, 2021, by and among the Company and the AST Equityholders, as the same may be amended, restated, amended and restated, supplemented or otherwise modified from time to time.

 

Subsequent Shelf Registration” shall have the meaning given in Section 2.1.3.

 

Total Limit” shall have the meaning given in Section 2.1.5.

 

Transactions” shall have the meaning given in the Recitals hereto.

 

Transfer” shall mean the (i) sale of, offer to sell, contract or agreement to sell, hypothecate, pledge, grant of any option to purchase or otherwise dispose of or agreement to dispose of, directly or indirectly, or establishment or increase of a put equivalent position or liquidation with respect to or decrease of a call equivalent position within the meaning of Section 16 of the Exchange Act with respect to, any security, (ii) entry into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of any security, whether any such transaction is to be settled by delivery of such securities, in cash or otherwise, or (iii) public announcement of any intention to effect any transaction specified in clause (i) or (ii).

 

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Underwriter” shall mean a securities dealer who purchases any Registrable Securities as principal and not as part of such dealer’s market-making activities.

 

Underwritten Lock-Up Period” shall have the meaning given in Section 3.4.3.

 

Underwritten Offering” shall mean a Registration in which securities of the Company are sold to an Underwriter in a firm commitment underwriting for distribution to the public.

 

Underwritten Shelf Takedown” shall have the meaning given in Section 2.1.5.

 

Withdrawal Notice” shall have the meaning given in Section 2.1.7.

 

Yearly Limit” shall have the meaning given in Section 2.1.5.

 

Article II
REGISTRATIONS AND OFFERINGS

 

2.1 Shelf Registration.

 

2.1.1 Filing. The Company shall file within 90 days of the Closing Date, and use commercially reasonable efforts to cause to be declared effective as soon as practicable thereafter, a Registration Statement for a Shelf Registration on Form S-1 (the “Form S-1 Shelf”) or, if the Company is eligible to use a Registration Statement on Form S-3, a Shelf Registration on Form S-3 (the “Form S-3 Shelf”), in each case, covering the resale of all the Initial Registrable Securities (determined as of two business days prior to such filing) on a delayed or continuous basis. Such Shelf shall provide for the resale of the Registrable Securities included therein pursuant to any method or combination of methods legally available to, and requested by, any Holder named therein. Subject to Sections 2.1.3 and 3.4, the Company shall maintain a Shelf in accordance with the terms hereof, and shall prepare and file with the SEC such amendments, including post-effective amendments, and supplements as may be necessary to keep a Shelf continuously effective, available for use and in compliance with the provisions of the Securities Act until such time as there are no longer any Registrable Securities. In the event the Company files a Form S-1 Shelf, the Company shall use its commercially reasonable efforts to convert the Form S-1 Shelf (and any Subsequent Shelf Registration) to a Form S-3 Shelf as soon as reasonably practicable after the Company is eligible to use Form S-3.

 

2.1.2 Issuer Shelf Registration. The Company shall file within nine months of the Closing Date, and use commercially reasonable efforts to cause to be declared effective as soon as reasonably practicable thereafter, a Registration Statement on an appropriate form covering issuance and resale of the Additional Registrable Securities on a delayed or continuous basis (an “Issuer Shelf Registration Statement”). Such Shelf shall provide for (i) the issuance by the Company, from time to time, to the Holders of Common Units, of shares of Class A Common Stock registered under the Securities Act in connection with the redemption thereof (the “Primary Shares”) and (ii) to the extent such Primary Shares constitute Restricted Shares, the registered resale of such Class A Common Stock by their Holders from time to time in accordance with the methods of distribution elected by the Holders and set forth therein. Subject to Sections 2.1.3 and 3.4, the Company shall maintain an Issuer Shelf Registration Statement in accordance with the terms hereof, and shall prepare and file with the SEC such amendments, including post-effective amendments, and supplements as may be necessary to keep an Issuer Shelf Registration Statement continuously effective, available for use and in compliance with the provisions of the Securities Act until such time as there are no longer any Additional Registrable Securities to be issued that are subject to such Issuer Shelf Registration Statement. In the event the Company files a Form S-1 Shelf, the Company shall use its commercially reasonable efforts to convert the Form S-1 Shelf (and any Subsequent Shelf Registration) to a Form S-3 Shelf as soon as reasonably practicable after the Company is eligible to use Form S-3. If the Company shall exercise its rights under this Section 2.1.2, Holders shall have no right to have shares of Class A Common Stock issued or issuable upon exchange of Common Units included in a Shelf pursuant to Section 2.1.1.

 

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2.1.3 Subsequent Shelf Registration. If any Shelf ceases to be effective under the Securities Act for any reason at any time while Registrable Securities are still outstanding, the Company shall, subject to Section 3.4, use its commercially reasonable efforts to as promptly as is reasonably practicable cause such Shelf to again become effective under the Securities Act (including obtaining the prompt withdrawal of any order suspending the effectiveness of such Shelf), and shall use its commercially reasonable efforts to as promptly as is reasonably practicable amend such Shelf in a manner reasonably expected to result in the withdrawal of any order suspending the effectiveness of such Shelf or file an additional registration statement as a Shelf Registration (a “Subsequent Shelf Registration” with such Subsequent Shelf Registration to constitute a Shelf or an Issuer Registration Statement, as the case may be, hereunder) registering the resale of all Registrable Securities (determined as of two business days prior to such filing), and pursuant to any method or combination of methods legally available to, and requested by, any Holder named therein. If a Subsequent Shelf Registration is filed, the Company shall use its commercially reasonable efforts to (i) cause such Subsequent Shelf Registration to become effective under the Securities Act as promptly as is reasonably practicable after the filing thereof (it being agreed that the Subsequent Shelf Registration shall be an automatic shelf registration statement (as defined in Rule 405 promulgated under the Securities Act) if the Company is a well-known seasoned issuer (as defined in Rule 405 promulgated under the Securities Act) at the most recent applicable eligibility determination date) and (ii) keep such Subsequent Shelf Registration continuously effective, available for use and in compliance with the provisions of the Securities Act until such time as there are no longer any Registrable Securities. Any such Subsequent Shelf Registration shall be on Form S-3 to the extent that the Company is eligible to use such form. Otherwise, such Subsequent Shelf Registration shall be on another appropriate form.

 

2.1.4 New Registerable Securities. In the event that any Holder or Holders, collectively, hold Registrable Securities that are not registered for resale on a delayed or continuous basis, the Company, upon request of such Holder(s), shall promptly use its commercially reasonable efforts to cause the resale of such Registrable Securities to be covered by either, at the Company’s option, the Shelf (including by means of a post-effective amendment) or a Subsequent Shelf Registration and cause the same to become effective as soon as practicable after such filing and such Shelf or Subsequent Shelf Registration shall be subject to the terms hereof; provided, however, that (i) the Company shall only be required to cause such Registrable Securities to be so covered if the total offering price thereof is reasonably expected to exceed, in the aggregate, $50 million and (ii) the Company shall only be required to cause such Registrable Securities to be so covered once per calendar year.

 

2.1.5 Requests for Underwritten Shelf Takedowns. Following the expiration of the Lock-up Period, at any time and from time to time when an effective Shelf is on file with the Commission, any AST Equityholder (a “Demanding Holder”) may request to sell all or any portion of its Registrable Securities in an Underwritten Offering or other coordinated offering that is registered pursuant to the Shelf (each, an “Underwritten Shelf Takedown”); provided that the Company shall only be obligated to effect an Underwritten Shelf Takedown if such offering shall include Registrable Securities proposed to be sold by the Demanding Holder with a total offering price reasonably expected to exceed, in the aggregate, $50 million (the “Minimum Takedown Threshold”). All requests for Underwritten Shelf Takedowns shall be made by giving written notice to the Company, which shall specify the approximate number of Registrable Securities proposed to be sold in the Underwritten Shelf Takedown. Subject to Section 2.4.4, the Company shall have the right to select the Underwriters for such offering (which shall consist of one or more reputable nationally recognized investment banks), subject to the initial Demanding Holder’s prior approval (which shall not be unreasonably withheld, conditioned or delayed). The AST Equityholders collectively may demand Underwritten Shelf Takedowns pursuant to this Section 2.1.5 and Block Trades pursuant to Section 2.4.1 (i) not more than two (2) times in any 12-month period (the “Yearly Limit”) and (ii) not more than five (5) times in the aggregate (the “Total Limit”). Notwithstanding anything to the contrary in this Agreement, the Company may effect any Underwritten Offering pursuant to any then effective Registration Statement, including a Form S-3, that is then available for such offering.

 

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2.1.6 Reduction of Underwritten Offering. If the managing Underwriter or Underwriters in an Underwritten Shelf Takedown, in good faith, advises the Company, the Demanding Holders and the Holders requesting piggy back rights pursuant to this Agreement with respect to such Underwritten Shelf Takedown (the “Requesting Holders”) (if any) in writing that the dollar amount or number of Registrable Securities that the Demanding Holders and the Requesting Holders (if any) desire to sell, taken together with all other shares of Class A Common Stock or other equity securities that the Company desires to sell and all other shares of Class A Common Stock or other equity securities, if any, that have been requested to be sold in such Underwritten Offering pursuant to separate written contractual piggy-back registration rights held by any other stockholders, exceeds the maximum dollar amount or maximum number of equity securities that can be sold in the Underwritten Offering without adversely affecting the proposed offering price, the timing, the distribution method, or the probability of success of such offering (such maximum dollar amount or maximum number of such securities, as applicable, the “Maximum Number of Securities”), then the Company shall include in such Underwritten Offering, before including any shares of Class A Common Stock or other equity securities proposed to be sold by Company or by other holders of Class A Common Stock or other equity securities, the Registrable Securities of the Demanding Holders and the Requesting Holders (if any) (pro rata based on the respective number of Registrable Securities that each Demanding Holder and Requesting Holder (if any) has requested be included in such Underwritten Shelf Takedown and the aggregate number of Registrable Securities that the Demanding Holders and Requesting Holders have requested be included in such Underwritten Shelf Takedown) that can be sold without exceeding the Maximum Number of Securities.

 

2.1.7 Withdrawal. Prior to the filing of the applicable “red herring” prospectus or prospectus supplement used for marketing such Underwritten Shelf Takedown, a majority-in-interest of the Demanding Holders initiating an Underwritten Shelf Takedown shall have the right to withdraw from such Underwritten Shelf Takedown for any or no reason whatsoever upon written notification (a “Withdrawal Notice”) to the Company and the Underwriter or Underwriters (if any) of their intention to withdraw from such Shelf Takedown; provided that any other Demanding Holder(s) may elect to have the Company continue an Underwritten Shelf Takedown if the Minimum Takedown Threshold would still be satisfied by the Registrable Securities proposed to be sold in the Underwritten Shelf Takedown by the Demanding Holder(s). If withdrawn, a demand for an Underwritten Shelf Takedown shall constitute a demand for an Underwritten Shelf Takedown for purposes of Section 2.1.5 and shall count toward the Yearly Limit and the Total Limit, unless either (i) the Demanding Holder(s) making the withdrawal has not previously withdrawn any Underwritten Shelf Takedown or (ii) the Demanding Holder(s) making the withdrawal reimburses the Company for all Registration Expenses with respect to such Underwritten Shelf Takedown; provided that, if any other Demanding Holder elects to continue an Underwritten Shelf Takedown pursuant to the proviso in the immediately preceding sentence, such Underwritten Shelf Takedown shall instead count as an Underwritten Shelf Takedown demanded by the Demanding Holders for purposes of Section 2.1.5 and shall count toward the Yearly Limit and the Total Limit. Following the receipt of any Withdrawal Notice, the Company shall promptly forward such Withdrawal Notice to any other Holders that had elected to participate in such Shelf Takedown. Notwithstanding anything to the contrary in this Agreement, the Company shall be responsible for the Registration Expenses incurred in connection with a Shelf Takedown, other than if a Demanding Holder elects to pay such Registration Expenses pursuant to clause (ii) of the second sentence of this Section 2.1.7.

 

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2.2 Piggyback Registration.

 

2.2.1 Piggyback Rights. Subject to Section 2.4.3, if the Company or any Holder proposes to conduct a registered offering of, or if the Company proposes to file a Registration Statement under the Securities Act with respect to the Registration of, equity securities, or securities or other obligations exercisable or exchangeable for, or convertible into equity securities, for its own account or for the account of stockholders of the Company (or by the Company and by the stockholders of the Company including, without limitation, an Underwritten Shelf Takedown pursuant to Section 2.1 hereof), other than a Registration Statement (or any registered offering with respect thereto) (i) filed in connection with any employee stock option or other benefit plan, (ii) pursuant to a Registration Statement on Form S-4 (or similar form that relates to a transaction subject to Rule 145 under the Securities Act or any successor rule thereto), (iii) for an offering of debt that is convertible into equity securities of the Company or (iv) for a dividend reinvestment plan, then the Company shall give written notice of such proposed offering to all of the Holders of Registrable Securities as soon as practicable but not less than ten (10) days before the anticipated filing date of such Registration Statement or, in the case of an Underwritten Offering pursuant to a Shelf Registration, the applicable “red herring” prospectus or prospectus supplement used for marketing such offering, which notice shall (A) describe the amount and type of securities to be included in such offering, the intended method(s) of distribution, and the name of the proposed managing Underwriter or Underwriters, if any, in such offering, and (B) offer to all of the Holders of Registrable Securities the opportunity to include in such registered offering such number of Registrable Securities as such Holders may request in writing within five (5) days after receipt of such written notice (such registered offering, a “Piggyback Registration”). Subject to Section 2.2.2, the Company shall, in good faith, cause such Registrable Securities to be included in such Piggyback Registration and, if applicable, shall use its commercially reasonable efforts to cause the managing Underwriter or Underwriters of such Piggyback Registration to permit the Registrable Securities requested by the Holders pursuant to this Section 2.2.1 to be included therein on the same terms and conditions as any similar securities of the Company included in such registered offering and to permit the sale or other disposition of such Registrable Securities in accordance with the intended method(s) of distribution thereof. The inclusion of any Holder’s Registrable Securities in a Piggyback Registration shall be subject to such Holder’s agreement to enter into an underwriting agreement in customary form with the Underwriter(s) selected for such Underwritten Offering.

 

2.2.2 Reduction of Piggyback Registration. If the managing Underwriter or Underwriters in an Underwritten Offering that is to be a Piggyback Registration, in good faith, advises the Company and the Holders of Registrable Securities participating in the Piggyback Registration in writing that the dollar amount or number of shares of Class A Common Stock or other equity securities that the Company desires to sell, taken together with (i) the shares of Class A Common Stock or other equity securities, if any, as to which Registration or a registered offering has been demanded pursuant to separate written contractual arrangements with persons or entities other than the Holders of Registrable Securities hereunder, (ii) the Registrable Securities as to which registration has been requested pursuant to Section 2.2 hereof, and (iii) the shares of Class A Common Stock or other equity securities, if any, as to which Registration or a registered offering has been requested pursuant to separate written contractual piggy-back registration rights of other stockholders of the Company, exceeds the Maximum Number of Securities, then:

 

(a) If the Registration or registered offering is undertaken for the Company’s account, the Company shall include in any such Registration or registered offering (A) first, the shares of Class A Common Stock or other equity securities that the Company desires to sell, which can be sold without exceeding the Maximum Number of Securities; (B) second, to the extent that the Maximum Number of Securities has not been reached under the foregoing clause (A), the Registrable Securities of Holders exercising their rights to register their Registrable Securities pursuant to Section 2.2.1, pro rata, based on the respective number of Registrable Securities that each Holder has requested be included in such Underwritten Offering and the aggregate number of Registrable Securities that the Holders have requested to be included in such Underwritten Offering, which can be sold without exceeding the Maximum Number of Securities; and (C) third, to the extent that the Maximum Number of Securities has not been reached under the foregoing clauses (A) and (B), the shares of Class A Common Stock or other equity securities, if any, as to which Registration or a registered offering has been requested pursuant to written contractual piggy-back registration rights of other stockholders of the Company, which can be sold without exceeding the Maximum Number of Securities;

 

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(b) If the Registration or registered offering is pursuant to a request by persons or entities other than the Holders of Registrable Securities, then the Company shall include in any such Registration or registered offering (A) first, the shares of Class A Common Stock or other equity securities, if any, of such requesting persons or entities, other than the Holders of Registrable Securities, which can be sold without exceeding the Maximum Number of Securities; (B) second, to the extent that the Maximum Number of Securities has not been reached under the foregoing clause (A), the Registrable Securities of Holders exercising their rights to register their Registrable Securities pursuant to Section 2.2.1, pro rata, based on the respective number of Registrable Securities that each Holder has requested be included in such Underwritten Offering and the aggregate number of Registrable Securities that the Holders have requested to be included in such Underwritten Offering, which can be sold without exceeding the Maximum Number of Securities; (C) third, to the extent that the Maximum Number of Securities has not been reached under the foregoing clauses (A) and (B), the shares of Class A Common Stock or other equity securities that the Company desires to sell, which can be sold without exceeding the Maximum Number of Securities; and (D) fourth, to the extent that the Maximum Number of Securities has not been reached under the foregoing clauses (A), (B) and (C), the shares of Class A Common Stock or other equity securities for the account of other persons or entities that the Company is obligated to register pursuant to separate written contractual arrangements with such persons or entities, which can be sold without exceeding the Maximum Number of Securities; and

 

(c) If the Registration or registered offering is pursuant to a request by Holder(s) of Registrable Securities pursuant to Section 2.1 hereof, then the Company shall include in any such Registration or registered offering securities pursuant to Section 2.1.6.

 

2.2.3 Piggyback Registration Withdrawal. Any Holder of Registrable Securities (other than a Demanding Holder, whose right to withdrawal from an Underwritten Shelf Takedown, and related obligations, shall be governed by Section 2.1.7) shall have the right to withdraw from a Piggyback Registration for any or no reason whatsoever upon written notification to the Company and the Underwriter or Underwriters (if any) of his, her or its intention to withdraw from such Piggyback Registration prior to the effectiveness of the Registration Statement filed with the Commission with respect to such Piggyback Registration or, in the case of a Piggyback Registration pursuant to a Shelf Registration, the filing of the applicable “red herring” prospectus or prospectus supplement with respect to such Piggyback Registration used for marketing such transaction. The Company (whether on its own good faith determination or as the result of a request for withdrawal by persons pursuant to separate written contractual obligations) may withdraw a Registration Statement filed with the Commission in connection with a Piggyback Registration (which, in no circumstance, shall include the Shelf) at any time prior to the effectiveness of such Registration Statement. Notwithstanding anything to the contrary in this Agreement (other than Section 2.1.7), the Company shall be responsible for the Registration Expenses incurred in connection with the Piggyback Registration.

 

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2.2.4 Unlimited Piggyback Registration Rights. For purposes of clarity, subject to Section 2.1.7, any Piggyback Registration effected pursuant to Section 2.2 hereof shall not be counted as a demand for an Underwritten Shelf Takedown under Section 2.1.5 hereof and shall not count toward the Yearly Limit or the Total Limit.

 

2.3 Market Stand-off. In connection with any Underwritten Offering of equity securities of the Company (other than a Block Trade), each Holder participating in the Underwritten Offering agrees that it shall not Transfer any shares of Class A Common Stock or other equity securities of the Company (other than those included in such offering pursuant to this Agreement), without the prior written consent of the Company, during the 90-day period beginning on the date of pricing of such offering, except in the event the Underwriters managing the offering otherwise agree by written consent. Each Holder agrees to execute a customary lock-up agreement in favor of the Underwriters to such effect (in each case on substantially the same terms and conditions as all such Holders).

 

2.4 Block Trades.

 

2.4.1 Notwithstanding the foregoing, following the expiration of the Lock-up Period, at any time and from time to time when an effective Shelf is on file with the Commission, if a Demanding Holder wishes to engage in an underwritten or other coordinated registered offering not involving a “roadshow,” an offer commonly known as a “block trade” (a “Block Trade”), with a total offering price reasonably expected to exceed, in the aggregate, either (x) $50 million or (y) all remaining Registrable Securities held by the Demanding Holder (the “Minimum Block Threshold”), then notwithstanding the time periods provided for in Section 2.1.5, such Demanding Holder only need to notify the Company of the Block Trade at least five (5) business days prior to the day such offering is to commence and the Company shall as expeditiously as possible use its commercially reasonable efforts to facilitate such Block Trade; provided that the Demanding Holders representing a majority of the Registrable Securities wishing to engage in the Block Trade shall use commercially reasonable efforts to work with the Company and any Underwriters prior to making such request in order to facilitate preparation of the registration statement, prospectus and other offering documentation related to the Block Trade. Any demand for a Block Trade, unless withdrawn pursuant to Section 2.4.2, shall count as a Block Trade demanded by the AST Equityholders, and shall count toward the Yearly Limit and the Total Limit.

 

2.4.2 Prior to the filing of the applicable “red herring” prospectus or prospectus supplement used in connection with a Block Trade, a majority-in-interest of the Demanding Holders initiating such Block Trade shall have the right to submit a Withdrawal Notice to the Company and the Underwriter or Underwriters (if any) of their intention to withdraw from such Block Trade; provided that any other Demanding Holder(s) may elect to have the Company continue a Block Trade if the Minimum Block Threshold would still be satisfied by the Registrable Securities proposed to be sold in the Block Trade by the Demanding Holder(s). If withdrawn, a demand for a Block Trade shall constitute a demand for a Block Trade for purposes of Section 2.4.1 and shall count toward the Yearly Limit and the Total Limit, unless either (i) the Demanding Holder(s) making the withdrawal has not previously withdrawn any Underwritten Shelf Takedown or Block Trade or (ii) the Demanding Holder(s) making the withdrawal reimburses the Company for all Registration Expenses with respect to such Block Trade; provided that, if any other Demanding Holder elects to continue a Block Trade pursuant to the proviso in the immediately preceding sentence, such Block Trade shall instead count as a Block Trade demanded by the Demanding Holders for purposes of Section 2.4.1 and shall count toward the Yearly Limit and the Total Limit. Following the receipt of any Withdrawal Notice, the Company shall promptly forward such Withdrawal Notice to any other Holders that had elected to participate in such Block Trade. Notwithstanding anything to the contrary in this Agreement, the Company shall be responsible for the Registration Expenses incurred in connection with a Block Trade, other than if a Demanding Holder elects to pay such Registration Expenses pursuant to clause (ii) of the second sentence of this Section 2.4.2.

 

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2.4.3 Notwithstanding anything to the contrary in this Agreement, Section 2.2 hereof shall not apply to a Block Trade initiated by a Demanding Holder pursuant to this Agreement.

 

2.4.4 The Demanding Holder in a Block Trade shall have the right to select the Underwriters for such Block Trade (which shall consist of one or more reputable nationally recognized investment banks).

 

Article III
COMPANY PROCEDURES

 

3.1 General Procedures. In connection with any Shelf and/or Shelf Takedown, the Company shall use its commercially reasonable efforts to effect such Registration to permit the sale of such Registrable Securities in accordance with the intended plan of distribution thereof, and pursuant thereto the Company shall, as expeditiously as possible:

 

3.1.1 prepare and file with the Commission as soon as reasonably practicable a Registration Statement with respect to such Registrable Securities and use its commercially reasonable efforts to cause such Registration Statement to become effective and remain effective until all Registrable Securities have ceased to be Registrable Securities;

 

3.1.2 prepare and file with the Commission such amendments and post-effective amendments to the Registration Statement, and such supplements to the Prospectus, as may be reasonably requested by any Holder that holds at least two and one-half percent (2.5%) percent of the Registrable Securities registered on such Registration Statement or any Underwriter of Registrable Securities or as may be required by the rules, regulations or instructions applicable to the registration form used by the Company or by the Securities Act or rules and regulations thereunder to keep the Registration Statement effective until all Registrable Securities covered by such Registration Statement are sold in accordance with the intended plan of distribution set forth in such Registration Statement or supplement to the Prospectus;

 

3.1.3 prior to filing a Registration Statement or Prospectus, or any amendment or supplement thereto, furnish without charge to the Underwriters, if any, and the Holders of Registrable Securities included in such Registration, and such Holders’ legal counsel, copies of such Registration Statement as proposed to be filed, each amendment and supplement to such Registration Statement (in each case including all exhibits thereto and documents incorporated by reference therein), the Prospectus included in such Registration Statement (including each preliminary Prospectus), and such other documents as the Underwriters and the Holders of Registrable Securities included in such Registration or the legal counsel for any such Holders may request in order to facilitate the disposition of the Registrable Securities owned by such Holders;

 

3.1.4 prior to any public offering of Registrable Securities (i) register or qualify the Registrable Securities covered by the Registration Statement under such securities or “blue sky” laws of such jurisdictions in the United States as the Holders of Registrable Securities included in such Registration Statement (in light of their intended plan of distribution) may request (or provide evidence satisfactory to such Holders that the Registrable Securities are exempt from such registration or qualification) and (ii) take such action necessary to cause such Registrable Securities covered by the Registration Statement to be registered with or approved by such other governmental authorities as may be necessary by virtue of the business and operations of the Company and do any and all other acts and things that may be necessary or advisable to enable the Holders of Registrable Securities included in such Registration Statement to consummate the disposition of such Registrable Securities in such jurisdictions; provided, however, that the Company shall not be required to qualify generally to do business in any jurisdiction where it would not otherwise be required to qualify or take any action to which it would be subject to general service of process or taxation in any such jurisdiction where it is not then otherwise so subject;

 

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3.1.5 cause all such Registrable Securities to be listed on each national securities exchange on which similar securities issued by the Company are then listed;

 

3.1.6 provide a transfer agent or warrant agent, as applicable, and registrar for all such Registrable Securities no later than the effective date of such Registration Statement;

 

3.1.7 advise each seller of such Registrable Securities, promptly after it shall receive notice or obtain knowledge thereof, of the issuance of any stop order by the Commission suspending the effectiveness of such Registration Statement or the initiation or threatening of any proceeding for such purpose and promptly use its reasonable best efforts to prevent the issuance of any stop order or to obtain its withdrawal if such stop order should be issued;

 

3.1.8 at least two (2) days prior to the filing of any Registration Statement or Prospectus or any amendment or supplement to such Registration Statement or Prospectus (or such shorter period of time as may be necessary in order to comply with the Securities Act, the Exchange Act, and the rules and regulations promulgated under the Securities Act or Exchange Act, as applicable), furnish a copy thereof to each seller of such Registrable Securities or its counsel (excluding any exhibits thereto and any filing made under the Exchange Act that is to be incorporated by reference therein);

 

3.1.9 notify the Holders at any time when a Prospectus relating to such Registration Statement is required to be delivered under the Securities Act, of the happening of any event as a result of which the Prospectus included in such Registration Statement, as then in effect, includes a Misstatement, and then to correct such Misstatement as set forth in Section 3.4 hereof;

 

3.1.10 permit a representative of the Holders, the Underwriters, if any, and any attorney or accountant retained by such Holders or Underwriter to participate, at each such person’s own expense, in the preparation of the Registration Statement, and cause the Company’s officers, directors and employees to supply all information reasonably requested by any such representative, Underwriter, attorney or accountant in connection with the Registration; provided, however, that such representatives or Underwriters agree to confidentiality arrangements reasonably satisfactory to the Company, prior to the release or disclosure of any such information;

 

3.1.11 obtain a “comfort” letter from the Company’s independent registered public accountants in the event of an Underwritten Offering or other coordinated offering that is registered pursuant to a Registration Statement, in customary form and covering such matters of the type customarily covered by “comfort” letters as the managing Underwriter or other similar type of sales agent or placement agent may reasonably request, and reasonably satisfactory to a majority-in-interest of the participating Holders;

 

3.1.12 on the date the Registrable Securities are delivered for sale pursuant to such Registration, obtain an opinion, dated such date, of counsel representing the Company for the purposes of such Registration, addressed to the Holders, the placement agent or sales agent, if any, and the Underwriters, if any, covering such legal matters with respect to the Registration in respect of which such opinion is being given as the Holders, placement agent, sales agent, or Underwriter may reasonably request and as are customarily included in such opinions and negative assurance letters, and reasonably satisfactory to a majority-in-interest of the participating Holders;

 

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3.1.13 in the event of any Underwritten Offering or other coordinated offering that is registered pursuant to a Registration Statement, enter into and perform its obligations under an underwriting agreement, sales agreement or placement agreement, in usual and customary form, with the managing Underwriter, sales agent or placement agent of such offering;

 

3.1.14 make available to its security holders, as soon as reasonably practicable, an earnings statement covering the period of at least twelve (12) months beginning with the first day of the Company’s first full calendar quarter after the effective date of the Registration Statement which satisfies the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder (or any successor rule then in effect);

 

3.1.15 with respect to an Underwritten Offering pursuant to Section 2.1.5, use its reasonable efforts to make available senior executives of the Company to participate in customary “road show” presentations that may be reasonably requested by the Underwriter in such Underwritten Offering; and

 

3.1.16 otherwise, in good faith, cooperate reasonably with, and take such customary actions as may reasonably be requested by the Holders, in connection with such Registration.

 

Notwithstanding the foregoing, the Company shall not be required to provide any documents or information to an Underwriter or other sales agent or placement agent if such Underwriter or other sales agent or placement agent has not then been named with respect to the applicable Underwritten Offering or other coordinated offering that is registered pursuant to a Registration Statement.

 

3.2 Registration Expenses. The Registration Expenses of all Registrations shall be borne by the Company. It is acknowledged by the Holders that the Holders shall bear all incremental selling expenses relating to the sale of Registrable Securities, such as Underwriters’ or agents’ commissions and discounts, brokerage fees, Underwriter marketing costs and, other than as set forth in the definition of “Registration Expenses,” all reasonable fees and expenses of any legal counsel representing the Holders.

 

3.3 Requirements for Participation in Registration Statement Underwritten Offerings. Notwithstanding anything in this Agreement to the contrary, if any Holder does not timely provide the Company with its requested Holder Information, the Company may exclude such Holder’s Registrable Securities from the applicable Registration Statement or Prospectus if the Company determines, based on the advice of counsel, that such information is necessary to effect the registration and such Holder continues thereafter to withhold such information. No person may participate in any Underwritten Offering or other coordinated offering for equity securities of the Company pursuant to a Registration initiated by the Company hereunder unless such person (i) agrees to sell such person’s securities on the basis provided in any arrangements approved by the Company and (ii) timely completes and executes all customary questionnaires, powers of attorney, indemnities, lock-up agreements, underwriting or other agreements and other customary documents as may be reasonably required under the terms of such arrangements. The exclusion of a Holder’s Registrable Securities as a result of this Section 3.3 shall not affect the registration of the other Registrable Securities to be included in such Registration.

 

3.4 Suspension of Sales; Adverse Disclosure; Restrictions on Registration Rights.

 

3.4.1 Upon receipt of written notice from the Company that a Registration Statement or Prospectus contains a Misstatement, each of the Holders shall forthwith discontinue disposition of Registrable Securities until it has received copies of a supplemented or amended Prospectus correcting the Misstatement (it being understood that the Company hereby covenants to prepare and file such supplement or amendment as soon as practicable after the time of such notice), or until it is advised in writing by the Company that the use of the Prospectus may be resumed.

 

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3.4.2 If the filing, initial effectiveness or continued use of a Registration Statement in respect of any Registration at any time would (i) require the Company to make an Adverse Disclosure, (ii) require the inclusion in such Registration Statement of financial statements that are unavailable to the Company for reasons beyond the Company’s control, or (iii) in the good faith judgment of the majority of the Board such Registration, be seriously detrimental to the Company and the majority of the Board concludes as a result that it is essential to defer such filing, initial effectiveness or continued use at such time, the Company may, upon giving prompt written notice of such action to the Holders, delay the filing or initial effectiveness of, or suspend use of, such Registration Statement for the shortest period of time determined in good faith by the Company to be necessary for such purpose. In the event the Company exercises its rights under this Section 3.4.2, the Holders agree to suspend, immediately upon their receipt of the notice referred to above, their use of the Prospectus relating to any Registration in connection with any sale or offer to sell Registrable Securities.

 

3.4.3 (i) during the period starting with the date sixty (60) days prior to the Company’s good faith estimate of the date of the filing of, and ending on a date one hundred and twenty (120) days after the effective date of, a Company-initiated Registration and provided that the Company continues to actively employ, in good faith, all reasonable efforts to maintain the effectiveness of the applicable Shelf Registration Statement, or (ii) if, pursuant to Section 2.1.5, Holders have requested an Underwritten Shelf Takedown and the Company and such Holders are unable to obtain the commitment of underwriters to firmly underwrite such offering, the Company may, upon giving prompt written notice of such action to the Holders, delay any other registered offering pursuant to Section 2.1.5 or 2.4.

 

3.5 Lock-Up Agreements. The Holders agree that, if requested by the Underwriters in any Company-initiated Registration for the account of the Company (subject to the Company’s compliance with Section 2.2), the Holders will enter into customary “lock-up” agreements providing that the Holders will not, directly or indirectly, sell, offer to sell, grant any option for the sale of, or otherwise dispose of any securities that are the same or similar to the securities being offered in such offering (or securities convertible into or exchangeable or exercisable for such securities) (subject to customary exceptions) and will not enter into derivative transactions with similar economic effect, for a period not to exceed ninety (90) days from the effective date of the registration statement pertaining to such securities or from such other date as may be requested by the Underwriter(s) (the “Underwritten Lock-Up Period”); provided, that in no event shall the Holders be obligated to enter into such lock-agreements that are any more restrictive than such lock-up agreements agreed to by the Company, its directors and executive officers or the other stockholders of the Company participating in such offering. The Company will not be obligated to undertake an Underwritten Shelf Takedown during any Underwritten Lock-Up Period binding on the Holders, nor will the Company be obligated to include in any Piggyback Registration any Registrable Securities that are then subject to a “lock-up” agreement.

 

3.6 Reporting Obligations. As long as any Holder shall own Registrable Securities, the Company, at all times while it shall be a reporting company under the Exchange Act, covenants to use commercially reasonable efforts to file timely (or obtain extensions in respect thereof and file within the applicable grace period) all reports required to be filed by the Company after the date hereof pursuant to Sections 13(a) or 15(d) of the Exchange Act.

 

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Article IV
INDEMNIFICATION AND CONTRIBUTION

 

4.1 Indemnification.

 

4.1.1 The Company agrees to indemnify, to the extent permitted by law, each Holder of Registrable Securities, its officers, directors and agents and each person who controls such Holder (within the meaning of the Securities Act) against all losses, claims, damages, liabilities and reasonable out-of-pocket expenses (including without limitation reasonable outside attorneys’ fees) resulting from any untrue or alleged untrue statement of material fact contained in any Registration Statement, Prospectus or preliminary Prospectus or any amendment thereof or supplement thereto or any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein not misleading, except insofar as the same are caused by or contained in any information or affidavit so furnished in writing to the Company by such Holder expressly for use therein.

 

4.1.2 In connection with any Registration Statement in which a Holder of Registrable Securities is participating, such Holder shall furnish to the Company in writing such information and affidavits as the Company reasonably requests for use in connection with any such Registration Statement or Prospectus (the “Holder Information”) and, to the extent permitted by law, shall indemnify the Company, its directors, officers and agents and each person who controls the Company (within the meaning of the Securities Act) against all losses, claims, damages, liabilities and reasonable out-of-pocket expenses (including without limitation reasonable outside attorneys’ fees) resulting from any untrue or alleged untrue statement of material fact contained in any Registration Statement, Prospectus or preliminary Prospectus or any amendment thereof or supplement thereto or any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein not misleading, but only to the extent that such untrue statement or omission is contained in any information or affidavit so furnished in writing by such Holder expressly for use therein; provided, however, that the obligation to indemnify shall be several, not joint and several, among such Holders of Registrable Securities, and the liability of each such Holder of Registrable Securities shall be in proportion to and limited to the net proceeds received by such Holder from the sale of Registrable Securities pursuant to such Registration Statement. The Holders of Registrable Securities shall indemnify the Underwriters, their officers, directors and each person who controls such Underwriters (within the meaning of the Securities Act) to the same extent as provided in the foregoing with respect to indemnification of the Company.

 

4.1.3 Any person entitled to indemnification herein shall (i) give prompt written notice to the indemnifying party of any claim with respect to which it seeks indemnification (provided that the failure to give prompt notice shall not impair any person’s right to indemnification hereunder to the extent such failure has not materially prejudiced the indemnifying party) and (ii) unless in such indemnified party’s reasonable judgment a conflict of interest between such indemnified and indemnifying parties may exist with respect to such claim, permit such indemnifying party to assume the defense of such claim with counsel reasonably satisfactory to the indemnified party. If such defense is assumed, the indemnifying party shall not be subject to any liability for any settlement made by the indemnified party without its consent (but such consent shall not be unreasonably withheld). An indemnifying party who is not entitled to, or elects not to, assume the defense of a claim shall not be obligated to pay the fees and expenses of more than one counsel for all parties indemnified by such indemnifying party with respect to such claim, unless in the reasonable judgment of any indemnified party a conflict of interest may exist between such indemnified party and any other of such indemnified parties with respect to such claim. No indemnifying party shall, without the consent of the indemnified party, consent to the entry of any judgment or enter into any settlement which cannot be settled in all respects by the payment of money (and such money is so paid by the indemnifying party pursuant to the terms of such settlement) or which settlement does not include as an unconditional term thereof the giving by the claimant or plaintiff to such indemnified party of a release from all liability in respect to such claim or litigation.

 

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4.1.4 The indemnification provided for under this Agreement shall remain in full force and effect regardless of any investigation made by or on behalf of the indemnified party or any officer, director or controlling person of such indemnified party and shall survive the transfer of securities. The Company and each Holder of Registrable Securities participating in an offering also agrees to make such provisions as are reasonably requested by any indemnified party for contribution to such party in the event the Company’s or such Holder’s indemnification is unavailable for any reason.

 

4.1.5 If the indemnification provided under Section 4.1 hereof from the indemnifying party is unavailable or insufficient to hold harmless an indemnified party in respect of any losses, claims, damages, liabilities and out-of-pocket expenses referred to herein, then the indemnifying party, in lieu of indemnifying the indemnified party, shall contribute to the amount paid or payable by the indemnified party as a result of such losses, claims, damages, liabilities and out-of-pocket expenses in such proportion as is appropriate to reflect the relative fault of the indemnifying party and the indemnified party, as well as any other relevant equitable considerations. The relative fault of the indemnifying party and indemnified party shall be determined by reference to, among other things, whether any action in question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact, was made by, or relates to information supplied by, such indemnifying party or indemnified party, and the indemnifying party’s and indemnified party’s relative intent, knowledge, access to information and opportunity to correct or prevent such action; provided, however, that the liability of any Holder under this Section 4.1.5 shall be limited to the amount of the net proceeds received by such Holder in such offering giving rise to such liability. The amount paid or payable by a party as a result of the losses or other liabilities referred to above shall be deemed to include, subject to the limitations set forth in Sections 4.1.1, 4.1.2 and 4.1.3 above, any legal or other fees, charges or out-of-pocket expenses reasonably incurred by such party in connection with any investigation or proceeding. The parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 4.1.5 were determined by pro rata allocation or by any other method of allocation, which does not take account of the equitable considerations referred to in this Section 4.1.5. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution pursuant to this Section 4.1.5 from any person who was not guilty of such fraudulent misrepresentation.

 

Article V
MISCELLANEOUS

 

5.1 Notices. Any notice or communication under this Agreement must be in writing and given by (i) deposit in the United States mail, addressed to the party to be notified, postage prepaid and registered or certified with return receipt requested, (ii) delivery in person or by courier service providing evidence of delivery, or (iii) transmission by hand delivery, electronic mail or facsimile. Each notice or communication that is mailed, delivered, or transmitted in the manner described above shall be deemed sufficiently given, served, sent, and received, in the case of mailed notices, on the third business day following the date on which it is mailed and, in the case of notices delivered by courier service, hand delivery, electronic mail or facsimile, at such time as it is delivered to the addressee (with the delivery receipt or the affidavit of messenger) or at such time as delivery is refused by the addressee upon presentation. Any notice or communication under this Agreement must be addressed, if to the Company, to: AST & Science LLC, Midland International Air and Space Port, 2901 Enterprise Lane, Midland, TX 79706, Attention: Tom Severson, Email: [●], and, if to any Holder, at such Holder’s address or facsimile number as set forth in the Company’s books and records. Any party may change its address for notice at any time and from time to time by written notice to the other parties hereto, and such change of address shall become effective thirty (30) days after delivery of such notice as provided in this Section 5.1.

 

17

 

 

5.2 Assignment; No Third Party Beneficiaries.

 

5.2.1 This Agreement and the rights, duties and obligations of the Company hereunder may not be assigned or delegated by the Company in whole or in part.

 

5.2.2 This Agreement and the rights, duties and obligations of the Holders hereunder may not be assigned or delegated by the Holders in whole or in part; provided, however, that, subject to Section 5.2.5, a Holder may assign the rights and obligations of such Holder hereunder relating to particular Registrable Securities in connection with the transfer of such Registrable Securities to a Permitted Transferee of such Holder in accordance with the Stockholders Agreement.

 

5.2.3 This Agreement and the provisions hereof shall be binding upon and shall inure to the benefit of each of the parties and its successors and the permitted assigns.

 

5.2.4 This Agreement shall not confer any rights or benefits on any persons that are not parties hereto, other than as expressly set forth in this Agreement and Section 5.2 hereof.

 

5.2.5 No assignment by any party hereto of such party’s rights, duties and obligations hereunder shall be binding upon or obligate the Company unless and until the Company shall have received (i) written notice of such assignment as provided in Section 5.1 hereof and (ii) the written agreement of the assignee, in a form reasonably satisfactory to the Company, to be bound by the terms and provisions of this Agreement (which may be accomplished by an addendum or certificate of joinder to this Agreement). Any transfer or assignment made other than as provided in this Section 5.2 shall be null and void.

 

5.3 Counterparts. This Agreement may be executed in multiple counterparts (including facsimile or PDF counterparts), each of which shall be deemed an original, and all of which together shall constitute the same instrument, but only one of which need be produced.

 

5.4 Governing Law. This Agreement, and all claims or causes of action based upon, arising out of, or related to this Agreement, shall be governed by, and construed in accordance with, the laws of the State of Delaware, without giving effect to principles or rules of conflict of Laws to the extent such principles or rules would require or permit the application of Laws of another jurisdiction.

 

5.5 Jurisdiction; Waiver of Jury Trial.

 

5.5.1 Any proceeding or Action based upon, arising out of or related to this Agreement or the Transactions must be brought in the Court of Chancery of the State of Delaware (or, to the extent such Court does not have subject matter jurisdiction, the Superior Court of the State of Delaware), or, if it has or can acquire jurisdiction, in the United States District Court for the District of Delaware, and each of the parties irrevocably submits to the exclusive jurisdiction of each such court in any such proceeding or Action, waives any objection it may now or hereafter have to personal jurisdiction, venue or to convenience of forum, agrees that all claims in respect of the proceeding or Action shall be heard and determined only in any such court, and agrees not to bring any proceeding or Action arising out of or relating to this Agreement or the Transactions in any other court. Nothing herein contained shall be deemed to affect the right of any party to serve process in any manner permitted by Law or to commence legal proceedings or otherwise proceed against any other party in any other jurisdiction, in each case, to enforce judgments obtained in any Action, suit or proceeding brought pursuant to this Section 5.5.

 

18

 

 

5.5.2 Each party acknowledges and agrees that any controversy which may arise under this Agreement and the Transactions is likely to involve complicated and difficult issues, and therefore each such party hereby irrevocably, unconditionally and voluntarily waives any right such party may have to a trial by jury in respect of any Action, suit or proceeding directly or indirectly arising out of or relating to this Agreement or any of the Transactions.

 

5.6 Amendments and Modifications. Upon the written consent of (i) the Company and (ii) the Holders of a majority of the total Registrable Securities, compliance with any of the provisions, covenants and conditions set forth in this Agreement may be waived, or any of such provisions, covenants or conditions may be amended or modified; provided, however, that in the event any such waiver, amendment or modification would be adverse in any material respect to the material rights or obligations hereunder of a Holder of at least two and one-half percent (2.5%) percent of the Registrable Securities, the written consent of such Holder will also be required; provided further that in the event any such waiver, amendment or modification would be disproportionate and adverse in any material respect to the material rights or obligations hereunder of a Holder, the written consent of such Holder will also be required. No course of dealing between any Holder or the Company and any other party hereto or any failure or delay on the part of a Holder or the Company in exercising any rights or remedies under this Agreement shall operate as a waiver of any rights or remedies of any Holder or the Company. No single or partial exercise of any rights or remedies under this Agreement by a party shall operate as a waiver or preclude the exercise of any other rights or remedies hereunder or thereunder by such party.

 

5.7 Other Registration Rights. From and after the date hereof, the Company shall not enter into any agreement granting registration rights to any party with respect to the Company’s securities that would cause a violation of the rights granted to the Holders hereunder. The Company represents and warrants that no person, other than a Holder of Registrable Securities, has any right to require the Company to register any securities of the Company for sale or to include such securities of the Company in any Registration Statement filed by the Company for the sale of securities for its own account or for the account of any other person.

 

5.8 Term. This Agreement shall terminate with respect to any Holder on the date that such Holder no longer holds any Registrable Securities. The provisions of Section 3.5 and Article IV shall survive any termination.

 

5.9 Holder Information. Each Holder agrees, if requested in writing, to represent to the Company the total number of Registrable Securities held by such Holder in order for the Company to make determinations hereunder.

 

[SIGNATURE PAGES FOLLOW]

 

19

 

 

IN WITNESS WHEREOF, the undersigned have caused this Agreement to be executed as of the date first written above.

 

  COMPANY:
   
  New Providence Acquisition Corp.
  a Delaware corporation
     
  By: /s/ Gary Smith
  Name: Gary Smith
  Title: Chief Executive Officer

 

[Signature Page to Registration Rights Agreement]

 

 

 

 

  SPONSOR:
     
  New Providence Management LLC
  a Delaware limited liability company
     
  By: /s/ Alexander Coleman
  Name: Alexander Coleman
  Title: Co-Chief Executive Officer

 

[Signature Page to Registration Rights Agreement]

 

 

 

 

  AST EQUITYHOLDERS:
                            
  Invesat LLC
  a Delaware limited liability company
     
  By: /s/ Adriana Cisneros
  Name: Adriana Cisneros
  Title: President

 

[Signature Page to Registration Rights Agreement]

 

 

 

 

  Vodafone Ventures Limited
 

a private limited company organized under the

Laws of England and Wales

     
  By: /s/ Edward Verner
  Name: Edward Verner
  Title: Authorized Signatory

 

[Signature Page to Registration Rights Agreement]

 

 

 

 

  ATC TRS II LLC
  a Delaware limited liability company
     
  By: /s/ Edmund DiSanto
  Name: Edmund DiSanto
  Title: EVP, Chief Administration Officer and General Counsel

 

[Signature Page to Registration Rights Agreement]

 

 

 

 

  Rakuten Mobile USA Serivce Inc.,
  a Delaware Corporation
     
  By: /s/ Kaname Sueyoshi
  Name: Kaname Sueyoshi
  Title: Authorized Signatory

 

[Signature Page to Registration Rights Agreement]

 

 

 

 

  Samsung Next Fund LLC
  a Delaware limited liability company
     
  By: /s/ Brendon Kim
  Name: Brendon Kim
  Title: Authorized Officer of Samsung Next Fund LLC

 

[Signature Page to Registration Rights Agreement]

 

 

 

 

  /s/ Abel Avellan
  Abel Avellan

 

[Signature Page to Registration Rights Agreement]

 

 

 

 

  /s/ Tom Severson
  Tom Severson

 

[Signature Page to Registration Rights Agreement]

 

 

 

 

 

 

Exhibit 10.4

 

TAX RECEIVABLE AGREEMENT

 

by and among

 

AST SPACEMOBILE, INC.

 

AST & SCIENCE, LLC,

 

THOMAS SEVERSON, as TRA HOLDER REPRESENTATIVE,

 

the several TRA HOLDERS (as defined herein)

 

and

 

OTHER TRA HOLDERS
FROM TIME TO TIME PARTY HERETO

 

Dated as of April 6, 2021

 

 

 

 
 

 

TABLE OF CONTENTS

 

  Page
   
Article I. DEFINITIONS 2
     
Section 1.1 Definitions 2
Section 1.2 Rules of Construction 10
     
Article II. DETERMINATION OF REALIZED TAX BENEFIT 11
     
Section 2.1 Basis Adjustments; LLC 754 Election 11
Section 2.2 Reorganization Transaction Date Attribute Schedule 11
Section 2.3 Basis Schedules 12
Section 2.4 Tax Benefit Schedules 12
Section 2.5 Procedures; Amendments 13
     
Article III. TAX BENEFIT PAYMENTS 14
     
Section 3.1 Timing and Amount of Tax Benefit Payments 14
Section 3.2 No Duplicative Payments 17
Section 3.3 Pro-Ration of Payments as Between the TRA Holders 18
Section 3.4 Optional Estimated Tax Benefit Payment Procedure 19
     
Article IV. TERMINATION 20
     
Section 4.1 Early Termination of Agreement; Breach of Agreement 20
Section 4.2 Early Termination Notice 22
Section 4.3 Payment Upon Early Termination 22
     
Article V. SUBORDINATION AND LATE PAYMENTS 23
     
Section 5.1 Subordination 23
Section 5.2 Late Payments by the Corporation 23
     
Article VI. TAX MATTERS; CONSISTENCY; COOPERATION 24
     
Section 6.1 Participation in the Corporation’s Tax Matters 24
Section 6.2 Consistency 24
Section 6.3 Cooperation 25
     
Article VII. MISCELLANEOUS 25
     
Section 7.1 Notices 25
Section 7.2 Counterparts 26
Section 7.3 Entire Agreement; No Third Party Beneficiaries 26
Section 7.4 Governing Law 26

 

i
 

 

Section 7.5 Severability 26
Section 7.6 Assignments; Amendments; Successors; No Waiver 27
Section 7.7 Titles and Subtitles 28
Section 7.8 Resolution of Disputes 28
Section 7.9 Reconciliation 29
Section 7.10 Withholding 30
Section 7.11 Admission of the Corporation into a Consolidated Group; Transfers of Corporate Assets 30
Section 7.12 Change in Law 31
Section 7.13 Interest Rate Limitation 31
Section 7.14 Independent Nature of Rights and Obligations 31
Section 7.15 LLC Agreement 32
Section 7.16 TRA Holder Representative 32
Section 7.17 Non-Effect of Other Tax Receivable Agreements 32

 

Exhibits    
     
Exhibit A - Form of Joinder Agreement

 

ii
 

 

TAX RECEIVABLE AGREEMENT

 

This TAX RECEIVABLE AGREEMENT (as the same may be amended, restated, amended and restated, supplemented or otherwise modified from time to time, this “Agreement”), dated as of April 6, 2021, is hereby entered into by and among AST SpaceMobile, Inc., a Delaware corporation (the “Corporation”), AST & Science, LLC, a Delaware limited liability company (the “LLC”), the TRA Holder Representative (as defined below), and each of the Exchange TRA Holders and the Blocker TRA Holders (each as defined below) from time to time party hereto (collectively, the “TRA Holders”).

 

RECITALS

 

WHEREAS, the LLC is treated as a partnership for U.S. federal income tax purposes;

 

WHEREAS, each of the members of the LLC other than the Corporation (such members who are parties hereto, and their respective assignees who become parties hereto by satisfying the Joinder Requirement, directly or indirectly owns limited liability company interests in the LLC (the “Units”);

 

WHEREAS, pursuant to that certain Equity Purchase Agreement by and among (i) the LLC, (ii) the AST Equityholders, (iii) the other existing equityholders of the LLC (other than the AST Equityholders) set forth on Annex A thereto, (iv) New Providence Acquisition Corp., a Delaware corporation and predecessor to the Company (“NPA”), (v) New Providence Management LLC, a Delaware limited liability company (“NPA Sponsor”) and (vi) Abel Avellan as the Existing Equityholder Representative (as defined therein), the Corporation will acquire newly-issued LLC Units in exchange for the Closing Date Contribution Amount (as defined therein) and become the Managing Member of the LLC (as defined in the LLC Agreement (such Equity Purchase Agreement the “Equity Purchase Agreement,” and the foregoing transactions, the “Business Combination”);

 

WHEREAS, in connection with the Business Combination, the LLC will revalue its property for U.S. federal income tax purposes (and any corresponding U.S. state or local tax purposes) pursuant to Section 1.704-1 of the Treasury Regulations;

 

WHEREAS, pursuant to and subject to the terms of the LLC Agreement, from time to time following the twelve (12) month anniversary of the Business Combination, certain Members (as defined in the LLC Agreement) or their respective Affiliates may enter into certain reorganization transactions with the Corporation (the “Blocker TRA Holders”) pursuant to which the Corporation acquires, directly or indirectly including by way of merger, a Blocker Corporation (as defined in the LLC Agreement) from such Blocker TRA Holders or their respective Affiliates (the “Reorganization Transactions”), and as a result of any such transactions, the Corporation may obtain or be entitled to certain Tax attributes as further described herein;

 

1
 

 

WHEREAS, pursuant to and subject to the terms of the LLC Agreement, from time to time following the twelve (12) month anniversary of the Business Combination, each holder of Units (other than the Corporation) has the right to require the LLC to redeem (a “Redemption”) all or a portion of such holder’s Units, at the Corporation’s election, cash or Class A Common Stock, in either case contributed to the LLC by the Corporation; provided that, at the election of the Corporation in its sole discretion, the Corporation may effect a direct exchange (a “Direct Exchange”) of such cash or shares of Class A Common Stock for such Units (holders described in this clause, the “Exchange TRA Holders”);

 

WHEREAS, the LLC and any direct or indirect Subsidiary (owned through a chain of entities each of which is treated as a partnership or a disregarded entity for U.S. federal income tax purposes) of the LLC that is treated as a partnership for U.S. federal income tax purposes (together with the LLC and any direct or indirect Subsidiary (owned through a chain of entities each of which is treated as a partnership or a disregarded entity for U.S. federal income tax purposes) of the LLC that is treated as a disregarded entity for U.S. federal income tax purposes, the “LLC Group”) will, to the extent such direct or indirect Subsidiary is treated as a partnership for U.S. federal income tax purposes, have in effect an election under Section 754 of the Code (as defined below) for the Taxable Year (as defined below) in which any Exchange (as defined below) occurs, which election should result in an adjustment to the Corporation’s share of the tax basis of the assets owned by the LLC Group as of the date of the Exchange; and

 

WHEREAS, the parties to this Agreement desire to provide for certain payments and make certain arrangements with respect to certain tax benefits derived by the Corporation as a result of any Exchanges or any Reorganization Transactions, certain tax attributes of the LLC Group and the receipt of payments under this Agreement.

 

NOW, THEREFORE, in consideration of the foregoing and the respective covenants and agreements set forth herein, and intending to be legally bound hereby, the parties hereto agree as follows:

 

Article I.
DEFINITIONS

 

Section 1.1 Definitions. As used in this Agreement, the terms set forth in this Article I shall have the following meanings (such meanings to be equally applicable to both (i) the singular and plural and (ii) the active and passive forms of the terms defined).

 

Advisory Firm” means any accounting firm that is nationally recognized as being an expert in Covered Tax matters and is not an Affiliate of the Corporation, provided that such Advisory Firm that is used by the Corporation shall be selected by the Corporation and be reasonably acceptable to the TRA Holder Representative.

 

Actual Interest Amount” is defined in Section 3.1(b)(vii) of this Agreement.

 

Affiliate” means, with respect to any Person, any other Person that directly or indirectly, through one or more intermediaries, Controls, is Controlled by, or is under common Control with, such first Person.

 

Agreed Rate” means LIBOR plus 200 basis points.

 

2
 

 

Agreement” is defined in the preamble to this Agreement.

 

Amended Schedule” is defined in Section 2.5(b) of this Agreement.

 

Assumed State and Local Tax Rate” means the tax rate equal to the sum of the products of (x) the Corporation’s income tax apportionment factor for each state and local jurisdiction in which the Corporation files income or franchise tax returns for the relevant Taxable Year and (y) the highest corporate income and franchise tax rate in effect for such Taxable Year for each such state and local jurisdiction in which the Corporation files income tax returns for each relevant Taxable Year.

 

Attributable” is defined in Section 3.1(b)(i) of this Agreement.

 

Bankruptcy Code” is defined in Section 4.1(c) of this Agreement.

 

Basis Adjustment” means the increase or decrease to the tax basis of, or the Corporation’s share of, the tax basis of the Reference Assets (i) under Section 734(b), 743(b) and 754 of the Code (in situations where, following an Exchange, the LLC remains in existence as an entity for tax purposes) and (ii) under Sections 732 and 1012 of the Code (in situations where, as a result of one or more Exchanges, the LLC becomes an entity that is disregarded as separate from its owner for tax purposes), in each case, as a result of any Exchange and any payments made under this Agreement. Notwithstanding any other provision of this Agreement, the amount of any Basis Adjustment resulting from an Exchange of one or more Units shall be determined without regard to any Pre-Exchange Transfer of such Units and as if any such Pre-Exchange Transfer had not occurred.

 

Basis Schedule” is defined in Section 2.3 of this Agreement.

 

Blocker Attributes” means any U.S. federal, state, or local net operating losses, capital losses, disallowed interest expense carryforwards under Section 163(j) of the Code (and any comparable provision of U.S. federal, state, or local tax law),credit carryforwards, and foreign tax credits of a Blocker Corporation relating to taxable periods ending on or prior to the date of an applicable Reorganization Transaction.

 

Blocker Corporation” is defined in the recitals to this Agreement.

 

Blocker TRA Holders” is defined in the recitals to this Agreement.

 

Board” means the Board of Directors of the Corporation.

 

Business Combination” is defined in the recitals to this Agreement.

 

Business Combination Date” means the closing of the Business Combination.

 

Business Day” means any day excluding Saturday, Sunday and any day that is a legal holiday under the laws of the State of New York or is a day on which banking institutions located in New York are closed.

 

3
 

 

Change of Control” shall have the same meaning defined in the LLC Agreement.

 

Class A Common Stock” is defined in the recitals to this Agreement.

 

Class B Common Stock” means shares of Class B common stock of the Corporation.

 

Class C Common Stock” means the shares of Class C common stock of the Corporation.

 

Code” means the U.S. Internal Revenue Code of 1986, as amended.

 

Common Basis” means the existing tax basis of the Reference Assets (determined, with respect to each TRA Holder, as of immediately prior to such TRA Holder’s Exchange or Reorganization Transaction) that are depreciable or amortizable (including assets that will eventually be subject to depreciation or amortization, once placed in service) for U.S. federal income tax purposes attributable to Units acquired by the Corporation in an Exchange or Reorganization Transaction. For the avoidance of doubt, Common Basis shall not include any Basis Adjustments.

 

Control” means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a Person, whether through ownership of voting securities, by contract or other agreement.

 

Corporation” is defined in the preamble to this Agreement.

 

Covered Person” is defined in Section 7.16 of this Agreement.

 

Covered Tax Benefit” is defined in Section 3.3(a) of this Agreement.

 

Covered Taxes” means any and all U.S. federal, state, local, and foreign taxes, assessments or similar charges that are based on or measured with respect to net income or profits and any interest related thereto.

 

Cumulative Net Realized Tax Benefit” is defined in Section 3.1(b)(iii) of this Agreement.

 

Default Rate” means LIBOR plus 400 basis points.

 

Default Rate Interest” is defined in Section 3.1(b)(ix) of this Agreement.

 

Determination” shall have the meaning ascribed to such term in Section 1313(a) of the Code or similar provision of U.S. state tax law, as applicable, or any other event (including the execution of IRS Form 870-AD) that finally and conclusively establishes the amount of any liability for tax.

 

Direct Exchange” is defined in the recitals to this agreement.

 

Dispute” is defined in Section 7.8(a) of this Agreement.

 

4
 

 

Early Termination Effective Date” means the date of an Early Termination Notice for purposes of determining the Early Termination Payment.

 

Early Termination Notice” is defined in Section 4.2 of this Agreement.

 

Early Termination Payment” is defined in Section 4.3(b) of this Agreement.

 

Early Termination Rate” means the LIBOR plus 200 basis points.

 

Early Termination Reference Date” is defined in Section 4.2 of this Agreement.

 

Early Termination Schedule” is defined in Section 4.2 of this Agreement.

 

Equity Purchase Agreement” is defined in the recitals to this Agreement.

 

Estimated Reorganization Transaction Date Attribute Schedule” is defined in Section 2.2.

 

Estimated Tax Benefit Payment” is defined in Section 3.4 of this Agreement.

 

Exchange” means any Direct Exchange or Redemption.

 

Exchange Date” means the date of any Exchange.

 

Exchange TRA Holders” is defined in the recitals to this Agreement.

 

Expert” is defined in Section 7.9 of this Agreement.

 

Final Payment Date” means any date on which a payment is required to be made pursuant to this Agreement. For the avoidance of doubt, the Final Payment Date in respect of a Tax Benefit Payment is determined pursuant to Section 3.1(a) of this Agreement.

 

Hypothetical Tax Liability” means, with respect to any Taxable Year, the hypothetical liability of the Corporation that would arise in respect of Covered Taxes, using the same methods, elections, conventions and similar practices used on the actual relevant Tax Returns of the Corporation but (i) calculating depreciation, amortization, or other similar deductions, or otherwise calculating any items of income, gain, or loss, using the Corporation’s share of the Non-Adjusted Tax Basis as reflected on the applicable Basis Schedule, including amendments thereto for the Taxable Year, (ii) excluding the effect of any and all Blocker Attributes, and (iii) excluding any deduction attributable to Imputed Interest for the Taxable Year; provided, that for purposes determining the Hypothetical Tax Liability, the combined tax rate for U.S. state and local Covered Taxes (but not, for the avoidance of doubt, federal Covered Taxes) shall be the Assumed State and Local Tax Rate. For the avoidance of doubt, (A) the Hypothetical Tax Liability shall be determined without taking into account the carryover or carryback of any tax item attributable to Imputed Interest, Basis Adjustments (or portions thereof), Blocker Attributes, or Common Basis and (B) the calculation of the Hypothetical Tax Liability shall take into account any U.S. federal income tax benefit actually realized by the Corporation with respect to state and local jurisdiction income taxes (with such benefit taking into account the Corporation’s marginal U.S. federal income tax rate for the relevant Taxable Year, the Assumed State and Local Tax Rate, and the deductibility, if any, of state and local jurisdiction income taxes).

 

5
 

 

Imputed Interest” is defined in Section 3.1(b)(vi) of this Agreement.

 

IRS” means the U.S. Internal Revenue Service.

 

Joinder” means a joinder to this Agreement, in form and substance substantially similar to Exhibit A to this Agreement.

 

Joinder Requirement” is defined in Section 7.6(a) of this Agreement.

 

LIBOR” means for each month (or portion thereof) during any period, an interest rate per annum equal to the rate per annum reported, on the date two Business Days prior to the first Business Day of such month, as published on the applicable Bloomberg screen page (or other commercially available source providing quotations of LIBOR) for one-month London interbank offered rates for U.S. dollar deposits for such month (or portion thereof). If LIBOR ceases to be published in accordance with the definition thereof, the Corporation and the LLC shall work together in good faith to select a replacement rate with similar characteristics that gives due consideration to the prevailing market conventions for determining rates of interest in the United States at such time, and from and after the date LIBOR ceases to be so published any such replacement rate so selected shall be treated as LIBOR for purposes of this Agreement.

 

LLC” is defined in the preamble to this Agreement.

 

LLC Agreement” means that certain Fifth Amended and Restated Limited Liability Company Agreement of the LLC, dated as of the date hereof, as such agreement may be further amended, restated, supplemented and/or otherwise modified from time to time.

 

LLC Group” is defined in the recitals to this Agreement.

 

Net Tax Benefit” is defined in Section 3.1(b)(ii) of this Agreement.

 

Non-Adjusted Tax Basis” means (i) with respect to any Reference Asset at any time the tax basis for purposes of U.S. federal income tax law that such asset would have had at such time if no Basis Adjustments had been made, and (ii) in the case of any Reference Asset that is depreciable or amortizable (including, for the avoidance of doubt, any amortizable Section 197 intangible (as such term is used in the Code), for purposes of U.S. federal income tax law, treating such Reference Asset as having a Common Basis of zero at all times.

 

Objection Notice” is defined in Section 2.5(a)(i) of this Agreement.

 

Parties” means the parties named on the signature pages to this agreement and each additional party that satisfies the Joinder Requirement, in each case with their respective successors and assigns.

 

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Person” means any individual, corporation, firm, partnership, joint venture, limited liability company, estate, trust, business association, organization, governmental entity or other entity.

 

Pre-Exchange Transfer” means any transfer of one or more Units (including upon the death of a TRA Holder) (i) that occurs after the Business Combination but prior to an Exchange of such Units and (ii) to which Section 743(b) of the Code applies.

 

Realized Tax Benefit” is defined in Section 3.1(b)(iv) of this Agreement.

 

Realized Tax Detriment” is defined in Section 3.1(b)(v) of this Agreement.

 

Reconciliation Dispute” is defined in Section 7.9 of this Agreement.

 

Reconciliation Procedures” is defined in Section 2.5(a) of this Agreement.

 

Redemption” has the meaning in the recitals to this Agreement.

 

Reference Asset” means any tangible or intangible asset of any member of the LLC Group or any of their respective successors or assigns, whether held directly by the LLC or indirectly by the LLC through any entity in which the LLC now holds or may subsequently hold an ownership interest (but only if such entity is treated as a partnership or disregarded entity for U.S. federal income tax purposes and for purposes of state or local income tax law), at the time of an Exchange, Reorganization Transaction or other applicable transaction. A Reference Asset also includes any asset the tax basis of which is determined, in whole or in part, by reference to the tax basis of an asset that is described in the preceding sentence, including “substituted basis property” within the meaning of Section 7701(a)(42) of the Code.

 

Reorganization Transactions” is defined in the recitals to this Agreement.

 

Reorganization Transaction Date” means the date of any applicable Reorganization Transaction.

 

Reorganization Transaction Date Attribute Schedule” has the meaning set forth in Section 2.2 of this Agreement.

 

Schedule” means any of the following: (i) a Basis Schedule, (ii) a Reorganization Transaction Date Attribute Schedule, (iii) a Tax Benefit Schedule, or (iv) the Early Termination Schedule, and, in each case, any amendments thereto.

 

Senior Obligations” is defined in Section 5.1 of this Agreement.

 

Subsidiary” means, with respect to any Person and as of the date of any determination, any other Person as to which such Person, owns, directly or indirectly, or otherwise controls, more than 50% of the voting power or other similar interests, or the sole general partner interest, or managing member or similar interest, of such Person.

 

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Subsidiary Stock” means any stock or other equity interest in any Subsidiary of the Corporation that is treated as a corporation for U.S. federal income tax purposes and applicable state and local tax purposes.

 

Tax Benefit Payment” is defined in Section 3.1(b) of this Agreement.

 

Tax Benefit Schedule” is defined in Section 2.4(a) of this Agreement.

 

Tax Return” means any return, declaration, report or similar statement filed or required to be filed with respect to taxes (including any attached schedules), including, without limitation, any information return, claim for refund, amended return and declaration of estimated tax.

 

Taxable Year” means a taxable year of the Corporation as defined in Section 441(b) of the Code or comparable section of U.S. state or local tax law, as applicable (and, therefore, for the avoidance of doubt, may include a period of less than 12 months for which a Tax Return is made), ending on or after the Business Combination Date.

 

Taxing Authority” means any national, federal, state, county, municipal, or local government, or any subdivision, agency, commission or authority thereof, or any quasi-governmental body, or any other authority of any kind, exercising regulatory or other authority in relation to tax matters.

 

Termination Objection Notice” is defined in Section 4.2 of this Agreement.

 

TRA Holders” is defined in the preamble to this Agreement.

 

TRA Holder Representative” means Thomas Severson, as of the date hereof, and any successor TRA Holder Representative that may be appointed pursuant to Section 7.16 of this Agreement.

 

Treasury Regulations” means the final, temporary, and (to the extent they can be relied upon) proposed regulations under the Code, as promulgated from time to time (including corresponding provisions and succeeding provisions) as in effect for the relevant taxable period.

 

True-Up” is defined in Section 3.4 of this Agreement.

 

U.S.” means the United States of America.

 

Units” is defined in the recitals to this Agreement.

 

Valuation Assumptions” means, as of an Early Termination Effective Date, the assumptions that:

 

(1) in each Taxable Year ending on or after such Early Termination Effective Date, the Corporation will have taxable income sufficient to fully use the deductions arising from the Basis Adjustments, Common Basis, Blocker Attributes, and the Imputed Interest during such Taxable Year or future Taxable Years (including, for the avoidance of doubt, Basis Adjustments and Imputed Interest that would result from future Tax Benefit Payments that would be paid in accordance with the Valuation Assumptions) in which such deductions would become available, taking into account clause (4) below;

 

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(2) (i) the U.S. federal income tax rates that will be in effect for each such Taxable Year will be those specified for each such Taxable Year by the Code and other law as in effect on the Early Termination Effective Date, except to the extent any change to such tax rates for such Taxable Year have already been enacted into law, and (ii) the combined U.S. state and local income tax rates (but not, for the avoidance of doubt, U.S. federal income tax rates) for each such Taxable Year shall be the Assumed State and Local Tax Rate for the Taxable Year that includes the Early Termination Effective Date;

 

(3) all taxable income of the Corporation will be subject to the maximum applicable tax rates for each Covered Tax throughout the relevant period; provided, the combined tax rate for U.S. state and local income taxes (but not, for the avoidance of doubt, federal income tax) shall be the Assumed State and Local Tax Rate, and, for the avoidance of doubt, the applicable calculations shall take into account any U.S. federal income tax benefit actually realized by the Corporation with respect to state and local jurisdiction income taxes (with such benefit taking into account the Corporation’s applicable marginal U.S. federal income tax rate, the Assumed State and Local Tax Rate, and the deductibility, if any, of state and local jurisdiction income taxes);

 

(4) any loss or disallowed interest or other loss carryovers or carryforwards generated by any Basis Adjustments, Common Basis, Blocker Attributes, or Imputed Interest (including any such Basis Adjustments, and Imputed Interest generated as a result of payments under this Agreement) and available as of the Early Termination Effective Date, and any Blocker Attributes that have not been previously utilized in determining a Tax Benefit Payment as of the Early Termination Effective Date, will be used by the Corporation on a pro rata basis over a fifteen-year period beginning on the Early Termination Effective Date, or up through their scheduled expiration under applicable law (if earlier) (provided that, in any year that the Corporation is prevented from fully utilizing net operating losses or other tax attributes attributable to a Blocker Corporation pursuant to Section 382, 383, or 384 of the Code, or any successor provision or similar provision under state or local law, the amount utilized for purposes of this provision shall not exceed the amount that would otherwise be utilizable under Section 382, 383, or 384 of the Code, or any successor provision or similar provision under state or local law);

 

(5) any non-amortizable assets (other than Subsidiary Stock) will be disposed of on the earlier of (i) the fifteenth anniversary of the applicable Basis Adjustment (or, if such Basis Adjustment occurred more than fifteen years before the Early Termination Effective Date, the Early Termination Effective Date) and (ii) the fifteenth anniversary of the Early Termination Effective Date;

 

(6) any Subsidiary Stock will be deemed never to be disposed of except if Subsidiary Stock is directly disposed of in the Change of Control;

 

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(7) if, on the Early Termination Effective Date, any TRA Holder has Units that have not been Exchanged, then such Units shall be deemed to be Exchanged for the fair market value that would be received by such TRA Holder if such Units had been Exchanged on the Early Termination Effective Date (including Units held by Blocker Corporations that have not consummated a Reorganization Transaction, in which case, the relevant Blocker Corporation would be treated as having Exchanged its Units, in the manner set forth above in this clause, and would be an Exchange TRA Holder (and not a Blocker TRA Holder) with respect to such Units), and such TRA Holder shall be deemed to receive the amount of cash such TRA Holder would have been entitled to pursuant to Section 4.3(a) had such Units actually been Exchanged on the Early Termination Effective Date; and

 

(8) any payment obligations pursuant to this Agreement will be satisfied on the date that any Tax Return to which such payment obligation relates is required to be filed under applicable law as of the Early Termination Effective Date excluding any extensions.

 

Section 1.2 Rules of Construction. Unless otherwise specified herein: 

 

(a) The meanings of defined terms are equally applicable to the singular and plural forms of the defined terms.

 

(b) For purposes of interpretation of this Agreement:

 

(i) The words “herein,” “hereto,” “hereof” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision thereof.

 

(ii) References in this Agreement to a Schedule, Article, Section, clause or sub-clause refer to the appropriate Schedule to, or Article, Section, clause or subclause in, this Agreement.

 

(iii) References in this Agreement to dollars or “$” refer to the lawful currency of the United States of America.

 

(iv) The term “including” is by way of example and not limitation.

 

(v) The term “documents” includes any and all instruments, documents, agreements, certificates, notices, reports, financial statements and other writings, however evidenced, whether in physical or electronic form.

 

(vi) The term “or” shall not be exclusive and shall instead mean “and/or.”

 

(c) In the computation of periods of time from a specified date to a later specified date, the word “from” means “from and including;” the words “to” and “until” each mean “to but excluding;” and the word “through” means “to and including.”

 

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(d) Unless otherwise expressly provided herein, (a) references to organization documents (including the LLC Agreement), agreements (including this Agreement) and other contractual instruments shall be deemed to include all subsequent amendments, restatements, extensions, supplements and other modifications thereto, but only to the extent that such amendments, restatements, extensions, supplements and other modifications are permitted hereby; and (b) references to any law (including the Code and the Treasury Regulations) shall include all statutory and regulatory provisions consolidating, amending, replacing, supplementing or interpreting such law.

 

Article II.
DETERMINATION OF REALIZED TAX BENEFIT

 

Section 2.1 Basis Adjustments; LLC 754 Election; Revaluation

 

(a) Basis Adjustments. The Parties acknowledge and agree to treat (A) to the fullest extent permitted by law each Direct Exchange as giving rise to Basis Adjustments and (B) to the fullest extent permitted by law each Redemption using cash or Class A Common Stock contributed to the LLC by the Corporation as a direct purchase of Units by the Corporation from the applicable Exchange TRA Holder pursuant to Section 707(a)(2)(B) of the Code as giving rise to Basis Adjustments.

 

(b) Section 754 Election. The Corporation shall ensure that, on and after the date hereof and continuing throughout the term of this Agreement, the LLC and each other member of the LLC Group that is treated as a partnership for U.S. federal income tax purposes will have in effect an election under Section 754 of the Code (and under any similar provisions of applicable U.S. state or local law).

 

(c) Revaluation. Pursuant to, and in accordance with, Section 1.704-1 of the Treasury Regulations, for U.S. federal income tax purposes (and any corresponding U.S. state or local tax purposes), the LLC shall revalue its property to fair market value as of the time of the Business Combination.

 

Section 2.2 Reorganization Transaction Date Attribute Schedule. At least thirty (30) days prior to any Reorganization Transaction, the relevant Blocker Corporation shall deliver to the Corporation and the TRA Holder Representative an estimated schedule (the “Estimated Reorganization Transaction Date Attribute Schedule”) of (a) the Blocker Attributes of each of the Blocker Entities as of December 31 of the calendar year ending immediately prior to the year of the applicable Reorganization Transaction and as of the date of the applicable Reorganization Transaction and (b) any current or anticipated (including after the Reorganization) applicable limitations on the use of the Blocker Attributes for tax purposes (including under Section 382 of the Code). Within ninety (90) days after the filing of the U.S. federal income Tax Return of the relevant Blocker Corporation for its short Taxable Year including the Reorganization Transaction, the Corporation, in consultation with the Advisory Firm, the TRA Holder Representative and the relevant Blocker TRA Holder, shall update the Estimated Reorganization Transaction Date Attribute Schedule to reflect the actual Blocker Attributes reflected on such Tax Returns and the Corporation shall deliver such updated schedule (the “Reorganization Transaction Date Attribute Schedule”) to the TRA Holder Representative and the relevant Blocker TRA Holder. The Reorganization Transaction Date Attribute Schedule will become final and binding on the Parties pursuant to the procedures set forth in Section 2.5(a) and may be amended by the Parties pursuant to the procedures set forth in Section 2.5(b). 

 

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Section 2.3 Basis Schedules. Within ninety (90) days after the filing of the U.S. federal income Tax Return of the Corporation for each relevant Taxable Year, the Corporation shall deliver to the TRA Holder Representative a schedule developed in consultation with the Advisory Firm (the “Basis Schedule”) that shows, in reasonable detail as necessary in order to understand the calculations performed under this Agreement: (a) the Basis Adjustments with respect to the Reference Assets as a result of the relevant Exchanges effected in such Taxable Year, (b) the period (or periods) over which each Basis Adjustment is amortizable and/or depreciable, (c) the Non-Adjusted Tax Basis with respect to the Reference Assets described in clause (a) as of each relevant Exchange, (d) the Common Basis Attributable to the relevant TRA Holder that remains (if any) and may give rise to payments pursuant to the terms of this Agreement, and (e) the period (or periods) over which the Common Basis is amortizable and/or depreciable. The Basis Schedule will become final and binding on the Parties pursuant to the procedures set forth in Section 2.5(a) and may be amended by the Parties pursuant to the procedures set forth in Section 2.5(b). 

 

Section 2.4 Tax Benefit Schedules

 

(a) Tax Benefit Schedule. Within ninety (90) days after the filing of the U.S. federal income Tax Return of the Corporation for any Taxable Year in which there is a Realized Tax Benefit or Realized Tax Detriment, the Corporation shall provide to the TRA Holder Representative a schedule developed in consultation with the Advisory Firm showing, in reasonable detail, the calculation of the Realized Tax Benefit or Realized Tax Detriment for such Taxable Year (a “Tax Benefit Schedule”). The Tax Benefit Schedule will become final and binding on the Parties pursuant to the procedures set forth in Section 2.5(a), and may be amended by the Parties pursuant to the procedures set forth in Section 2.5(b).

 

(b) Applicable Principles. Subject to the provisions of this Agreement, the Realized Tax Benefit or Realized Tax Detriment for each Taxable Year is intended to measure the decrease or increase in the actual liability of the Corporation for Covered Taxes for such Taxable Year attributable to the Basis Adjustments, Common Basis, Blocker Attributes, and Imputed Interest, as determined using a “with and without” methodology described in Section 2.5(a). Carryovers, carryforwards, or carrybacks, of any tax item attributable to any Basis Adjustment, Common Basis, Blocker Attributes, or Imputed Interest or any other tax item in respect thereof shall be considered to be subject to the rules of the Code and the Treasury Regulations or the appropriate provisions of U.S. state or local tax law, as applicable, governing the use, limitation, and expiration of carryovers, carryforwards, carrybacks, or other tax items of the relevant type. If a carryover or carryback of any tax item includes a portion that is attributable to any Basis Adjustments, Common Basis, Blocker Attributes, or Imputed Interest (a “TRA Portion”) and another portion that is not (a “Non-TRA Portion”), such portions shall be considered to be used in accordance with the “with and without” methodology so that: (i) the amount of any Non-TRA Portion is deemed utilized first, followed by the amount of any TRA Portion (calculated by taking into account the provisions of Section 3.3(a) to the extent applicable); and (ii) in the case of a carryback of a Non-TRA Portion, such carryback shall not affect the original “with and without” calculation made in the prior Taxable Year. The Parties agree to treat (i) all Tax Benefit Payments (other than Imputed Interest) solely to the extent attributable to an Exchange and to the extent permitted by applicable law (A) as subsequent upward purchase price adjustments that give rise to further Basis Adjustments in respect of an applicable Exchange and (B) have the effect of creating additional Basis Adjustments arising in the Taxable Year in which the applicable Tax Benefit Payment is made and (ii) as a result, to the extent permitted by applicable law, any additional Basis Adjustments arising from such a Tax Benefit Payment shall be treated as giving rise to a Basis Adjustment in the Taxable Year in which the Tax Benefit Payment is made on an iterative basis continuing until any incremental Basis Adjustment is immaterial as reasonably determined by the TRA Holder Representative and the Corporation in good faith and in consultation with the Advisory Firm.

 

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Section 2.5 Procedures; Amendments

 

(a) Procedures. Each time the Corporation delivers an applicable Schedule to the TRA Holder Representative, under this Agreement, including any Amended Schedule delivered pursuant to Section 2.5(b), but excluding any Early Termination Schedule or amended Early Termination Schedule delivered pursuant to the procedures set forth in Section 4.2, the Corporation shall also: (x) deliver supporting schedules and work papers from an Advisory Firm and any additional materials as reasonably requested by the TRA Holder Representative that are reasonably necessary in order to understand the calculations that were relevant for purposes of preparing the Schedule; and (y) allow the TRA Holder Representative and its advisors to have reasonable access to the appropriate representatives, as reasonably requested by the TRA Holder Representative, at the Corporation and the applicable Advisory Firm in connection with a review of such Schedule. Without limiting the generality of the preceding sentence, the Corporation shall ensure that any Tax Benefit Schedule that is delivered to the TRA Holder Representative, along with any supporting schedules and work papers, provides a reasonably detailed presentation of the calculation of the actual liability of the Corporation for Covered Taxes (the “with” calculation) and the Hypothetical Tax Liability of the Corporation (the “without” calculation), and identifies any material assumptions or operating procedures or principles that were used for purposes of such calculations. An applicable Schedule or amendment thereto shall become final and binding on the Parties forty-five (45) days from the date on which the TRA Holder Representative first receives the applicable Schedule or amendment thereto unless:

 

(i) the TRA Holder Representative within forty-five (45) days after receiving the applicable Schedule or amendment thereto, or any TRA Holder impacted by the applicable Schedule or amendment thereto, provides the Corporation with written notice of a material objection to such Schedule that is made in good faith and that sets forth in reasonable detail the TRA Holder Representative or TRA Holder’s material objection (an “Objection Notice”) or

 

(ii) the TRA Holder Representative provides a written waiver of its right to deliver an Objection Notice within the time period described in clause (i) above, in which case such Schedule or amendment thereto becomes binding on the date the waiver from the TRA Representative is received by the Corporation.

 

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In the event that the TRA Holder Representative or any TRA Holder timely delivers an Objection Notice pursuant to clause (i) above, and if the Corporation and the TRA Holder Representative or applicable TRA Holder(s), for any reason, are unable to successfully resolve the issues raised in the Objection Notice through good faith discussions within thirty (30) days after receipt by the Corporation of the Objection Notice, the Corporation and the TRA Holder Representative or applicable TRA Holders shall employ the reconciliation procedures as described in Section 7.9 of this Agreement (the “Reconciliation Procedures”).

 

(b) Amended Schedule. The applicable Schedule for any Taxable Year may be amended from time to time by the Corporation: (i) in connection with a Determination affecting such Schedule; (ii) to correct material inaccuracies in the Schedule identified as a result of the receipt of additional factual information relating to a Taxable Year after the date the Schedule was originally provided to the TRA Holder Representative; (iii) to comply with an Expert’s determination under the Reconciliation Procedures applicable to this Agreement; (iv) to reflect a change in the Realized Tax Benefit or Realized Tax Detriment for such Taxable Year attributable to a carryback or carryforward of a loss or other tax item to such Taxable Year; (v) to reflect a change in the Realized Tax Benefit or Realized Tax Detriment for such Taxable Year attributable to an amended Tax Return filed for such Taxable Year; or (vi) to adjust a Basis Schedule to take into account any Tax Benefit Payments made pursuant to this Agreement (any such Schedule, an “Amended Schedule”).

 

Article III.
TAX BENEFIT PAYMENTS

 

Section 3.1 Timing and Amount of Tax Benefit Payments

 

(a) Timing of Payments. Except as provided in Sections 3.4, and subject to Sections 3.2 and 3.3, within three (3) Business Days following the date on which each Tax Benefit Schedule that is required to be delivered by the Corporation to the TRA Holder Representative pursuant to Section 2.4(a) of this Agreement becomes final in accordance with Section 2.5(a) of this Agreement, the Corporation shall pay to each relevant TRA Holder the Tax Benefit Payment as determined pursuant to Section 3.1(b) that is Attributable to the relevant TRA Holder. Each such Tax Benefit Payment shall be made by wire transfer of immediately available funds to the bank account previously designated by such TRA Holder or as otherwise agreed by the Corporation and such TRA Holder. For the avoidance of doubt, without limiting the Corporation’s ability to make offsets against Tax Benefit Payments with respect to a particular TRA Holder to the extent permitted by Section 3.5, the TRA Holders shall not be required under any circumstances to return any portion of any Tax Benefit Payment previously paid by the Corporation to the TRA Holders (including any portion of any Estimated Tax Benefit Payment or any Early Termination Payment).

 

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(b) Amount of Payments. For purposes of this Agreement, a “Tax Benefit Payment” with respect to any TRA Holder means an amount, not less than zero, equal to the sum of: (i) the portion of the Net Tax Benefit that is Attributable to such TRA Holder (including Imputed Interest, if any, calculated in respect of such amount); and (ii) the Actual Interest Amount and any Default Rate Interest with respect to the Net Tax Benefit described in (i).

 

(i) Attributable. A Net Tax Benefit is “Attributable” to (A) an Exchange TRA Holder to the extent that it is derived from any Common Basis, Basis Adjustment, or Imputed Interest, that is attributable to such Exchange TRA Holder (whether through an Exchange or otherwise, which in the case of Common Basis shall be based on the Common Basis attributable to such Exchange TRA Holder’s LLC Units subject to a given Exchange for U.S. federal income tax purposes as of immediately prior to the applicable Exchange(s)), and (B) any Blocker TRA Holder to the extent that it is derived from any Common Basis, Blocker Attributes, or Imputed Interest (whether attributable to a Reorganization Transaction in respect of such Blocker TRA Holder’s interest in a Blocker Corporation, the Units held by such Blocker Corporation, or otherwise, which in the case of Common Basis shall be based on the Common Basis attributable to such Blocker TRA Holder’s (direct or indirect (through a Blocker Corporation)) LLC Units included in a Reorganization Transaction for U.S. federal income tax purposes as of immediately prior to such Reorganization Transaction), in the case of each of (A) and (B), determined without regard to any dilutive or antidilutive effect of any contribution to or distribution from the LLC after an applicable Exchange or Reorganization Transaction.

 

(ii) Net Tax Benefit. The “Net Tax Benefit” for a Taxable Year equals the amount of the excess, if any, of (x) 85% of the Cumulative Net Realized Tax Benefit as of the end of such Taxable Year over (y) the aggregate amount of all Tax Benefit Payments previously made under this Section 3.1. For the avoidance of doubt, without limiting the Corporation’s ability to make offsets against Tax Benefit Payments with respect to a particular TRA Holder to the extent permitted by Section 3.5, if the Cumulative Net Realized Tax Benefit as of the end of any Taxable Year is less than the aggregate amount of all Tax Benefit Payments previously made, no TRA Holder shall be required to return any portion of any Tax Benefit Payment previously made by the Corporation to such TRA Holder.

 

(iii) Cumulative Net Realized Tax Benefit. The “Cumulative Net Realized Tax Benefit” for a Taxable Year equals the cumulative amount of Realized Tax Benefits for all Taxable Years of the Corporation, up to and including such Taxable Year, net of the cumulative amount of Realized Tax Detriments for the same periods. The Realized Tax Benefit and Realized Tax Detriment for each Taxable Year shall be determined based on the most recent Tax Benefit Schedule or Amended Schedule, if any, in existence at the time of such determination. The computation of the Cumulative Net Realized Tax Benefit shall be adjusted to reflect any applicable Determination with respect to any Realized Tax Benefits and/or Realized Tax Detriments.

 

(iv) Realized Tax Benefit. The “Realized Tax Benefit” for a Taxable Year equals the excess, if any, of (a) the Hypothetical Tax Liability over (b) the actual liability of the Corporation for Covered Taxes; provided, that for purposes of determining the Hypothetical Tax Liability and actual liability of the Corporation for Covered Taxes, the Corporation shall use the Assumed State and Local Tax Rate for purposes of determining such liabilities for all state and local Covered Taxes. For the avoidance of doubt, the calculation of the Hypothetical Tax Liability and the actual liability of the Corporation for Covered Taxes shall take into account any U.S. federal income tax benefit, if any, received by the Corporation with respect to state and local jurisdiction income taxes (with such benefit taking into account the Corporation’s marginal U.S. federal income tax rate for the relevant Taxable Year, the Assumed State and Local Tax Rate, and the deductibility, if any, of state and local jurisdiction income taxes). If all or a portion of the actual liability for such Covered Taxes for the Taxable Year arises as a result of an audit by a Taxing Authority of any Taxable Year, such liability shall not be included in determining the Realized Tax Benefit unless and until there has been a Determination.

 

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(v) Realized Tax Detriment. The “Realized Tax Detriment” for a Taxable Year equals the excess, if any, of the actual liability of the Corporation for Covered Taxes over the Hypothetical Tax Liability for such Taxable Year; provided, that for purposes of determining the Hypothetical Tax Liability and actual liability of the Corporation for Covered Taxes, the Corporation shall use the Assumed State and Local Tax Rate for purposes of determining such liabilities for all state and local Covered Taxes. For the avoidance of doubt, the calculation of the Hypothetical Tax Liability and the actual liability of the Corporation for Covered Taxes shall take into account any U.S. federal income tax benefit received by the Corporation with respect to state and local jurisdiction income taxes (with such benefit taking into account the Corporation’s marginal U.S. federal income tax rate for the relevant Taxable Year, the Assumed State and Local Tax Rate, and the deductibility, if any, of state and local jurisdiction income taxes). If all or a portion of the actual liability for such Covered Taxes for the Taxable Year arises as a result of an audit by a Taxing Authority of any Taxable Year, such liability shall not be included in determining the Realized Tax Detriment unless and until there has been a Determination.

 

(vi) Imputed Interest. The Parties acknowledge that the principles of Sections 1272, 1274, or 483 of the Code, as applicable, and the principles of any similar provision of U.S. state and local tax law, may, as applicable, apply to cause a portion of any payments by the Corporation to a TRA Holder under this Agreement to be treated as imputed interest (“Imputed Interest”). For the avoidance of doubt, the deduction for the amount of Imputed Interest, if any, as determined with respect to any payments made by the Corporation to a TRA Holder shall be excluded in determining the Hypothetical Tax Liability of the Corporation for purposes of calculating Realized Tax Benefits and Realized Tax Detriments pursuant to this Agreement.

 

(vii) Actual Interest Amount. Subject to Section 3.4, the “Actual Interest Amount” calculated in respect of the Net Tax Benefit for a Taxable Year, will equal an amount equal to interest calculated at the Agreed Rate from the due date (without extensions) for filing the U.S. federal income Tax Return of the Corporation for such Taxable Year until the date on which the Corporation makes a timely Tax Benefit Payment to the TRA Holder on or before the Final Payment Date as determined pursuant to Section 3.1(a).

 

(viii) Default Rate Interest. In accordance with Section 5.2, in the event that the Corporation does not make timely payment of all or any portion of a Tax Benefit Payment to a TRA Holder on or before the Final Payment Date as determined pursuant to Section 3.1(a), the amount of any “Default Rate Interest” calculated and payable in accordance with Section 5.2 (if any) in respect of the Tax Benefit Payment (including previously accrued Imputed Interest and Actual Interest Amounts) for a Taxable Year will equal interest calculated at the Default Rate from the Final Payment Date for a Tax Benefit Payment as determined pursuant to Section 3.1(a) until the date on which the Corporation makes such Tax Benefit Payment to such TRA Holder.

 

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(ix) The Corporation and the TRA Holders hereby acknowledge and agree that, as of the date of this Agreement and as of the date of any future Exchange that may be subject to this Agreement, the aggregate value of the Tax Benefit Payments cannot be reasonably ascertained for U.S. federal income or other applicable tax purposes. Notwithstanding anything to the contrary in this Agreement, with respect to each Exchange by any TRA Holder, if such TRA Holder notifies the Corporation in writing of a stated maximum selling price (within the meaning of Treasury Regulation 15A.453-1(c)(2)) to be applied with respect to such Exchange, the amount of the initial consideration received in connection with such Exchange and the aggregate Tax Benefit Payments to such TRA Holder in respect of such Exchange (other than amounts accounted for as interest under the Code) shall not exceed such stated maximum selling price.

 

(c) Interest. The provisions of Section 3.1(b) and Section 5.2 in respect of Default Rate Interest are intended to operate so that interest will effectively accrue (or in the case of Imputed Interest be treated as accruing solely for U.S. federal income or applicable state or local income tax purposes) in respect of the Net Tax Benefit (or Tax Benefit Payment in respect of any Actual Interest Amount or Default Rate Interest) for any Taxable Year as follows:

 

(i) first, solely for U.S. federal income or applicable state or local income tax purposes, at the applicable rate used to determine the amount of Imputed Interest under the Code (from the relevant Exchange Date or Reorganization Transaction Date until the due date (without extensions) for filing the U.S. federal income Tax Return of the Corporation for such Taxable Year and, if required under applicable law, through the Final Payment Date for a Tax Benefit Payment as determined pursuant to Section 3.1(a));

 

(ii) second, at the Agreed Rate (from the due date (without extensions) for filing the U.S. federal income Tax Return of the Corporation for such Taxable Year until the Final Payment Date for a Tax Benefit Payment as determined pursuant to Section 3.1(a)); and

 

(iii) third, in accordance with Section 5.2, at the Default Rate (from the Final Payment Date for a Tax Benefit Payment as determined pursuant to Section 3.1(a) until the date on which the Corporation makes the relevant Tax Benefit Payment to the applicable TRA Holder).

 

Section 3.2 No Duplicative Payments. It is intended that the provisions of this Agreement will not result in the duplicative payment of any amount (including interest) that may be required under this Agreement and the provisions of this Agreement shall be consistently interpreted and applied in accordance with that intent. 

 

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Section 3.3 Pro-Ration of Payments as Between the TRA Holders

 

(a) Insufficient Taxable Income. Notwithstanding anything in Section 3.1(b) to the contrary, if the aggregate potential depreciation, amortization or other tax benefit in respect of the Basis Adjustments, Blocker Attributes, Imputed Interest, Actual Interest Amounts, and Default Rate Interest for purposes of determining the Corporation’s liability for Covered Taxes (the “Covered Tax Benefit”) is limited in a particular Taxable Year because the Corporation does not have sufficient taxable income, then the available Covered Tax Benefit for the Corporation shall be allocated among the TRA Holders in proportion to the respective Tax Benefit Payments that would have been payable if the Corporation had in fact had sufficient taxable income and there had been no such limitation. As an illustration of the intended operation of this Section 3.3(a), if the Corporation had $200 of aggregate potential Covered Tax Benefits in a particular Taxable Year (with $50 of such Covered Tax Benefits being attributable to TRA Holder 1 and $150 of such Covered Tax Benefits being attributable to TRA Holder 2), such that TRA Holder 1 would have potentially been entitled to a Tax Benefit Payment of $10.62 and TRA Holder 2 would have been entitled to a Tax Benefit Payment of $31.87 if the Corporation had $200 of actual taxable income (assuming for purposes of this illustration a 25% tax rate), and if the Corporation in fact (for purposes of this illustration) only had $100 of actual taxable income in such Taxable Year, then $25 of the aggregate $100 actual Covered Tax Benefit for the Corporation for such Taxable Year would be allocated to TRA Holder 1 and $75 of the aggregate $100 actual Covered Tax benefit for the Corporation would be allocated to TRA Holder 2, such that TRA Holder 1 would receive a Tax Benefit Payment of $5.31 and TRA Holder 2 would receive a Tax Benefit Payment of $15.94. Notwithstanding anything to the contrary in Section 3.1(b), in no event will the aggregate of the portions of the Net Tax Benefit that are “Attributable” to the TRA Holders exceed 100% of the Net Tax Benefit.

 

(b) Late Payments. If for any reason the Corporation is not able to timely and fully satisfy its payment obligations under this Agreement in respect of a particular Taxable Year, then Default Rate Interest will begin to accrue pursuant to Section 5.2 and the Corporation and other Parties agree that (i) the Corporation shall pay the Tax Benefit Payments due in respect of such Taxable Year to each TRA Holder pro rata in proportion to the amount of such Tax Benefit Payments, without favoring one obligation over the other, and (ii) no Tax Benefit Payment shall be made in respect of any Taxable Year until all Tax Benefit Payments to all TRA Holders in respect of all prior Taxable Years have been made in full.

 

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Section 3.4 Optional Estimated Tax Benefit Payment Procedure. As long as the Corporation is current in respect of its payment obligations owed to each TRA Holder pursuant to this Agreement and there are no delinquent Tax Benefit Payments (including interest thereon) outstanding in respect of prior Taxable Years for any TRA Holder, the Corporation may, at any time on or after the due date (without extensions) for filing the U.S. federal income Tax Return of the Corporation for a Taxable Year and at the Corporation’s option, in its sole discretion, make one or more estimated payments to the TRA Holders in respect of any anticipated amounts to be owed with respect to a Taxable Year to the TRA Holders pursuant to Section 3.1 of this Agreement (any such estimated payment referred to as an “Estimated Tax Benefit Payment”); provided that any Estimated Tax Benefit Payment made to a TRA Holder pursuant to this Section 3.4 is matched by a proportionately equal Estimated Tax Benefit Payment to all other TRA Holders then entitled to a Tax Benefit Payment. Any Estimated Tax Benefit Payment made under this Section 3.4 shall be paid by the Corporation to the TRA Holders and applied against the final amount of any Tax Benefit Payment to be made pursuant to Section 3.1. The payment of an Estimated Tax Benefit Payment by the Corporation to the TRA Holders pursuant to this Section 3.4 shall also terminate the obligation of the Corporation to make payment of any Actual Interest Amount that might have otherwise accrued with respect to the proportionate amount of the Tax Benefit Payment that is being paid in advance of the applicable Tax Benefit Schedule being finalized pursuant to Section 2.5. Upon the making of any Estimated Tax Benefit Payment pursuant to this Section 3.4, the amount of such Estimated Tax Benefit Payment shall first be applied to any estimated Actual Interest Amount, and then applied to the remaining residual amount of the Tax Benefit Payment to be made pursuant to Section 3.1. In determining the final amount of any Tax Benefit Payment to be made pursuant to Section 3.1, and for purposes of finalizing the Tax Benefit Schedule pursuant to Section 2.5, the amount of any Estimated Tax Benefit Payments that may have been made with respect to the Taxable Year shall be increased if the finally determined Tax Benefit Payment for a Taxable Year exceeds the Estimated Tax Benefit Payments made for such Taxable Year, with such increase being paid by the Corporation to the TRA Holders along with an appropriate Actual Interest Amount (and any Default Rate Interest) in respect of the amount of such increase (a “True-Up”). If the Estimated Tax Benefit Payment to a TRA Holder for a Taxable Year exceeds the finally determined Tax Benefit Payment to the TRA Holder for such Taxable Year, such excess shall be applied to reduce the amount of any subsequent future Tax Benefit Payments (including Estimated Tax Benefit Payments, if any) to be paid by the Corporation to such TRA Holder. As of the date on which any Estimated Tax Benefit Payments are made, and as of the date on which any True-Up is made, all such payments shall be made in the same manner and subject to the same terms and conditions as otherwise contemplated by Section 3.1 and all other applicable terms of this Agreement. For the avoidance of doubt, as is the case with Tax Benefit Payments made by the Corporation to the TRA Holders pursuant to Section 3.1, the Parties intend to treat the amount of any Estimated Tax Benefit Payments made pursuant to this Section 3.4 that are attributable to an Exchange in part as subsequent upward purchase price adjustments that give rise to Basis Adjustments in the Taxable Year of payment to the extent permitted by applicable law and as of the date on which such payments are made (exclusive of any amounts treated as Imputed Interest); provided that any additional Basis Adjustments arising from an Estimated Tax Benefit Payment will be determined on an iterative basis continuing until any incremental Basis Adjustment is immaterial as determined by the TRA Holder Representative and the Corporation in good faith and in consultation with the Advisory Firm. 

 

Section 3.5 Overpayments. To the extent the Corporation makes any Tax Benefit Payment to a TRA Holder in respect of a particular Taxable Year in an amount in excess of the amount of such payment that should have been made to such TRA Holder in respect of such Taxable Year (taking into account this Article III) under the terms of this Agreement, then such excess shall be applied to reduce the amount of any subsequent future Tax Benefit Payments (including Estimated Tax Benefit Payments, if any) to be paid by the Corporation to such TRA Holder and such TRA Holder shall not receive any further Tax Benefit Payments (including Estimated Tax Benefit Payments, if any) until such TRA Holder has foregone an amount of Tax Benefit Payments equal to such excess. The amount of any excess Tax Benefit Payment shall be deemed to have been paid by the Corporation to the relevant TRA Holders on the original due date for the filing of the subsequent Tax Return to which the excess Tax Benefit Payment relates for purposes of determining the Actual Interest Amount to which such relevant TRA Holders shall be entitled. Notwithstanding the foregoing or anything to the contrary contained in this Agreement, the TRA Holders shall not be required, under any circumstances, to return any portion of any Tax Benefit Payment previously paid by the Corporation to the TRA Holders (including any portion of any Estimated Tax Benefit Payment or any Early Termination Payment).

 

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Article IV.
TERMINATION

 

Section 4.1 Early Termination of Agreement; Breach of Agreement

 

(a) Corporation’s Early Termination Right. The Corporation may completely terminate this Agreement, as and to the extent provided herein, with respect to all amounts payable to the TRA Holders pursuant to this Agreement by paying to the TRA Holders the Early Termination Payments; provided that Early Termination Payments may be made pursuant to this Section 4.1(a) only if made to all TRA Holders that are entitled to such a payment, and provided further, that the Corporation may withdraw any notice to execute its termination rights under this Section 4.1(a) prior to the time at which any Early Termination Payment has been paid. Upon the Corporation’s payment of the Early Termination Payments, the Corporation shall not have any further payment obligations under this Agreement, other than with respect to any: (i) prior Tax Benefit Payments that are due and payable under this Agreement but that still remain unpaid as of the date of the Early Termination Notice and that remain unpaid as of the payment of the Early Termination Payments (which Tax Benefit Payments shall not be included in the Early Termination Payments); and (ii) current Tax Benefit Payments due for the Taxable Year ending on or including the date of the Early Termination Notice (except to the extent that the amount described in clause (ii) is included in the calculation of the Early Termination Payments or is included in clause (i)) that remain unpaid as of the payment of the Early Termination Payments. If an Exchange or Reorganization Transaction subsequently occurs with respect to Units (including Units held by Blocker Entities) for which the Corporation has exercised its termination rights under this Section 4.1(a) and paid all amounts owed in connection with the exercise of such rights, the Corporation shall have no obligations under this Agreement with respect to such Exchange or Reorganization Transaction.

 

(b) Acceleration Upon Change of Control. In the event of a Change of Control, the TRA Holder Representative shall have the option, by written notice to the Corporation, to cause the acceleration of all unpaid payment obligations of the Corporation hereunder as calculated pursuant to this Article IV as if an Early Termination Notice had been delivered on the closing date of the Change of Control and utilizing the Valuation Assumptions by substituting the phrase “the closing date of a Change of Control” in each place where the phrase “Early Termination Effective Date” appears. Such obligations shall include, without duplication, but not be limited to, (i) the Early Termination Payments calculated as if an Early Termination Notice had been delivered on the closing date of the Change of Control, (ii) any Tax Benefit Payments agreed to by the Corporation and the TRA Holders as due and payable but unpaid as of the Early Termination Notice (which Tax Benefit Payments shall not be included in the Early Termination Payments) and that remain unpaid as of the payment of the Early Termination Payments, and (iii) any Tax Benefit Payments due for any Taxable Year ending prior to, with or including the closing date of a Change of Control unpaid as of the Early Termination Notice (except to the extent that any amounts described in clause (iii) are included in the Early Termination Payments or are included in clause (ii)) and that remain unpaid as of the payment of the Early Termination Payments. For the avoidance of doubt, Sections 4.2 and 4.3 shall apply to a Change of Control, mutadis mutandis.

 

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(c) Acceleration Upon Breach of Agreement. In the event that the Corporation materially breaches any of its material obligations under this Agreement, whether as a result of failure to make any payment when due, failure to honor any other material obligation required hereunder, or by operation of law as a result of the rejection of this Agreement in a case commenced under Title 11 of the United States Code (11 U.S.C. § 101 et seq.) (the “Bankruptcy Code”) or otherwise, then, at the option of the TRA Holder Representative, all obligations of the Corporation hereunder shall be accelerated and become immediately due and payable upon notice of acceleration from the TRA Holder Representative (provided that in the case of any proceeding under the Bankruptcy Code or other insolvency statute, such acceleration shall be automatic without any such notice), and such obligations shall be calculated as if an Early Termination Notice had been delivered on the date of such notice of acceleration (or, in the case of any proceeding under the Bankruptcy Code or other insolvency statute, on the date of such breach) and shall include, but not be limited to: (i) the Early Termination Payments calculated as if an Early Termination Notice had been delivered on the date of such acceleration; (ii) any prior Tax Benefit Payments that are due and payable under this Agreement but that still remain unpaid as of the date of such acceleration (which Tax Benefit Payments shall not be included in the Early Termination Payments) and that remain unpaid as of the payment of the Early Termination Payments; and (iii) any current Tax Benefit Payments due for the Taxable Year ending with or including the date of such acceleration (except to the extent included in the Early Termination Payments or in clause (ii)) and that remain unpaid as of the payment of the Early Termination Payments. Notwithstanding the foregoing, in the event that the Corporation breaches this Agreement and such breach is not a material breach of a material obligation, the TRA Holder Representative and each TRA Holder shall still be entitled to enforce all of its rights otherwise available under this Agreement, excluding, for the avoidance of doubt, seeking or otherwise obtaining an acceleration of amounts payable under this Agreement pursuant to this Section 4.1(c). For purposes of this Section 4.1(c), and subject to the following sentence, the Parties agree that the failure to make any payment due pursuant to this Agreement within sixty (60) days of the relevant Final Payment Date shall be deemed to be a material breach of a material obligation under this Agreement for all purposes of this Agreement, and that it will not be considered to be a material breach of a material obligation under this Agreement to make a payment due pursuant to this Agreement within sixty (60) days of the relevant Final Payment Date. Notwithstanding anything in this Agreement to the contrary, it shall not be a material breach of a material obligation of this Agreement if the Corporation fails to make any Tax Benefit Payment within sixty (60) days of the relevant Final Payment Date to the extent that the Corporation has insufficient funds or cannot make such payment as a result of obligations imposed in connection with the Senior Obligations or under applicable law, and cannot obtain sufficient funds to make such payments by taking commercially reasonable actions or would become insolvent as a result of making such payment; provided that the interest provisions of Section 5.2 shall apply to such late payment (unless the Corporation does not have sufficient funds to make such payment as a result of limitations imposed by any Senior Obligations, in which case Section 5.2 shall apply, but the Default Rate shall be replaced by the Agreed Rate); and further provided that such payment obligation shall nonetheless accrue for the benefit of the TRA Holders and the Corporation shall make such payment at the first opportunity that it has sufficient funds and is otherwise able to make such payment.

 

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Section 4.2 Early Termination Notice. If the Corporation chooses to exercise its right of early termination under Section 4.1 above, the Corporation shall deliver to the TRA Holder Representative a notice of the Corporation’s decision to exercise such right (an “Early Termination Notice”). Upon delivery of the Early Termination Notice or the occurrence of an event described in Section 4.1(b) or (c) (or an early termination pursuant to Section 4.1(d)), the Corporation shall deliver a schedule developed in consultation with the Advisory Firm (the “Early Termination Schedule”) showing in reasonable detail the calculation of the Early Termination Payment. The Corporation shall also (x) deliver to the TRA Holder Representative supporting schedules and work papers from an Advisory Firm and any additional materials reasonably requested by the TRA Holder Representative that are reasonably necessary in order to understand the calculations that were relevant for purposes of preparing the Early Termination Schedule; and (y) allow the TRA Holder Representative and its advisors to have reasonable access to the appropriate representatives at the Corporation and the applicable Advisory Firm as determined by the Corporation or as reasonably requested by the TRA Holder Representative, in connection with a review of such Early Termination Schedule. The Early Termination Schedule shall become final and binding on each Party forty-five (45) days from the first date on which the TRA Holder Representative received such Early Termination Schedule unless: 

 

(i) the TRA Holder Representative within forty-five (45) days after receiving the Early Termination Schedule, provides the Corporation with notice of a material objection to such Early Termination Schedule made in good faith and setting forth in reasonable detail the TRA Holder Representative’s material objection (a “Termination Objection Notice”); or

 

(ii) the TRA Holder Representative provides a written waiver of such right of a Termination Objection Notice within the period described in clause (i) above, in which case such Early Termination Schedule becomes binding on the date the waiver from the TRA Holder Representative is received by the Corporation.

 

In the event that the TRA Holder Representative timely delivers a Termination Objection Notice pursuant to clause (i) above, and if the Parties, for any reason, are unable to successfully resolve the issues raised in the Termination Objection Notice within thirty (30) days after receipt by the Corporation of the Termination Objection Notice, the Corporation and the TRA Holder Representative shall employ the Reconciliation Procedures. The date on which the Early Termination Schedule becomes final in accordance with this Section 4.2 shall be the “Early Termination Reference Date.”

 

Section 4.3 Payment Upon Early Termination

 

(a) Timing of Payment. Within three (3) Business Days after the Early Termination Reference Date, the Corporation shall pay to each TRA Holder an amount equal to the Early Termination Payment for such TRA Holder. Such Early Termination Payment shall be made by the Corporation by wire transfer of immediately available funds to a bank account or accounts designated by such TRA Holder or as otherwise agreed by the Corporation and such TRA Holder.

 

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(b) Amount of Payment. The “Early Termination Payment” payable to a TRA Holder pursuant to and subject to Section 4.3(a) shall equal the present value, discounted at the Early Termination Rate as determined as of the Early Termination Reference Date, of all Tax Benefit Payments that would be required to be paid (and which have not yet been paid prior to the Early Termination Effective Date) by the Corporation to such TRA Holder, whether payable with respect to Units that were Exchanged prior to the Early Termination Effective Date or on or after the Early Termination Effective Date (including Units held by Blocker Corporations that have not consummated a Reorganization Transaction, in which case, the relevant Blocker Corporation shall be treated as having Exchanged its Units in the manner set forth in the Valuation Assumptions and shall be treated as an Exchange TRA Holder (and not a Blocker TRA Holder) with respect to such Units), beginning from the Early Termination Effective Date and using the Valuation Assumptions.

 

Article V.
SUBORDINATION AND LATE PAYMENTS

 

Section 5.1 Subordination. Notwithstanding any other provision of this Agreement to the contrary, any Tax Benefit Payments or Early Termination Payments required to be made by the Corporation to the TRA Holders under this Agreement shall rank subordinate and junior in right of payment to any principal, interest, or other amounts due and payable in respect of any obligations owed in respect of secured or unsecured indebtedness for borrowed money of the Corporation and its Subsidiaries (“Senior Obligations”) and shall rank pari passu in right of payment with all current or future unsecured obligations of the Corporation that are not Senior Obligations. To the extent that any payment under this Agreement is not permitted to be made at the time payment is due as a result of this Section 5.1 and the terms of the agreements governing Senior Obligations, such payment obligation nevertheless shall accrue for the benefit of the TRA Holders and the Corporation shall make any such payments at the first opportunity that such payments are permitted to be made in accordance with the terms of the Senior Obligations. Furthermore, each TRA Holder shall enter into any subordination agreements in a form reasonably satisfactory to the TRA Holder Representative in order to effectuate the purposes of this Section 5.1. 

 

Section 5.2 Late Payments by the Corporation. Except as otherwise provided in this Agreement, the amount of all or any portion of any Tax Benefit Payment or Early Termination Payment not made to the TRA Holders when due under the terms of this Agreement shall be payable together with any interest thereon, computed at the Default Rate and commencing from the Final Payment Date on which such Tax Benefit Payment or Early Termination Payment was first due and payable to the date of actual payment of such Tax Benefit Payment or Early Termination Payment; provided that if any Tax Benefit Payment or Early Termination Payment is not made to the TRA Holders when due under the terms of this Agreement as a result of Section 5.1 and the terms of the agreements governing Senior Obligations, any such interest shall be computed at the Agreed Rate and not the Default Rate. 

 

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Article VI.
TAX MATTERS; CONSISTENCY; COOPERATION

 

Section 6.1 Participation in the Corporation’s Tax Matters. Except as otherwise provided herein, the Corporation shall have full responsibility for, and sole discretion over, all tax matters concerning the Corporation and its Subsidiaries including without limitation the preparation, filing, or amending of any Tax Return and defending, contesting or settling any audit, contest, or other proceeding pertaining to Taxes; provided, however, that the Corporation shall not settle or fail to contest any issue pertaining to Covered Taxes that is reasonably expected to materially and adversely affect the TRA Holders’ rights and obligations under this Agreement without the consent of the TRA Holder Representative, such consent not to be unreasonably withheld or delayed. The Corporation shall notify the TRA Holder Representative of, and keep it reasonably informed with respect to, the any tax audit or other tax contest of the Corporation the outcome of which is reasonably expected to reduce or defer the Tax Benefit Payments payable to any TRA Holder under this Agreement and the TRA Holder Representative, and any affected TRA Holder, shall have the right to (i) discuss with the Corporation, and provide input and comment to the Corporation regarding, any portion of any such tax audit or other tax contest and (ii) participate in, at the affected TRA Holders’ and TRA Holder Representative’s expense, any such portion of any such tax audit or other tax contest to the extent it relates to issues the resolution of which would reasonably be expected to reduce or defer the Tax Benefit Payments payable to any TRA Holder under this Agreement. To the extent there is a conflict between this Agreement and either the Equity Purchase Agreement or the LLC Agreement relating to tax matters concerning Covered Taxes and the Corporation, including preparation, filing or amending of any Tax Return and defending, contesting or settling any issue pertaining to taxes, this Agreement shall control solely with respect to the matters governed by this Agreement. 

 

Section 6.2 Consistency. Except as otherwise required by applicable law, all calculations and determinations made hereunder, including, without limitation, any Basis Adjustments, the determination of any deductions arising from Common Basis, the Schedules or the determination of any Realized Tax Benefits or Realized Tax Detriments, shall be made in accordance with the elections, methodologies or positions taken by the Corporation and the LLC on their respective Tax Returns. Each TRA Holder shall prepare its Tax Returns in a manner that is consistent with the terms of this Agreement and any related calculations or determinations that are made hereunder, including, without limitation, the Schedules provided under this Agreement, unless otherwise required by applicable law. In the event that an Advisory Firm or Expert is used and is replaced with another Advisory Firm or Expert, such replacement Advisory Firm or Expert shall perform its services under this Agreement using procedures and methodologies consistent with the previous Advisory Firm or Expert, unless otherwise required by applicable law or unless the Corporation and the TRA Holder Representative agree to the use of other procedures and methodologies. 

 

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Section 6.3 Cooperation. The TRA Holder Representative and each TRA Holder, on the one hand, and the Corporation, on the other hand, shall (i) furnish to the other in a timely manner such information, documents and other materials as the other may reasonably request for purposes of making, reviewing, or approving any determination or computation necessary or appropriate under or with respect to this Agreement, preparing any Tax Return or contesting or defending any audit, examination, controversy or other proceeding with any Taxing Authority, or estimating any future Tax Benefit Payments hereunder, (ii) make itself available to the other and its representatives to provide explanations of documents and materials and such other information as may be reasonably requested in connection with any of the matters described in clause (i) above, and (iii) reasonably cooperate in connection with any such matter. Subject to Section 6.1, the Corporation shall provide reasonable assistance as reasonably requested by the TRA Holder Representative on behalf of any TRA Holder in connection with such TRA Holder’s tax returns or financial reporting materials that are required to be prepared under applicable law or contract and/or the consummation of any assignment or transfer of any of its rights and/or obligations under this Agreement, including without limitation, providing any information or executing any documentation. The requesting Party shall reimburse the other Party for any reasonable and documented out-of-pocket costs and expenses incurred by such other Party pursuant to Section 6.3(a). 

 

Article VII.
MISCELLANEOUS

 

Section 7.1 Notices. All notices, requests, consents and other communications hereunder shall be in writing and shall be given (and shall be deemed to have been duly given upon receipt) by delivery in person, by courier service, by fax, by electronic mail (delivery receipt requested) or by certified or registered mail (postage prepaid, return receipt requested) to the respective Parties at the following addresses (or at such other address for a Party as shall be as specified in a notice given in accordance with this Section 7.1). All notices hereunder shall be delivered as set forth below, or pursuant to such other instructions as may be designated in writing by the Party to receive such notice: 

 

If to the Corporation, to:
 
AST SpaceMobile, Inc.
Midland International Air and Space Port
2901 Enterprise Lane
Midland, TX 79706
Attn: Abel Avellan
  Tom Severson
Phone: +1 (432) 276-3966
Email:   [●]
   
with a copy (which shall not constitute notice to the Corporation) to:
   
Latham & Watkins LLP
355 South Grand Avenue, Suite 100
Los Angeles, CA 90071-1560
Attn: Bradley A. Helms
  Ryan Maierson
Fax: +1 (213) 891-8763
Phone:  +1 (213) 891-8640
  +1 (713) 546-7420
Email: [●]

 

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If to the TRA Holder Representative:
   
Attn: Tom Severson
c/o AST SpaceMobile, Inc.
Midland International Air and Space Port
2901 Enterprise Lane
Midland, TX 79706

 

Any Party may change its address, fax number or e-mail address by giving each of the other Parties written notice thereof in the manner set forth above.

 

Section 7.2 Counterparts. This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement and shall become effective when one or more counterparts have been signed by each of the Parties and delivered to the other Parties, it being understood that all Parties need not sign the same counterpart. Delivery of an executed signature page to this Agreement by facsimile transmission shall be as effective as delivery of a manually signed counterpart of this Agreement. 

 

Section 7.3 Entire Agreement; No Third Party Beneficiaries. This Agreement constitutes the entire agreement and supersedes all prior agreements and understandings, both written and oral, among the Parties with respect to the subject matter hereof. This Agreement shall be binding upon and inure solely to the benefit of each Party hereto and their respective successors and permitted assigns, and nothing in this Agreement, express or implied, is intended to or shall confer upon any other Person any right, benefit or remedy of any nature whatsoever under or by reason of this Agreement. 

 

Section 7.4 Governing Law. This Agreement shall be governed by, and construed in accordance with, the law of the State of Delaware, without regard to the conflicts of laws principles thereof that would mandate the application of the laws of another jurisdiction. 

 

Section 7.5 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 and provisions of this Agreement shall 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 hereto shall 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. 

 

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Section 7.6 Assignments; Amendments; Successors; No Waiver

 

(a) Assignment. Each TRA Holder may assign, sell, pledge, or otherwise alienate or transfer any interest in this Agreement, including the right to receive any Tax Benefit Payments under this Agreement, without the consent of the Corporation, to any Person; provided such Person executes and delivers a Joinder agreeing to succeed to the applicable portion of such TRA Holder’s interest in this Agreement and to become a Party and TRA Holder for all purposes of this Agreement (the “Joinder Requirement”). For the avoidance of doubt, if a TRA Holder transfers Units in accordance with the terms of the LLC Agreement but does not assign to the transferee of such Units its rights under this Agreement with respect to such transferred Units, such TRA Holder shall continue to be entitled to receive the Tax Benefit Payments arising in respect of a subsequent Exchange of such Units (and any such transferred Units shall be separately identified, so as to facilitate the determination of Tax Benefit Payments hereunder). The Corporation may not assign any of its rights or obligations under this Agreement to any Person (other than any direct or indirect successor (whether by purchase, merger, consolidation or otherwise) to all or substantially all of the business or assets of the Corporation) without the prior written consent of each of the TRA Holders (and any purported assignment without such consent shall be null and void).

 

(b) Amendments. No provision of this Agreement may be amended unless such amendment is approved in writing by (i) the Corporation, (ii) the TRA Holder Representative, and (iii) TRA Holders who would be entitled to receive at least two-thirds of the Early Termination Payments payable to all TRA Holders in the event the Corporation exercised its rights pursuant to Section 4.1(a) as of the later of the most recent Exchange Date or the most recent Reorganization Transaction, in which case such amendment shall be permitted. Notwithstanding the foregoing, no such amendment shall be effective if such amendment would have a disproportionate adverse impact on the payments certain TRA Holders will or may receive under this Agreement unless all such disproportionately impacted TRA Holders consent in writing to such amendment (such consent not to be unreasonably withheld, conditioned or delayed). No provision of this Agreement may be waived unless such waiver is in writing and signed by the Party against whom the waiver is to be effective.

 

(c) Successors. Except as provided in Section 7.6(a), all of the terms and provisions of this Agreement shall be binding upon, and shall inure to the benefit of and be enforceable by, the Parties hereto and their respective successors, assigns, heirs, executors, administrators and legal representatives. The Corporation shall require and cause any direct or indirect successor (whether by purchase, merger, consolidation or otherwise) to all or substantially all of the business or assets of the Corporation, by written agreement, expressly to (i) assume and agree to perform this Agreement, in the same manner and to the same extent that the Corporation would be required to perform if no such succession had taken place and (ii) become a Party to this Agreement.

 

(d) Waiver. No failure by any Party to insist upon the strict performance of any covenant, duty, agreement, or condition of this Agreement, or to exercise any right or remedy consequent upon a breach thereof, shall constitute a waiver of any such breach or any other covenant, duty, agreement, or condition.

 

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Section 7.7 Titles and Subtitles. The titles of the sections and subsections of this Agreement are for convenience of reference only and are not to be considered in construing this Agreement. 

 

Section 7.8 Resolution of Disputes

 

(a) Except for Reconciliation Disputes subject to Section 7.9, any and all disputes which cannot be settled amicably, including any ancillary claims of any Party, arising out of, relating to or in connection with the validity, negotiation, execution, interpretation, performance or non-performance of this Agreement (including the validity, scope and enforceability of this arbitration provision) (each a “Dispute”) shall be finally resolved by arbitration in accordance with the International Institute for Conflict Prevention and Resolution Rules for Administered Arbitration (the “Rules”) by three arbitrators, of which the Corporation shall appoint one arbitrator and the TRA Holders party to such Dispute shall appoint one arbitrator in accordance with the “screened” appointment procedure provided in Rule 5.4. The arbitration shall be governed by the Federal Arbitration Act, 9 U.S.C. §§ 1 et seq., and judgment upon the award rendered by the arbitrators may be entered by any court having jurisdiction thereof. The place of the arbitration shall be New York, New York.

 

(b) Notwithstanding the provisions of paragraph (a), any Party may bring an action or special proceeding in any court of competent jurisdiction for the purpose of compelling another Party to arbitrate, seeking temporary or preliminary relief in aid of an arbitration hereunder, and/or enforcing an arbitration award and, for the purposes of this paragraph (b), each Party (i) expressly consents to the application of paragraph (c) of this Section 7.8 to any such action or proceeding, and (ii) agrees that proof shall not be required that monetary damages for breach of the provisions of this Agreement would be difficult to calculate and that remedies at law would be inadequate. For the avoidance of doubt, this Section 7.8 shall not apply to Reconciliation Disputes to be settled in accordance with the procedures set forth in Section 7.9.

 

(c) Each Party irrevocably consents to service of process by means of notice in the manner provided for in Section 7.1. Nothing in this Agreement shall affect the right of any Party to serve process in any other manner permitted by law.

 

(d) WAIVER OF RIGHT TO TRIAL BY JURY. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY).

 

(e) In the event the parties are unable to agree whether a dispute between them is a Reconciliation Dispute subject to the dispute resolution procedure set forth in Section 7.9 or a Dispute subject to the dispute resolution procedure set forth in this Section 7.8, such disagreement shall be decided and resolved in accordance with the procedure set forth in this Section 7.8.

 

28
 

 

Section 7.9 Reconciliation. In the event that the Corporation and the TRA Holder Representative (or any applicable TRA Holder) are unable to resolve a disagreement with respect to a Schedule prepared in accordance with the procedures set forth in Section 2.5, or with respect to an Early Termination Schedule prepared in accordance with the procedures set forth in Section 4.2, within the relevant time period designated in this Agreement (a “Reconciliation Dispute”), the Reconciliation Dispute shall be submitted for determination to a nationally recognized expert (the “Expert”) in the particular area of disagreement mutually acceptable to the disputing Parties. The Expert shall be a partner or principal in a nationally recognized accounting firm, and unless the Corporation and the TRA Holder Representative (or any applicable TRA Holder) agree otherwise, the Expert shall not, and the firm that employs the Expert shall not, have any material relationship with the Corporation, the TRA Holder Representative (or any applicable TRA Holder) or other actual or potential conflict of interest. If the disputing Parties are unable to agree on an Expert within fifteen (15) days of receipt by the respondent(s) of written notice of a Reconciliation Dispute, the selection of an Expert shall be treated as a Dispute subject to Section 7.8 and an arbitration panel shall pick an Expert from a nationally recognized accounting firm that does not have any material relationship with the Corporation, the TRA Holder Representative (or any applicable TRA Holder) or other actual or potential conflict of interest. The Expert shall resolve any matter relating to any Schedule or an amendment thereto or the Early Termination Schedule or an amendment thereto within thirty (30) days and shall resolve any matter relating to a Tax Benefit Schedule or an amendment thereto within fifteen (15) days or as soon thereafter as is reasonably practicable, in each case after the matter has been submitted to the Expert for resolution. Notwithstanding the preceding sentence, if the matter is not resolved before any payment that is the subject of a disagreement would be due (in the absence of such disagreement) or any Tax Return reflecting the subject of a disagreement is due, the undisputed amount shall be paid on the date prescribed by this Agreement and such Tax Return may be filed as prepared by the Corporation, subject to adjustment or amendment upon resolution. The Corporation and the applicable TRA Holder(s) shall bear their own costs and expenses of such proceeding, unless (i) the Expert adopts the TRA Holder Representative or applicable TRA Holder(s)’s position, in which case the Corporation shall reimburse the TRA Holder Representative or applicable TRA Holder(s) for any reasonable and documented out-of-pocket costs and expenses in such proceeding (including for the avoidance of doubt any costs and expenses incurred by the TRA Holder Representative or any applicable TRA Holder(s) relating to the engagement of the Expert or amending any applicable Tax Return), or (ii) the Expert adopts the Corporation’s position, in which case the applicable TRA Holder(s) (or the TRA Holder Representative on behalf of such TRA Holder(s)) shall reimburse the Corporation for any reasonable and documented out-of-pocket costs and expenses in such proceeding (including for the avoidance of doubt costs and expenses incurred by the Corporation relating to the engagement of the Expert or amending any applicable Tax Return). The Corporation may withhold payments under this Agreement to collect amounts due under the preceding sentence. The Expert shall finally determine any Reconciliation Dispute and the determinations of the Expert pursuant to this Section 7.9 shall be binding on the Corporation, the TRA Holder Representative and the TRA Holders and may be entered and enforced in any court having competent jurisdiction. 

 

29
 

  

Section 7.10 Withholding. Notwithstanding anything in this Agreement, the Corporation, or any other applicable withholding agent, shall be entitled to deduct and withhold (or cause there to be deduction or withholding), from any payment that is payable to any TRA Holder (or any other person) pursuant to this Agreement any taxes or other amounts as the Corporation or other applicable withholding agent is required to deduct and withhold with respect to the making of any such payment under the Code or any provision of U.S. state, local or foreign tax law or other applicable tax law. Any such deducted or withheld taxes or other amounts, to the extent paid over to the appropriate Taxing Authority or other governmental entity shall be treated for all purposes of this Agreement as having been paid by the Corporation (and/or other applicable withholding agent) to the relevant TRA Holder or other person in respect of which such deduction or withholding was made. Each TRA Holder or other recipient of any payments hereunder shall provide the Corporation with any applicable tax forms, including IRS Form W-9 or the appropriate series of IRS Form W-8, as applicable, or any other information or certifications reasonably requested by the Corporation or other applicable withholding agent in connection with determining whether any such deductions and withholdings are required under the Code or any provision of U.S. state, local or foreign tax law. Notwithstanding the foregoing, if a withholding obligation arises as a result of a Change of Control or other transaction that causes the Corporation (or its successor) to become a non-U.S. Person (for U.S. federal income tax purpose), any amount payable to a TRA Holder under this Agreement shall be increased such that after all required deductions and withholdings have been made (including such deductions and withholdings applicable to additional sums payable under this sentence) the relevant TRA Holder receives an amount equal to the sum that it would have received had no such deductions or withholdings been made. 

 

Section 7.11 Admission of the Corporation into a Consolidated Group; Transfers of Corporate Assets

 

(a) If the Corporation is or becomes a member of an affiliated or consolidated group of corporations that files a consolidated income Tax Return pursuant to Section 1501 or other applicable Sections of the Code governing affiliated or consolidated groups, or any corresponding provisions of U.S. state or local tax law, then: (i) the provisions of this Agreement shall be applied with respect to the group as a whole; and (ii) Tax Benefit Payments, Early Termination Payments, and other applicable items hereunder shall be computed with reference to the consolidated Covered Taxes of the group as a whole.

 

(b) If the Corporation, its successor in interest or any member of a group described in Section 7.11(a) or any member of the LLC Group transfers one or more Reference Assets to a corporation (or a Person classified as a corporation for U.S. federal income tax purposes) with which such entity does not file a consolidated Tax Return pursuant to Section 1501 of the Code, such entity, for purposes of calculating the amount of any Tax Benefit Payment or Early Termination Payment due hereunder, shall be treated as having disposed of such Reference Asset in a fully taxable transaction on the date of such transfer. The consideration deemed to be received by such entity shall be equal to the fair market value of the transferred Reference Asset as determined by a valuation expert mutually agreed upon by the Corporation and the TRA Holder Representative plus, without duplication, (i) the amount of debt to which any such Reference Assets is subject, in the case of a transfer of an encumbered Reference Asset or (ii) the amount of debt allocated to any such Reference Asset, in the case of a transfer of a partnership interest. For purposes of this Section 7.11, a transfer of a partnership interest shall be treated as a transfer of the transferring partner’s share of each of the assets and liabilities of that partnership. Notwithstanding anything to the contrary set forth herein, if the Corporation, its successor in interest or any member of a group described in Section 7.11(a), transfers its assets pursuant to a transaction that qualifies as a “reorganization” (within the meaning of Section 368(a) of the Code) in which such entity does not survive or pursuant to any other transaction, in each case, to which Section 381(a) of the Code applies (other than any such reorganization or any such other transaction, in each case, pursuant to which such entity transfers assets to a corporation with which the Corporation, its successor in interest or any member of the group described in Section 7.11(a) (other than any such member being transferred in such reorganization or other transaction) does not file a consolidated Tax Return pursuant to Section 1501 of the Code), the transfer will not cause such entity to be treated as having transferred any assets to a corporation (or a Person classified as a corporation for U.S. income tax purposes) pursuant to this Section 7.11(b).

 

30
 

 

Section 7.12 Change in Law. Notwithstanding anything herein to the contrary, if, as a result of or, in connection with an actual or proposed change in law, a TRA Holder reasonably believes that the existence of this Agreement could cause adverse tax consequences to such TRA Holder or any direct or indirect owner of such TRA Holder, then at the written election of such TRA Holder in its sole discretion (in an instrument signed by such TRA Holder and delivered to the Corporation and the TRA Holder Representative) and to the extent specified therein by such TRA Holder, this Agreement shall cease to have further effect and shall not apply to such TRA Holder after a date specified by such TRA Holder. 

 

Section 7.13 Interest Rate Limitation. Notwithstanding anything to the contrary contained herein, the interest paid or agreed to be paid hereunder with respect to amounts due to any TRA Holder hereunder shall not exceed the maximum rate of non-usurious interest permitted by applicable law (the “Maximum Rate”). If any TRA Holder shall receive interest in an amount that exceeds the Maximum Rate, the excess interest shall be applied to the Tax Benefit Payment, Estimated Tax Benefit Payment or Early Termination Payment, as applicable (but in each case exclusive of any component thereof comprising interest) or, if it exceeds such unpaid non-interest amount, refunded to the Corporation. In determining whether the interest contracted for, charged, or received by any TRA Holder exceeds the Maximum Rate, such TRA Holder may, to the extent permitted by applicable law, (a) characterize any payment that is not principal as an expense, fee, or premium rather than interest, (b) exclude voluntary prepayments and the effects thereof, and (c) amortize, prorate, allocate, and spread in equal or unequal parts the total amount of interest throughout the contemplated term of the payment obligations owed by the Corporation to such TRA Holder hereunder. Notwithstanding the foregoing, it is the intention of the Parties to conform strictly to any applicable usury laws. 

 

Section 7.14 Independent Nature of Rights and Obligations. The rights and obligations of each TRA Holder hereunder are several and not joint with the rights and obligations of any other Person. A TRA Holder shall not be responsible in any way for the performance of the obligations of any other Person hereunder, nor shall a TRA Holder have the right to enforce the rights or obligations of any other Person hereunder (other than the Corporation). Nothing contained herein or in any other agreement or document delivered at any closing, and no action taken by any TRA Holder pursuant hereto or thereto, shall be deemed to constitute the TRA Holders acting as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the TRA Holders are in any way acting in concert or as a group with respect to such rights or obligations or the transactions contemplated hereby, and the Corporation acknowledges that the TRA Holders are not acting in concert or as a group and will not assert any such claim with respect to such rights or obligations or the transactions contemplated hereby. 

 

31
 

 

Section 7.15 LLC Agreement. This Agreement shall be treated as part of the LLC Agreement as described in Section 761(c) of the Code and Sections 1.704-1(b)(2)(ii)(h) and 1.761-1(c) of the Treasury Regulations. 

 

Section 7.16 TRA Holder Representative. By executing this Agreement, each of the TRA Holders shall be deemed to have irrevocably constituted and appointed Thomas Severson (in the capacity described in this Section 7.16 and each successor as provided below, the “TRA Holder Representative”) as its agent and attorney in fact with full power of substitution to act from and after the date hereof and to do any and all things and execute any and all documents on behalf of such TRA Holders which may be necessary, convenient or appropriate to facilitate any matters under this Agreement, including but not limited to, and unless otherwise provided by this Agreement: (i) execution of the documents and certificates required pursuant to this Agreement; (ii) receipt and forwarding of notices and communications pursuant to this Agreement; (iv) administration of the provisions of this Agreement; (v) giving or agreeing to, on behalf of such TRA Holders, any and all consents, waivers, amendments or modifications deemed by the TRA Holder Representative, in its sole and absolute discretion, to be necessary or appropriate under this Agreement and the execution or delivery of any documents that may be necessary or appropriate in connection therewith; (vi) taking actions the TRA Holder Representative is expressly authorized to take pursuant to the other provisions of this Agreement; (vii) negotiating and compromising, on behalf of such TRA Holders, any dispute that may arise under, and exercising or refraining from exercising any remedies available under, this Agreement or any other agreement contemplated hereby and executing, on behalf of such TRA Holders, any settlement agreement, release or other document with respect to such dispute or remedy; (viii) engaging attorneys, accountants, agents or consultants on behalf of such TRA Holders in connection with this Agreement or any other agreement contemplated hereby and paying any fees related thereto; and (ix) effectuating the purposes of Section 5.1 (Subordination). If the TRA Holder Representative is unwilling to so serve, then the person then-serving as the TRA Holder Representative shall be entitled to appoint its successor which such successor shall be subject to the approval of a majority of the TRA Holders. To the fullest extent permitted by law, none of the TRA Holder Representative, any of its Affiliates, or any of the TRA Holder Representative’s or Affiliate’s directors, officers, employees or other agents (each a “Covered Person”) shall be liable, responsible or accountable in damages or otherwise to any TRA Holder, the LLC, or the Corporation for damages arising from any action taken or omitted to be taken by the TRA Holder Representative or any other Person with respect to the LLC or the Corporation, except in the case of any action or omission which constitutes, with respect to such Person, willful misconduct or fraud. Each of the Covered Persons may consult with legal counsel, accountants, and other experts selected by it, and any act or omission suffered or taken by it on behalf of the LLC or the Corporation or in furtherance of the interests of the LLC or the Corporation in good faith in reliance upon and in accordance with the advice of such counsel, accountants, or other experts shall create a rebuttable presumption of the good faith and due care of such Covered Person with respect to such act or omission; provided that such counsel, accountants, or other experts were selected with reasonable care. Each of the Covered Persons may rely in good faith upon, and shall have no liability to the LLC, the Corporation or the TRA Holders for acting or refraining from acting upon, any resolution, certificate, statement, instrument, opinion, report, notice, request, consent, order, bond, debenture, or other paper or document reasonably believed by it to be genuine and to have been signed or presented by the proper party or parties. For the avoidance of doubt, notwithstanding the foregoing, if a provision of this Agreement provides a right or entitlement of any kind to a TRA Holder, this Section 7.16 shall not override the TRA Holder’s ability to exercise or enforce such right or enjoy such entitlement. 

 

Section 7.17 Non-Effect of Other Tax Receivable Agreements. If the Corporation enters into any other agreement after the date hereof (for the avoidance of doubt other than the Equity Purchase Agreement, the LLC Agreement, or any related agreement entered into in connection with the execution of the Equity Purchase Agreement or as contemplated by the Equity Purchase Agreement in connection with the consummation of the transactions contemplated thereby) after the date of the execution of this Agreement that obligates the Corporation to make payments to another party in exchange for tax benefits conferred upon the Corporation, unless otherwise agreed by the TRA Holder Representative, such tax benefits and such payments shall be ignored for all purposes of this Agreement (including for purposes of calculating the Hypothetical Tax Liability and the actual Tax liability of the Corporation hereunder). 

 

[Signature Page Follows This Page]

 

32
 

 

IN WITNESS WHEREOF, the undersigned have executed or caused to be executed on their behalf this Agreement as of the date first written above.

 

  CORPORATION:
     
  AST SpaceMobile, Inc.
     
  By: /s/ Thomas Severson
  Name:  Thomas Severson
  Title: Chief Financial Officer and
    Chief Operating Officer

 

 
 

  

  THE LLC:
   
  AST & Science, LLC
     
  By: /s/ Thomas Severson
  Name: Thomas Severson
  Title: Chief Financial Officer and
    Chief Operating Officer

 

 
 

 

  TRA HOLDER REPRESENTATIVE:
     
  By: /s/ Thomas Severson             
  Name: Thomas Severson

 

 
 

 

  TRA HOLDER:
     
  Abel Avellan
     
  By: /s/ Abel Avellan  
  Name: Abel Avellan

 

 
 

 

  TRA HOLDER:
     
  Invesat LLC
     
  By: /s/ Adriana Cisneros  
  Name: Adriana Cisneros
  Title: President

 

 
 

 

  TRA HOLDER:
     
  Vodafone Ventures Limited
     
  By: /s/ Rahul Atri   
  Name:  Rahul Atri
  Title: Managing Director

 

 
 

 

  TRA HOLDER:
     
  ATC TRS II LLC
     
  By: /s/ Edmund DiSanto   
  Name:  Edmund DiSanto
  Title: EVP, Chief Administration Officer and General Counsel

 

 
 

  

  TRA HOLDER:
     
  Rakuten Mobile USA Service Inc.
     
  By: /s/ Kaname Sueyoshi  
  Name: Kaname Sueyoshi
  Title: Authorized Signatory

 

 
 

  

  TRA HOLDER:
     
  SAMSUNG NEXT FUND LLC
     
  By: /s/ Brendon Kim   
  Name:  Brendon Kim
  Title: Authorized Officer of Samsung Next Fund LLC

 

 
 

 

Exhibit A

 

FORM OF JOINDER AGREEMENT

 

This JOINDER AGREEMENT, dated as of _________________, 20___ (this “Joinder”), is delivered pursuant to that certain Tax Receivable Agreement, dated as of [●] (as amended, restated, amended and restated, supplemented or otherwise modified from time to time, the “Tax Receivable Agreement”) by and among AST SpaceMobile, Inc., a Delaware corporation (the “Corporation”), AST & Science, LLC, a Delaware limited liability company (the “LLC”), the TRA Holder Representative (as defined in the Tax Receivable Agreement), and each of the Exchange TRA Holders and the Blocker TRA Holders (each as defined in the Tax Receivable Agreement and, collectively, the “TRA Holders,” from time to time party thereto). Capitalized terms used but not otherwise defined herein have the respective meanings set forth in the Tax Receivable Agreement.

 

  1. Joinder to the Tax Receivable Agreement. Upon the execution of this Joinder by the undersigned and delivery hereof to the Corporation, the undersigned hereby is and hereafter will be a TRA Holder under the Tax Receivable Agreement and a Party thereto, with all the rights, privileges and responsibilities of a TRA Holder thereunder. The undersigned hereby agrees that it shall comply with and be fully bound by the terms of the Tax Receivable Agreement as if it had been a signatory thereto as of the date thereof.
     
  2. Incorporation by Reference. All terms and conditions of the Tax Receivable Agreement are hereby incorporated by reference in this Joinder as if set forth herein in full.
     
  3. Address. All notices under the Tax Receivable Agreement to the undersigned shall be direct to:

 

[Name]

[Address]

[City, State, Zip Code]

Attn:

Facsimile:

E-mail:

 

IN WITNESS WHEREOF, the undersigned has duly executed and delivered this Joinder as of the day and year first above written.

 

  [NAME OF NEW PARTY]
     
  By:  
  Name:  
  Title:  

 

Acknowledged and agreed

as of the date first set forth above:

 

[●]

 

By:    
Name:    
Title:    

 

 

 

Exhibit 10.5

 

 

 

AST & SCIENCE, LLC

 

A Delaware Limited Liability Company

 

 

 

FIFTH AMENDED AND RESTATED
LIMITED LIABILITY COMPANY OPERATING AGREEMENT

 

Dated as of April 6, 2021

 

THE UNITS REPRESENTED BY THIS FIFTH AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED, OR UNDER ANY OTHER APPLICABLE SECURITIES LAWS. SUCH UNITS MAY NOT BE SOLD, ASSIGNED OR OTHERWISE DISPOSED OF AT ANY TIME WITHOUT EFFECTIVE REGISTRATION UNDER SUCH ACT AND LAWS OR EXEMPTION THEREFROM, AND COMPLIANCE WITH THE OTHER SUBSTANTIAL RESTRICTIONS ON TRANSFERABILITY SET FORTH HEREIN.

 

 
 

 

TABLE OF CONTENTS

 

    Page
     
Article 1. DEFINITIONS 1
   
Article 2. FORMATION OF LIMITED LIABILITY COMPANY 9
  2.1 Formation and Tax Classification 9
  2.2 Continuation of the Company 10
  2.3 Company Name 10
  2.4 Term of Company 10
  2.5 Purposes 10
  2.6 Limitation of Liability 10
  2.7 Title to Company Property 10
     
Article 3. MANAGEMENT 11
  3.1 Management of the Company 11
  3.2  Officers 11
  3.3  No Management by Members 11
  3.4 Reliance by Third Parties 11
  3.5  Personnel; Expenses; Insurance; Reimbursements; Related Party Transactions 11
  3.6 Restrictions on the Managing Member’s Authority 12
       
Article 4. MEMBERS, UNITS, CAPITAL CONTRIBUTIONS, CAPITAL ACCOUNTS 13
  4.1  Identity of Members 13
  4.2 Units 13
  4.3 Capital Contributions 14
  4.4  Capital Accounts 14
  4.5  Additional Ownership Interests 15
  4.6 Advances 15
  4.7  No Resignation or Withdrawal; No Interest 16
  4.8  Nature of Ownership Interest; No Partition 16
  4.9 Warrants 16
  4.10  Authorization and Issuance of Additional Common Units 17
  4.11 Repurchase or Redemption of Shares of Class A Common Stock 17
  4.12 Managing Member Equity Awards 18
       
Article 5. ALLOCATIONS 19
  5.1 Allocations of Profits and Losses 19
  5.2  Regulatory Allocations 20
  5.3 Tax Allocations 21
       
Article 6. DISTRIBUTIONS 21
  6.1  Distributions 21
  6.2  Distributions In-Kind 22
  6.3  Tax Distributions 22
  6.4 Amounts Withheld 23
  6.5 Limitations on Distribution 23
       
Article 7 . BOOKS AND RECORDS 24
  7.1 Books, Record and Financial Statements 24

 

 
 

 

  7.2 Accounting Methods 24
  7.3 Audit 24
       
Article 8. TAX MATTERS 25
  8.1 Tax Matters Partner; BBA Rules 25
  8.2 Section 754 Election 25
  8.3 Section 83(b) Elections 26
  8.4 Other Tax Matters 26
  8.5 Adverse Tax Consequences 27
       
Article 9. LIABILITY, EXCULPATION AND INDEMNIFICATION 27
  9.1 Exculpation 27
  9.2 Indemnification by the Company 28
  9.3 Insurance 29
       
Article 10. RESTRICTIONS ON TRANSFERS OF OWNERSHIP INTERESTS 30
  10.1 Transfers by the Managing Member 30
  10.2 Transfers by Members 30
  10.3 Certain Provisions Applicable to Transfers 30
  10.4 Pledges 31
  10.5 Certain Transactions with Respect to the Managing Member 31
       
Article 11. REDEMPTION 33
  11.1 Redemption Right of a Member 33
  11.2 Election and Contribution of the Managing Member 35
  11.3 Exchange of Incentive Equity Units 36
  11.4 Direct Exchange Right of the Managing Member 37
  11.5 Reservation of shares of Class A Common Stock; Listing; Certificate of Incorporation 37
  11.6 Effect of Exercise of Redemption 38
  11.7 Tax Treatment 38
  11.8 Blocker Merger Transaction Cooperation 38
       
Article 12. DISSOLUTION, LIQUIDATION AND TERMINATION 39
  12.1 Dissolution 39
  12.2 Notice of Dissolution 39
  12.3 Liquidation 39
  12.4 Termination 39
  12.5 Claims of the Members 39
       
Article 13. PROCEDURES FOR ACTIONS AND CONSENTS OF MEMBERS 39
  13.1 Procedures for Actions and Consents of Members 39
  13.2 Actions and Consents of Members 39
       
Article 14. MISCELLANEOUS 40
  14.1 Notices 40
  14.2 Failure to Pursue Remedies 41
  14.3 Cumulative Remedies 41
  14.4 Binding Effect 41
  14.5 Interpretation 41
  14.6 Severability 41
  14.7 Counterparts 41
  14.8 Integration 41
  14.9 Amendments 41
  14.10 Headings 41
  14.11 Governing Law 42
  14.12 Consent to Jurisdiction 42
  14.13 Waiver of Jury Trial 42

 

 
 

 

AST & SCIENCE, LLC

 

FIFTH AMENDED AND RESTATED
LIMITED LIABILITY COMPANY OPERATING AGREEMENT

 

This FIFTH AMENDED AND RESTATED LIMITED LIABILITY COMPANY OPERATING AGREEMENT (this “Agreement”) of AST & SCIENCE, LLC, a Delaware limited liability company (the “Company”), is made and entered into and becomes effective as of the 6th day of April, 2021 (the “Effective Date”) by and among the Company, AST SpaceMobile, Inc., a Delaware corporation, as the managing member of the Company (together with any successor managing member permitted pursuant to this Agreement, the “Managing Member”) and the Members.

 

RECITALS

 

WHEREAS, the Company was organized on May 31, 2017 under the name AST & SCIENCE, LLC by filing a Certificate of Formation (the “Certificate”) with the office of the Secretary of State of the State of Delaware pursuant to the provisions of the Delaware Limited Liability Company Act (6 Del. C. §18-101 et. seq.), as amended from time to time (the “Act”);

 

WHEREAS, the Company and certain other persons have entered into that certain Fourth Amended and Restated Limited Liability Company Operating Agreement of AST & SCIENCE, LLC, dated as of February 4, 2020 (as amended and supplemented to date, the “Previous Agreement”);

 

WHEREAS, the Previous Agreement may be amended only by a written instrument executed by (a) the Company, (b) the holders of a majority of the outstanding Shares, voting as a single class on an as-converted to Common Shares basis, (c) Rakuten Mobile USA Service Inc., (d) Vodafone Ventures Limited, and (e) Invesat LLC; and

 

WHEREAS, in connection with the transactions contemplated by the Equity Purchase Agreement, dated December 15, 2020 (the “Purchase Agreement”), by and among New Providence Acquisition Corp., the Company and the Shareholders (as defined in the Previous Agreement), the Shareholders desire to amend and restate the Previous Agreement to, among other things: (i) reflect AST SpaceMobile, Inc. as the Managing Member, (ii) recapitalize the Company to (x) reclassify the Common Shares, Preferred Shares and Prior Company Options (collectively, the “Previous Interests”) as set forth herein, (y) create two classes of units, Common Units and Incentive Equity Units and (z) provide for the issuance of additional Common Units as contemplated by the Purchase Agreement and the issuance of the Warrants pursuant to the Warrant Agreements.

 

NOW, THEREFORE, in consideration of the mutual covenants herein contained and other valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto hereby agree as follows:

 

AGREEMENT

 

Article 1.
DEFINITIONS

 

As used in this Agreement, the following terms have the following meanings:

 

Act” has the meaning given to such term in the recitals to this Agreement.

 

1
 

 

Action” means any claim, action, suit, charge, litigation, arbitration, mediation audit, notice of violation or citation received, or other proceeding at law or in equity (whether civil, criminal or administrative) by or before any Governmental Entity.

 

Adjusted Capital Account Deficit” means with respect to the Capital Account of any Member as of the end of any Fiscal Year, the amount by which the balance in such Capital Account is less than zero. For this purpose, such Member’s Capital Account balance shall be:

 

(a) reduced for any items described in Treasury Regulation Section 1.704- 1(b)(2)(ii)(d)(4), (5), and (6); and

 

(b) increased for any amount such Member is obligated to contribute or is treated as being obligated to contribute to the Company pursuant to Treasury Regulation Section 1.704-1(b)(2)(ii)(c) (relating to partner liabilities to a partnership) or 1.704-2(g)(1) and 1.704-2(i) (relating to minimum gain).

 

Affiliate” means with respect to a specified Person, any Person that directly or indirectly controls, is controlled by, or is under common control with, the specified Person. As used in this definition, the term “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through ownership of voting securities, by contract or otherwise, and is not limited, for instance, to the ownership of more than fifty percent (50%) of the voting securities of a corporate Person. For purposes of this Agreement, no Member shall be deemed to be an Affiliate of any other Member solely as a result of membership in the Company.

 

Agreement” has the meaning given to such term in the Preamble.

 

Assumed Tax Rate” has the meaning set forth in Section 6.3.

 

Avellan Holders” has the meaning set forth in the Stockholders Agreement.

 

BBA Rules” has the meaning set forth in Section 8.1.1.

 

Black-Out Period” means any “black-out” or similar period under the Managing Member’s policies covering trading in the Managing Member’s securities to which the applicable Redeeming Member is subject (or will be subject at such time as it owns Class A Common Stock), which period restricts the ability of such Redeeming Member to immediately resell shares of Class A Common Stock to be delivered to such Redeeming Member in connection with a Share Settlement.

 

Blocker Corporation” has the meaning set forth in Section 11.8.

 

Blocker Merger Transaction” has the meaning set forth in Section 11.8.

 

Board” means the Board of Directors of the Managing Member.

 

Book Value” means, with respect to any property of the Company (including any property of any Company Subsidiary that is treated as a disregarded entity for U.S. federal income tax purposes), the Company’s adjusted basis for U.S. federal income tax purposes, adjusted from time to time to reflect the adjustments required or permitted by Treasury Regulation Section 1.704-1(b)(2)(iv)(d)-(g).

 

Capital Account” means, with respect to any Member, the account maintained for such Member in accordance with the provisions of this Agreement.

 

2
 

 

Capital Contribution” means a contribution of money or other property by a Member to the Company.

 

Cash Settlement” means immediately available funds in U.S. dollars in an amount equal to the Redeemed Units Equivalent.

 

Certificate” has the meaning set forth in the Preamble.

 

Change of Control” means the occurrence of any of the following events:

 

(1) any “person” or “group” (within the meaning of Sections 13(d) and 14(d) of the Exchange Act, but excluding any employee benefit plan of such person and its subsidiaries, and any person or entity acting in its capacity as trustee, agent or other fiduciary or administrator of any such plan, and excluding the Permitted Holders) becomes the “beneficial owner” (within the meaning of Rules 13d-3 and 13d-5 under the Exchange Act), directly or indirectly, of shares of Class A Common Stock, Class B Common Stock, Class C Common Stock, preferred stock and/or any other class or classes of capital stock of the Managing Member (if any) representing in the aggregate more than fifty percent (50%) of the voting power of all of the outstanding shares of capital stock of the Managing Member entitled to vote;

 

(2) the stockholders of the Managing Member approve a plan of complete liquidation or dissolution of the Managing Member or there is consummated an agreement or series of related agreements for the sale or other disposition, directly or indirectly, by the Managing Member of all or substantially all of the Managing Member’s assets (including a sale of all or substantially all of the assets of the Company); or

 

(3) there is consummated a merger or consolidation of the Managing Member with any other corporation or entity, and, immediately after the consummation of such merger or consolidation, the voting securities of the Managing Member immediately prior to such merger or consolidation do not continue to represent, or are not converted into, more than fifty percent (50%) of the combined voting power of, or economic interest in, the then outstanding voting securities of the Person resulting from such merger or consolidation or, if the surviving company is a Subsidiary, the ultimate parent thereof.

 

Notwithstanding the foregoing, a “Change of Control” shall not be deemed to have occurred by virtue of the consummation of any transaction or series of integrated transactions immediately following which the record holders of the Class A Common Stock, Class B Common Stock, Class C Common Stock, preferred stock and/or any other class or classes of capital stock of the Managing Member immediately prior to such transaction or series of transactions continue to have substantially the same proportionate ownership in and voting control over, and own substantially all of the shares of, an entity which owns all or substantially all of the assets of the Managing Member immediately following such transaction or series of transactions.

 

Change of Control Date” has the meaning set forth in Section 10.5.1.

 

Change of Control Transaction” means any Change of Control that was approved by the Board prior to such Change of Control.

 

Class A Common Stock” means the Class A Common Stock, par value $0.0001 per share, of the Managing Member.

 

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Class B Common Stock” means the Class B Common Stock, par value $0.0001 per share, of the Managing Member.

 

Class C Common Stock” means the Class C Common Stock, par value $0.0001 per share, of the Managing Member.

 

Code” means the Internal Revenue Code of 1986, as amended from time to time, or any corresponding federal tax statute enacted after the date of this Agreement.

 

Common Shares” means common shares issued pursuant to the Previous Agreement.

 

Common Unit” means a unit of Ownership Interest which entitles the holder thereof to the distributions, allocations, and other rights that are accorded holders of Common Units under this Agreement.

 

Common Unit Redemption Price” means, with respect to any Redemption, the arithmetic average of the volume weighted average prices for a share of Class A Common Stock (or any class of stock into which it has been converted) on the Stock Exchange, or any other exchange or automated or electronic quotation system on which the Class A Common Stock trades, as reported by Bloomberg, L.P., or its successor, for each of the five (5) consecutive full trading days ending on and including the last full trading day immediately prior to the applicable Redemption Date, subject to appropriate and equitable adjustment (if any) for any stock splits, reverse splits, stock dividends or similar events affecting the Class A Common Stock as determined by the Managing Member in good faith. If the Class A Common Stock no longer trades on the Stock Exchange or any other securities exchange or automated or electronic quotation system as of any particular Redemption Date, then the Managing Member (through a majority of its independent directors (within the meaning of the rules of the Stock Exchange)) shall determine the Common Unit Redemption Price in good faith.

 

Company” has the meaning given to such term in the preamble to this Agreement.

 

Company Equity Plan” means the Company 2019 Equity Incentive Plan.

 

Consent” means the consent to, approval of, or vote in favor of a proposed action by a Member given in accordance with Article 13 hereof

 

Control” of a Person 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 the ownership of voting securities, as trustee or executor, by contract or otherwise, including, without limitation, the ownership, directly or indirectly, of securities having the power to elect a majority of the board of directors or similar body governing the affairs of such Person.

 

Corresponding Rights” means any rights issued with respect to a share of Class A Common Stock, Class B Common Stock, Class C Common Stock pursuant to a “poison pill” or similar stockholder rights plan approved by the Board.

 

Covered Person” has the meaning set forth in Section 9.1.1.

 

Covered Proceeding” has the meaning set forth in Section 9.2.2.

 

Direct Exchange” has the meaning set forth in Section 11.4.

 

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Direct Exchange Election Notice” has the meaning set forth in Section 11.4.

 

Draft Tax Statements” has the meaning set forth in Section 8.4.2.3.

 

Effective Date” has the meaning set forth in the Preamble.

 

Election Notice” has the meaning set forth in Section 11.1.2.

 

Equity Securities” means, with regard to any Person, as applicable, (a) any capital stock, voting, partnership, membership, joint venture or other ownership or equity interests, or other share capital of such Person, (b) any debt or equity securities of such Person, directly or indirectly, convertible into or exchangeable for any capital stock, partnership, membership, joint venture or other ownership or equity interests, or other share capital (whether voting or non-voting, whether preferred, common or otherwise) of such Person or containing any profit participation features with respect to such Person, (c) any rights or options directly or indirectly to subscribe for or to purchase any capital stock, partnership, membership, joint venture or other ownership or equity interests, other share capital of such Person or securities containing any profit participation features with respect to such Person or directly or indirectly to subscribe for or to purchase any securities directly or indirectly convertible into or exchangeable for any capital stock, partnership, membership, joint venture or other ownership interests, other share capital of such Person or securities containing any profit participation features with respect to such Person, (d) any share, unit or Ownership Interest appreciation rights, phantom share rights, contingent interest or other similar rights relating to such Person, or (e) any Equity Securities of such Person issued or issuable with respect to the securities referred to in clauses (a) through (d) above in connection with a combination of shares, units or Ownership Interests or recapitalization, exchange, merger, consolidation or other reorganization.

 

Estimated Tax Periods” means the periods from January 1 to March 31, from April 1 to May 31, from June 1 to August 31, and from September 1 to December 31, which may be adjusted by the Managing Member to the extent necessary to take into account changes in estimated tax payment due dates for U.S. federal income taxes under applicable law.

 

Exchanged Incentive Equity Units” has the meaning set forth in Section 11.3.

 

Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended, and any applicable rules and regulations promulgated thereunder, and any successor to such statute, rules or regulations.

 

Excluded Instruments” has the meaning set forth in Section 4.9.

 

Final Tax Statements” has the meaning set forth in Section 8.4.2.3.“Fiscal Year” means (i) any twelve (12) month period commencing on January 1 and ending on December 31 or (ii) any portion of the period described in clause (i) of this sentence for which the Company is required to allocate Profits, Losses and other items of Company income, gain, loss or deduction pursuant to Section 4, subject to, in either case for tax matters, Section 706 of the Code.

 

GAAP” means U.S. generally accepted accounting principles, in effect as of the date of determination thereof.

 

Governmental Entity” means any nation or government, any state, province or other political subdivision thereof, any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government, including any court, arbitrator (public or private) or other body or administrative, regulatory or quasi-judicial authority, agency, department, board, commission or instrumentality of any federal, state, local or non-U.S. jurisdiction.

 

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Incentive Equity Exchange” has the meaning set forth in Section 11.3.

 

Incentive Equity Exchange Date” has the meaning set forth in Section 11.3.

 

Incentive Equity Exchange Notice” has the meaning set forth in Section 11.3.

 

Incentive Equity Exchange Right” has the meaning set forth in Section 11.3.

 

Incentive Equity Exchanging Member” has the meaning set forth in Section 11.3.

 

Incentive Equity Option” has the meaning set forth in Section 4.2.2 below.

 

Incentive Equity Unit” means a unit of Ownership Interest designated as an Incentive Equity Unit which entitles the holder thereof to the distributions, allocations, and other rights that are accorded holders of Incentive Equity Units under this Agreement.

 

Lender” has the meaning set forth in Section 10.4.2.

 

Managing Member” has the meaning set forth in the preamble.

 

Managing Member Equity Plan” means any stock incentive or equity purchase plan or other similar equity compensation plan now or hereafter adopted by the Managing Member, including the AST SpaceMobile, Inc. 2020 Incentive Award Plan.

 

Member(s)” means as of any particular time any Person who is a Member. Any reference to a particular Member or holder of an Ownership Interest shall include successors and permitted transferees of such Member.

 

Member Representative” means Abel Avellan.

 

Member Schedule” has the meaning set forth in Section 7.1,1.

 

Minimum Gain” means “partnership minimum gain” determined pursuant to Treasury Regulation Section 1.704-2(d).

 

Optionee” means a Person to whom a Stock Option is granted under any Managing Member Equity Plan and any holder of an Incentive Equity Option.

 

Ownership Interest” means the entire ownership interest of a Member in the Company at any particular time, including the right of such Member to any and all benefits to which a Member may be entitled under this Agreement and the Act, together with the obligations of such Member to comply with all the terms and provisions of this Agreement with which such Member is required to comply.

 

Percentage Interest” means, with respect to any Member as of any time, the percentage determined by dividing the number of Units held by the Member as of such time by the total number of Units then outstanding.

 

Permitted Holder” means (i) the Voting Parties (as defined in the Stockholders’ Agreement) as of the Closing; (ii) any Permitted Transferee (as defined in the Stockholders’ Agreement) that becomes party to the Stockholders’ Agreement; (iii) any Affiliate of any of the foregoing; or (iv) any “group” (within the meaning of Sections 13(d) and 14(d) of the Exchange Act) in which the Persons referred to in the foregoing clauses (i) – (v) beneficially own (within the meaning of Rules 13d-3 and 13d-5 under the Exchange Act) in the aggregate, directly or indirectly, a majority of the voting power of the shares of Class A Common Stock, Class B Common Stock and Class C Common Stock beneficially owned by such “group.”

 

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Permitted Transfer” has the meaning set forth in Section 10.2.2.

 

Permitted Transferee” has the meaning set forth in Section 10.2.2.

 

Person” means any individual, corporation, association, partnership (general or limited), joint venture, trust, estate, limited liability company, or other legal entity or organization, and any government or subdivision thereof or any governmental or regulatory agency.

 

Preferred Shares” means, collectively, Series A Preferred Shares and Series B Preferred Shares issued pursuant to the Previous Agreement.

 

Previous Agreement” has the meaning set forth in the Recitals.

 

Previous Interests” has the meaning set forth in the Recitals.

 

Prior Company Option” means each option to purchase Common Shares granted pursuant to the Company Equity Plan or otherwise and outstanding as of the Effective Date.

 

Profits” and “Losses” means, for each Fiscal Year or other applicable period, an amount equal to the Company’s taxable income or loss for such Fiscal Year or other applicable period, determined in accordance with section 703(a) of the Code (but including in taxable income or loss for this purpose all items of income, gain, loss or deduction required to be stated separately pursuant to section 703(a)(1) of the Code), with the following adjustments:

 

(i) any income of the Company exempt from federal income tax and not otherwise taken into account in computing Profits or Losses pursuant to this definition will be added to such taxable income or loss;

 

(ii) any expenditures of the Company described in section 705(a)(2)(B) of the Code (or treated as expenditures described in section 705(a)(2)(B) of the Code pursuant to Treasury Regulation § 1.704-1(b)(2)(iv)(i)) and not otherwise taken into account in computing Profits or Losses pursuant to this definition will be subtracted from such taxable income or loss;

 

(iii) depreciation, amortization, and gain or loss with respect to any property shall be computed with regard to the Book Value of the property;

 

(iv) if the Book Value of any Company property is adjusted pursuant to Treasury Regulation Section 1.704-1(b)(2)(iv)(e) or (f), the amount of such adjustment shall be taken into account as gain or loss from the disposition of such property;

 

(v) items of income, gain, loss or deduction attributable to the disposition of Company property having a Book Value that differs from its adjusted basis for tax purposes shall be computed by reference to the Book Value of such property;

 

(vi) to the extent an adjustment to the adjusted tax basis of any Company asset pursuant to Sections 732(d), 734(b) or 743(b) is required, pursuant to Treasury Regulation Section 1.704-1(b)(2)(iv)(m), to be taken into account in determining Capital Accounts, the amount of such adjustment to the Capital Accounts shall be treated as an item of gain (if the adjustment increases the basis of the asset) or loss (if the adjustment decreases such basis); and

 

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(vii) such other adjustments shall be made as are reasonably required in the good faith discretion of the Managing Member in order for the allocations under Section 4 to comply with section 704(b) of the Code and the Treasury Regulations promulgated thereunder.

 

Items of Company income, gain, loss, deduction, and expense that are to be specially allocated under any provision hereof shall be computed in a manner consistent with the computation of “Profits and Losses.”

 

Pubco Offer” has the meaning set forth in Section 10.5.2.

 

Purchase Agreement” has the meaning set forth in the Recitals.

 

Redeemed Units Equivalent” means the product of (a) the applicable number of Redeemed Units, multiplied by (b) the Common Unit Redemption Price.

 

Redeeming Member” has the meaning set forth in Section 11.1.1.

 

Redemption” has the meaning set forth in Section 11.1.1.

 

Redemption Date” has the meaning set forth in Section 11.1.1.

 

Redemption Election Committee” means the Redemption Election Committee of the Board, as established by the Board in accordance with the bylaws of the Managing Member, which committee shall be comprised solely of directors not nominated under the Stockholders’ Agreement or other contractual right by, or otherwise affiliated with, holders of Class B Common Stock or Class C Common Stock.

 

Redemption Notice” has the meaning set forth in Section 11.1.1.

 

Redemption Right” has the meaning set forth in Section 11.1.1.

 

Registration Rights Agreement” means the Registration Rights Agreement, dated the Effective Date, by and among the Managing Member, the Sponsor and the other parties thereto from time to time.

 

Regulatory Allocations” has the meaning set forth in Section 5.2.6.

 

Securities” means any “security” as that term is defined in Section 2(1) of the Securities Act.

 

Securities Act” means the U.S. Securities Act of 1933 and the rules promulgated thereunder, each as amended from time to time.

 

Share(s)” means, collectively, the Common Shares and Preferred Shares issuable pursuant to the Previous Agreement.

 

Share Settlement” means a number of shares of Class A Common Stock (together with any Corresponding Rights) equal to the number of Redeemed Units.

 

Sponsor” means New Providence Management LLC.

 

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State” means any state or commonwealth of the United States of America; the District of Columbia; the Commonwealth of Puerto Rico; and any other dependency, possession or territory of the United States of America.

 

Stock Exchange” means The Nasdaq Stock Market LLC.

 

Stock Option” has the meaning set forth in Section 4.12.1.

 

Stockholders’ Agreement” means the Stockholders’ Agreement, dated the Effective Date, by and among the Managing Member and the other parties thereto from time to time.

 

Subsidiary” means, for any Person, any other Person of which the initial Person directly or indirectly owns more than fifty percent (50%) of the outstanding voting securities or that is required to be consolidated with the initial Person under GAAP. Unless the context otherwise specifically requires, the term “Subsidiary” shall be a reference to a Subsidiary of the Company.

 

Tax Date” has the meaning set forth in Section 4.12.2.2.

 

Tax Distribution Amounts” has the meaning set forth in Section 6.3.

 

Tax Matters Partner” has the meaning set forth in Section 8.1.1.

 

Tax Receivable Agreement” means the Tax Receivable Agreement, dated as of the Effective Date, by and among the Company, the Managing Member and the other parties named therein.

 

Tax Withholding/Payment Amounts” has the meaning set forth in Section 6.4.

 

Transfer” means any sale, exchange, transfer, or assignment (including a pledge or other grant of a security interest), whether voluntary or involuntary.

 

Transferee” has the meaning set forth in Section 10.3.

 

Treasury Regulations” means the income tax regulations, including temporary regulations, promulgated under the Code, as such regulations may be amended from time to time (including corresponding provisions of succeeding regulations).

 

Units” means, collectively, the Common Units and the vested Incentive Equity Units.

 

Warrant Agreements” has the meaning set forth in Section 4.9.

 

Warrants” has the meaning set forth in Section 4.9.

 

Other terms defined in this Agreement have the meanings so given them.

 

Article 2.
FORMATION OF LIMITED LIABILITY COMPANY

 

2.1 Formation and Tax Classification. The Company has been previously formed as a limited liability company under and pursuant to the Act. Each Member represents and warrants that such Member is duly authorized to join in this Agreement and that the person executing this Agreement on its behalf is duly authorized to do so. The Members intend that the Company will and shall continue to be classified as a partnership for federal, state and local income and franchise tax purposes and each Member and the Company shall file all tax returns and shall otherwise take all tax and financial reporting positions in a manner consistent with such treatment. The Members intend that the Company shall not be a partnership (including, without limitation, a limited partnership) for any other purpose.

 

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2.2 Continuation of the Company. The Members hereby continue the Company as a limited liability company under the Act and agree to operate the Company on the terms and subject to the conditions and for the purposes and the term set forth herein. The rights and obligations of the Members shall be as provided in the Act, except as expressly provided herein. As of the Effective Date, any previous agreement for the formation, organization, or governance of the Company (including, but not limited to, the Previous Agreement) is hereby superseded and amended by substituting this Agreement in its entirety. The Managing Member shall, from time to time, execute or cause to be executed all such certificates, instruments and other documents, and do, make, or cause to be done or made all such filings, recordings, publishings and other acts as the Managing Member may deem necessary or appropriate to comply with the requirements of law for the continuation and operation of the Company in all jurisdictions in which the Company shall desire to conduct its business.

 

2.3 Company Name. The name of the Company is “AST & SCIENCE, LLC.” The business of the Company shall be conducted under such name or such other name as shall be designated from time to time by the Managing Member in compliance with the Act.

 

2.4 Term of Company. The term of the Company shall be deemed to have commenced on the date that the Certificate of the Company was initially filed with the Secretary of State of the State of Delaware and shall continue until dissolved or otherwise terminated pursuant to this Agreement or the laws of the State of Delaware.

 

2.5 Purposes. The Company has been formed for the object and purpose of engaging in any lawful act or activity for which a limited liability company may be organized under the Delaware Act.

 

2.6 Limitation of Liability. Except as provided in the Act or as expressly provided in this Agreement, no Member of the Company shall be obligated personally for any debt, obligation, or liability of the Company or of any other Member solely by reason of being a Member of the Company. In no event shall any Member or former Member (i) be obligated to make any capital contribution or payment to or on behalf of the Company except as expressly provided for in this Agreement, (ii) have any liability in its capacity as a Member in excess of such Member’s obligation to make capital contributions or other payments pursuant to Section 4.4 and any other payments expressly provided for in this Agreement or (iii) have any liability to return distributions received by such Member from the Company except as otherwise specifically provided in this Agreement or other related agreements, as expressly agreed to in another writing, or as may be required by applicable law.

 

2.7 Title to Company Property. Title to Company property may be held in the name of the Company or a nominee of the Company.

 

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Article 3.
MANAGEMENT

 

3.1 Management of the Company. The business and affairs of the Company will be managed by and under the direction of the Managing Member. Subject to the terms of this Agreement, including, without limitation, Section 3.6, the Managing Member will have full, exclusive, and complete discretion to manage and control the business and affairs of the Company and, except as expressly otherwise provided in this Agreement as it may be amended from time to time, to make all decisions affecting the business and affairs of the Company and to take all such actions as it deems necessary, appropriate, advisable, incidental, or convenient to accomplish the purposes of the Company as set forth herein. The Managing Member will have the sole power to bind the Company, except and to the extent that such power is expressly delegated by the Managing Member pursuant to Section 3.2. Any reference in this Agreement to a decision, determination, or other action which may be made or taken by the Managing Member shall mean that such decision, determination, or other action may be made or taken in the sole and absolute discretion of the Managing Member (or in the sole and absolute discretion of any Person to whom the Managing Member has expressly delegated the authority or duty to make or take such decision, determination, or other action pursuant to Section 3.2). The Managing Member may not be removed.

 

3.2 Officers. The Managing Member may, from time to time, delegate to one or more Persons (including any other Member, any officer of the Company or of any Member, or any member, partner, shareholder, or Affiliate of any Member) such authority and duties and assign such titles to such Persons as the Managing Member shall determine. Any such delegation pursuant to this Section 3.2 may be revoked at any time by the Managing Member.

 

3.3 No Management by Members. No Member (other than the Managing Member, in its capacity as such) will take part in the day-to-day management, operation, or control of the business and affairs of the Company. Except and only to the extent expressly provided for in this Agreement and as delegated by the Managing Member, no Member or other Person, other than the Managing Member, will be an agent of the Company or have any right, power or authority to transact any business in the name of the Company or to act for or on behalf of or to bind the Company. Notwithstanding the foregoing, nothing in this Section 3.3 shall limit the rights of any Person under the Purchase Agreement or the Tax Receivable Agreement.

 

3.4 Reliance by Third Parties. Any Person dealing with the Company or the Managing Member may rely upon a certificate signed by the Managing Member as to:

 

(a) the identity of any officers of the Managing Member, any officer of the Company, or any Member thereof;

 

(b) the existence or non-existence of any fact or facts which constitute a condition precedent to acts by the Managing Member or in any other manner germane to the affairs of the Company;

 

(c) the Persons who are authorized to execute and deliver any agreement, instrument, or document of or on behalf of the Company; or

 

(d) any act or failure to act by the Company or as to any other matter whatsoever involving the Company or any Member.

 

3.5 Personnel; Expenses; Insurance; Reimbursements; Related Party Transactions.

 

3.5.1 The Company may employ or contract with personnel to carry on the Company’s business. Subject to the terms of any employment, consulting, or other contract to which the Company or any of its Subsidiaries is a party and to any other provision of this Agreement, the Managing Member may employ, dismiss from employment, terminate and determine the compensation of any and all employees, agents, independent contractors, attorneys, accountants, and such other persons as it shall determine to be necessary, advisable, incidental, or convenient. Without limiting the generality of the foregoing, the Company may employ or contract any Person who is a Member or a member, partner, shareholder, or Affiliate of a Member.

 

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3.5.2 The Managing Member may cause the Company to purchase, at the Company’s expense, (i) such liability, casualty, property, life, and other insurance as the Managing Member in its discretion deems necessary, advisable, incidental, or convenient to protect the Company’s assets and personnel against loss or claims of any nature, and (ii) any insurance covering the potential liabilities of any contractor for, or agent or employee of, the Company or the Managing Member, and any of the officers, directors and employees of the Managing Member or the Company, and potential liabilities of the Managing Member or any other Person serving at the request of the Managing Member as a director and/or officer of a corporation or official of any other entity in which the Company has an investment; provided, however, the Managing Member shall not be liable to the Company or other Members for its failure to purchase any insurance or its failure to purchase insurance with adequate coverage.

 

3.5.3 The Company may reimburse the Members, officers, and employees of the Company for all out-of-pocket expenses incurred by such Persons on behalf of the Company in accordance with such reimbursement policies as may be established by the Managing Member, as such policies may be limited by the terms of any applicable employment agreement and any agreement that may be entered into among the Members amending the terms of this Agreement. In addition, the Company shall reimburse and indemnify and hold harmless the Managing Member for the direct and indirect costs of carrying on its business, including without limitation, (i) operating, administrative and other similar costs, (ii) any insurance, legal, tax, accounting and other professional fees and expenses (but, for the avoidance of doubt, excluding any income tax liabilities of the Managing Member (which shall include any withholding tax liabilities with respect to the Managing Member)), (iii) fees and expenses related to any securities offering, investment or acquisition transaction authorized by the Managing Member, (iv) other fees and expenses in connection with the maintenance of the existence of the Managing Member, (v) any other liabilities of the Managing Member to the extent permitted by law, and (vi) any costs or expenses with respect to directors, officers or employees of the Managing Member. The Managing Member’s reasonable determination of which expenses may be reimbursed to a Member or officer of the Company, as applicable, and the amount of such expenses, shall be conclusive and binding on the Members. Such reimbursement shall be treated as an expense of the Company and shall not be deemed to constitute a distributive share of the Profits or a distribution or return of capital to any Member.

 

3.5.4 The Company may engage in any transaction or contract with any Member or Affiliate of a Member or any employee or officer of such Member or Affiliate of a Member, on such terms and conditions as may be prescribed by the Managing Member in its discretion.

 

3.6 Restrictions on the Managing Member’s Authority.

 

3.6.1 The Managing Member may not take any action in contravention of an express prohibition or limitation of this Agreement without the Consent of the Members (other than the Managing Member), and may not, without limitation:

 

(a) take any action that would make it impossible to carry on the ordinary business of the Company, except as otherwise provided in this Agreement;

 

(b) perform any act that would subject a Member to personal liability in any jurisdiction or any other liability except as provided herein or under the Act; or

 

(c) enter into any contract, mortgage, loan or other agreement that expressly prohibits or restricts (i) the Managing Member or the Company from performing its specific obligations under Section 11.1 or Section 11.3 hereof or (ii) a Member from exercising its rights under Section 11.1 or Section 11.3 hereof to effect a Redemption or an Exchange, respectively.

 

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Article 4.
MEMBERS, UNITS, CAPITAL CONTRIBUTIONS, CAPITAL ACCOUNTS

 

4.1 Identity of Members. The names and addresses of the Members of the Company as of the Effective Date are set forth on Exhibit A hereto.

 

4.2 Units.

 

4.2.1 As of the Effective Date, each Member’s Ownership Interest in the Company shall be represented by Units, which may be divided into one or more types, classes or series, or subseries of any type, class or series, with each type, class or series, or subseries thereof, having the rights and privileges, as determined by the Managing Member in accordance with this Agreement. The classes of Units as of the Effective Time is as follows: Common Units and Incentive Equity Units. The Members shall have no right to vote on any matter, except as specifically set forth in this Agreement, or as may be required under the Delaware Act. Any such vote shall be at a meeting of the Members entitled to vote or in writing as provided herein.

 

4.2.2 The Managing Member shall have the right to authorize and cause the Company to issue an unlimited number of Units. The number of Common Shares and Preferred Shares that were issued and outstanding and held by the Members immediately prior to the Effective Date are as set forth in Exhibit B hereto and are hereby converted, as of the Effective Date, into the number of Common Units set forth opposite the name of the respective Member as set forth in Exhibit B hereto under the heading “Converted Common Units”, and such Common Units are hereby issued and outstanding as of the Effective Date and the holders of such Common Units are Members hereunder. The number of Prior Company Options that were issued and outstanding, and the names of the holders thereof, immediately prior to the Effective Date are as set forth in Exhibit B hereto and are hereby converted, as of the Effective Date, into options covering the number of Incentive Equity Units (“Incentive Equity Options”) set forth opposite the name of the respective holder as set forth in Exhibit B hereto, with the exercise price set forth opposite the name of the respective holder as set forth in Exhibit B hereto, in each case, under the heading “Converted Incentive Equity Options”, and such Incentive Equity Options are hereby issued and outstanding as of the Effective Date and, except as expressly provided herein, subject in each case to the terms and conditions applicable to the Prior Company Option underlying the applicable Incentive Equity Option; provided, however, that the holders of such Incentive Equity Options shall not be Members hereunder with respect to such Incentive Equity Options until the applicable Incentive Equity Option is exercised in accordance with its terms and the Incentive Equity Units subject to the Incentive Equity Option are issued. Exhibit B hereto also reflects the Common Units and Warrants issued to the Managing Member in connection with the transactions contemplated by the Purchase Agreement.

 

4.2.3 The Common Units and Incentive Equity Units shall have such economic rights and interests and legal rights and obligations as are set forth in this Agreement.

 

4.2.4 All holders of Common Units and all holders of Incentive Equity Units shall be entitled to the allocations of Profit and Loss (and items of income, gain, loss, and deduction) provided by Article 5 and the distributions described in Article 6.

 

4.2.5 The Managing Member may cause the Company to authorize and issue from time to time such other Units or other Equity Securities of any type, class or series, in each case, having the designations, preferences and/or special rights as may be determined by the Managing Member. Such Units or other Equity Securities may be issued pursuant to such agreements as the Managing Member shall approve in its sole discretion. When any such other Units or other Equity Securities are authorized and issued, the Member Schedule and this Agreement shall be amended by the Managing Member to reflect such additional issuances and the resulting dilution, which shall be borne pro rata by all Members based on their Common Units and Incentive Equity Units.

 

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4.2.6 Except as otherwise determined by the Managing Member, the Company shall not in any manner effect any subdivision (by any stock or Unit split, stock or Unit dividend or distribution, reclassification, reorganization, recapitalization or otherwise) or combination (by reverse stock or Unit split, reclassification, reorganization, recapitalization or otherwise) of the outstanding Common Units or Incentive Equity Units unless accompanied by a substantively identical subdivision or combination, as applicable, of the outstanding Equity Securities of the Managing Member, with corresponding changes made with respect to any other exchangeable or convertible securities, to maintain at all times a one-to-one ratio between the number of Common Units owned by the Managing Member and the number of outstanding shares of Class A Common Stock. For each Common Unit issued to a Member other than the Managing Member, the Managing Member shall issue to such Member one share of Class B Common Stock (in the case of a Member other than the Avellan Holders) or one share of Class C Common Stock (in the case of the Avellan Holders).

 

4.2.7 Unless the Managing Member otherwise consents, Units will not be represented by certificates. Notwithstanding the foregoing sentence, the Managing Member will provide Members with Units represented by certificates to facilitate pledges pursuant to Section 10.4 or Transfers otherwise permitted by Article 10 of this Agreement and the Stockholders’ Agreement.

 

4.3 Capital Contributions. No Member will be required to make any Capital Contributions to the Company or to lend any funds to the Company unless all the Members agree. No Member will have any personal liability for the payment or repayment of any Capital Contribution of any other Member or its predecessor.

 

4.4 Capital Accounts.

 

4.4.1 A Capital Account shall be established and maintained for each Member in accordance with Treasury Regulation Section 1.704-1(b)(2)(iv) and, to the extent consistent with said Treasury Regulations, in accordance with Section 4.4.2, Section 4.4.3, Section 4.4.4, and Section 4.4.5 for items accounted for from and after the date of this Agreement.

 

4.4.2 The Capital Account of each Member shall be credited with: (i) the amount of any Capital Contribution made in cash by such Member; (ii) the fair market value (net of any liabilities the Company is considered to assume or take subject to under Section 752 of the Code) of any Capital Contribution made in property other than cash by such Member (as determined in good faith by the Managing Member); (iii) allocations to such Member of Profits pursuant to Article 5; and (iv) any other item required to be credited for proper maintenance of capital accounts by the Treasury Regulations under Section 704(b) of the Code.

 

4.4.3 A Member’s Capital Account shall be debited with: (i) the amount of any cash distributed to such Member; (ii) the fair market value (net of liabilities that such Member is considered to assume or take subject to under Section 752 of the Code) of any property other than cash distributed to such Member (as determined in good faith by the Managing Member); (iii) allocations to such Member of Losses pursuant to Article 5; and (iv) any other item required to be debited for proper maintenance of capital accounts by the Treasury Regulations under Section 704(b) of the Code.

 

4.4.4 The Company may (in the discretion of the Managing Member), upon the occurrence of the events specified in Treasury Regulation Section 1.704-1(b)(2)(iv)(f) or as otherwise provided in the Treasury Regulations, increase or decrease the Capital Accounts of the Members in accordance with the rules of such Treasury Regulation and Treasury Regulation Section 1.704-1(b)(2)(iv)(g) to reflect a revaluation of Company property. The fair market value of Company property used to determine such increases or decreases shall be determined in good faith by the Managing Member.

 

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4.4.5 Following the date hereof, upon any permitted Transfer by a Member of an Ownership Interest in accordance with the terms of this Agreement, so much of the Capital Account of the Transferring Member as is attributable to the Ownership Interest Transferred shall be Transferred to the Capital Account of the Transferee Member.

 

4.5 Additional Ownership Interests.

 

4.5.1 The Managing Member shall have the right to cause the Company to create and/or issue Equity Securities of the Company (including other classes, groups or series thereof having such relative rights, powers, and/or obligations as may from time to time be established by the Managing Member, including rights, powers, and/or obligations different from, senior to or more favorable than existing classes, groups and series of Equity Securities of the Company), in which event the Managing Member shall have the power to amend this Agreement to reflect such additional issuances and to make any such other amendments as the Managing Member reasonably and in good faith deems necessary to reflect such additional issuances (including amending this Agreement to increase the authorized number of Equity Securities of any class, group or series, to create and authorize a new class, group or series of Equity Securities and to add the terms of such new class, group or series of Equity Securities including economic and governance rights which may be different from, senior to or more favorable than the other existing Equity Securities), in each case without the Consent of any Member. In connection with any issuance of Equity Securities of the Company pursuant to this Section 4.5.1, each Person who acquires such Equity Securities shall execute a counterpart to this Agreement, accepting and agreeing to be bound by all terms and conditions hereof. Each Person who acquires Equity Securities of the Company may be required in exchange for such Equity Securities to make a Capital Contribution to the Company in an amount to be determined by the Managing Member.

 

4.5.2 The Company may issue preferred Ownership Interests, which may have such designations, preferences, and relative, optional or other special rights as shall be fixed by the Managing Member and, notwithstanding any provision to the contrary contained herein, the Managing Member may, without the Consent of any Member, make such amendments to this Agreement as are necessary or appropriate to effect the terms and conditions of any such issuance.

 

4.5.3 A holder of an Incentive Equity Option shall be admitted to the Company as a Member (if not yet a Member) upon the delivery of Incentive Equity Units following valid exercise of the applicable Incentive Equity Option in accordance with the terms and conditions of the Company Equity Plan and the applicable award agreement evidencing such Incentive Equity Option.

 

4.5.4 Each Person who subscribes for an additional Ownership Interest and satisfies the conditions established by the Managing Member shall be admitted to the Company as a Member in respect of said Ownership Interest, effective upon the execution by such Person of a counterpart of this Agreement, without the Consent of the Members.

 

4.6 Advances. If any Member advances any funds to the Company, the amount of such advance will neither increase its Capital Account nor entitle it to any increase in its share of the distributions of the Company. The amount of any such advance will be a debt obligation of the Company to such Member (which may be evidenced by a promissory note) and, unless otherwise specifically provided in this Agreement, will be repaid to it by the Company with interest at a rate equal to (a) an annual floating rate equal to the average bank prime lending rate as published in the Wall Street Journal from time to time or (b) such higher rate as may be approved by all the Members, and upon such other terms and subject to such other conditions as may be determined by the Managing Member. Unless otherwise specifically provided in this Agreement, any such advance will be payable and collectible only out of Membership assets, and the other Members will not be personally obligated to repay any part thereof. No Person who makes any such loan to the Company will have or acquire, as a result of making such loan, any direct or indirect interest in the profits, capital or property of the Company, other than as a creditor.

 

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4.7 No Resignation or Withdrawal; No Interest. Except as approved by the Managing Member in its sole discretion or as expressly provided herein, a Member (i) may not resign, withdraw, or dissociate from the Company prior to the dissolution and winding up of the Company in accordance with the provisions of Article 12 or in connection with a Transfer of all of such Member’s Ownership Interests, (ii) may not receive the return of, or interest on, its Capital Contribution, Capital Account, or other amount, and (iii) shall not have the right to petition or to take any action to subject Membership assets or any part thereof to the authority of any court or other governmental body in connection with any bankruptcy, insolvency, receivership or similar proceeding.

 

4.8 Nature of Ownership Interest; No Partition. An Ownership Interest shall for all purposes be personal property. A Member has no interest in specific Membership property. Each Member waives any and all rights that it may have to maintain an action for partition of the Company’s property.

 

4.9 Warrants. On the Effective Date, in connection with the transactions contemplated by the Purchase Agreement, the Company has issued warrants to purchase Common Units (the “Warrants”) to the Managing Member as set forth on Exhibit B hereto pursuant to warrant agreements (the “Warrant Agreements”) entered into between the Company and the Managing Member as of the Effective Date. Upon the valid exercise of a Warrant in accordance with the applicable Warrant Agreement, the Company shall issue to the Managing Member the number of Common Units, free and clear of all liens and encumbrances other than those arising under applicable securities laws and this Agreement, to be issued in connection with such exercise. Excluding warrants, options or similar instruments governed by Section 4.12 (the “Excluded Instruments”), which shall be governed by such section, in the event any holder of a warrant (other than an Excluded Instrument) to purchase shares of Class A Common Stock (the “Upstairs Warrants”) exercises an Upstairs Warrant, then the Managing Member agrees that it shall cause a corresponding exercise (including by effecting such exercise in the same manner, i.e., by payment of a cash exercise price or on a cashless basis) of a Warrant with similar terms held by it, such that the number of shares of Class A Common Stock issued in connection with the exercise of such Upstairs Warrant shall match with a corresponding number of Common Units issued by the Company pursuant to the Warrant Agreements. the Managing Member agrees that it will not exercise any Warrants other than in connection with the corresponding exercise of an Upstairs Warrant. In the event an Upstairs Warrant is redeemed, the Company will redeem a Warrant with similar terms held by the Managing Member.

 

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4.10 Authorization and Issuance of Additional Common Units.

 

4.10.1 The Company shall undertake all actions, including, without limitation, an issuance, reclassification, distribution, division, combination or recapitalization, with respect to the Common Units, to maintain at all times a one-to-one ratio between the number of Common Units owned by the Managing Member, directly or indirectly, and the number of outstanding shares of Class A Common Stock, disregarding, for purposes of maintaining the one-to-one ratio, (i) unvested shares of Class A Common Stock, (ii) treasury stock or (iii) preferred stock or other debt or equity securities (including without limitation warrants, options or rights) issued by the Managing Member that are convertible into or exercisable or exchangeable for Class A Common Stock (except to the extent the net proceeds from such other securities, including any exercise or purchase price payable upon conversion, exercise or exchange thereof, has been contributed by the Managing Member to the equity capital of the Company). In the event the Managing Member issues, transfers or delivers from treasury stock or repurchases Class A Common Stock in a transaction not contemplated in this Agreement, the Managing Member shall take all actions such that, after giving effect to all such issuances, transfers, deliveries or repurchases, the number of outstanding Common Units owned by the Managing Member will equal on a one-for-one basis the number of outstanding shares of Class A Common Stock. In the event the Managing Member issues, transfers or delivers from treasury stock or repurchases or redeems the Managing Member’s preferred stock in a transaction not contemplated in this Agreement, the Managing Member shall have the authority to take all actions such that, after giving effect to all such issuances, transfers, deliveries, repurchases or redemptions, the Managing Member holds (in the case of any issuance, transfer or delivery) or ceases to hold (in the case of any repurchase or redemption) equity interests in the Company which (in the good faith determination of the Managing Member) are in the aggregate substantially equivalent to the outstanding preferred stock of the Managing Member so issued, transferred, delivered, repurchased or redeemed. Except as specifically contemplated by this Agreement, to maintain at all times a one-to-one ratio between the number of Common Units owned by the Managing Member and the number of outstanding shares of Class A Common Stock, the Company shall not undertake any subdivision (by any Common Unit split, Common Unit distribution, reclassification, recapitalization or similar event) or combination (by reverse Common Unit split, reclassification, recapitalization or similar event) of the Common Units that is not accompanied by an identical subdivision or combination of Class A Common Stock, unless such action is necessary to maintain at all times a one-to-one ratio between the number of Common Units owned directly or indirectly by the Managing Member and the number of outstanding shares of Class A Common Stock as contemplated by the first sentence of Section 4.4.1. In addition, the Company and the Members shall undertake all actions that the Managing Member in its reasonable discretion determines are necessary, including, without limitation, an issuance, reclassification, distribution, division, combination or recapitalization, with respect to the Common Units, to maintain at all times a one-to-one ratio between the number of Common Units owned by any Member (other than the Managing Member), directly or indirectly, and the number of outstanding shares of Class B Common Stock and/or Class C Common Stock owned by such Member.

 

4.10.2 The Company shall only be permitted to issue additional Common Units, and/or establish other classes of Ownership Interests to the Persons and on the terms and conditions provided for in Section 4.5, this Section 4.10 or Section 4.12.

 

4.11 Repurchase or Redemption of Shares of Class A Common Stock. If, at any time, any shares of Class A Common Stock are repurchased or redeemed (whether by exercise of a put or call, automatically or by means of another arrangement) by the Managing Member for cash, then the Managing Member shall cause the Company, immediately prior to such repurchase or redemption of Class A Common Stock, to redeem a corresponding number of Common Units held by the Managing Member, at an aggregate redemption price equal to the aggregate purchase or redemption price of the shares of Class A Common Stock being repurchased or redeemed by the Managing Member (plus any expenses related thereto) and upon such other terms as are the same for the shares of Class A Common Stock being repurchased or redeemed by the Managing Member. Notwithstanding the foregoing, the provisions of this Section 4.11 shall not apply in the event that such repurchase of shares of Class A Common Stock is paired with a stock split or stock dividend such that after giving effect to such repurchase and subsequent stock split or stock dividend there shall be outstanding an equal number of shares of Class A Common Stock as were outstanding prior to such repurchase and subsequent stock split or stock dividend. Notwithstanding any provision to the contrary contained in this Agreement, the Company shall not make any repurchase or redemption if such repurchase or redemption would violate any applicable law.

 

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4.12 Managing Member Equity Awards.

 

4.12.1 Options Granted to Service Providers. If at any time or from time to time, an option to purchase shares of Class A Common Stock that was granted under any Managing Member Equity Plan to an employee or other service provider of the Company or its Subsidiaries (or any stock appreciation right or similar award, collectively, a “Stock Option”) is duly exercised:

 

4.12.1.1 For each share of Class A Common Stock with respect to which the Stock Option is exercised, the Managing Member shall be considered to have sold to the Optionee, and the Optionee shall be considered to have purchased from the Managing Member, for a cash price per share equal to the value of a share of Class A Common Stock at the time of the exercise, a number of shares of Class A Common Stock equal to the quotient of (x) the per share exercise price of such Stock Option divided by (y) the value of a share of Class A Common Stock at the time of such exercise (provided, that if such Stock Option is exercised on a cashless basis, no such shares of Class A Common Stock shall be considered to have been purchased by the Optionee pursuant to this Section 4.12.1.1).

 

4.12.1.2 The Managing Member shall be considered to have sold to the Company (or if the Optionee is an employee of, or other service provider to, a Subsidiary of the Company, the Managing Member shall be considered to have sold to such Subsidiary), and the Company (or such Subsidiary, as applicable) shall be considered to have purchased from the Managing Member, a number of shares of Class A Common Stock equal to the excess of (x) the number of shares of Class A Common Stock as to which such Stock Option is being exercised over (y) the number of shares of Class A Common Stock sold to the Optionee pursuant to Section 4.12.1.1 hereof (provided, that if such Stock Option is exercised on a cashless basis, the Managing Member shall be considered to have sold to the Company (or an applicable Subsidiary of the Company) the number of shares of Class A Common Stock into which such Stock Option is settled on a cashless basis). The purchase price per share of Class A Common Stock for such sale of shares of Class A Common Stock to the Company (or such Subsidiary) shall be the fair market value of a share of Class A Common Stock as of the date of exercise of such Stock Option (as determined in good faith by the Managing Member).

 

4.12.1.3 The Company shall be considered to have transferred to the Optionee (or if the Optionee is an employee of, or other service provider to, a Company Subsidiary, the Subsidiary shall transfer to the Optionee) at no additional cost to such Optionee and as additional compensation to such Optionee, the number of shares of Class A Common Stock described in Section 4.12.1.1.

 

4.12.1.4 The Managing Member shall be considered to have made a Capital Contribution to the Company in an amount equal to all proceeds considered to have been received by the Managing Member pursuant to Section 4.12.1.1 and Section 4.12.1.2 in connection with the exercise of such Stock Option. The Managing Member shall receive for such Capital Contribution, a number of Common Units equal to the number of shares of Class A Common Stock for which such Stock Option was exercised (or, if such Stock Option is exercised on a cashless basis, the number of shares of Class A Common Stock into which such Stock Option is settled on a cashless basis).

 

4.12.2 Restricted Stock Granted to Service Providers. If at any time or from time to time, in connection with any Managing Member Equity Plan, any shares of Class A Common Stock are issued to an employee of the Company or its Subsidiaries (including (i) any shares of Class A Common Stock that are subject to forfeiture in the event such employee terminates his or her employment with the Company or any Subsidiary, and (ii) any shares of Class A Common Stock issued in settlement of restricted stock units or any other non-Stock Option award under a Managing Member Equity Plan) in consideration for services performed for the Company or any Subsidiary:

 

4.12.2.1 The Managing Member shall issue such number of shares of Class A Common Stock as are to be issued to such employee in accordance with the applicable Managing Member Equity Plan;

 

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4.12.2.2 on the date (such date, the “Tax Date”) that the value of such shares is includible in taxable income of such employee, the following events will be deemed to have occurred: (A) the Managing Member shall be deemed to have sold such shares of Class A Common Stock to the Company (or if such employee is an employee of, or other service provider to, a Subsidiary, to such Subsidiary) for a purchase price equal to the value of such shares of Class A Common Stock on the Tax Date, (B) the Company (or such Subsidiary) shall be deemed to have delivered such shares of Class A Common Stock to such employee, (C) the Managing Member shall be deemed to have contributed the purchase price described in clause (A) for such shares of Class A Common Stock to the as a Capital Contribution and (D) in the case where such employee is an employee of a Subsidiary, the Company shall be deemed to have contributed such amount to the capital of the Subsidiary; and

 

4.12.2.3 the Company shall issue to the Managing Member on the Tax Date a number of Common Units equal to the number of shares of Class A Common Stock issued under Section 4.12.2.1 in consideration for a Capital Contribution that the Managing Member is deemed to make to the Company pursuant to clause (C) of Section 4.12.2.2 above.

 

4.12.3 Future Managing Member Equity Plans. Nothing in this Agreement shall be construed or applied to preclude or restrain the Managing Member from adopting, modifying or terminating stock incentive plans for the benefit of employees, directors or other business associates of the Managing Member, the Company or any of their respective Affiliates. The Members acknowledge and agree that, in the event that any such plan is adopted, modified or terminated by the Managing Member, the Managing Member and the Company and their Affiliates shall be entitled to administer such plans in a manner consistent with the provisions of this Section 4.12, and that the Managing Member and the Company may make any amendments that are necessary or advisable to this Section 4.12 to accommodate such administration, without the requirement of any further Consent or acknowledgement of any other Member.

 

Article 5.
ALLOCATIONS

 

5.1 Allocations of Profits and Losses.

 

5.1.1 Except as otherwise provided herein, each item of income, gain, loss or deduction of the Company (determined in accordance with U.S. tax principles as applied to the maintenance of capital accounts) shall be allocated among the Capital Accounts of the Members as of the end of each Fiscal Year or as circumstances otherwise require or allow, in a manner that as closely as possible causes each Member’s Capital Account balance to equal the amount that would be distributed to such Member if the Company sold all of its assets for their Book Values, repaid all of its liabilities and distributed the balance pursuant to Article 12.

 

5.1.2 If during any Fiscal Year there is a change in any Member’s Ownership Interest as a result of the admission of one or more Members, the withdrawal of a Member, or a Transfer of an Ownership Interest, the Profits, Losses, or any other item allocable to the Members under this Agreement for the Fiscal Year shall, subject to the terms of the Purchase Agreement (and for the avoidance of doubt, to the extent there is a conflict between this Section 5.1.2 and Section 7.11(a) of the Purchase Agreement, Section 7.11(a) of the Purchase Agreement shall control), be allocated among the Members so as to reflect their varying interests in the Company during the Fiscal Year, using any permissible method convention or extraordinary item under section 706 of the Code and the Treasury Regulations promulgated thereunder, as reasonably selected by the Managing Member in consultation with the Members. In furtherance of the foregoing, any such permissible method, convention or extraordinary item selected by the Managing Member shall be set forth in a dated, written statement maintained with the Company’s books and records. The Members hereby agree that any such selection by the Managing Member is made by “agreement of the partners” within the meaning of Treasury Regulation Section 1.706-4(f).

 

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5.2 Regulatory Allocations.

 

5.2.1 Losses attributable to partner nonrecourse debt (as defined in Treasury Regulation Section 1.704-2(b)(4)) shall be allocated in the manner required by Treasury Regulation Section 1.704-2(i). If there is a net decrease during a Fiscal Year in partner nonrecourse debt minimum gain (as defined in Treasury Regulation Section 1.704-2(i)(3)), Profits for such Fiscal Year (and, if necessary, for subsequent Fiscal Years) shall be allocated to the Members in the amounts and of such character as determined according to Treasury Regulation Section 1.704-2(i)(4).

 

5.2.2 Nonrecourse deductions (as determined according to Treasury Regulation Section 1.704-2(b)(1)) for any Fiscal Year shall be allocated pro rata among the Members in accordance with their Percentage Interests. Except as otherwise provided in Section 5.2.1, if there is a net decrease in the Minimum Gain during any Fiscal Year, each Member shall be allocated Profits for such Fiscal Year (and, if necessary, for subsequent Fiscal Years) in the amounts and of such character as determined according to Treasury Regulation Section 1.704-2(f). This Section 5.2.2 is intended to be a minimum gain chargeback provision that complies with the requirements of Treasury Regulation Section 1.704-2(f), and shall be interpreted in a manner consistent therewith.

 

5.2.3 If any Member that unexpectedly receives an adjustment, allocation or distribution described in Treasury Regulation Section 1.704-1(b)(2)(ii)(d)(4), (5) and (6) has an Adjusted Capital Account Deficit as of the end of any Fiscal Year, computed after the application of Sections 5.2.1 and 5.2.2 but before the application of any other provision of this Article 5, then Profits for such Fiscal Year shall be allocated to such Member in proportion to, and to the extent of, such Adjusted Capital Account Deficit. This Section 5.2.3 is intended to be a qualified income offset provision as described in Treasury Regulation Section 1.704-1(b)(2)(ii)(d) and shall be interpreted in a manner consistent therewith.

 

5.2.4 If the allocation of Losses to a Member as provided in Section 5.1 would create or increase an Adjusted Capital Account Deficit, there shall be allocated to such Member only that amount of Losses as will not create or increase an Adjusted Capital Account Deficit. The Losses that would, absent the application of the preceding sentence, otherwise be allocated to such Member shall be allocated to the other Members in accordance with their relative Percentage Interests, subject to this Section 5.2.4.

 

5.2.5 Profits and Losses described in clause (vi) of the definition of “Profits” and “Loss” shall be allocated in a manner consistent with the manner that the adjustments to the Capital Accounts are required to be made pursuant to Treasury Regulation Section 1.704-1(b)(2)(iv)(j), (k) and (m).

 

5.2.6 The allocations set forth in Section 5.2.1 through and including Section 5.2.5 (the “Regulatory Allocations”) are intended to comply with certain requirements of Sections 1.704-1(b) and 1.704-2 of the Treasury Regulations. The Regulatory Allocations may not be consistent with the manner in which the Members intend to allocate Profit and Loss of the Company or make distributions. Accordingly, notwithstanding the other provisions of this Article 5, but subject to the Regulatory Allocations, income, gain, deduction and loss shall be reallocated among the Members so as to eliminate the effect of the Regulatory Allocations and thereby cause the respective Capital Accounts of the Members to be in the amounts (or as close thereto as possible) they would have been if Profit and Loss (and such other items of income, gain, deduction and loss) had been allocated without reference to the Regulatory Allocations. In general, the Members anticipate that this will be accomplished by specially allocating other Profit and Loss (and such other items of income, gain, deduction and loss) among the Members so that the net amount of the Regulatory Allocations and such special allocations to each such Member is zero.

 

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5.2.7 Allocations and other adjustments with respect to any “non-compensatory options” (as defined in Treasury Regulation Section 1.721-2(f)), shall be made in accordance with the Treasury Regulations including Treasury Regulations Section 1.721-2.

 

5.3 Tax Allocations.

 

5.3.1 The income, gains, losses, deductions and credits of the Company will be allocated, for federal, state and local income tax purposes, among the Members in accordance with the allocation of such income, gains, losses, deductions and credits among the Members for computing their Capital Accounts; provided that if any such allocation is not permitted by the Code or other applicable Law, the Company’s subsequent income, gains, losses, deductions and credits will be allocated among the Members so as to reflect as nearly as possible the allocation set forth herein in computing their Capital Accounts.

 

5.3.2 Items of Company taxable income, gain, loss and deduction with respect to any property contributed to the capital of the Company shall be allocated among the Members in accordance with Section 704(c) of the Code so as to take account of any variation between the adjusted basis of such property to the Company for federal income tax purposes and its Book Value using any proper method reasonably selected by the Managing Member.

 

5.3.3 If the Book Value of any Company asset is adjusted pursuant to Section 4.4.4, subsequent allocations of items of taxable income, gain, loss and deduction with respect to such asset shall take account of any variation between the adjusted basis of such asset for federal income tax purposes and its Book Value using any proper method reasonably selected by the Managing Member.

 

5.3.4 Allocations of tax credits, tax credit recapture, and any items related thereto shall be allocated to the Members as reasonably determined by the Managing Member taking into account the principles of Treasury Regulation Section 1.704-1(b)(4)(ii).

 

5.3.5 For purposes of determining a Member’s share of the Company’s “excess nonrecourse liabilities” within the meaning of Treasury Regulation Section 1.752-3(a)(3), each Member’s interest in income and gain shall be determined pursuant to any proper method, as reasonably determined by the Managing Member.

 

5.3.6 Allocations pursuant to this Section 5.3 are solely for purposes of federal, state and local taxes and shall not affect, or in any way be taken into account in computing, any Member’s Capital Account or share of Profits, Losses distributions or other items.

 

Article 6.
DISTRIBUTIONS

 

6.1 Distributions. Distributions shall be made to the Members, as and when determined by the Managing Member in its sole discretion, pro rata in accordance with their respective Percentage Interests; provided, however, that notwithstanding anything in this Article 6 to the contrary (other than Section 6.3), no distributions shall be made in respect of any unvested Incentive Equity Units. Any amounts that are not distributed to holders of such unvested Incentive Equity Units by virtue of the foregoing proviso shall instead be distributed to the Members in accordance with this Section 6.1. Except (a) for pro rata distributions to the Members in accordance with this Section 6.1 and Section 6.2, (b) for distributions in accordance with Section 6.3 or (c) as authorized by written Consent of each Member, the Company shall not make any distributions (in cash or in kind) or dividend payments to any Member. For clarity, unless otherwise determined by the Managing Member, no distributions shall be made in respect of any Incentive Equity Options.

 

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6.2 Distributions In-Kind. To the extent that the Company makes pro rata distributions of property in-kind to the Members, the Company shall be treated as making a distribution equal to the fair market value of such property for purposes of Section 6.1 and such property shall be treated as if it were sold for an amount equal to its fair market value. Any resulting gain or loss shall be allocated to the Members’ Capital Accounts in accordance with Article 5. The fair market value of such property shall be determined in good faith by the Managing Member.

 

6.3 Tax Distributions. The Managing Member shall cause the Company to make distributions to each Member (“Tax Distributions”), pro rata in proportion to each Member’s respective Percentage Interests in an amount such that the Member with the highest Tax Distribution Amount per Common Unit receives an amount equal to such Member’s Tax Distribution Amount, on a quarterly basis at least five (5) days prior to the date on which any estimated tax payments are due, in order to permit each Member to timely pay its estimated tax obligations for each such Estimated Tax Period (or portion thereof) (and solely in the case of AST SpaceMobile, Inc., to satisfy its obligations under the Tax Receivable Agreement). The “Tax Distribution Amount” for a Member for an Estimated Tax Period (or portion thereof) shall be equal to (i) the product of (A) the highest marginal combined federal, state, and local income tax rate applicable to an individual or corporation resident in New York, New York, whichever is higher, (after giving effect to income tax deductions (if allowable) for state and local income taxes and excluding, for this purpose, any reduction in rate attributable to Section 199A of the Code) for such Estimated Tax Period (or portion thereof) (the “Assumed Tax Rate”), and (B) the aggregate amount of taxable income or gain of the Company that is allocated or is estimated to be allocated to such Member for U.S. federal income tax purposes for such Estimated Tax Period (or portion thereof) and all prior Estimated Tax Periods (to the extent no Tax Distribution has previously been made with respect to any amounts of taxable income or gain including to the extent such amounts of taxable income or gain were not taken into account in calculating the Tax Distribution Amount for which a Tax Distribution was previously made (e.g. if upon filing the Company’s final tax return for the applicable taxable year taxable income or gain of the Company is higher than estimated)) reduced, but not below zero, by any tax deduction, loss, or credit previously allocated to such Member and not previously taken into account for purposes of the calculation of the amount of any Tax Distribution Amount plus (ii) solely with respect to AST SpaceMobile, Inc., to the extent the amounts described in clause (i) are not sufficient to permit AST SpaceMobile, Inc. to timely pay its actual U.S. federal, state, local, and foreign tax liabilities related to tax items of the Company and timely meet its obligations pursuant to the Tax Receivable Agreement, any incremental amount required to permit AST SpaceMobile, Inc. to timely pay such actual tax liabilities and timely meet its obligations pursuant to the Tax Receivable Agreement (with all Tax Distribution Amounts updated to reflect the final Company tax returns for each applicable taxable year). The Managing Member may adjust the Assumed Tax Rate as it reasonably determines is necessary to take into account the effect of any changes in applicable tax law. Tax Distribution Amounts pursuant to this Section 6.3 shall be computed without regard to the effect of any special basis adjustments or resulting adjustments to taxable income made pursuant to Sections 734(b), 743(b), and 754 of the Code. Notwithstanding the foregoing, final Tax Distributions in respect of the applicable quarterly period (or portion thereof) shall be made immediately prior to and in connection with any distributions made pursuant to Section 12.3 below. The Assumed Tax Rate shall be the same for all Members, regardless of the actual combined income tax rate of the Member or its direct or indirect owners. The Managing Member shall make, in its reasonable discretion, equitable adjustments (downward (but not below zero) or upward) to the Members’ Tax Distributions (but in any event pro rata in proportion to the Members’ respective number of Common Units) to take into account increases or decreases in the number of Common Units held by each Member during the relevant period. All Tax Distributions shall be treated for all purposes under this Agreement as advances against, and shall offset and reduce dollar-for-dollar, subsequent distributions under Section 6.1.

 

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6.4 Amounts Withheld. To the extent the Company (or any entity in which the Company holds a direct or indirect interest) or the Managing Member is required by law to deduct or withhold any amounts or to make tax payments (including, without limitation, any imputed underpayments under the Code, or similar amounts under state, local, or non-U.S. law) on behalf of or with respect to any Member or in respect of any Redemption, Direct Exchange, Incentive Equity Exchange, conversion of any interest into a Unit, or any other acquisition of Units or Ownership Interests by any Person, or if any entity in which the Company holds a direct or indirect interest is required to withhold on amounts payable to the Company or its Subsidiaries as a result of the status (e.g., based on tax residency or treaty qualification status) of a Member, the Managing Member may deduct or withhold or cause the Company (or other applicable withholding agent) to deduct or withhold any such amounts and make any such tax payments as so required without any gross-up payments owed to the applicable Member or other Person. All such amounts deducted or withheld, or to be deducted or withheld, or payments made, or to be made, on behalf of a Member or as a result of the status of a Member (“Tax Withholding/Payment Amounts”) shall, at the option of the Managing Member, (i) be promptly paid to the Company (or the Managing Member, as applicable) by the Member or other Person on whose behalf such Tax Withholding/Payment Amounts were made or are to be made (either before the deduction or withholding (e.g. if there is no cash payment from which to withhold) or payment is required to be made or after the Managing Member, the Company (or other applicable withholding agent) undertakes such deduction or withholding or makes such tax payment), or (ii) be repaid by reducing the amount of the current or next succeeding distribution or distributions which would otherwise have been made to such Member or, if such distributions are not sufficient for that purpose, by so reducing the proceeds of liquidation otherwise payable to such Member. Whenever the Managing Member selects option (ii) pursuant to the preceding sentence for repayment of a Tax Withholding/Payment Amount by a Member, for all other purposes of this Agreement such Member shall be treated as having received all distributions (whether before or upon liquidation) unreduced by the amount of such Tax Withholding/Payment Amount. At the reasonable request of the Managing Member, the Company, or any applicable withholding agent, the Members (or other applicable Persons) shall provide the Managing Member, the Company, or other applicable withholding agent with any necessary tax forms, including Internal Revenue Service Form W-9 or the appropriate series of Internal Revenue Service Form W-8, as applicable, or any other information or form that is relevant to determine whether any deduction or withholding is required. To the fullest extent permitted by law, each Member hereby agrees to indemnify and hold harmless the Company, the Managing Member, and the other Members from and against any liability (including, without limitation, any liability for taxes, penalties, additions to tax, interest or imputed underpayments under Section 6232(a) of the Code, or similar amounts under state, local, or non-U.S. law) with respect to income attributable to or distributions or other payments or property deliverable to such Member, including any amounts required to be deducted or withheld in respect thereof. Each Member’s obligations under this Section 6.4 shall survive the termination, liquidation, winding up and dissolution of the Company for the applicable statute of limitations period and will survive any partial or complete transfer or redemption of a Member’s interest in the Company. To the extent any amounts are deducted or withheld and paid over to the appropriate taxing authority pursuant to this Section 6.4, such amounts shall be treated as having been paid to the Person to whom such amounts would otherwise have been required to be paid.

 

6.5 Limitations on Distribution. Notwithstanding any provision to the contrary contained in this Agreement, the Company will not make a distribution to any Member if such distribution would violate applicable law or the terms of any indebtedness of the Company.

 

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Article 7.
BOOKS AND RECORDS

 

7.1 Books, Record and Financial Statements.

 

7.1.1 The number and type of Units issued to each Member shall be set forth opposite such Member’s name on the schedule of Members of the Company held by the Company in its books and records (the “Member Schedule”). The Member Schedule shall be maintained by the Managing Member on behalf of the Company in accordance with this Agreement. When any Units or other Equity Securities of the Company are issued, repurchased, redeemed, converted or Transferred in accordance with this Agreement, the Member Schedule shall be amended by the Managing Member to reflect such issuance, repurchase, redemption or Transfer, the admission of Additional Members or Substitute Members and the resulting Percentage Interest of each Member. Following the date hereof, no Person shall be admitted as a Member and no additional Units shall be issued except as expressly provided herein.

 

7.1.2 At all times during the continuance of the Company, the Managing Member shall cause the Company to maintain, at its principal place of business, separate books of account for the Company that will show a true and accurate record of all costs and expenses incurred, all charges made, all credits made and received and all income derived in connection with the operation of the Company’s business in accordance with generally accepted accounting principles consistently applied, and, to the extent inconsistent therewith, in accordance with this Agreement.

 

7.2 Accounting Methods. For financial reporting purposes and for purposes of determining Profits and Losses and other items required to be allocated pursuant to Article 5, the books and records of the Company will be kept on the accrual method of accounting, in accordance with GAAP consistently applied, and to the extent inconsistent therewith, in accordance with this Agreement. Such books and records and the entries therein will reflect all Company transactions and be appropriate for the Company’s business.

 

7.3 Audit. The financial statements of the Company, or of the Managing Member if such statements are prepared solely on a consolidated basis with the Managing Member, will be audited at the end of each Fiscal Year by the Company’s independent certified public accountant, with each such audit to be accompanied by a report of such accountant containing its opinion, addressed and provided to each of the Members. The cost of such audits will be an expense of the Company. A copy of any such audited financial statements and accountant’s report, and any management letters from such accountants, will be provided to the Members promptly upon receipt by the Company thereof. The Managing Member may select and change the Company’s independent public accountants.

 

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Article 8.
TAX MATTERS

 

8.1 Tax Matters Partner; BBA Rules.

 

8.1.1 The Managing Member is hereby initially designated as (i) “tax matters partner” of the Company for purposes of section 6231(a)(7) of the Code as in effect prior to the amendments made by the BBA Rules (and to the extent applicable for state and local tax purposes) and (ii) the “partnership representative” pursuant to section 6223 of the Code, as amended by Public Law 114-74, the Bipartisan Budget Act of 2015 and the Consolidated Appropriations Act of 2016, and any Treasury Regulations and other guidance promulgated thereunder (and as such term is defined under any analogous provision of state or local tax law), and any similar state or local legislation, regulations, or guidance (the “BBA Rules”), for U.S. federal income and applicable state and local income tax purposes for Fiscal Years for which the BBA Rules apply to the Company (in its capacity as “tax matters partner” or “partnership representative,” the “Tax Matters Partner”). For each Taxable Year in which the Tax Matters Partner is an entity, the Company shall appoint the “designated individual” identified by the Tax Matters Partner to act on its behalf in accordance with the applicable Treasury Regulations or analogous provisions of state or local law. Each Member, by execution of this Agreement (and subject to the terms of the Purchase Agreement), hereby consents to the appointment of the Managing Member as Tax Matters Partner as set forth herein and agrees to execute, certify, acknowledge, deliver, swear to, file and record, at the appropriate public offices, such documents as may be necessary or appropriate to evidence such consent and agrees to take, and that the Managing Member is authorized to take (or cause the Company to take), such other actions as may be necessary pursuant to Treasury Regulations or other Internal Revenue Service or Treasury guidance or applicable state or local law to cause such designation. Subject to the terms of this Agreement and the Purchase Agreement, the Tax Matters Member shall have the power and authority to (A) manage, control, settle, challenge, litigate, or prosecute, on behalf of the Company, any administrative proceeding or other Action at the Company level with the Internal Revenue Service or any other Governmental Entity relating to the determination of any item of Company income, gain, loss, deduction, or credit for federal income tax purposes or otherwise relating to the BBA Rules, (B) make any election under sections 6221-6241 of the Code, as amended by the BBA Rules, and (C) shall have all other rights and powers granted under the BBA Rules with respect to the Company and its Members. If the Tax Matters Partner causes the Company to make an election under Code Section 6226(a) or any successor provision (or any analogous provision of state, local, or non- U.S. law), each Member who was a Member of the Company for U.S. federal income tax purposes for the “reviewed year” (within the meaning of Code Section 6225(d)(1) or similar concept under applicable state, local law, or non-U.S. law), shall take any adjustment to income, gain, loss, deduction, credit, or otherwise (as determined in the notice of final partnership adjustment or similar concept under applicable state, local, or non-U.S. law) into account as provided for in Code Section 6226(b) (or similar concept under applicable state, local, or non-U.S. law). Each Member other than the Tax Matters Member or the Managing Member (any such Member an “Other Member”) agrees to cooperate in good faith with the Tax Matters Member with respect to the BBA Rules, including timely providing any information and complying with any requirements that are necessary or advisable to reduce the amount of any tax, interest, penalties or similar amounts the cost of which is (or would otherwise be) borne by the Company (directly or indirectly), or to make any election permitted by this Agreement and the Code or other relevant tax law unless such Other Member is restricted from providing such information under any applicable law or contract. Subject to the foregoing, each Other Member shall provide the Tax Matters Partner with reasonable advance notice prior to treating any Company item inconsistently on such Other Member’s tax return with the treatment of the item on the Company’s tax return or prior to independently acting with respect to tax audits, examinations, or other proceedings affecting the Company.

 

8.1.2 The Tax Matters Partner will, within ten (10) days of the receipt of any notice from the Internal Revenue Service in any administrative proceeding at the Company level relating to the determination of any Company item of income, gain, loss, deduction or credit, mail a copy of such notice to each Member.

 

8.1.3 The Company shall not be obligated to pay any fees or other compensation to the Tax Matters Partner in its capacity as such. However, the Company shall reimburse and indemnify and hold harmless the Tax Matters Partner (and any “designated individual”) for any and all out-of-pocket costs and expenses (including reasonable attorneys and other professional fees) incurred by it in its capacity as Tax Matters Partner (or “designated individual”).

 

8.1.4 This Section 8.1 shall be interpreted to apply to Members and former Members and shall survive the transfer of a Member’s Ownership Interest, the termination of this Agreement, and the termination, dissolution, liquidation and winding up of the Company.

 

8.2 Section 754 Election. The Company (and to the extent provided in the Tax Receivable Agreement, each Subsidiary of the Company that is treated as a partnership for U.S. federal income tax purposes) shall have in effect an election under Section 754 of the Code for the taxable year in which the date of this Agreement occurs. Each Member will, upon request of the Tax Matters Partner, supply the information necessary to give effect to any such election.

 

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8.3 Section 83(b) Elections. Each Member who acquires Units that are subject to a “substantial risk of forfeiture” within the meaning of Section 83 of the Code at the time of such acquisition shall consult with such Member’s tax advisor to determine the tax consequences of such acquisition and the advisability of filing an election under Section 83(b) of the Code with respect to such Units. Each Member who acquires Units that are intended to constitute profits interests, and at the time of such acquisition are subject to a “substantial risk of forfeiture” within the meaning of Section 83 of the Code shall make a timely election under Section 83 of the Code with respect to such Units. It is the sole responsibility of a Member, and not the Company, to file the election under Section 83(b) of the Code even if such Member requests the Company or any of its representatives to assist in making such filing. Each Member who files an election under Section 83(b) of the Code with respect to Units (including each Member who is required to file such an election under this Section 8.3) shall provide a copy of such election and proof of filing of such election to the Company on or before the due date for the filing of such election.

 

8.4 Other Tax Matters.

 

8.4.1 Certain Tax Agreements.

 

8.4.1.1 The Members and the Company intend that (i) payments made under the Tax Receivable Agreement in respect of Redemptions be treated as additional consideration in respect of the transfer of the interests in the Company effectuated in connection with such Redemptions except to the extent required to be treated as imputed interest under applicable law or as otherwise provided under the Tax Receivable Agreement; (ii) the conversion of the Previous Interests into interests in the Company in connection with the transactions contemplated by Section 4.2 be treated as a non-taxable recapitalization of the equity interests in the Company; and (iii) the Managing Member’s contribution of cash to the Company for Units in accordance with the Purchase Agreement be treated as a Capital Contribution governed by Section 721(a) of the Code (and any similar applicable state, local or non-U.S. provision of tax law). The Members and the Company will, and the Other Members will cause all of their Affiliates to, file all tax returns consistent with the foregoing, unless otherwise required by applicable law including a determination of an applicable taxing authority that is final.

 

8.4.1.2 The Members and the Company agree to cooperate in good faith to consider whether the Company, or any Company Subsidiary, shall apply, or make any elections out of the application of, the additional depreciation allowances under Section 168(k) of the Code and the Treasury Regulations promulgated thereunder with respect to any applicable class of property of the Company or any Company Subsidiary placed into service in a relevant taxable year, taking into account what would be in the best interest of the Members, the Company or any applicable Company Subsidiary, based on the applicable facts and law in effect at the time of such determinations.

 

8.4.2 Tax Returns.

 

8.4.2.1 The Managing Member shall arrange for the preparation and filing of all tax returns required to be filed by the Company in accordance with the procedures set forth in this Section 8.4.2.

 

8.4.2.2 On or before April 15, June 15, September 15, and December 15 of each Fiscal Year (or, if the due dates for estimated tax payments applicable to the Members or their equityholders are modified after the date of this Agreement, on or before such modified due dates), the Company shall send to each Person who was a Member at any time during the prior quarter, an estimate of information that each such Member reasonably requires in connection with discharging its tax reporting and estimated tax payment obligations.

 

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8.4.2.3 As soon as reasonably practicable after the end of a Fiscal Year, the Managing Member shall cause the Company to provide to the Member Representative, on behalf of each Member, a statement showing an estimate of each Member’s state tax apportionment information and each Member’s estimated allocations of taxable income, gains, losses, deductions and credits for such Fiscal Year and, as soon as reasonably practicable following the end of the prior Fiscal Year, the Managing Member shall cause the Company to provide to the Member Representative, on behalf of each Member, a statement showing each Member’s final state tax apportionment information and allocations to the Members of taxable income, gains, losses, deductions and credits for such Fiscal Year and a completed Internal Revenue Service Schedule K-1 (and, if applicable, completed Schedules K-2 and K-3) (the statements referred to in this sentence, collectively, the “Draft Tax Statements”). Upon delivery of any Draft Tax Statements to the Member Representative, the Member Representative shall have thirty (30) days to review the applicable Draft Tax Statements and provide any comments to the Managing Member on such Draft Tax Statements. The Managing Member shall incorporate all reasonable comments received from the Member Representative during the thirty (30) day review period and such statements, reflecting the Member Representative’s reasonable comments, shall be the (“Final Tax Statements”). The Managing Member shall cause the Company to deliver Final Tax Statements to each applicable Member within five (5) days of such statements becoming Final Tax Statements.

 

8.4.2.4 At least thirty (30) days prior to the due date for the filing of any tax return of the Company or any Company Subsidiary, the Managing Member shall send a draft of such tax return, which shall be prepared consistently with any applicable Final Tax Statements, to the Member Representative for the Member Representative’s review and comment. The Managing Member shall incorporate all reasonable comments received from the Member Representative at least five (5) days prior to the due date for the filing of any such tax return and shall not file any tax return without receiving prior written consent of the Member Representative.

 

8.5 Adverse Tax Consequences. Notwithstanding anything to the contrary in this Agreement, the Purchase Agreement, the Previous Agreement, the Registration Rights Agreement, the Stockholders’ Agreement, the Tax Receivable Agreement or the Warrant Agreements, the Managing Member shall have the authority to, and shall, take any steps it determines are necessary or appropriate to prevent the Company from being taxable as a corporation for U.S. federal income tax purposes. In furtherance of the foregoing, except with the consent of the Managing Member, no Transfer by a Member of its Units (including any Redemption, Direct Exchange, Incentive Equity Exchange, conversion of any interest into a Unit or any other acquisition of Units by any Person or the Company) may be made to or by any Person if such Transfer, Redemption, Direct Exchange, Incentive Equity Exchange, conversion, acquisition or other action could result in the Company being unable to qualify for one or more of the “safe harbors” set forth in Regulations Section 1.7704-1 (or such other guidance subsequently published by the Internal Revenue Service setting forth safe harbors under which interests will not be treated as “readily tradable on a secondary market (or the substantial equivalent thereof)” within the meaning of Section 7704 of the Code).

 

Article 9.
LIABILITY, EXCULPATION AND INDEMNIFICATION

 

9.1 Exculpation.

 

9.1.1 A “Covered Person” shall mean any Member, any Affiliate of a Member, any partner, shareholder, member, director, officer, agent, or employee of any Member or of any Affiliate of any Member, any director, officer, agent, or employee of the Company or of any of its Subsidiaries, and any Person who, at the request of the Company serves in any capacity on behalf of another entity, including, without limitation, any director, officer or employee of the Managing Member. No Covered Person will be liable to the Company or any other Covered Person for any loss, damage or claim incurred by reason of any act or omission performed or omitted by such Covered Person in good faith on behalf of the Company and in a manner reasonably believed to be within the scope of authority conferred on such Covered Person by this Agreement, except that a Covered Person will be liable for any such loss, damage or claim incurred by reason of such Covered Person’s gross negligence, willful misconduct, or knowing violation of the law or of this Agreement.

 

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9.1.2 A Covered Person will be fully protected in relying in good faith upon the records of the Company (or such other entity which he or she serves) and upon such information, opinions, reports or statements presented to the Company (or such other entity which he or she serves) by any Person as to matters the Covered Person reasonably believes are within such other Person’s professional or expert competence and who in the reasonable belief of such Covered Person has been selected with reasonable care by or on behalf of the Company (or such other entity which he or she serves), including information, opinions, reports or statements as to the value and amount of the assets, liabilities, profits, losses, or any other facts pertinent to the existence and amount of assets from which distributions to Members might properly be paid.

 

9.2 Indemnification by the Company.

 

9.2.1 To the fullest extent permitted by law, in addition to any indemnification obligations of the Managing Member, the Company shall indemnify any Covered Person to the extent and in the manner specified in this Section 9.2.

 

9.2.2 A Covered Person who was or is a party, or is threatened to be made a party, to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of alleged acts or omissions in his capacity as a Covered Person (a “Covered Proceeding”), other than a Covered Proceeding brought by or in the right of the Company or the Members generally, shall be indemnified and held harmless by the Company from and against all losses, claims, damages, liabilities, costs, expenses (including reasonable legal fees and expenses), judgments, fines, settlements, and other amounts which the Covered Person may actually and reasonably incur in connection with or by reason of such Covered Proceeding, by reason of any acts, omissions, or alleged acts or omissions committed directly or indirectly on behalf of the Company (whether or not the Covered Person is still acting in such capacity at the commencement of or during such Covered Proceeding), except to the extent that such act or omission was done fraudulently or in bad faith or as a result of willful and wanton misconduct or gross negligence or except to the extent that, with respect to any criminal action or proceeding, such Person had reasonable cause to believe his conduct was unlawful. The termination of any Covered Proceeding by judgment, order, conviction, plea, settlement, or its equivalent, shall not of itself create a presumption that the act or omission was done fraudulently or in bad faith or as a result of wanton or willful misconduct or, with respect to any criminal Covered Proceeding, that the Person had reasonable cause to believe that his conduct was unlawful.

 

9.2.3 A Covered Person who was or is a party, or is threatened to be made a party, by reason of alleged acts or omissions in his capacity as a Covered Person, to any Covered Proceeding brought by or in the right of the Company or of the Members generally to procure a judgment in its or their favor, shall be indemnified and held harmless as set forth in Section 9.2.2 to the extent that such Covered Person acted in good faith and in a manner such Covered Person reasonably believed to be in or not opposed to the best interests of the Company. If the Covered Person shall have been adjudicated by final and nonappealable order in such Covered Proceeding to be liable to the Company or to the Members generally, then the indemnification provided for in the preceding sentence shall apply only to the extent that the tribunal having jurisdiction over such Covered Proceeding shall determine that, despite the adjudication of liability, in view of all the circumstances of the case, the Covered Person is fairly and reasonably entitled to such indemnification.

 

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9.2.4 The Company shall pay, (i) from the inception of a Covered Proceeding and for its entire duration, all costs and expenses of the Covered Person with respect to such Covered Proceeding as they become due, including without limitation reasonable legal fees and expenses, and (ii) in connection with the termination of a Covered Proceeding (whether or not appellate or other review proceedings are taken or contemplated), all judgments, fines, settlement payments, other costs and expenses (including reasonable legal fees and expenses) and other amounts incurred by the Covered Person, provided that in each case described in clause (i) or (ii), the Covered Person shall have delivered to the Company a written undertaking to repay all such amounts to the Company to the extent it is determined, as provided in Section 9.2.2 or Section 9.2.3, that the Covered Person is not entitled to indemnification with respect to part or all of the amounts paid.

 

9.2.5 The Managing Member shall control the defense of any Covered Person in a Covered Proceeding as well as any settlement with respect to such Covered Person, including without limitation the selection and direction of counsel. The Covered Person shall not consent to the entry of any judgment or other dispositive order or to any settlement without the consent of the Managing Member. The Managing Member and counsel selected by it shall not consent to the entry of any judgment or other dispositive order as to the Covered Person which does not provide for a complete and unconditional release of all liability in favor of the Covered Person.

 

9.2.6 The obligations of the Company under this Section 9.2 shall be enforceable solely against the assets of the Company, and not against the assets of any Member, of any securityholder of the Managing Member, or of any officer, director, agent, or employee of the Company or the Managing Member. The provisions of this Section 9.2 are solely for the benefit of the Covered Person and his, her, or its heirs, personal representatives, successors, and assigns.

 

9.2.7 The rights and remedies granted a Covered Person by this Section 9.2 shall be in addition to, and not in lieu of, (i) any and all rights and remedies available to a Covered Person against the Company or any other Person, whether conferred by any provision of law, by any agreement, bylaw, articles of incorporation, or other document, or by any resolution or other action, and (ii) any and all rights and claims available to a Covered Person under any policy of insurance. Amounts payable under this Section 9.2 shall not be reduced or deferred by reason of any such other rights, remedies, or claims which may be available to a Covered Person, provided however, that a Covered Person shall have only one satisfaction with respect to amounts incurred, and provided further, that the Company shall be subrogated to a Covered Person’s claims against other Persons and under any policy of insurance, to the extent of payments made by the Company to such Covered Person under this Section 9.2. Notwithstanding anything herein to the contrary, no Person shall be entitled to any rights under this Section 9.2 without the prior written consent of the Managing Member.

 

9.3 Insurance. The Company may purchase and maintain such insurance with such coverages on behalf of Covered Persons and such other Persons as the Managing Member may determine, against any liability that may be asserted against or expenses that may be incurred by any such Person in connection with the activities of the Company (or such other entity which he or she serves), regardless of whether the Company (or such entity) would have the power to indemnify such Person against such liability under the provisions of this Agreement. The Managing Member and the Company may enter into indemnity contracts with Covered Persons or other parties and adopt written procedures pursuant to which arrangements are made for the advancement of expenses and the funding of obligations under Section 9.2.2 above and containing such other procedures regarding indemnification as are appropriate, provided that such contracts and procedures shall not be in derogation of the protections provided by this Article 9. No Covered Person shall be permitted to make a claim under any insurance coverage purchased and maintained by the Company without the prior written consent of the Managing Member. For the avoidance of doubt, any costs or liabilities under any indemnity contract entered into by the Managing Member with a Covered Person shall be paid by the Company.

 

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Article 10.
RESTRICTIONS ON TRANSFERS OF OWNERSHIP INTERESTS

 

10.1 Transfers by the Managing Member. Except as otherwise provided in this Agreement, including in Sections 4.9, 4.10, 4.11 and 10.5, the Managing Member may not Transfer all or any part of its Ownership Interest without the Consent of the Members (other than the Managing Member) holding at least a majority of the aggregate Common Units then outstanding and held by such Members.

 

10.2 Transfers by Members.

 

10.2.1 Except as set forth in Section 10.2.2 or Section 10.5, to the fullest extent permitted by law, no Member may Transfer all or any part of such Member’s Ownership Interests without the prior written consent of the Managing Member, which consent may be given or withheld in the Managing Member’s sole and absolute discretion. Unless a Transferee is admitted as a substitute Member in accordance with Section 10.3, a Transfer by a Member of all or any part of such Member’s Common Units shall not release such Member from any of such Member’s obligations or liabilities hereunder or limit the Managing Member’s rights with respect to such Member of any nature whatsoever arising under this Agreement; provided, that any such Transferee shall be entitled to allocations and distributions with respect to its Common Units but shall not have any of the other rights of a Member under this Agreement.

 

10.2.2 The restrictions contained in the first sentence of Section 10.2.1 shall not apply to any of the following (each, a “Permitted Transfer” and each transferee, a “Permitted Transferee”): (i)(A) a Transfer pursuant to a Redemption in accordance with Section 11 or (B) a Transfer by a Member to another Member, the Company or any of its Subsidiaries, (ii) a Transfer to an Affiliate of, or owner of an equity interest in, a Member (including any distribution by such Member to its members, partners or shareholders or any redemption of the equity interests in such Member held by one or more of its members, partners or shareholders, and any related distributions or redemptions by such members, partners or shareholders to their respective members, partners or shareholders) or (iii) any Transfer of equity or other interests in such Member (including, for the avoidance of doubt, any Transfers of equity or other interests in the Managing Member) so long as such Transfer is consistent with the terms of any agreement with the Managing Member and/or the Company; provided, however, that (x) the restrictions contained in this Agreement will continue to apply to the transferred Units after any Permitted Transfer of such Units, and (y) in the case of the foregoing clause (ii), prior to such Transfer the transferor will deliver a written notice to the Managing Member, which notice will disclose in reasonable detail the identity of the proposed Permitted Transferee.

 

10.3 Certain Provisions Applicable to Transfers. Any Person who acquires Common Units in accordance with this Agreement (“Transferee”) shall be admitted as a Member upon the satisfaction of the following conditions:

 

10.3.1 the Transferee agrees to be bound by all the terms and provisions of this Agreement applicable to it;

 

10.3.2 the Transferor and Transferee execute and acknowledge such other instruments, in form and substance satisfactory to the Managing Member, as the Managing Member may deem necessary or desirable to effect such substitution; and

 

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10.3.3 such Transfer does not (A) cause the Company to become a “publicly traded partnership”, as such term is defined in Section 469(k)(2) or 7704 of the Code, or (B) cause the Company to become subject to regulation or inspection under the Bank Holding Company Act of 1956, as amended.

 

For purposes of this Article 10, a transaction shall be deemed to be a Transfer, irrespective of its form, if it has economic effect which is substantially equivalent to that of a Transfer under the relevant circumstances.

 

10.4 Pledges. A holder of Common Units may pledge or grant a security interest in such Common Units subject to the following conditions:

 

10.4.1 such holder provides thirty (30) days’ prior written notice of the pledge or grant to the Managing Member;

 

10.4.2 such pledge or grant of security interest shall be made in connection with a bona fide extension of credit by a Person (the “Lender”) who in the ordinary course of such Person’s business engages in such extensions of credit; and

 

10.4.3 prior to completing such pledge or grant of security interest, such holder shall deliver to the Managing Member an undertaking or other instrument reasonably satisfactory to the Managing Member (and for the benefit of each holder of Common Units) in which the Lender acknowledges and agrees that the exercise by the Lender of remedies involving Transfer of ownership of such shares or of rights appurtenant thereto will be a Transfer subject to all the terms of conditions of this Agreement.

 

Notwithstanding the foregoing, the Managing Member may prevent a holder from pledging or granting a security interest in its Common Units if it determines that the exercise of the Lender’s remedies could cause a Transfer otherwise prohibited by this Agreement, including a Transfer prohibited by Section 10.3.3.

 

10.5 Certain Transactions with Respect to the Managing Member.

 

10.5.1 In connection with a Change of Control Transaction, each Member shall, and the Managing Member shall have the right, in its sole discretion, to require each Member to effect an Exchange of all of such Member’s vested Incentive Equity Units (if any) pursuant to Section 11.3, and, a Redemption of all or a portion of such Member’s Common Units (including, but not limited to, any Common Units received by such member pursuant to such Exchange and any other Common Units held by any Member), pursuant to which such Common Units will be exchanged for shares of Class A Common Stock (or economically equivalent cash or securities of a successor entity), mutatis mutandis, in accordance with the Redemption provisions of Article 11 (applied for this purpose as if the Managing Member had delivered an Election Notice that specified a Share Settlement with respect to such Redemption) and otherwise in accordance with this Section 10.5.1. Any such Redemption pursuant to this Section 10.5.1 shall be effective immediately prior to the consummation of such Change of Control Transaction (and, for the avoidance of doubt, shall be contingent upon the consummation of such Change of Control Transaction and shall not be effective if such Change of Control Transaction is not consummated) (the date of such Redemption pursuant to this Section 10.5.1, the “Change of Control Date”). From and after the Change of Control Date, (i) the Common Units subject to such Redemption shall be deemed to be transferred to the Managing Member on the Change of Control Date and (ii) each such Member shall cease to have any rights with respect to the Common Units subject to such Redemption (other than the right to receive shares of Class A Common Stock (or economically equivalent cash or equity securities in a successor entity) pursuant to such Redemption). In the event of an expected Change of Control Transaction, the Managing Member shall provide written notice of an expected Change of Control Transaction to all Members within the earlier of (x) five (5) Business Days following the execution of a definitive agreement providing for such Change of Control Transaction and (y) ten (10) Business Days before the proposed date upon which the contemplated Change of Control Transaction is to be effected, including in such notice such information as may reasonably describe the Change of Control Transaction, subject to applicable law or regulation, including the date of execution of such agreement or such proposed effective date, as applicable, the amount and types of consideration to be paid for shares of Class A Common Stock in the Change of Control Transaction and any election with respect to types of consideration that a holder of shares of Class A Common Stock, as applicable, shall be entitled to make in connection with a Change of Control Transaction (which election shall be available to each Member on the same terms as holders of shares of Class A Common Stock). Following delivery of such notice and on or prior to the Change of Control Date, the Members shall take all actions reasonably requested by the Managing Member to effect such Redemption, including taking any action and delivering any document required pursuant to this Section 10.5.1 to effect such Redemption.

 

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10.5.2 In the event that a tender offer, share exchange offer, issuer bid, take-over bid, recapitalization, or similar transaction with respect to Class A Common Stock (a “Pubco Offer”) is proposed by the Managing Member or is proposed to the Managing Member or its stockholders and approved by the Board or is otherwise effected or to be effected with the consent or approval of the Board, the Managing Member shall provide written notice of the Pubco Offer to all Members within the earlier of (i) five (5) Business Days following the execution of an agreement (if applicable) with respect to, or the commencement of (if applicable), such Pubco Offer and (ii) ten (10) Business Days before the proposed date upon which the Pubco Offer is to be effected, including in such notice such information as may reasonably describe the Pubco Offer, subject to applicable law or regulation, including the date of execution of such agreement (if applicable) or of such commencement (if applicable), the material terms of such Pubco Offer, including the amount and types of consideration to be received by holders of shares of Class A Common Stock in the Pubco Offer, any election with respect to types of consideration that a holder of shares of Class A Common Stock, as applicable, shall be entitled to make in connection with such Pubco Offer, and the number of Common Units held by such Member that is applicable to such Pubco Offer. The Members shall be permitted to participate in such Pubco Offer by delivering a written notice of participation that is effective immediately prior to the consummation of such Pubco Offer (and that is contingent upon consummation of such offer), and shall include such information necessary for consummation of such offer as requested by the Managing Member. In the case of any Pubco Offer that was initially proposed by the Managing Member, the Managing Member shall use reasonable best efforts to enable and permit the Members to participate in such transaction to the same extent or on an economically equivalent basis as the holders of shares of Class A Common Stock, and to enable such Members to participate in such transaction without being required to exchange Common Units prior to the consummation of such transaction.

 

10.5.3 In the event that a transaction or proposed transaction constitutes both a Change of Control Transaction and a Pubco Offer, the provisions of Section 10.5.1 shall take precedence over the provisions of Section 10.5.2 with respect to such transaction, and the provisions of Section 10.5.2 shall be subordinate to provisions of Section 10.5.1, and may only be triggered if the Managing Member elects to waive the provisions of Section 10.5.1.

 

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Article 11.
REDEMPTION

 

11.1 Redemption Right of a Member.

 

11.1.1 Each Member (other than the Managing Member and its Subsidiaries) shall be entitled to cause the Company to redeem (a “Redemption”) its Common Units in whole or in part (the “Redemption Right”) at any time and from time to time following the waiver or expiration of the Lock-Up Period (as defined in the Stockholders’ Agreement), relating to the shares of the Managing Member that may be applicable to such Member. A Member desiring to exercise its Redemption Right (each, a “Redeeming Member”) shall exercise such right by giving written notice (the “Redemption Notice”) to the Company with a copy to the Managing Member. The Redemption Notice shall specify the number of Common Units (the “Redeemed Units”) that the Redeeming Member intends to have the Company redeem and a date, not less than three (3) Business Days nor more than ten (10) Business Days after delivery of such Redemption Notice (unless and to the extent that the Managing Member in its sole discretion agrees in writing to waive such time periods), on which exercise of the Redemption Right shall be completed (the “Redemption Date”); provided, that the Company, the Managing Member and the Redeeming Member may change the number of Redeemed Units and/or the Redemption Date specified in such Redemption Notice to another number and/or date by mutual agreement signed in writing by each of them; provided, further, that in the event the Managing Member elects a Share Settlement, the Redemption may be conditioned (including as to timing) by the Redeeming Member on the closing of an underwritten distribution of the shares of Class A Common Stock that may be issued in connection with such proposed Redemption. Subject to Section 11.3 and unless the Redeeming Member has revoked or delayed a Redemption as provided in Section 11.1.4, on the Redemption Date (to be effective immediately prior to the close of business on the Redemption Date):

 

11.1.1.1 the Redeeming Member shall Transfer and surrender, free and clear of all liens and encumbrances the Redeemed Units to the Company (including any certificates representing the Redeemed Units if they are certificated); and

 

11.1.1.2 the Company shall (x) cancel the Redeemed Units, (y) transfer to the Redeeming Member the consideration to which the Redeeming Member is entitled under Section 11.1.2, and (z) if the Units are certificated, issue to the Redeeming Member a certificate for a number of Common Units equal to the difference (if any) between the number of Common Units evidenced by the certificate surrendered by the Redeeming Member pursuant to clause (i) of this Section 11.1.1 and the Redeemed Units.

 

11.1.2 Subject to the final sentence of this Section 11.1.2, the Managing Member, acting through the Redemption Election Committee, shall have the option to elect to have the Redeemed Units be redeemed in consideration for either a Share Settlement or a Cash Settlement. The Managing Member, acting through the Redemption Election Committee, shall give written notice (the “Election Notice”) to the Company (with a copy to the Redeeming Member) of such election within three (3) Business Days of receiving the Redemption Notice; provided, that if the Managing Member does not timely deliver an Election Notice, or if the Redemption Election Committee for any reason is unable to or does not take action within such three (3) Business Day period, then the Managing Member shall be deemed to have elected the Share Settlement method. Notwithstanding anything to the contrary in this Agreement, the Managing Member (acting through the Redemption Election Committee) may only elect a Cash Settlement if such Cash Settlement is limited to the net proceeds from any issuance of shares of Class A Common Stock issued for the purpose of satisfying such Cash Settlement.

 

11.1.3 In the event the Managing Member elects a Share Settlement in connection with a Redemption, a Redeeming Member shall be entitled to revoke its Redemption Notice or delay the consummation of a Redemption if any of the following conditions exists:

 

11.1.3.1 any registration statement pursuant to which the resale of the Class A Common Stock to be registered for such Redeeming Member at or immediately following the consummation of the Redemption shall have ceased to be effective pursuant to any action or inaction by the SEC or no such resale registration statement has yet become effective;

 

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11.1.3.2 the Managing Member shall have failed to cause any related prospectus to be supplemented by any required prospectus supplement necessary to effect such Redemption;

 

11.1.3.3 the Managing Member shall have exercised its right to defer, delay or suspend the filing or effectiveness of a registration statement and such deferral, delay or suspension shall affect the ability of such Redeeming Member to have its Class A Common Stock registered at or immediately folling the consummation of the Redemption;

 

11.1.3.4 the Redeeming Member is in possession of any material non-public information concerning the Managing Member, the receipt of which results in such Redeeming Member being prohibited or restricted from selling Class A Common Stock at or immediately following the Redemption without disclosure of such information (and the Managing Member does not permit disclosure of such information);

 

11.1.3.5 any stop order relating to the registration statement pursuant to which the Class A Common Stock was to be registered by such Redeeming Member at or immediately following the Redemption shall have been issued by the SEC;

 

11.1.3.6 there shall have occurred a material disruption in the securities markets generally or in the market or markets in which the Class A Common Stock is then traded;

 

11.1.3.7 there shall be in effect an injunction, a restraining order or a decree of any nature of any Governmental Entity that restrains or prohibits the Redemption;

 

11.1.3.8 the Managing Member shall have failed to comply in all material respects with its obligations under the Registration Rights Agreement, and such failure shall have affected the ability of such Redeeming Member to consummate the resale of Class A Common Stock to be received upon such Redemption pursuant to an effective registration statement; or

 

11.1.3.9 the Redemption Date would occur three (3) Business Days or less prior to, or during, a Black-Out Period;

 

If a Redeeming Member delays the consummation of a Redemption pursuant to this Section 11.1.3, the Redemption Date shall occur on the fifth (5th) Business Day following the date on which the condition(s) giving rise to such delay cease to exist (or such other day as the Managing Member, the Company and such Redeeming Member may agree in writing).

 

11.1.4 The number of shares of Class A Common Stock (or Redeemed Units Equivalent, if applicable) (together with any Corresponding Rights) applicable to any Share Settlement or Cash Settlement shall not be adjusted on account of any distributions previously made with respect to the Redeemed Units or dividends previously paid with respect to Class A Common Stock; provided, however, that if a Redeeming Member causes the Company to redeem Redeemed Units and the Redemption Date occurs subsequent to the record date for any distribution with respect to the Redeemed Units but prior to payment of such distribution, the Redeeming Member shall be entitled to receive such distribution with respect to the Redeemed Units on the date that it is made notwithstanding that the Redeeming Member Transferred and surrendered the Redeemed Units to the Company prior to such date; provided, further, however, that a Redeeming Member shall be entitled to receive any and all distributions pursuant to Section 6.3 that such Redeeming Member otherwise would have received in respect of income allocated to such Member for the portion of any tax year irrespective of whether such distribution(s) are declared or made after the Redemption Date. For the avoidance of doubt and for the purpose of avoiding duplication, the Redeeming Member entitled to receive any distribution pursuant to the preceding sentence shall not also receive the dividend declared on the applicable Share Settlement in connection with the same distribution.

 

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11.1.5 In the case of a Share Settlement, in the event a reclassification or other similar transaction occurs following delivery of a Redemption Notice, but prior to the Redemption Date, as a result of which shares of Class A Common Stock are converted into another security, then a Redeeming Member shall be entitled to receive the amount of such other security (and, if applicable, any Corresponding Rights) that the Redeeming Member would have received if such Redemption Right had been exercised and the Redemption Date had occurred immediately prior to the record date of such reclassification or other similar transaction.

 

11.1.6 Notwithstanding anything to the contrary contained herein, neither the Company nor the Managing Member shall be obligated to effectuate a Redemption if such Redemption could (as determined in the reasonable discretion of the Managing Member) cause the Company to be treated as a “publicly traded partnership” or to be taxed as a corporation pursuant to Section 7704 of the Code or successor provisions of the Code.

 

11.2 Election and Contribution of the Managing Member. Unless the Redeeming Member has timely revoked or delayed a Redemption as provided in Section 11.1.4, subject to Section 11.5, on the Redemption Date (to be effective immediately prior to the close of business on the Redemption Date) (i) the Managing Member shall make a capital contribution to the Company (in the form of the Share Settlement or the Cash Settlement, as determined by the Managing Member (acting through the Redemption Election Committee) in accordance with and subject to the conditions in Section 11.1.2), and (ii) in the event of a Share Settlement, the Company shall issue to the Managing Member a number of Common Units equal to the number of Redeemed Units surrendered by the Redeeming Member. Notwithstanding any other provisions of this Agreement to the contrary, but subject to Section 11.3, in the event that the Managing Member (acting through the Redemption Election Committee) elects a Cash Settlement in accordance with and subject to the conditions in Section 11.1.2, the Managing Member shall only be obligated to contribute to the Company, an amount in respect of such Cash Settlement equal to the Redeemed Units Equivalent with respect to such Cash Settlement, which in no event shall exceed the amount actually paid by the Company to the Redeeming Member as the Cash Settlement.

 

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11.3 Exchange of Incentive Equity Units. Subject to Section 11.3.1 below, from and after the later of the (i) twenty-four (24)-month anniversary of the consummation of the Transactions and (ii) six (6)–month anniversary of the date on which the Incentive Equity Option vests with respect to the relevant Incentive Equity Units (unless such time restriction is waived by the Managing Member in its sole discretion with respect to any proposed Incentive Equity Exchange or such restriction is expressly waived in an individual award agreement), and subject to (A) the terms of any Trading Policy (including any Blackout Period contained therein), (B) the waiver or expiration of any contractual lock-up period relating to the shares of the Managing Member (or any corresponding Units) that may be applicable to such Member and (C) the terms of this Agreement, each Member shall be entitled to cause the Company to exchange (an “Incentive Equity Exchange”) its vested Incentive Equity Units for Common Units, in whole or in part (the “Incentive Equity Exchange Right”) at any time and from time to time (for clarity, in no event shall any Incentive Equity Exchange Right exist (x) with respect to any Incentive Equity Option at any time, or (y) with respect to Incentive Equity Units subject to an Incentive Equity Option prior to the valid exercise of the Incentive Equity Option with respect to such Incentive Equity Units). A Member desiring to exercise its Incentive Equity Exchange Right (an “Incentive Equity Exchanging Member”) shall exercise such right by giving written notice (the “Incentive Equity Exchange Notice”) to the Company. The Incentive Equity Exchange Notice shall specify the number of Incentive Equity Units (the “Exchanged Incentive Equity Units”) that the Incentive Equity Exchanging Member intends to have the Company exchange for Common Units and a date, not less than three (3) Business Days nor more than ten (10) Business Days after delivery of such Incentive Equity Exchange Notice (unless and to the extent that the Managing Member in its sole discretion agrees in writing to waive such time periods), on which exercise of the Incentive Equity Exchange Right shall be completed (the “Incentive Equity Exchange Date”); provided, that the Company and the Incentive Equity Exchanging Member may change the number of Exchanged Incentive Equity Units and/or the Incentive Equity Exchange Date specified in such Incentive Equity Exchange Notice to another number and/or date by mutual agreement signed in writing by each of them. On the Incentive Equity Exchange Date (to be effective immediately prior to the close of business on the Incentive Equity Exchange Date): (a) the Incentive Equity Exchanging Member shall Transfer and surrender, free and clear of all liens and encumbrances, the Exchanged Incentive Equity Units to the Company and (b) the Company shall (i) cancel the Exchanged Incentive Equity Units, (ii) issue to the Incentive Equity Exchanging Member the Common Units applicable to the Exchanged Incentive Equity Units and (iii) if the Exchanged Incentive Equity Units are certificated, issue to the Incentive Equity Exchanging Member a certificate for a number of Incentive Equity Units equal to the difference (if any) between the number of Incentive Equity Units evidenced by the certificate surrendered by the Incentive Equity Exchanging Member pursuant to clause (a) of this Section 11.3 and the Exchanged Incentive Equity Units. Upon issuance of the Common Units, such Common Units shall immediately be subject to all of the provisions herein applicable to Common Units, including the Redemption provisions contained in this Article 11, and notwithstanding anything herein to the contrary, immediately upon consummation of any Exchange, unless otherwise agreed in writing between the Incentive Equity Exchanging Member and the Managing Member, the Incentive Equity Exchanging Member shall be deemed to have initiated its Redemption Right with respect to the new Common Units received in such Incentive Equity Exchange, and therefore the provisions of the foregoing Section 11.1 shall be deemed to apply as though the applicable Member had sent a Redemption Notice thereunder on the date that it sent the Incentive Equity Exchange Notice under this Section 11.3, such that the Redemption occurs on the same day as, and immediately following, the Incentive Equity Exchange.

 

11.3.2 Notwithstanding anything to the contrary contained in this Section 11.3, and subject to the terms of any Trading Policy (including any Blackout Period contained therein), the holder of any Incentive Equity Option shall, in connection with the exercise of such Incentive Equity Option, pay the exercise price and, subject to the conditions specified below, any taxes required by law to be withheld in connection with the exercise of any Incentive Equity Option, and may satisfy such obligations by (i) cash, check or wire transfer of immediately available funds, or (ii) (A) in the case of payment of the exercise price of an Incentive Equity Option, surrender of Incentive Equity Units underlying the Incentive Equity Option having a fair market value (as determined in good faith by the Managing Member) on the date of delivery equal to the aggregate exercise price payment required, and (B) in the case of satisfaction of tax withholding obligations, solely if such exercise occurs at a time when a market sale of Class A Common Stock by the holder of the Incentive Equity Option is permitted under applicable law, stock exchange rules, applicable Trading Policies and any other applicable Company/Managing Member policies, in each case as determined by the Managing Member in its sole discretion, delivery of a written or electronic notice that the holder has placed a market sell order with a broker acceptable to the Company with respect to a number of shares of Class A Common Stock issuable in connection with an Incentive Equity Exchange of the Incentive Equity Units underlying the Incentive Equity Option (which notice shall be deemed to effectuate an Incentive Equity Exchange with respect to such Incentive Equity Units in accordance with Section 11.3 above) sufficient to cover the applicable tax withholding obligations (not in excess of the maximum statutory withholding rate), and that the broker has been directed to pay a sufficient portion of the net proceeds of the sale to the Company in satisfaction of the aggregate payments required; provided that payment of such proceeds is then made to the Company upon settlement of such sale.

 

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11.4 Direct Exchange Right of the Managing Member.

 

11.4.1 Notwithstanding anything to the contrary in this Article 11 (save for the limitations set forth in Section 11.1 regarding the Managing Member’s option to select the Share Settlement or the Cash Settlement, and without limitation to the rights of the Members under this Article 11, including the right to revoke a Redemption Notice), the Managing Member may, in its sole and absolute discretion, elect to effect on the Redemption Date the exchange of Redeemed Units for the Share Settlement or the Cash Settlement, as the case may be, through a direct exchange of such Redeemed Units and the Share Settlement or the Cash Settlement, as applicable, between the Redeeming Member, on the one hand, and the Managing Member, on the other hand (a “Direct Exchange”) (rather than contributing the Share Settlement or the Cash Settlement, as the case may be, to the Company for purposes of the Company redeeming the Redeemed Units from the Redeeming Member in consideration of the Share Settlement or the Cash Settlement, as applicable. Upon such Direct Exchange pursuant to this Section 11.4, the Managing Member shall acquire the Redeemed Units and shall be treated for all purposes of this Agreement as the owner of such Units.

 

11.4.2 The Managing Member may, at any time prior to a Redemption Date (including after delivery of an Election), deliver written notice (an “Exchange Election Notice”) to the Company and the Redeeming Member setting forth its election to exercise its right to consummate a Direct Exchange; provided, that such election is subject to the limitations set forth in Article 11 and does not unreasonably prejudice the ability of the parties to consummate a Redemption or Direct Exchange on the Redemption Date. An Exchange Election Notice may be revoked by the Managing Member at any time; provided, that any such revocation does not unreasonably prejudice the ability of the parties to consummate a Redemption or Direct Exchange on the Redemption Date. The right to consummate a Direct Exchange in all events shall be exercisable for all of the Redeemed Units that would have otherwise been subject to a Redemption.

 

11.4.3 Except as otherwise provided by this Section 11.4, a Direct Exchange shall be consummated pursuant to the same timeframe as the relevant Redemption would have been consummated if the Managing Member had not delivered an Exchange Election Notice and as follows:

 

11.4.3.1 the Redeeming Member shall transfer and surrender, free and clear of all liens and encumbrances, the Redeemed Units to the Managing Member;

 

11.4.3.2 the Managing Member shall pay to the Redeeming Member the Share Settlement or the Cash Settlement, as applicable; and

 

11.4.3.3 the Company shall (x) register the Managing Member as the owner of the Redeemed Units and (y) if the Units are certificated, issue to the Redeeming Member a certificate for a number of Common Units equal to the difference (if any) between the number of Common Units evidenced by the certificate surrendered by the Redeeming Member pursuant to this Section 11.4 and the Redeemed Units, and issue to the Managing Member a certificate for the number of Redeemed Units acquired from the Redeeming Member pursuant to this Section 11.4.

 

11.5 Reservation of shares of Class A Common Stock; Listing; Certificate of Incorporation. At all times the Managing Member shall reserve and keep available out of its authorized but unissued Class A Common Stock, solely for the purpose of issuance upon a Share Settlement in connection with a Redemption, such number of shares of Class A Common Stock as shall be issuable upon any such Share Settlement pursuant to a Redemption; provided that nothing contained herein shall be construed to preclude the Managing Member from satisfying its obligations in respect of any such Share Settlement pursuant to a Redemption by delivery of purchased Class A Common Stock (which may or may not be held in the treasury of the Managing Member) or by way of Cash Settlement. Subject to the terms of the Registration Rights Agreement, the Managing Member shall deliver Class A Common Stock that has been registered under the Securities Act with respect to any Share Settlement pursuant to a Redemption to the extent a registration statement is effective and available with respect to such shares. The Managing Member shall use its commercially reasonable efforts to list the Class A Common Stock required to be delivered upon any such Share Settlement pursuant to a Redemption prior to such delivery upon each national securities exchange upon which the outstanding shares of Class A Common Stock are listed at the time of such Share Settlement pursuant to a Redemption (it being understood that any such shares may be subject to transfer restrictions under applicable securities Laws). The Managing Member covenants that all shares of Class A Common Stock issued in connection with a Share Settlement pursuant to a Redemption will, upon issuance, be validly issued, fully paid and non-assessable. The provisions of this Article 11 shall be interpreted and applied in a manner consistent with any corresponding provisions of the Managing Member’s certificate of incorporation (if any).

 

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11.6 Effect of Exercise of Redemption. This Agreement shall continue notwithstanding the consummation of a Redemption by a Member and all rights set forth herein shall continue in effect with respect to the remaining Members and, to the extent the Redeeming Member has any remaining Common Units following such Redemption, the Redeeming Member. No Redemption shall relieve a Redeeming Member of any prior breach of this Agreement by such Redeeming Member.

 

11.7 Tax Treatment. Unless otherwise required by applicable law including a determination of an applicable taxing authority that is final, the parties hereto agree to treat any Redemption (including any Redemption occurring in connection with an Incentive Equity Exchange) or Direct Exchange as a direct exchange between the Managing Member and the Redeeming Member for U.S. federal and applicable state and local income tax purposes and each of the Company, the Managing Member and the applicable Redeeming Members and their respective Affiliates shall report any Redemption or Direct Exchange consistent therewith for all U.S. federal and applicable state and local income tax purposes unless otherwise required by applicable law including a determination of an applicable taxing authority that is final.

 

11.8 Blocker Merger Transaction Cooperation. Following the waiver or expiration of the Lock-Up Period (as defined in the Stockholders’ Agreement), if requested by any Member, the Managing Member and the Company shall work together in good faith with any such requesting Member to structure a transaction that provides for such Member (or an Affiliate thereof) to, in lieu of exercising Redemption Rights applicable to all or a portion of the Common Units held (directly or indirectly) by such Member, merge an entity (a “Blocker Corporation”) that (i) is classified as a corporation for U.S. federal income tax purposes, (ii) has no material assets other than Common Units and (iii) has no liabilities other than any liabilities directly relating to the Common Units held by such corporation (iv) does not have, and has never engaged in, any activities other than holding Common Units, and (v) was formed sufficiently in advance of any merger with and into the Managing Member or with or into one or more Subsidiaries of the Managing Member that is treated as a corporation or an entity that is disregarded as separate from the Managing Member for U.S. federal income tax purposes (any such merger, or any substantially similar transaction pursuant to which the equityholder of the Blocker Corporation receives Class A Common Stock in exchange for all of the interests in the Blocker Corporation, a “Blocker Merger Transaction”). Such Member shall notify the Managing Member and the Company in writing of any request by the Member to implement a Blocker Merger Transaction, and the Managing Member, the Company and the applicable Member shall work together to structure any such Blocker Merger Transaction in a manner that qualifies as a “reorganization” within the meaning of Section 368(a) of the Code and shall draft definitive documentation with respect to any such Blocker Merger Transaction. Such definitive documentation shall include customary representations and customary indemnification, including customary indemnification with respect to any taxes of or with respect to the Blocker Corporation, and shall provide for the rights, if any, the Member may have under the Tax Receivable Agreement following any such Blocker Merger Transaction. Notwithstanding the foregoing, in no event shall any Blocker Merger Transaction be required if such Blocker Merger Transaction would reasonably be expected to result in adverse tax consequences to the Company or any Subsidiary thereof, the Managing Member or any Subsidiary thereof, or any other Member.

 

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Article 12.
DISSOLUTION, LIQUIDATION AND TERMINATION

 

12.1 Dissolution. The Company will be dissolved and its affairs will be wound up upon the occurrence of the first of any of the following events: (a) the written agreement of Members holding 80% of the Units then outstanding; or (b) dissolution required by operation of law.

 

12.2 Notice of Dissolution. Upon the dissolution of the Company, the Managing Member will promptly notify each of the Members of such dissolution.

 

12.3 Liquidation. Upon dissolution of the Company, the Managing Member, as liquidating trustee, will immediately commence to wind up the Company’s affairs; provided, however, that a reasonable time will be allowed for the orderly liquidation of the assets of the Company and the satisfaction of liabilities to creditors so as to enable the Members to minimize the losses attendant upon a liquidation. The Members will continue to share Profits and Losses and other items required to be allocated under Article 5, in the same manner as before the dissolution of the Company. The proceeds of liquidation will be applied (i) first, to the payment of amounts owed to creditors, (ii) then to the establishment of such reserves for contingent liabilities and costs of liquidation as the Managing Member may reasonably determine, and (iii) then to distributions to the Members in accordance with Section 6.1 or Section 6.2.

 

12.4 Termination. The Company will terminate when all of the assets of the Company have been distributed in the manner provided for in Section 12.3. Notwithstanding the foregoing, Section 3.5, Article 5, Article 8, Article 9, Section 11.7, this Article 12 and Article 14 will survive termination of the Company and this Agreement in accordance with their terms.

 

12.5 Claims of the Members. Members and former Members will look solely to the Company’s assets for the return of their Capital Contributions, and if the assets of the Company remaining after payment of or due provision for all debts, liabilities and obligations of the Company are insufficient to return such Capital Contributions, the Members and former Members will have no recourse against the Company or any other Member.

 

Article 13.
PROCEDURES FOR ACTIONS AND CONSENTS OF MEMBERS

 

13.1 Procedures for Actions and Consents of Members. The actions requiring Consent of any Member or Members pursuant to this Agreement, including Section 3.6 hereof, or otherwise pursuant to applicable law, are subject to the procedures set forth in this Article 13.

 

13.2 Actions and Consents of Members.

 

13.2.1 Meetings of the Members may be called only by the Managing Member to transact any business that the Managing Member determines. The call shall state the nature of the business to be transacted. Notice of any such meeting shall be given to all Members entitled to act at the meeting not less than seven (7) days nor more than sixty (60) days prior to the date of such meeting. Members may vote in person or by proxy at such meeting. Unless approval by a different number or proportion of the Members is required by this Agreement, the affirmative vote of Members holding a majority of the outstanding Units held by the Members entitled to act on any proposal shall be sufficient to approve such proposal at a meeting of the Members. Whenever the vote, consent or approval of Members is permitted or required under this Agreement, such vote, consent or approval may be given at a meeting of Members by written Consent in accordance with the procedure prescribed in Section 13.2.2 hereof.

 

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13.2.2 Any action requiring the Consent of any Member or group of Members pursuant to this Agreement or that is required or permitted to be taken at a meeting of the Members may be taken without a meeting if a consent in writing or by electronic transmission setting forth the action so taken or consented to is given by Members whose affirmative vote would be sufficient to approve such action or provide such Consent at a meeting of the Members. Such consent may be in one instrument or in several instruments, and shall have the same force and effect as the affirmative vote of such Members at a meeting of the Members. Such consent shall be filed with the Managing Member. An action so taken shall be deemed to have been taken at a meeting held on the effective date so specified by the Managing Member. For purposes of obtaining a Consent in writing or by electronic transmission, the Managing Member may require a response within a reasonable specified time, but not less than fifteen (15) days, and failure to respond in such time period shall constitute a Consent to the Managing Member’s recommendation with respect to the proposal; provided, however, that an action shall become effective at such time as requisite Consents are received even if prior to such specified time.

 

13.2.3 Each Member entitled to act at a meeting of the Members may authorize any Person or Persons to act for it by proxy on all matters in which a Member is entitled to participate, including waiving notice of any meeting, or voting or participating at a meeting. Each proxy must be signed by the Member or its attorney-in-fact. Every proxy shall be revocable in the discretion of the Member executing it, such revocation to be effective upon the Company’s receipt of written notice of such revocation from the Member executing such proxy, unless such proxy states that it is irrevocable and is coupled with an interest.

 

13.2.4 The Managing Member may set, in advance, a record date for the purpose of determining the Members (i) entitled to Consent to any action, (ii) entitled to receive notice of or vote at any meeting of the Members or (iii) in order to make a determination of Members for any other proper purpose. Such date, in any case, shall not be prior to the close of business on the day the record date is fixed and shall be not more than ninety (90) days and, in the case of a meeting of the Members, not less than five (5) days, before the date on which the meeting is to be held or Consent is to be given. If no record date is fixed, the record date for the determination of Members entitled to notice of or to vote at a meeting of the Members shall be at the close of business on the day on which the notice of the meeting is sent, and the record date for any other determination of Members shall be the effective date of such Member action, distribution or other event. When a determination of the Members entitled to vote at any meeting of the Members has been made as provided in this section, such determination shall apply to any adjournment at such meeting.

 

13.2.5 Each meeting of Members shall be conducted by the Managing Member or such other Person as the Managing Member may appoint pursuant to such rules for the conduct of the meeting as the Managing Member or such other Person deems appropriate in its sole and absolute discretion. Without limitation of the foregoing, meetings of Members may be held at the same time as and as part of, and conducted in the same manner as, the meetings of the Managing Member’s stockholders.

 

Article 14.
MISCELLANEOUS

 

14.1 Notices. All notices provided for in this Agreement will be in writing, duly signed by the party giving such notice, addressed as follows:

 

(a) If given to the Company, to the Managing Member at the address for such Member set forth on Exhibit A; and

 

(b) If given to any Member or any of such Member’s members or shareholders, at its address set forth on Exhibit A.

 

40
 

 

All notices required or permitted by this Agreement shall be given by overnight first class mail, postage prepaid, sent by commercial overnight courier service or by electronic mail (with a subject indicating that it is a notice pursuant to this Agreement). Any such notice will be deemed to have been duly given or made and to have become legally effective, in each case, only at the time of receipt thereof by both the primary Person to whom it is directed and each Person to whom a copy is required to be sent in accordance with Exhibit A. Any provision in this Agreement referring to the “giving” or “delivery” of a notice shall be construed in accordance with the preceding sentence.

 

14.2 Failure to Pursue Remedies. The failure of any party to seek redress for violation of, or to insist upon the strict performance of, any provision of this Agreement will not prevent a subsequent act, which would have originally constituted a violation from having the effect of an original violation.

 

14.3 Cumulative Remedies. The rights and remedies provided by this Agreement are cumulative and the use of any one right or remedy by any party will not preclude or waive its right to use any or all other remedies. Said rights and remedies are given in addition to any other rights the parties may have by law, statute, ordinance or otherwise.

 

14.4 Binding Effect. Subject to other applicable provisions of this Agreement, this Agreement will be binding upon and inure to the benefit of the parties and, to the extent permitted by this Agreement, their successors, heirs, legal representatives and assigns. Whenever any provision of this Agreement refers to a Member, such provision shall be deemed to refer also to any Transferee of an Ownership Interest of such Member, subject to other applicable provisions of this Agreement.

 

14.5 Interpretation. All references to “this Agreement” include the exhibits, schedules, and appendixes hereto. Throughout this Agreement, nouns, pronouns and verbs will be construed as masculine, feminine, neuter, singular or plural, whichever will be applicable. All references herein to Sections, subsections, paragraphs or clauses, or to exhibits, schedules or appendixes, will refer to corresponding provisions of this Agreement. Use of the word “including” shall mean “including without limitation,” unless otherwise stated.

 

14.6 Severability. The invalidity or unenforceability of any particular provision of this Agreement will not affect the other provisions hereof, and this Agreement will be construed in all respects as if such invalid or unenforceable provision were omitted.

 

14.7 Counterparts. This Agreement may be executed in any number of counterparts with the same effect as if the parties hereto had signed the same document. All counterparts will be construed together and will constitute one instrument.

 

14.8 Integration. This Agreement and all Exhibits and Appendices hereto, together with all other agreements that will become effective on the Effective Date, constitute the entire agreement among the parties hereto pertaining to the subject matter hereof and shall supersede all prior agreements and understanding pertaining hereto.

 

14.9 Amendments. Subject to the Stockholders’ Agreement, this Agreement may be amended, supplemented, waived or modified by the written consent of the Managing Member in its sole discretion without the approval of any other Member or other Person.

 

14.10 Headings. The headings and subheadings in this Agreement are included for convenience and identification only and are in no way intended to describe, interpret, define or limit the scope, extent or intent of this Agreement or any provision hereof.

 

41
 

 

14.11 Governing Law. This Agreement and the rights of the parties hereunder will be interpreted in accordance with the laws of the State of Delaware and all rights and remedies will be governed by such laws without regard to principles of conflict of laws.

 

14.12 Consent to Jurisdiction. Each party to this Agreement hereby irrevocably submits to the exclusive jurisdiction of any state or federal court sitting in the State of Delaware in any action or proceeding arising out of or relating to this Agreement, and each party hereby irrevocably agrees that all claims asserted in such action or proceeding shall be heard and determined in any such court. Each party further irrevocably waives any objection which such party may now or hereafter have to the venue of the state or federal court in the State of Delaware having jurisdiction, and irrevocably agrees not to assert that such court is an inconvenient forum.

 

14.13 Waiver of Jury Trial. EACH OF THE PARTIES HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY TRANSACTION DOCUMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.

 

[Remainder of Page Intentionally Left Blank]

 

42
 

 

IN WITNESS WHEREOF, the parties hereto have executed and delivered this Fifth Amended and Restated Limited Liability Company Operating Agreement of AST & Science, LLC, as of the date first above written.

 

  THE COMPANY:
   
  AST & SCIENCE, LLC, a Delaware limited liability company
   
  /s/ Tom Severson
  Name: Tom Severson
  Title: Chief Operating Officer and Chief
    Financial Officer

 

[Signature page to Operating Agreement]

 

 
 

 

  THE MANAGING MEMBER:
   
  AST SPACEMOBILE, INC., a Delaware corporation
   
  /s/ Thomas Severson
  Name: Thomas Severson
  Title: Chief Operating Officer and Chief
    Financial Officer

 

[Signature page to Operating Agreement]

 

 
 

 

  MEMBERS:
   
  By: /s/ Abel Avellan
    Abel Avellan, Individually

 

[Signature page to Operating Agreement]

 

 
 

 

  By: /s/ Tom Severson
    Tom Severson, Individually

 

[Signature page to Operating Agreement]

 

 
 

 

  INVESAT LLC, a Delaware limited liability company
   
  By: /s/ Adriana Cisneros
  Name: Adriana Cisneros
  Title: President

 

[Signature page to Operating Agreement]

 

 
 

 

  Vodafone Ventures Limited, a private limited company organized under the laws of England and Wales
     
  By: /s/ Edward Verner
  Name: Edward Verner
  Title: Authorized Signatory

 

[Signature page to Operating Agreement]

 

 
 

 

  ATC TRS II LLC, a Delaware limited liability company
     
  By: /s/ Edmund DiSanto
  Name: Edmund DiSanto
  Title: EVP, Chief Administration Officer and General Counsel

 

[Signature page to Operating Agreement]

 

 
 

 

  Rakuten Mobile USA Service Inc.,
  a Delaware corporation
     
  By: /s/ Kaname Sueyoshi
  Name: Kaname Sueyoshi
  Title: Authorized Signatory

 

[Signature page to Operating Agreement]

 

 
 

 

  SAMSUNG NEXT FUND LLC, a Delaware limited liability company
     
  By: /s/ Brendon Kim
  Name: Brendon Kim
  Title: Authorized Officer of Samsung Next Fund LLC

 

[Signature page to Operating Agreement]

 

 
 

 

EXHIBIT A

 

Names and Addresses of the Members for Notice and Other Purposes

 

[Intentionally Omitted]

 

 
 

 

EXHIBIT B

 

Members and Units

 

[Intentionally Omitted]

 

Exhibit B-1

 

 

 

Exhibit 10.6

 

AST SPACEMOBILE, INC.
2020 INCENTIVE AWARD PLAN

 

ARTICLE 1.

 

PURPOSE

 

The purpose of the AST SpaceMobile, Inc. 2020 Incentive Award Plan (as it may be amended or restated from time to time, the “Plan”) is to promote the success and enhance the value of AST SpaceMobile, Inc., a Delaware corporation (the “Company”) and AST & Science, LLC (the “Operating Company”) by linking the individual interests of Directors, Employees, and Consultants to those of Company stockholders and by providing such individuals with an incentive for outstanding performance to generate superior returns to Company stockholders. The Plan is further intended to provide flexibility to the Company and the Operating Company and their subsidiaries in their ability to motivate, attract, and retain the services of those individuals upon whose judgment, interest, and special effort the successful conduct of the Company’s and the Operating Company’s operation is largely dependent.

 

ARTICLE 2.

 

DEFINITIONS AND CONSTRUCTION

 

Wherever the following terms are used in the Plan they shall have the meanings specified below, unless the context clearly indicates otherwise. The singular pronoun shall include the plural where the context so indicates.

 

2.1 “Administrator” shall mean the Board or a Committee to the extent that the Board’s powers or authority under the Plan have been delegated to such Committee.

 

2.2 “Affiliate” shall mean the Operating Company and any other person or entity that, directly or indirectly through one or more intermediaries, controls, is controlled by or is under common control with the Company, including any Subsidiary and any Affiliate that is a domestic eligible entity that is disregarded, under Treasury Regulation Section 301-7701-3, as an entity separate from either the Company or any Subsidiary. As used in this definition, “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of the Company, whether through ownership of voting securities, by contract or otherwise.

 

2.3 “Applicable Accounting Standards” shall mean Generally Accepted Accounting Principles in the United States, International Financial Reporting Standards or such other accounting principles or standards as may apply to the Company’s financial statements under United States federal securities laws from time to time.

 

2.4 “Applicable Law” shall mean any applicable law, including, without limitation: (a) provisions of the Code, the Securities Act, the Exchange Act and any rules or regulations thereunder; (b) corporate, securities, tax or other laws, statutes, rules, requirements or regulations, whether federal, state, local or foreign; and (c) rules of any securities exchange or automated quotation system on which the Shares are listed, quoted or traded.

 

 
 

 

2.5 “Automatic Exercise Date” shall mean, with respect to an Option or a Stock Appreciation Right, the last business day of the applicable Option Term or Stock Appreciation Right Term that was initially established by the Administrator for such Option or Stock Appreciation Right (e.g., the last business day prior to the tenth anniversary of the date of grant of such Option or Stock Appreciation Right if the Option or Stock Appreciation Right initially had a ten-year Option Term or Stock Appreciation Right Term, as applicable).

 

2.6 “Award” shall mean an Option, a Stock Appreciation Right, a Restricted Stock award, a Restricted Stock Unit award, an Incentive Unit award, an Other Stock or Cash Based Award or a Dividend Equivalent award, which may be awarded or granted under the Plan.

 

2.7 “Award Agreement” shall mean any written notice, agreement, terms and conditions, contract or other instrument or document evidencing an Award, including through electronic medium, which shall contain such terms and conditions with respect to an Award as the Administrator shall determine consistent with the Plan.

 

2.8 “Board” shall mean the Board of Directors of the Company.

 

2.9 “Change in Control” shall mean

 

(a) any “person” or “group” (within the meaning of Sections 13(d) and 14(d) of the Exchange Act, but excluding any employee benefit plan of such person and its subsidiaries, and any person or entity acting in its capacity as trustee, agent or other fiduciary or administrator of any such plan, and excluding the Permitted Holders (as defined in the Operating Company LLCA)) becomes the “beneficial owner” (within the meaning of Rules 13d-3 and 13d-5 under the Exchange Act), directly or indirectly, of shares of Common Stock, Class B Common Stock, Class C Common Stock, preferred stock and/or any other class or classes of capital stock of the Company (if any) representing in the aggregate more than fifty percent (50%) of the voting power of all of the outstanding shares of capital stock of the Company entitled to vote;

 

(b) the stockholders of the Company approve a plan of complete liquidation or dissolution of the Company or there is consummated an agreement or series of related agreements for the sale or other disposition, directly or indirectly, by the Company of all or substantially all of the Company’s assets (including a sale of all or substantially all of the assets of the Operating Company); or

 

(c) there is consummated a merger or consolidation of the Company with any other corporation or entity, and, immediately after the consummation of such merger or consolidation, the voting securities of the Company immediately prior to such merger or consolidation do not continue to represent, or are not converted into, more than fifty percent (50%) of the combined voting power of the then outstanding voting securities of the person resulting from such merger or consolidation or, if the surviving company is a subsidiary, the ultimate parent thereof.

 

 
 

 

Notwithstanding the foregoing, (i) a “Change in Control” shall not be deemed to have occurred by virtue of the consummation of any transaction or series of integrated transactions immediately following which the record holders of the Common Stock, Class B Common Stock, Class C Common Stock, preferred stock and/or any other class or classes of capital stock of the Company immediately prior to such transaction or series of transactions continue to have substantially the same proportionate ownership in and voting control over, and own substantially all of the shares of, an entity which owns all or substantially all of the assets of the Company immediately following such transaction or series of transactions and (ii) if a Change in Control constitutes a payment event with respect to any Award (or any portion of an Award) that provides for the deferral of compensation that is subject to Section 409A, to the extent required to avoid the imposition of additional taxes under Section 409A, the transaction or event described in subsections (a), (b) or (c) with respect to such Award (or portion thereof) shall only constitute a Change in Control for purposes of the payment timing of such Award if such transaction also constitutes a “change in control event,” as defined in Treasury Regulation Section 1.409A-3(i)(5) (it being understood that vesting of the Award may accelerate upon a Change in Control, even if payment or settlement of the Award may not accelerate pursuant to this clause (ii)).

 

The Administrator shall have full and final authority, which shall be exercised in its sole discretion, to determine conclusively whether a Change in Control has occurred pursuant to the above definition, the date of the occurrence of such Change in Control and any incidental matters relating thereto; provided that any exercise of authority in conjunction with a determination of whether a Change in Control is a “change in control event” as defined in Treasury Regulation Section 1.409A-3(i)(5) shall be consistent with such regulation.

 

2.10 “Class B Common Stock” means the Class B Common Stock, par value $0.0001 per share, of the Company.

 

2.11 “Class C Common Stock” means the Class C Common Stock, par value $0.0001 per share, of the Company.

 

2.12 “Code” shall mean the Internal Revenue Code of 1986, as amended from time to time, together with the regulations and official guidance promulgated thereunder, whether issued prior or subsequent to the grant of any Award.

 

2.13 “Committee” shall mean the Board, or another committee or subcommittee of the Board which may be comprised of one or more Directors and/or executive officers of the Company as appointed by the Board, to the extent permitted in accordance with Applicable Law.

 

2.14 “Common Stock” shall mean the Class A Common Stock, par value $0.0001 per share, of the Company.

 

2.15 “Common Units” means Common Units, as defined in the Operating Company LLCA.

 

2.16 “Company” shall have the meaning set forth in Article 1.

 

2.17 “Consultant” shall mean any consultant or adviser engaged to provide services to the Company or any parent of the Company or Affiliate who qualifies as a consultant or advisor under the applicable rules of the Securities and Exchange Commission for registration of shares on a Form S-8 Registration Statement.

 

 
 

 

2.18 “Director” shall mean a member of the Board, as constituted from time to time.

 

2.19 “Director Limit” shall have the meaning set forth in Section 4.6.

 

2.20 “Dividend Equivalent” shall mean a right to receive the equivalent value (in cash or Shares) of dividends paid on Shares, awarded under Section 9.2.

 

2.21 “DRO” shall mean a “domestic relations order” as defined by the Code or Title I of the Employee Retirement Income Security Act of 1974, as amended from time to time, or the rules thereunder.

 

2.22 “Effective Date” shall mean the date the Plan is adopted by the Board, subject to approval of the Plan by the Company’s stockholders.

 

2.23 “Eligible Individual” shall mean any person who is an Employee, a Consultant or a Non-Employee Director, as determined by the Administrator.

 

2.24 “Employee” shall mean any officer or other employee (as determined in accordance with Section 3401(c) of the Code and the Treasury Regulations thereunder) of the Company or of any parent of the Company or Affiliate.

 

2.25 “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended from time to time.

 

2.26 “Fair Market Value” shall mean, as of any given date, the value of a Share determined as follows:

 

(a) If the Common Stock is (i) listed on any established securities exchange (such as the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market), and the New York Stock Exchange, (ii) listed on any national market system or (iii) quoted or traded on any automated quotation system, its Fair Market Value shall be the closing sales price for a Share as quoted on such exchange or system for such date or, if there is no closing sales price for a Share on the date in question, the closing sales price for a Share on the last preceding date for which such quotation exists, as reported in The Wall Street Journal or such other source as the Administrator deems reliable;

 

(b) If the Common Stock is not listed on an established securities exchange, national market system or automated quotation system, but the Common Stock is regularly quoted by a recognized securities dealer, its Fair Market Value shall be the mean of the high bid and low asked prices for such date or, if there are no high bid and low asked prices for a Share on such date, the high bid and low asked prices for a Share on the last preceding date for which such information exists, as reported in The Wall Street Journal or such other source as the Administrator deems reliable; or

 

 
 

 

(c) If the Common Stock is neither listed on an established securities exchange, national market system or automated quotation system nor regularly quoted by a recognized securities dealer, its Fair Market Value shall be established by the Administrator in good faith.

 

2.27 “Greater Than 10% Stockholder” shall mean an individual then owning (within the meaning of Section 424(d) of the Code) more than 10% of the total combined voting power of all classes of stock of the Company or any subsidiary corporation (as defined in Section 424(f) of the Code) or parent corporation thereof (as defined in Section 424(e) of the Code).

 

2.28 “Holder” shall mean a person who has been granted an Award.

 

2.29 “Incentive Stock Option” shall mean an Option that is intended to qualify as an incentive stock option and conforms to the applicable provisions of Section 422 of the Code.

 

2.30 “Incentive Unit” shall mean, to the extent authorized by the Operating Company LLCA, a class of limited liability company unit in the Operating Company that is granted pursuant to Section 9.7 hereof and is intended to constitute a “profits interest” within the meaning of the Code.

 

2.31 “Non-Employee Director” shall mean a Director of the Company who is not an Employee.

 

2.32 “Non-Employee Director Equity Compensation Policy” shall have the meaning set forth in Section 4.6.

 

2.33 “Non-Qualified Stock Option” shall mean an Option that is not an Incentive Stock Option or which is designated as an Incentive Stock Option but does not meet the applicable requirements of Section 422 of the Code.

 

2.34 “Operating Company” means shall have the meaning set forth in Article 1.

 

2.35 “Operating Company LLCA” means the Fifth Amended and Restated Limited Liability Company Operating Agreement of the Operating Company, as may be amended and/or restated from time to time.

 

2.36 “Option” shall mean a right to purchase Shares at a specified exercise price, granted under Article 5. An Option shall be either a Non-Qualified Stock Option or an Incentive Stock Option; provided, however, that Options granted to Non-Employee Directors and Consultants shall only be Non-Qualified Stock Options.

 

2.37 “Option Term” shall have the meaning set forth in Section 5.4.

 

2.38 “Organizational Documents” shall mean, collectively, (a) the Company’s articles of incorporation, certificate of incorporation, bylaws or other similar organizational documents relating to the creation and governance of the Company, (b) the Committee’s charter or other similar organizational documentation relating to the creation and governance of the Committee, and (c) the Operating Company LLCA.

 

 
 

 

2.39 “Other Stock or Cash Based Award” shall mean a cash payment, cash bonus award, stock payment, stock bonus award, performance award or incentive award that is paid in cash, Shares or a combination of both, awarded under Section 9.1, which may include, without limitation, deferred stock, deferred stock units, performance awards, retainers, committee fees, and meeting-based fees.

 

2.40 “Performance Criteria” shall mean the criteria (and adjustments) that the Administrator selects for an Award for purposes of establishing the Performance Goal or Performance Goals for a Performance Period. The Performance Criteria that may be used to establish Performance Goals include, but are not limited to, the following: (i) net earnings or losses (either before or after one or more of the following: (A) interest, (B) taxes, (C) depreciation, (D) amortization and (E) non-cash equity-based compensation expense); (ii) net income (either before or after taxes) or net income growth; (iii) adjusted net income; (iv) operating earnings or profit (consolidated or unconsolidated, and either before or after taxes); (v) cash flow (including, but not limited to, operating cash flow and free cash flow); (vi) return on assets or return on net assets; (vii) return on capital (or invested capital) and cost of capital; (viii) return on stockholders’ equity; (ix) total stockholder return; (x) gross or net profit or operating margin; (xi) costs, reductions in costs and cost control measures; (xii) expenses and expense control measures; (xiii) working capital; (xiv) earnings or loss per share; (xv) adjusted earnings or loss per share; (xvi) price per share or dividends per share (or appreciation in and/or maintenance of such price or dividends); (xvii) regulatory achievements or compliance; (xviii) revenues, revenue growth or net revenue growth, (xix) implementation or completion of critical projects; (xx) market share; (xxi) economic value; (xxii) hiring or personnel, and (xxiii) individual employee performance, any of which may be measured either in absolute terms or as compared to any incremental increase or decrease or as compared to results of a peer group or other employees or to market performance indicators or indices.

 

2.41 “Performance Goals” shall mean, for a Performance Period, one or more goals established in writing by the Administrator for the Performance Period based upon one or more Performance Criteria. Depending on the Performance Criteria used to establish such Performance Goals, the Performance Goals may be expressed in terms of overall Company performance or the performance of an Affiliate, division, business unit, or an individual. The achievement of each Performance Goal shall be determined with reference to Applicable Accounting Standards or any other methodology as determined appropriate by the Administrator.

 

2.42 “Performance Period” shall mean one or more periods of time, which may be of varying and overlapping durations, as the Administrator may select, over which the attainment of one or more Performance Goals will be measured for the purpose of determining a Holder’s right to, vesting of, and/or the payment in respect of, an Award.

 

2.43 “Permitted Transferee” shall mean, with respect to a Holder, any “family member” of the Holder, as defined in the General Instructions to Form S-8 Registration Statement under the Securities Act (or any successor form thereto), or any other transferee specifically approved by the Administrator after taking into account Applicable Law.

 

2.44 “Plan” shall have the meaning set forth in Article 1.

 

 
 

 

2.45 “Program” shall mean any program adopted by the Administrator pursuant to the Plan containing the terms and conditions intended to govern a specified type of Award granted under the Plan and pursuant to which such type of Award may be granted under the Plan.

 

2.46 “Restricted Stock” shall mean Common Stock awarded under Article 7 that is subject to certain restrictions and may be subject to risk of forfeiture or repurchase.

 

2.47 “Restricted Stock Units” shall mean the right to receive Shares awarded under Article 8.

 

2.48 “Rule 16b-3” means Rule 16b-3 of the Exchange Act and any amendments thereto.

 

2.49 “SAR Term” shall have the meaning set forth in Section 5.4.

 

2.50 “Section 409A” shall mean Section 409A of the Code and the Department of Treasury regulations and other interpretive guidance issued thereunder, including, without limitation, any such regulations or other guidance that may be issued after the Effective Date.

 

2.51 “Securities Act” shall mean the Securities Act of 1933, as amended.

 

2.52 “Shares” shall mean shares of Common Stock.

 

2.53 “Stock Appreciation Right” shall mean an Award entitling the Holder (or other person entitled to exercise pursuant to the Plan) to exercise all or a specified portion thereof (to the extent then exercisable pursuant to its terms) and to receive from the Company an amount determined by multiplying (i) the difference obtained by subtracting (x) the exercise price per share of such Award from (y) the Fair Market Value on the date of exercise of such Award by (ii) the number of Shares with respect to which such Award shall have been exercised, subject to any limitations the Administrator may impose.

 

2.54 “Subsidiary” shall mean any entity (other than the Company), whether domestic or foreign, in an unbroken chain of entities beginning with the Company if each of the entities other than the last entity in the unbroken chain beneficially owns, at the time of the determination, securities or interests representing at least fifty percent (50%) of the total combined voting power of all classes of securities or interests in one of the other entities in such chain.

 

2.55 “Substitute Award” shall mean an Award granted under the Plan in connection with a corporate transaction, such as a merger, combination, consolidation or acquisition of property or stock, in any case, upon the assumption of, or in substitution for, outstanding equity awards previously granted by a company or other entity; provided, however, that in no event shall the term “Substitute Award” be construed to refer to an award made in connection with the cancellation and repricing of an Option or Stock Appreciation Right.

 

 
 

 

2.56 “Termination of Service” shall mean the date the Holder ceases to be an Eligible Individual. The Administrator, in its sole discretion, shall determine the effect of all matters and questions relating to any Termination of Service, including, without limitation, whether a Termination of Service has occurred, whether a Termination of Service resulted from a discharge for cause and all questions of whether particular leaves of absence constitute a Termination of Service; provided, however, that, with respect to Incentive Stock Options, unless the Administrator otherwise provides in the terms of any Program, Award Agreement or otherwise, or as otherwise required by Applicable Law, a leave of absence, change in status from an employee to an independent contractor or other change in the employee-employer relationship shall constitute a Termination of Service only if, and to the extent that, such leave of absence, change in status or other change interrupts employment for the purposes of Section 422(a)(2) of the Code and the then-applicable regulations and revenue rulings under said Section. For purposes of the Plan, a Holder’s employee-employer relationship or consultancy relations shall be deemed to be terminated in the event that the Affiliate employing or contracting with such Holder ceases to remain an Affiliate following any merger, sale of stock or other corporate transaction or event (including, without limitation, a spin-off).

 

ARTICLE 3.

 

SHARES SUBJECT TO THE PLAN

 

3.1 Number of Shares.

 

(a) Subject to Sections 3.1(b) and 12.2, Awards may be made under the Plan covering an aggregate number of Shares equal to 10,800,000. The limit provided in the immediately preceding sentence shall also constitute the maximum number of Awards under the Plan that may be granted as Incentive Stock Options. Any Shares distributed pursuant to an Award may consist, in whole or in part, of authorized and unissued Common Stock, treasury Common Stock or Common Stock purchased on the open market. Subject to Section 12.2, each Incentive Unit issued pursuant to an Award shall count as one Share for purposes of calculating the aggregate number of Shares available for issuance under the Plan as set forth in this Section 3.1(a).

 

(b) If any Shares are forfeited or expire, or such Award is settled for cash (in whole or in part) (including Shares repurchased by the Company under Section 7.4 at the same price paid by the Holder), the Shares subject to such Award shall, to the extent of such forfeiture, expiration or cash settlement, again be available for future grants of Awards under the Plan. Notwithstanding anything to the contrary contained herein, the following Shares shall not be added to the Shares authorized for grant under Section 3.1(a) and shall not be available for future grants of Awards: (i) Shares tendered by a Holder or withheld by the Company in payment of the exercise price of an Option; (ii) Shares tendered by the Holder or withheld by the Company to satisfy any tax withholding obligation with respect to an Option or a Stock Appreciation Right; (iii) Shares subject to a Stock Appreciation Right or other stock-settled Award (including Awards that may be settled in cash or stock) that are not issued in connection with the settlement or exercise, as applicable, of the Stock Appreciation Right or other stock-settled Award; and (iv) Shares purchased on the open market by the Company with the cash proceeds received from the exercise of Options. Any Shares repurchased by the Company under Section 7.4 at the same price paid by the Holder so that such Shares are returned to the Company shall again be available for Awards. The payment of Dividend Equivalents in cash in conjunction with any outstanding Awards shall not be counted against the Shares available for issuance under the Plan. Notwithstanding the provisions of this Section 3.1(b), no Shares may again be optioned, granted or awarded if such action would cause an Incentive Stock Option to fail to qualify as an incentive stock option under Section 422 of the Code.

 

 
 

 

(c) Substitute Awards may be granted on such terms as the Administrator deems appropriate, notwithstanding limitations on Awards in the Plan. Substitute Awards shall not reduce the Shares authorized for grant under the Plan, except as may be required by reason of Section 422 of the Code, and Shares subject to such Substitute Awards shall not be added to the Shares available for Awards under the Plan as provided in Section 3.1(b) above. Additionally, in the event that a company acquired by the Company or any Affiliate or with which the Company or any Affiliate combines has shares available under a pre-existing plan approved by its stockholders and not adopted in contemplation of such acquisition or combination, the shares available for grant pursuant to the terms of such pre-existing plan (as adjusted, to the extent appropriate, using the exchange ratio or other adjustment or valuation ratio or formula used in such acquisition or combination to determine the consideration payable to the holders of common stock of the entities party to such acquisition or combination) may be used for Awards under the Plan and shall not reduce the Shares authorized for grant under the Plan (and Shares subject to such Awards shall not be added to the Shares available for Awards under the Plan as provided in Section 3.1(b) above); provided that Awards using such available Shares shall not be made after the date awards or grants could have been made under the terms of the pre-existing plan, absent the acquisition or combination, and shall only be made to individuals who were not employed by or providing services to the Company or its Affiliates immediately prior to such acquisition or combination.

 

ARTICLE 4.

 

GRANTING OF AWARDs

 

4.1 Participation. The Administrator may, from time to time, select from among all Eligible Individuals those to whom an Award shall be granted and shall determine the nature and amount of each Award, which shall not be inconsistent with the requirements of the Plan. Except for any Non-Employee Director’s right to Awards that may be required pursuant to the Non-Employee Director Equity Compensation Policy as described in Section 4.6, no Eligible Individual or other person shall have any right to be granted an Award pursuant to the Plan and neither the Company nor the Administrator is obligated to treat Eligible Individuals, Holders or any other persons uniformly. Participation by each Holder in the Plan shall be voluntary and nothing in the Plan or any Program shall be construed as mandating that any Eligible Individual or other person shall participate in the Plan.

 

4.2 Award Agreement. Each Award shall be evidenced by an Award Agreement that sets forth the terms, conditions and limitations for such Award as determined by the Administrator in its sole discretion (consistent with the requirements of the Plan and any applicable Program). Award Agreements evidencing Incentive Stock Options shall contain such terms and conditions as may be necessary to meet the applicable provisions of Section 422 of the Code. The Administrator, in its sole discretion, may grant Awards to Eligible Individuals that are based on one or more Performance Criteria or achievement of one or more Performance Goals or any such other criteria or goals as the Administrator shall establish.

 

 
 

 

4.3 Limitations Applicable to Section 16 Persons. Notwithstanding any other provision of the Plan, the Plan, and any Award granted or awarded to any individual who is then subject to Section 16 of the Exchange Act, shall be subject to any additional limitations set forth in any applicable exemptive rule under Section 16 of the Exchange Act (including Rule 16b-3) that are requirements for the application of such exemptive rule. To the extent permitted by Applicable Law, the Plan and Awards granted or awarded hereunder shall be deemed amended to the extent necessary to conform to such applicable exemptive rule.

 

4.4 At-Will Service. Nothing in the Plan or in any Program or Award Agreement hereunder shall confer upon any Holder any right to continue in the employ of, or as a Director or Consultant for, the Company or any Affiliate, or shall interfere with or restrict in any way the rights of the Company and any Affiliate, which rights are hereby expressly reserved, to discharge any Holder at any time for any reason whatsoever, with or without cause, and with or without notice, or to terminate or change all other terms and conditions of employment or engagement, except to the extent expressly provided otherwise in a written agreement between the Holder and the Company or any Affiliate.

 

4.5 Foreign Holders. Notwithstanding any provision of the Plan or applicable Program to the contrary, in order to comply with the laws in countries other than the United States in which the Company and its Affiliates operate or have Employees, Non-Employee Directors or Consultants, or in order to comply with the requirements of any foreign securities exchange or other Applicable Law, the Administrator, in its sole discretion, shall have the power and authority to: (a) determine which Affiliates shall be covered by the Plan; (b) determine which Eligible Individuals outside the United States are eligible to participate in the Plan; (c) modify the terms and conditions of any Award granted to Eligible Individuals outside the United States to comply with Applicable Law (including, without limitation, applicable foreign laws or listing requirements of any foreign securities exchange); (d) establish subplans and modify exercise procedures and other terms and procedures, to the extent such actions may be necessary or advisable; provided, however, that no such subplans and/or modifications shall increase the share limitation contained in Section 3.1 or the Director Limit; and (e) take any action, before or after an Award is made, that it deems advisable to obtain approval or comply with any necessary local governmental regulatory exemptions or approvals or listing requirements of any foreign securities exchange.

 

4.6 Non-Employee Director Awards.

 

(a) Non-Employee Director Equity Compensation Policy. The Administrator, in its sole discretion, may provide that Awards granted to Non-Employee Directors shall be granted pursuant to a written nondiscretionary formula established by the Administrator (the “Non-Employee Director Equity Compensation Policy”), subject to the limitations of the Plan. The Non-Employee Director Equity Compensation Policy shall set forth the type of Award(s) to be granted to Non-Employee Directors, the number of Shares to be subject to Non-Employee Director Awards, the conditions on which such Awards shall be granted, become exercisable and/or payable and expire, and such other terms and conditions as the Administrator shall determine in its sole discretion. The Non-Employee Director Equity Compensation Policy may be modified by the Administrator from time to time in its sole discretion and pursuant to the exercise of its business judgment, taking into account such factors, circumstances and considerations as it shall deem relevant from time to time.

 

 
 

 

(b) Director Limit. Notwithstanding any provision to the contrary in the Plan or in the Non-Employee Director Equity Compensation Policy, the sum of the grant date fair value of equity-based Awards granted and the amount of any cash-based Awards or other fees paid to a Non-Employee Director during any calendar year shall not exceed $750,000 (the “Director Limit”). The Administrator may make exceptions to this limit for individual Non-Employee Directors in extraordinary circumstances, as the Administrator may determine in its discretion, provided that the Non-Employee Director receiving such additional compensation may not participate in the decision to award such compensation or in other contemporaneous compensation decisions involving Non-Employee Directors.

 

ARTICLE 5.

 

granting OF OPTIONS and stock appreciation rights

 

5.1 Granting of Options and Stock Appreciation Rights to Eligible Individuals. The Administrator is authorized to grant Options and Stock Appreciation Rights to Eligible Individuals from time to time, in its sole discretion, on such terms and conditions as it may determine, which shall not be inconsistent with the Plan, including any limitations in the Plan that apply to Incentive Stock Options; provided, however that Options and Stock Appreciation Rights may not be granted with respect to stock that is not “service recipient stock” as defined in Treasury Regulation Section 1.409A-1(b)(5)(iii).

 

5.2 Qualification of Incentive Stock Options. The Administrator may grant Options intended to qualify as Incentive Stock Options only to employees of the Company, any of the Company’s present or future “parent corporations” or “subsidiary corporations” as defined in Sections 424(e) or (f) of the Code, respectively, and any other entities the employees of which are eligible to receive Incentive Stock Options under the Code. No person who qualifies as a Greater Than 10% Stockholder may be granted an Incentive Stock Option unless such Incentive Stock Option conforms to the applicable provisions of Section 422 of the Code. To the extent that the aggregate fair market value of stock with respect to which “incentive stock options” (within the meaning of Section 422 of the Code, but without regard to Section 422(d) of the Code) are exercisable for the first time by a Holder during any calendar year under the Plan, and all other plans of the Company and any parent corporation or subsidiary corporation thereof (as defined in Section 424(e) and 424(f) of the Code, respectively), exceeds $100,000, the Options shall be treated as Non-Qualified Stock Options to the extent required by Section 422 of the Code. The rule set forth in the immediately preceding sentence shall be applied by taking Options and other “incentive stock options” into account in the order in which they were granted and the fair market value of stock shall be determined as of the time the respective options were granted. Any interpretations and rules under the Plan with respect to Incentive Stock Options shall be consistent with the provisions of Section 422 of the Code. Neither the Company nor the Administrator shall have any liability to a Holder, or any other person, (a) if an Option (or any part thereof) which is intended to qualify as an Incentive Stock Option fails to qualify as an Incentive Stock Option or (b) for any action or omission by the Company or the Administrator that causes an Option not to qualify as an Incentive Stock Option, including, without limitation, the conversion of an Incentive Stock Option to a Non-Qualified Stock Option or the grant of an Option intended as an Incentive Stock Option that fails to satisfy the requirements under the Code applicable to an Incentive Stock Option.

 

 
 

 

5.3 Option and Stock Appreciation Right Exercise Price. The exercise price per Share subject to each Option and Stock Appreciation Right shall be set by the Administrator, but shall not be less than 100% of the Fair Market Value of a Share on the date the Option or Stock Appreciation Right, as applicable, is granted (or, as to Incentive Stock Options, on the date the Option is modified, extended or renewed for purposes of Section 424(h) of the Code). In addition, in the case of Incentive Stock Options granted to a Greater Than 10% Stockholder, such price shall not be less than 110% of the Fair Market Value of a Share on the date the Option is granted (or the date the Option is modified, extended or renewed for purposes of Section 424(h) of the Code). Notwithstanding the foregoing, in the case of an Option or Stock Appreciation Right that is a Substitute Award, the exercise price per share of the Shares subject to such Option or Stock Appreciation Right, as applicable, may be less than the Fair Market Value per share on the date of grant; provided that the exercise price of any Substitute Award shall be determined in accordance with the applicable requirements of Section 424 and 409A of the Code.

 

5.4 Option and SAR Term. The term of each Option (the “Option Term”) and the term of each Stock Appreciation Right (the “SAR Term”) shall be set by the Administrator in its sole discretion; provided, however, that the Option Term or SAR Term, as applicable, shall not be more than (a) ten (10) years from the date the Option or Stock Appreciation Right, as applicable, is granted to an Eligible Individual (other than a Greater Than 10% Stockholder), or (b) five (5) years from the date an Incentive Stock Option is granted to a Greater Than 10% Stockholder. Except as limited by the requirements of Section 409A or Section 422 of the Code and regulations and rulings thereunder or the first sentence of this Section 5.4 and without limiting the Company’s rights under Section 10.7, the Administrator may extend the Option Term of any outstanding Option or the SAR Term of any outstanding Stock Appreciation Right, and may extend the time period during which vested Options or Stock Appreciation Rights may be exercised, in connection with any Termination of Service of the Holder or otherwise, and may amend, subject to Section 10.7 and 12.1, any other term or condition of such Option or Stock Appreciation Right relating to such Termination of Service of the Holder or otherwise.

 

5.5 Option and SAR Vesting. The period during which the right to exercise, in whole or in part, an Option or Stock Appreciation Right vests in the Holder shall be set by the Administrator and set forth in the applicable Award Agreement. Notwithstanding the foregoing and unless determined otherwise by the Company, in the event that on the last business day of the term of an Option or Stock Appreciation Right (other than an Incentive Stock Option) (a) the exercise of the Option or Stock Appreciation Right is prohibited by Applicable Law, as determined by the Company, or (b) Shares may not be purchased or sold by the applicable Holder due to any Company insider trading policy (including blackout periods) or a “lock-up” agreement undertaken in connection with an issuance of securities by the Company, the term of the Option or Stock Appreciation Right shall be extended until the date that is thirty (30) days after the end of the legal prohibition, black-out period or lock-up agreement, as determined by the Company; provided, however, in no event shall the extension last beyond the ten year (or any shorter) term of the applicable Option or Stock Appreciation Right. Unless otherwise determined by the Administrator in the Award Agreement, the applicable Program or by action of the Administrator following the grant of the Option or Stock Appreciation Right, (i) no portion of an Option or Stock Appreciation Right which is unexercisable at a Holder’s Termination of Service shall thereafter become exercisable and (ii) the portion of an Option or Stock Appreciation Right that is unexercisable at a Holder’s Termination of Service shall automatically expire on the date of such Termination of Service.

 

 
 

 

ARTICLE 6.

 

EXERCISE OF OPTIONS and STOCK APPRECIATION RIGHTS

 

6.1 Exercise and Payment. An exercisable Option or Stock Appreciation Right may be exercised in whole or in part. However, unless the Administrator otherwise determines, an Option or Stock Appreciation Right shall not be exercisable with respect to fractional Shares and the Administrator may require that, by the terms of the Option or Stock Appreciation Right, a partial exercise must be with respect to a minimum number of Shares. Payment of the amounts payable with respect to Stock Appreciation Rights pursuant to this Article 6 shall be in cash, Shares (based on its Fair Market Value as of the date the Stock Appreciation Right is exercised), or a combination of both, as determined by the Administrator.

 

6.2 Manner of Exercise. Except as set forth in Section 6.3, all or a portion of an exercisable Option or Stock Appreciation Right shall be deemed exercised upon delivery of all of the following to the Secretary of the Company, the stock plan administrator of the Company or such other person or entity designated by the Administrator, or his, her or its office, as applicable:

 

(a) A written notice of exercise in a form the Administrator approves (which may be electronic) complying with the applicable rules established by the Administrator. The notice shall be signed or otherwise acknowledged electronically by the Holder or other person then entitled to exercise the Option or Stock Appreciation Right or such portion thereof;

 

(b) Such representations and documents as the Administrator, in its sole discretion, deems necessary or advisable to effect compliance with Applicable Law;

 

(c) In the event that the Option shall be exercised pursuant to Section 10.3 by any person or persons other than the Holder, appropriate proof of the right of such person or persons to exercise the Option or Stock Appreciation Right, as determined in the sole discretion of the Administrator; and

 

(d) Full payment of the exercise price and applicable withholding taxes for the Shares with respect to which the Option or Stock Appreciation Right, or portion thereof, is exercised, in a manner permitted by the Administrator in accordance with Sections 10.1 and 10.2.

 

6.3 Expiration of Option Term or SAR Term: Automatic Exercise of In-the-Money Options and Stock Appreciation Rights. Unless otherwise provided by the Administrator in an Award Agreement or otherwise, or as otherwise directed by an Option or Stock Appreciation Rights Holder in writing to the Company, each vested and exercisable Option and Stock Appreciation Right outstanding on the Automatic Exercise Date with an exercise price per Share that is less than the Fair Market Value per Share as of such date, shall automatically and without further action by the Option or Stock Appreciation Rights Holder or the Company be exercised on the Automatic Exercise Date. In the sole discretion of the Administrator, payment of the exercise price of any such Option shall be made pursuant to Section 10.1(b) or 10.1(c), and the Company or any Subsidiary shall be entitled to deduct or withhold an amount sufficient to satisfy all taxes associated with such exercise in accordance with Section 10.2. Unless otherwise determined by the Administrator, this Section 6.3 shall not apply to an Option or Stock Appreciation Right if the Holder of such Option or Stock Appreciation Right incurs a Termination of Service on or before the Automatic Exercise Date. For the avoidance of doubt, no Option or Stock Appreciation Right with an exercise price per Share that is equal to or greater than the Fair Market Value per Share on the Automatic Exercise Date shall be exercised pursuant to this Section 6.3.

 

 
 

 

6.4 Notification Regarding Disposition. The Holder shall give the Company prompt written or electronic notice of any disposition or other transfer (other than in connection with a Change in Control) of Shares acquired by exercise of an Incentive Stock Option which occurs within (a) two years from the date of granting (including the date the Option is modified, extended or renewed for purposes of Section 424(h) of the Code) such Option to such Holder, or (b) one year after the date of transfer of such Shares to such Holder. Such notice shall specify the date of such disposition or other transfer and the amount realized, in cash, other property, assumption of indebtedness or other consideration, by the Holder in such disposition or other transfer.

 

ARTICLE 7.

 

AWARD OF RESTRICTED STOCK

 

7.1 Award of Restricted Stock. The Administrator is authorized to grant Restricted Stock, or the right to purchase Restricted Stock, to Eligible Individuals, and shall determine the terms and conditions, including the restrictions applicable to each award of Restricted Stock, which terms and conditions shall not be inconsistent with the Plan or any applicable Program, and may impose such conditions on the issuance of such Restricted Stock as it deems appropriate. The Administrator shall establish the purchase price, if any, and form of payment for Restricted Stock; provided, however, that if a purchase price is charged, such purchase price shall be no less than the par value, if any, of the Shares to be purchased, unless otherwise permitted by Applicable Law. In all cases, legal consideration shall be required for each issuance of Restricted Stock to the extent required by Applicable Law.

 

7.2 Rights as Stockholders. Subject to Section 7.4, upon issuance of Restricted Stock, the Holder shall have, unless otherwise provided by the Administrator, all of the rights of a stockholder with respect to said Shares, subject to the restrictions in the Plan, any applicable Program and/or the applicable Award Agreement, including the right to receive all dividends and other distributions paid or made with respect to the Shares to the extent such dividends and other distributions have a record date that is on or after the date on which the Holder to whom such Restricted Stock are granted becomes the record holder of such Restricted Stock; provided, however, that, in the sole discretion of the Administrator, any extraordinary dividends or distributions with respect to the Shares may be subject to the restrictions set forth in Section 7.3. Notwithstanding anything to the contrary herein, with respect to any award of Restricted Stock, dividends which are paid to holders of Common Stock prior to vesting shall only be paid out to the Holder holding such Restricted Stock to the extent that the vesting conditions are subsequently satisfied. All such dividend payments will be made no later than March 15 of the calendar year following the calendar year in which the right to the dividend payment becomes non-forfeitable.

 

 
 

 

7.3 Restrictions. All shares of Restricted Stock (including any shares received by Holders thereof with respect to shares of Restricted Stock as a result of stock dividends, stock splits or any other form of recapitalization) and any property or cash transferred to Holders in connection with an extraordinary dividend or distribution shall be subject to such restrictions and vesting requirements as the Administrator shall provide in the applicable Program or Award Agreement.

 

7.4 Repurchase or Forfeiture of Restricted Stock. Except as otherwise determined by the Administrator, if no price was paid by the Holder for the Restricted Stock, upon a Termination of Service during the applicable restriction period, the Holder’s rights in unvested Restricted Stock then subject to restrictions shall lapse, and such Restricted Stock shall be surrendered to the Company and cancelled without consideration on the date of such Termination of Service. If a price was paid by the Holder for the Restricted Stock, upon a Termination of Service during the applicable restriction period, the Company shall have the right to repurchase from the Holder the unvested Restricted Stock then subject to restrictions at a cash price per share equal to the price paid by the Holder for such Restricted Stock or such other amount as may be specified in the applicable Program or Award Agreement.

 

7.5 Section 83(b) Election. If a Holder makes an election under Section 83(b) of the Code to be taxed with respect to the Restricted Stock as of the date of transfer of the Restricted Stock rather than as of the date or dates upon which the Holder would otherwise be taxable under Section 83(a) of the Code, the Holder shall deliver a copy of such election to the Company promptly after filing such election with the Internal Revenue Service along with proof of the timely filing thereof with the Internal Revenue Service.

 

ARTICLE 8.

 

Award of restricted stock units

 

8.1 Grant of Restricted Stock Units. The Administrator is authorized to grant Awards of Restricted Stock Units to any Eligible Individual selected by the Administrator in such amounts and subject to such terms and conditions as determined by the Administrator. A Holder will have no rights of a stockholder with respect to Shares subject to any Restricted Stock Unit unless and until the Shares are delivered in settlement of the Restricted Stock Unit.

 

8.2 Vesting of Restricted Stock Units. At the time of grant, the Administrator shall specify the date or dates on which the Restricted Stock Units shall become fully vested and nonforfeitable, and may specify such conditions to vesting as it deems appropriate, including, without limitation, vesting based upon the Holder’s duration of service to the Company or any Affiliate, one or more Performance Goals or other specific criteria, in each case on a specified date or dates or over any period or periods, as determined by the Administrator. An Award of Restricted Stock Units shall only be eligible to vest while the Holder is an Employee, a Consultant or a Director, as applicable; provided, however, that the Administrator, in its sole discretion, may provide (in an Award Agreement or otherwise) that a Restricted Stock Unit award may become vested subsequent to a Termination of Service in the event of the occurrence of one or more specified events, including a Change in Control.

 

 
 

 

8.3 Maturity and Payment. At the time of grant, the Administrator shall specify the maturity date applicable to each grant of Restricted Stock Units, which shall be no earlier than the vesting date or dates of the Award and may be determined at the election of the Holder (if permitted by the applicable Award Agreement); provided that, except as otherwise determined by the Administrator, and subject to compliance with Section 409A, in no event shall the maturity date applicable to each Restricted Stock Unit occur following the later of (a) the 15th day of the third month following the end of the calendar year in which the applicable portion of the Restricted Stock Unit vests; and (b) the 15th day of the third month following the end of the Company’s fiscal year in which the applicable portion of the Restricted Stock Unit vests. On the maturity date, the Company shall, in accordance with the applicable Award Agreement and subject to Section 10.4(f), transfer to the Holder one unrestricted, fully transferable Share for each Restricted Stock Unit scheduled to be paid out on such date and not previously forfeited, or in the sole discretion of the Administrator, an amount in cash equal to the Fair Market Value of such Shares on the maturity date or a combination of cash and Common Stock as determined by the Administrator.

 

ARTICLE 9.

 

award of OTHER STOCK OR CASH BASED AWARDS, DIVIDEND

EQUIVALENTS AND INCENTIVE UNITS

 

9.1 Other Stock or Cash Based Awards. The Administrator is authorized to grant Other Stock or Cash Based Awards, including awards entitling a Holder to receive Shares or cash to be delivered immediately or in the future, to any Eligible Individual. Subject to the provisions of the Plan and any applicable Program, the Administrator shall determine the terms and conditions of each Other Stock or Cash Based Award, including the term of the Award, any exercise or purchase price, Performance Criteria and Performance Goals, transfer restrictions, vesting conditions and other terms and conditions applicable thereto, which shall be set forth in the applicable Award Agreement. Other Stock or Cash Based Awards may be paid in cash, Shares, or a combination of cash and Shares, as determined by the Administrator, and may be available as a form of payment in the settlement of other Awards granted under the Plan, as stand-alone payments, as a part of a bonus, deferred bonus, deferred compensation or other arrangement, and/or as payment in lieu of compensation to which an Eligible Individual is otherwise entitled.

 

9.2 Dividend Equivalents. Dividend Equivalents may be granted by the Administrator, either alone or in tandem with another Award, based on dividends declared on the Common Stock, to be credited as of dividend payment dates during the period between the date the Dividend Equivalents are granted to a Holder and the date such Dividend Equivalents terminate or expire, as determined by the Administrator. Such Dividend Equivalents shall be converted to cash or additional Shares by such formula and at such time and subject to such restrictions and limitations as may be determined by the Administrator. Notwithstanding the forgoing, Dividend Equivalents with respect to an Award shall only be paid to the Holder to the extent that the vesting conditions are subsequently satisfied. All such Dividend Equivalents will be made no later than March 15 of the calendar year following the calendar year in which the right to the Dividend Equivalent payment becomes non-forfeitable, unless determined otherwise by the Administrator.

 

 
 

 

9.3 Incentive Units. The Administrator is authorized to grant Incentive Units (if authorized under the Operating Company LLCA) in such amount and subject to such terms and conditions as may be determined by the Administrator; provided, however, that Incentive Units may only be issued to a Holder for the performance of services to or for the benefit of the Operating Company (a) in the Holder’s capacity as a member of the Operating Company, (b) in anticipation of the Holder becoming a member of the Operating Company, or (c) as otherwise determined by the Administrator, provided that if and to the extent that the Incentive Units are intended to constitute “profits interests” within the meaning of the Code, including, to the extent applicable, Revenue Procedure 93-27, 1993-2 C.B. 343 and Revenue Procedure 2001-43, 2001-2 C.B. 191, such Incentive Units shall be granted, administered and interpreted in all respects in accordance with the requirements thereof. The Administrator shall specify the conditions and dates upon which the Incentive Units shall vest and become nonforfeitable. Incentive Units shall be subject to the terms and conditions of the Operating Company LLCA and such other restrictions, including restrictions on transferability, as the Administrator may impose. These restrictions may lapse separately or in combination at such times, pursuant to such circumstances, in such installments, or otherwise, as the Administrator determines at the time of the grant of the Award or thereafter.

 

ARTICLE 10.

 

ADditional terms of awards

 

10.1 Payment. The Administrator shall determine the method or methods by which payments by any Holder with respect to any Awards granted under the Plan shall be made, including, without limitation: (a) cash, wire transfer of immediately available funds or check, (b) Shares (including, in the case of payment of the exercise price of an Award, Shares issuable pursuant to the exercise of the Award) or Shares held for such minimum period of time as may be established by the Administrator, in each case, having a Fair Market Value on the date of delivery equal to the aggregate payments required, (c) delivery of a written or electronic notice that the Holder has placed a market sell order with a broker acceptable to the Company with respect to Shares then issuable upon exercise or vesting of an Award, and that the broker has been directed to pay a sufficient portion of the net proceeds of the sale to the Company in satisfaction of the aggregate payments required; provided that payment of such proceeds is then made to the Company upon settlement of such sale, (d) other form of legal consideration acceptable to the Administrator in its sole discretion, or (e) any combination of the above permitted forms of payment. Notwithstanding any other provision of the Plan to the contrary, no Holder who is a Director or an “executive officer” of the Company within the meaning of Section 13(k) of the Exchange Act shall be permitted to make payment with respect to any Awards granted under the Plan, or continue any extension of credit with respect to such payment, with a loan from the Company or a loan arranged by the Company in violation of Section 13(k) of the Exchange Act.

 

 
 

 

10.2 Tax Withholding. The Company or any Affiliate shall have the authority and the right to deduct or withhold, or require a Holder to remit to the Company, an amount sufficient to satisfy federal, state, local and foreign taxes (including the Holder’s FICA, employment tax or other social security contribution obligation) required by law to be withheld with respect to any taxable event concerning a Holder arising as a result of the Plan or any Award. The Administrator may, in its sole discretion and in satisfaction of the foregoing requirement, or in satisfaction of such additional withholding obligations as a Holder may have elected, allow a Holder to satisfy such obligations by any payment means described in Section 10.1 hereof, including without limitation, by allowing such Holder to elect to have the Company or any Affiliate withhold Shares otherwise issuable under an Award (or allow the surrender of Shares). The number of Shares that may be so withheld or surrendered shall be limited to the number of Shares that have a fair market value on the date of withholding or repurchase no greater than the aggregate amount of such liabilities based on the maximum statutory withholding rates in such Holder’s applicable jurisdictions for federal, state, local and foreign income tax and payroll tax purposes that are applicable to such taxable income. The Administrator shall determine the fair market value of the Shares, consistent with applicable provisions of the Code, for tax withholding obligations due in connection with a broker-assisted cashless Option or Stock Appreciation Right exercise involving the sale of Shares to pay the Option or Stock Appreciation Right exercise price or any tax withholding obligation.

 

10.3 Transferability of Awards.

 

(a) Except as otherwise provided in Sections 10.3(b) and 10.3(c):

 

(i) No Award under the Plan may be sold, pledged, assigned or transferred in any manner other than (A) by will or the laws of descent and distribution or (B) subject to the consent of the Administrator, pursuant to a DRO, unless and until such Award has been exercised or the Shares underlying such Award have been issued, and all restrictions applicable to such Shares have lapsed;

 

(ii) No Award or interest or right therein shall be liable for or otherwise subject to the debts, contracts or engagements of the Holder or the Holder’s successors in interest or shall be subject to disposition by transfer, alienation, anticipation, pledge, hypothecation, encumbrance, assignment or any other means whether such disposition be voluntary or involuntary or by operation of law by judgment, levy, attachment, garnishment or any other legal or equitable proceedings (including bankruptcy) unless and until such Award has been exercised, or the Shares underlying such Award have been issued, and all restrictions applicable to such Shares have lapsed, and any attempted disposition of an Award prior to satisfaction of these conditions shall be null and void and of no effect, except to the extent that such disposition is permitted by Section 10.3(a)(i); and

 

(iii) During the lifetime of the Holder, only the Holder may exercise any exercisable portion of an Award granted to such Holder under the Plan, unless it has been disposed of pursuant to a DRO. After the death of the Holder, any exercisable portion of an Award may, prior to the time when such portion becomes unexercisable under the Plan or the applicable Program or Award Agreement, be exercised by the Holder’s personal representative or by any person empowered to do so under the deceased Holder’s will or under the then-applicable laws of descent and distribution.

 

 
 

 

(b) Notwithstanding Section 10.3(a), the Administrator, in its sole discretion, may determine to permit a Holder or a Permitted Transferee of such Holder to transfer an Award other than an Incentive Stock Option (unless such Incentive Stock Option is intended to become a Nonqualified Stock Option) to any one or more Permitted Transferees of such Holder, subject to the following terms and conditions: (i) an Award transferred to a Permitted Transferee shall not be assignable or transferable by the Permitted Transferee other than (A) to another Permitted Transferee of the applicable Holder or (B) by will or the laws of descent and distribution or, subject to the consent of the Administrator, pursuant to a DRO; (ii) an Award transferred to a Permitted Transferee shall continue to be subject to all the terms and conditions of the Award as applicable to the original Holder (other than the ability to further transfer the Award to any person other than another Permitted Transferee of the applicable Holder); (iii) any transfer of an Award to a Permitted Transferee shall be without consideration, except as required by applicable law; (iv) the Holder (or transferring Permitted Transferee) and the receiving Permitted Transferee shall execute any and all documents requested by the Administrator, including, without limitation documents to (A) confirm the status of the transferee as a Permitted Transferee, (B) satisfy any requirements for an exemption for the transfer under Applicable Law and (C) evidence the transfer; and (v) the transfer of an Award to a Permitted Transferee shall be without consideration. In addition, and further notwithstanding Section 10.3(a), hereof, the Administrator, in its sole discretion, may determine to permit a Holder to transfer Incentive Stock Options to a trust that constitutes a Permitted Transferee if, under Section 671 of the Code and other Applicable Law, the Holder is considered the sole beneficial owner of the Incentive Stock Option while it is held in the trust.

 

(c) Notwithstanding Section 10.3(a), a Holder may, in the manner determined by the Administrator, designate a beneficiary to exercise the rights of the Holder and to receive any distribution with respect to any Award upon the Holder’s death. A beneficiary, legal guardian, legal representative, or other person claiming any rights pursuant to the Plan is subject to all terms and conditions of the Plan and any Program or Award Agreement applicable to the Holder and any additional restrictions deemed necessary or appropriate by the Administrator. If the Holder is married or a domestic partner in a domestic partnership qualified under Applicable Law and resides in a community property state, a designation of a person other than the Holder’s spouse or domestic partner, as applicable, as the Holder’s beneficiary with respect to more than 50% of the Holder’s interest in the Award shall not be effective without the prior written or electronic consent of the Holder’s spouse or domestic partner. If no beneficiary has been designated or survives the Holder, payment shall be made to the person entitled thereto pursuant to the Holder’s will or the laws of descent and distribution. Subject to the foregoing, a beneficiary designation may be changed or revoked by a Holder at any time; provided that the change or revocation is delivered in writing to the Administrator prior to the Holder’s death.

 

10.4 Conditions to Issuance of Shares.

 

(a) The Administrator shall determine the methods by which Shares shall be delivered or deemed to be delivered to Holders. Notwithstanding anything herein to the contrary, the Company shall not be required to issue or deliver any certificates or make any book entries evidencing Shares pursuant to the exercise of any Award, unless and until the Administrator has determined that the issuance of such Shares is in compliance with Applicable Law and the Shares are covered by an effective registration statement or applicable exemption from registration. In addition to the terms and conditions provided herein, the Administrator may require that a Holder make such reasonable covenants, agreements and representations as the Administrator, in its sole discretion, deems advisable in order to comply with Applicable Law.

 

 
 

 

(b) All share certificates delivered pursuant to the Plan and all Shares issued pursuant to book entry procedures are subject to any stop-transfer orders and other restrictions as the Administrator deems necessary or advisable to comply with Applicable Law. The Administrator may place legends on any share certificate or book entry to reference restrictions applicable to the Shares (including, without limitation, restrictions applicable to Restricted Stock).

 

(c) The Administrator shall have the right to require any Holder to comply with any timing or other restrictions with respect to the settlement, distribution or exercise of any Award, including a window-period limitation, as may be imposed in the sole discretion of the Administrator.

 

(d) Unless the Administrator otherwise determines, no fractional Shares shall be issued and the Administrator, in its sole discretion, shall determine whether cash shall be given in lieu of fractional Shares or whether such fractional Shares shall be eliminated by rounding down.

 

(e) The Company, in its sole discretion, may (i) retain physical possession of any stock certificate evidencing Shares until any restrictions thereon shall have lapsed and/or (ii) require that the stock certificates evidencing such Shares be held in custody by a designated escrow agent (which may but need not be the Company) until the restrictions thereon shall have lapsed, and that the Holder deliver a stock power, endorsed in blank, relating to such Shares.

 

(f) Notwithstanding any other provision of the Plan, unless otherwise determined by the Administrator or required by Applicable Law, the Company shall not deliver to any Holder certificates evidencing Shares issued in connection with any Award and instead such Shares shall be recorded in the books of the Company (or, as applicable, its transfer agent or stock plan administrator).

 

10.5 Forfeiture and Claw-Back Provisions. All Awards (including any proceeds, gains or other economic benefit actually or constructively received by a Holder upon any receipt or exercise of any Award or upon the receipt or resale of any Shares underlying the Award and any payments of a portion of an incentive-based bonus pool allocated to a Holder) shall be subject to the provisions of any claw-back policy implemented by the Company, including, without limitation, any claw-back policy adopted to comply with the requirements of the Dodd-Frank Wall Street Reform and Consumer Protection Act (and any rules or regulations promulgated thereunder) or any other Applicable Law, whether or not such claw-back policy was in place at the time of grant of an Award, to the extent set forth in such claw-back policy and/or in the applicable Award Agreement.

 

 
 

 

10.6 Repricing. Subject to Section 12.2, the Administrator may not, without the approval of the stockholders of the Company, (a) authorize the amendment of any outstanding Option or Stock Appreciation Right to reduce its price per Share, or (b) cancel any Option or Stock Appreciation Right in exchange for cash or another Award when the Option or Stock Appreciation Right price per Share exceeds the Fair Market Value of the underlying Shares. Furthermore, for purposes of this Section 10.6, except in connection with a corporate transaction involving the Company (including, without limitation, any stock dividend, stock split, extraordinary cash dividend, recapitalization, reorganization, merger, consolidation, split-up, spin-off, combination or exchange of shares), the terms of outstanding Awards may not be amended to reduce the exercise price per Share of outstanding Options or Stock Appreciation Rights or cancel outstanding Options or Stock Appreciation Rights in exchange for cash, other Awards or Options or Stock Appreciation Rights with an exercise price per Share that is less than the exercise price per Share of the original Options or Stock Appreciation Rights without the approval of the stockholders of the Company.

 

10.7 Amendment of Awards. Subject to Applicable Law and Section 10.6, the Administrator may amend, modify or terminate any outstanding Award, including but not limited to, substituting therefor another Award of the same or a different type and changing the date of exercise or settlement. The Holder’s consent to such action shall be required unless (a) the Administrator determines that the action, taking into account any related action, would not materially and adversely affect the Holder, or (b) the change is otherwise permitted under the Plan (including, without limitation, under Section 12.2 or 12.10).

 

10.8 Lock-Up Period. The Company may, in connection with registering the offering of any Company securities under the Securities Act, prohibit Holders from, directly or indirectly, selling or otherwise transferring any Shares or other Company securities during a period of up to one hundred eighty days following the effective date of a Company registration statement filed under the Securities Act, or such longer period as determined by the underwriter. In order to enforce the foregoing, the Company shall have the right to place restrictive legends on the certificates of any securities of the Company held by the Holder and to impose stop transfer instructions with the Company’s transfer agent with respect to any securities of the Company held by the Holder until the end of such period.

 

10.9 Data Privacy. As a condition of receipt of any Award, each Holder explicitly and unambiguously consents to the collection, use and transfer, in electronic or other form, of personal data as described in this Section 10.9 by and among, as applicable, the Company and its Affiliates for the exclusive purpose of implementing, administering and managing the Holder’s participation in the Plan. The Company and its Affiliates may hold certain personal information about a Holder, including but not limited to, the Holder’s name, home address and telephone number, date of birth, social security or insurance number or other identification number, salary, nationality, job title(s), any shares of stock held in the Company or any of its Affiliates, details of all Awards, in each case, for the purpose of implementing, managing and administering the Plan and Awards (the “Data”). The Company and its Affiliates may transfer the Data amongst themselves as necessary for the purpose of implementation, administration and management of a Holder’s participation in the Plan, and the Company and its Affiliates may each further transfer the Data to any third parties assisting the Company and its Affiliates in the implementation, administration and management of the Plan. These recipients may be located in the Holder’s country, or elsewhere, and the Holder’s country may have different data privacy laws and protections than the recipients’ country. Through acceptance of an Award, each Holder authorizes such recipients to receive, possess, use, retain and transfer the Data, in electronic or other form, for the purposes of implementing, administering and managing the Holder’s participation in the Plan, including any requisite transfer of such Data as may be required to a broker or other third party with whom the Company or any of its Affiliates or the Holder may elect to deposit any Shares. The Data related to a Holder will be held only as long as is necessary to implement, administer, and manage the Holder’s participation in the Plan. A Holder may, at any time, view the Data held by the Company with respect to such Holder, request additional information about the storage and processing of the Data with respect to such Holder, recommend any necessary corrections to the Data with respect to the Holder or refuse or withdraw the consents herein in writing, in any case without cost, by contacting his or her local human resources representative. The Company may cancel the Holder’s ability to participate in the Plan, and, in the Administrator’s discretion, the Holder may forfeit any outstanding Awards if the Holder refuses or withdraws his or her consents as described herein. For more information on the consequences of refusal to consent or withdrawal of consent, Holders may contact their local human resources representative.

 

 
 

 

ARTICLE 11.

 

ADMINISTRATION

 

11.1 Administrator. The Committee shall administer the Plan (except as otherwise permitted herein). To the extent required to comply with the provisions of Rule 16b-3, it is intended that each member of the Committee will be, at the time the Committee takes any action with respect to an Award that is subject to Rule 16b-3, a “non-employee director” within the meaning of Rule 16b-3. Additionally, to the extent required by Applicable Law, each of the individuals constituting the Committee shall be an “independent director” under the rules of any securities exchange or automated quotation system on which the Shares are listed, quoted or traded. Notwithstanding the foregoing, any action taken by the Committee shall be valid and effective, whether or not members of the Committee at the time of such action are later determined not to have satisfied the requirements for membership set forth in this Section 11.1 or the Organizational Documents. Except as may otherwise be provided in the Organizational Documents or as otherwise required by Applicable Law, (a) appointment of Committee members shall be effective upon acceptance of appointment, (b) Committee members may resign at any time by delivering written or electronic notice to the Board and (c) vacancies in the Committee may only be filled by the Board. Notwithstanding the foregoing, (i) the full Board, acting by a majority of its members in office, (A) shall conduct the general administration of the Plan with respect to Awards granted to Non-Employee Directors and, with respect to such Awards, the term “Administrator” as used in the Plan shall be deemed to refer to the Board, and (B) may re-vest in itself at any time any authority of the Committee hereunder, and (ii) the Board or Committee may delegate its authority hereunder to the extent permitted by Section 11.6.

 

11.2 Duties and Powers of Administrator. It shall be the duty of the Administrator to conduct the general administration of the Plan in accordance with its provisions. The Administrator shall have the power to interpret the Plan, all Programs and Award Agreements, and to adopt such rules for the administration, interpretation and application of the Plan and any Program as are not inconsistent with the Plan, to interpret, amend or revoke any such rules and to amend the Plan or any Program or Award Agreement; provided that the rights or obligations of the Holder of the Award that is the subject of any such Program or Award Agreement are not materially and adversely affected by such amendment, unless the consent of the Holder is obtained or such amendment is otherwise permitted under Section 10.7 or Section 12.10. In its sole discretion, the Board may at any time and from time to time exercise any and all rights and duties of the Committee in its capacity as the Administrator under the Plan except with respect to matters which under Rule 16b-3 or any successor rule, or any regulations or rules issued thereunder, or the rules of any securities exchange or automated quotation system on which the Shares are listed, quoted or traded are required to be determined in the sole discretion of the Committee.

 

 
 

 

11.3 Action by the Administrator. Unless otherwise established by the Board, set forth in any Organizational Documents or as required by Applicable Law, a majority of the Administrator shall constitute a quorum, and the acts of a majority of the members present at any meeting at which a quorum is present, and acts approved in writing by all members of the Administrator in lieu of a meeting, shall be deemed the acts of the Administrator. Each member of the Administrator is entitled to, in good faith, rely or act upon any report or other information furnished to that member by any officer or other employee of the Company or any Affiliate, the Company’s independent certified public accountants, or any executive compensation consultant or other professional retained by the Company to assist in the administration of the Plan. Neither the Administrator nor any member or delegate thereof shall have any liability to any person (including any Holder) for any action taken or omitted to be taken or any determination made in good faith with respect to the Plan or any Award.

 

11.4 Authority of Administrator. Subject to the Organizational Documents, any specific designation in the Plan and Applicable Law, the Administrator has the exclusive power, authority and sole discretion to:

 

(a) Designate Eligible Individuals to receive Awards;

 

(b) Determine the type or types of Awards to be granted to each Eligible Individual (including, without limitation, any Awards granted in tandem with another Award granted pursuant to the Plan);

 

(c) Determine the number of Awards to be granted and the number of Shares to which an Award will relate;

 

(d) Determine the terms and conditions of any Award granted pursuant to the Plan, including, but not limited to, the exercise price, grant price, purchase price, any Performance Criteria and/or Performance Goals, any restrictions or limitations on the Award, any schedule for vesting, lapse of forfeiture restrictions or restrictions on the exercisability of an Award, and accelerations or waivers thereof, and any provisions related to non-competition and claw-back and recapture of gain on an Award, based in each case on such considerations as the Administrator in its sole discretion determines;

 

(e) Determine whether, to what extent, and under what circumstances an Award may be settled in, or the exercise price of an Award may be paid in cash, Shares, other Awards, or other property, or an Award may be canceled, forfeited, or surrendered;

 

(f) Prescribe the form of each Award Agreement, which need not be identical for each Holder;

 

 
 

 

(g) Decide all other matters that must be determined in connection with an Award;

 

(h) Establish, adopt, or revise any Programs, rules and regulations as it may deem necessary or advisable to administer the Plan;

 

(i) Interpret the terms of, and any matter arising pursuant to, the Plan, any Program or any Award Agreement, resolve any ambiguities under the Plan or any Award and supply any omissions; and

 

(j) Make all other decisions and determinations that may be required pursuant to the Plan or as the Administrator deems necessary or advisable to administer the Plan.

 

11.5 Decisions Binding. The Administrator’s interpretation of the Plan, any Awards granted pursuant to the Plan, any Program or any Award Agreement and all decisions and determinations by the Administrator with respect to the Plan are final, binding and conclusive on all persons.

 

11.6 Delegation of Authority. The Board or Committee may from time to time delegate to a committee of one or more Directors or one or more officers of the Company the authority to grant or amend Awards or to take other administrative actions pursuant to this Article 11; provided, however, that in no event shall an officer of the Company be delegated the authority to grant Awards to, or amend Awards held by, the following individuals: (a) individuals who are subject to Section 16 of the Exchange Act, or (b) officers of the Company (or Directors) to whom authority to grant or amend Awards has been delegated hereunder; provided, further, that any delegation of administrative authority shall only be permitted to the extent it is permissible under any Organizational Documents and Applicable Law. Any delegation hereunder shall be subject to the restrictions and limits that the Board or Committee specifies at the time of such delegation or that are otherwise included in the applicable Organizational Documents, and the Board or Committee, as applicable, may at any time rescind the authority so delegated or appoint a new delegatee. At all times, the delegatee appointed under this Section 11.6 shall serve in such capacity at the pleasure of the Board or the Committee, as applicable, and the Board or the Committee may abolish any committee at any time and re-vest in itself any previously delegated authority.

 

11.7 Acceleration. Subject to the Organizational Documents, any specific designation in the Plan and Applicable Law, the Administrator has the exclusive power, authority and sole discretion to accelerate, wholly or partially, the vesting or lapse of restrictions (and, if applicable, the Company shall cease to have a right of repurchase) of any Award or portion thereof at any time after the grant of an Award, subject to whatever terms and conditions it selects and Section 12.2.

 

 
 

 

ARTICLE 12.

MISCELLANEOUS PROVISIONS

 

12.1 Amendment, Suspension or Termination of the Plan.

 

(a) Except as otherwise provided in Section 12.1(b), the Plan may be wholly or partially amended or otherwise modified, suspended or terminated at any time or from time to time by the Board; provided that, except as provided in Section 10.7 and Section 12.10, no amendment, suspension or termination of the Plan shall, without the consent of the Holder, materially and adversely affect any rights or obligations under any Award theretofore granted or awarded, unless the Award itself otherwise expressly so provides.

 

(b) Notwithstanding Section 12.1(a), the Board may not, except as provided in Section 12.2, take any of the following actions without approval of the Company’s stockholders given within twelve (12) months before or after such action: (i) increase the limit imposed in Section 3.1 on the maximum number of Shares which may be issued under the Plan, (ii) reduce the price per share of any outstanding Option or Stock Appreciation Right granted under the Plan or take any action prohibited under Section 10.6, or (iii) cancel any Option or Stock Appreciation Right in exchange for cash or another Award in violation of Section 10.6.

 

(c) No Awards may be granted or awarded during any period of suspension or after termination of the Plan, and notwithstanding anything herein to the contrary, in no event may any Award be granted under the Plan after the tenth (10th) anniversary of the earlier of (i) the date on which the Plan was adopted by the Board and (ii) the date the Plan was approved by the Company’s stockholders (such anniversary, the “Expiration Date”). Any Awards that are outstanding on the Expiration Date shall remain in force according to the terms of the Plan, the applicable Program and the applicable Award Agreement.

 

12.2 Changes in Common Stock or Assets of the Company, Acquisition or Liquidation of the Company and Other Corporate Events.

 

(a) In the event of (i) any equity distribution, extraordinary cash dividend or other distribution (whether in the form of securities or other property), recapitalization, division of Shares or Common Units, Share or unit split, reverse Share or unit split, reorganization, merger, consolidation, split-up, split-off, combination, repurchase or exchange of Shares or Common Units or other securities of the Company or an Affiliate, as applicable, issuance of warrants or other rights to acquire Shares or Common Units or other securities of the Company or an Affiliate, as applicable, or other similar corporate transaction or event (including, without limitation, a Change in Control) that affects the Shares or Common Units, or (ii) unusual or nonrecurring events (including, without limitation, a Change in Control) affecting the Company or an Affiliate, or the financial statements of the Company or an Affiliate, or changes in applicable rules, rulings, regulations or other requirements of any governmental body or securities exchange or inter-dealer quotation system, accounting principles or law, such that in either case an adjustment is determined by the Administrator in its sole discretion to be necessary or appropriate, then the Administrator shall make any such adjustments in such manner as it may deem equitable, including without limitation any or all of the following:

 

(i) Adjusting any or all of (A) the number of Shares or other securities of the Company or an Affiliate (or the number and kind of other securities or other property) that may be delivered in respect of Awards or with respect to which Awards may be granted under the Plan (including, without limitation, adjusting any or all of the limitations under Section 3 of the Plan) and (B) the terms of any outstanding Award, including, without limitation, (1) the number of Shares or other securities of the Company or an Affiliate (or the number and kind of other securities or other property) subject to outstanding Awards or to which outstanding Awards relate, (2) the exercise price with respect to any Award or (3) any applicable performance measures;

 

 
 

 

(ii) Providing for a substitution or assumption of Awards, accelerating the exercisability of, lapse of restrictions on, or termination of, Awards or providing for a period of time for exercise prior to the occurrence of such event; and

 

(iii) Cancelling any one or more outstanding Awards and causing to be paid to the holders thereof, in cash, Shares, other securities or other property, or any combination thereof, the value of such Awards, if any, as determined by the Administrator (which, if applicable, may be based upon the price per Share received or to be received by other holders of the Shares or same class or series of securities as the securities subject to the Award in such event), including without limitation, in the case of an outstanding Option or SAR, a cash payment in an amount equal to the excess, if any, of the Fair Market Value (as of a date specified by the Administrator) of the Shares subject to such Option or SAR over the aggregate exercise price of such Option or SAR, respectively (it being understood that, in such event, any Option or SAR having an exercise price equal to, or in excess of, the Fair Market Value of a Share subject thereto may be canceled and terminated without any payment or consideration therefor).

 

For the avoidance of doubt, in the case of any “equity restructuring” (within the meaning of the Financial Accounting Standards Board Accounting Standard Codification (ASC) Section 718, Compensation – Stock Compensation (FASB ASC 718)), the Administrator shall make an equitable or proportionate adjustment to outstanding Awards to reflect such equity restructuring. Any adjustments under this Section 12.2(a) shall be made in a manner that does not adversely affect the exemption provided pursuant to Rule 16b-3, to the extent applicable. The Administrator or its designee shall give each Holder notice of an adjustment hereunder and, upon notice, such adjustment shall be conclusive and binding for all purposes.

 

(b) Except to the extent otherwise provided in an Award Agreement, in the event of a Change in Control, notwithstanding any provision of the Plan to the contrary, the Administrator may provide in its sole discretion that, with respect to all or any portion of a particular outstanding Award or Awards:

 

(i) To provide for the cancellation of any such Award in exchange for either an amount of cash or other property with a value equal to the amount that could have been obtained upon the exercise or settlement of the vested portion of such Award or realization of the Holder’s rights under the vested portion of such Award, as applicable; provided that, if the amount that could have been obtained upon the exercise or settlement of the vested portion of such Award or realization of the Holder’s rights, in any case, is equal to or less than zero, then the Award may be terminated without payment;

 

(ii) To provide that such Award shall vest and, to the extent applicable, be exercisable as to all Shares covered thereby, notwithstanding anything to the contrary in the Plan or the provisions of such Award;

 

 
 

 

(iii) To provide that such Award be assumed by the successor or survivor corporation, or a parent or subsidiary thereof, or shall be substituted for by awards covering the stock of the successor or survivor corporation, or a parent or subsidiary thereof, with appropriate adjustments as to the number and kind of shares and/or applicable exercise or purchase price, in all cases, as determined by the Administrator;

 

(iv) To make adjustments in the number and type of Shares (or other securities or property) subject to outstanding Awards and/or with respect to which Awards may be granted under the Plan (including, but not limited to, adjustments of the limitations in Article III on the maximum number and kind of shares which may be issued) and/or in the terms and conditions of (including the grant or exercise price or applicable performance goals), and the criteria included in, outstanding Awards;

 

(v) To replace such Award with other rights or property selected by the Administrator; and/or

 

(vi) To provide that the Award will terminate and cannot vest, be exercised or become payable after the applicable event.

 

To the extent practicable, any actions taken by the Administrator under the immediately preceding clauses (i) through (vi) shall occur in a manner and at a time which allows affected Holders the ability to participate in the Change in Control transaction with respect to the Shares subject to their Awards.

 

12.3 Approval of Plan by Stockholders. The Plan shall be submitted for the approval of the Company’s stockholders within twelve (12) months after the date of the Board’s initial adoption of the Plan. Awards may be granted or awarded prior to such stockholder approval; provided that such Awards shall not be exercisable, shall not vest and the restrictions thereon shall not lapse, and no Shares shall be issued pursuant thereto prior to the time when the Plan is approved by the Company’s stockholders; and provided, further, that if such approval has not been obtained at the end of said twelve (12) month period, all Awards previously granted or awarded under the Plan shall thereupon be canceled and become null and void.

 

12.4 No Stockholders Rights. Except as otherwise provided herein or in an applicable Program or Award Agreement, a Holder shall have none of the rights of a stockholder with respect to Shares covered by any Award until the Holder becomes the record owner of such Shares.

 

12.5 Paperless Administration. In the event that the Company establishes, for itself or using the services of a third party, an automated system for the documentation, granting or exercise of Awards, such as a system using an internet website or interactive voice response, then the paperless documentation, granting or exercise of Awards by a Holder may be permitted through the use of such an automated system.

 

12.6 Effect of Plan upon Other Compensation Plans. The adoption of the Plan shall not affect any other compensation or incentive plans in effect for the Company or any Affiliate. Nothing in the Plan shall be construed to limit the right of the Company or any Affiliate: (a) to establish any other forms of incentives or compensation for Employees, Directors or Consultants of the Company or any Affiliate, or (b) to grant or assume options or other rights or awards otherwise than under the Plan in connection with any proper corporate purpose including without limitation, the grant or assumption of options in connection with the acquisition by purchase, lease, merger, consolidation or otherwise, of the business, stock or assets of any corporation, partnership, limited liability company, firm or association.

 

 
 

 

12.7 Compliance with Laws. The Plan, the granting and vesting of Awards under the Plan and the issuance and delivery of Shares and Incentive Units and the payment of money under the Plan or under Awards granted or awarded hereunder are subject to compliance with all Applicable Law (including but not limited to state, federal and foreign securities law and margin requirements), and to such approvals by any listing, regulatory or governmental authority as may, in the opinion of counsel for the Company, be necessary or advisable in connection therewith. Any securities delivered under the Plan shall be subject to such restrictions, and the person acquiring such securities shall, if requested by the Company, provide such assurances and representations to the Company as the Company may deem necessary or desirable to assure compliance with all Applicable Law. The Administrator, in its sole discretion, may take whatever actions it deems necessary or appropriate to effect compliance with Applicable Law, including, without limitation, placing legends on share certificates and issuing stop-transfer notices to agents and registrars. Notwithstanding anything to the contrary herein, the Administrator may not take any actions hereunder, and no Awards shall be granted, that would violate Applicable Law. To the extent permitted by Applicable Law, the Plan and Awards granted or awarded hereunder shall be deemed amended to the extent necessary to conform to Applicable Law.

 

12.8 Titles and Headings, References to Sections of the Code or Exchange Act. The titles and headings of the Sections in the Plan are for convenience of reference only and, in the event of any conflict, the text of the Plan, rather than such titles or headings, shall control. References to sections of the Code or the Exchange Act shall include any amendment or successor thereto.

 

12.9 Governing Law. The Plan and any Programs and Award Agreements hereunder shall be administered, interpreted and enforced under the internal laws of the State of Delaware without regard to conflicts of laws thereof or of any other jurisdiction.

 

 
 

 

12.10 Section 409A. To the extent that the Administrator determines that any Award granted under the Plan is subject to Section 409A, the Plan, the Program pursuant to which such Award is granted and the Award Agreement evidencing such Award shall incorporate the terms and conditions required by Section 409A. In that regard, to the extent any Award under the Plan or any other compensatory plan or arrangement of the Company or any of its Affiliates is subject to Section 409A, and such Award or other amount is payable on account of a Holder’s Termination of Service (or any similarly defined term), then (a) such Award or amount shall only be paid to the extent such Termination of Service qualifies as a “separation from service” as defined in Section 409A (and for clarity, the foregoing shall apply to any Award or other amount that is payable on account of a Holder’s Termination of Service (or similarly defined term) and which relies on an exemption from Section 409A linked to a “separation from service”), and (b) if such Award or amount is payable to a “specified employee” as defined in Section 409A then to the extent required in order to avoid a prohibited distribution under Section 409A, such Award or other compensatory payment shall not be payable prior to the earlier of (i) the expiration of the six-month period measured from the date of the Holder’s Termination of Service, or (ii) the date of the Holder’s death. To the extent applicable, the Plan, the Program and any Award Agreements shall be interpreted in accordance with Section 409A. Notwithstanding any provision of the Plan to the contrary, in the event that following the Effective Date the Administrator determines that any Award may be subject to Section 409A, the Administrator may (but is not obligated to), without a Holder’s consent, adopt such amendments to the Plan and the applicable Program and Award Agreement or adopt other policies and procedures (including amendments, policies and procedures with retroactive effect), or take any other actions, that the Administrator determines are necessary or appropriate to (A) exempt the Award from Section 409A and/or preserve the intended tax treatment of the benefits provided with respect to the Award, or (B) comply with the requirements of Section 409A and thereby avoid the application of any penalty taxes under Section 409A. The Company makes no representations or warranties as to the tax treatment of any Award under Section 409A or otherwise. The Company shall have no obligation under this Section 12.10 or otherwise to take any action (whether or not described herein) to avoid the imposition of taxes, penalties or interest under Section 409A with respect to any Award and shall have no liability to any Holder or any other person if any Award, compensation or other benefits under the Plan are determined to constitute non-compliant, “nonqualified deferred compensation” subject to the imposition of taxes, penalties and/or interest under Section 409A.

 

12.11 Unfunded Status of Awards. The Plan is intended to be an “unfunded” plan for incentive compensation. With respect to any payments not yet made to a Holder pursuant to an Award, nothing contained in the Plan or any Program or Award Agreement shall give the Holder any rights that are greater than those of a general creditor of the Company or any Affiliate.

 

12.12 Indemnification. To the extent permitted under Applicable Law and the Organizational Documents, each member of the Administrator (and each delegate thereof pursuant to Section 11.6) shall be indemnified and held harmless by the Company from any loss, cost, liability, or expense that may be imposed upon or reasonably incurred by such member in connection with or resulting from any claim, action, suit, or proceeding to which he or she may be a party or in which he or she may be involved by reason of any action or failure to act pursuant to the Plan or any Award Agreement and against and from any and all amounts paid by him or her, with the Board’s approval, in satisfaction of judgment in such action, suit, or proceeding against him or her; provided he or she gives the Company an opportunity, at its own expense, to handle and defend the same before he or she undertakes to handle and defend it on his or her own behalf and, once the Company gives notice of its intent to assume such defense, the Company shall have sole control over such defense with counsel of the Company’s choosing. The foregoing right of indemnification shall not be available to the extent that a court of competent jurisdiction in a final judgment or other final adjudication, in either case not subject to further appeal, determines that the acts or omissions of the person seeking indemnity giving rise to the indemnification claim resulted from such person’s bad faith, fraud or willful criminal act or omission. The foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which such persons may be entitled pursuant to the Organizational Documents, as a matter of law, or otherwise, or any power that the Company may have to indemnify them or hold them harmless.

 

12.13 Relationship to Other Benefits. No payment pursuant to the Plan shall be taken into account in determining any benefits under any pension, retirement, savings, profit sharing, group insurance, welfare or other benefit plan of the Company or any Affiliate except to the extent otherwise expressly provided in writing in such other plan or an agreement thereunder.

 

12.14 Expenses. The expenses of administering the Plan shall be borne by the Company and its Affiliates.

 

 

 

 

 

Exhibit 10.7

 

AST SPACEMOBILE, INC.
2020 INCENTIVE AWARD PLAN

 

STOCK OPTION GRANT NOTICE

 

AST SpaceMobile, Inc., a Delaware corporation (the “Company”), has granted to the participant listed below (“Participant”) the stock option (the “Option”) described in this Stock Option Grant Notice (this “Grant Notice”), subject to the terms and conditions of the AST SpaceMobile, Inc. 2020 Incentive Award Plan (as may be amended from time to time, the “Plan”) and the Stock Option Agreement attached hereto as Exhibit A (the “Agreement”), both of which are incorporated into this Grant Notice by reference. Capitalized terms not specifically defined in this Grant Notice or the Agreement have the meanings given to them in the Plan.

 

Participant: [____________]
   
Grant Date: [____________]
   
Exercise Price per Share: [Can be no less than 100% of the FMV on the Grant Date]
   
Shares Subject to the Option: [____________]
   
Final Expiration Date: [Can be no later than 10th anniversary of Grant Date]
   
Vesting Commencement Date: [____________]
   
Vesting Schedule: [____________]
   
Type of Option [Incentive Stock Option]/[Non-Qualified Stock Option]

 

By accepting (whether in writing, electronically or otherwise) the Option, Participant agrees to be bound by the terms of this Grant Notice, the Plan and the Agreement. Participant has reviewed the Plan, this Grant Notice and the Agreement in their entirety, has had an opportunity to obtain the advice of counsel prior to executing this Grant Notice and fully understands all provisions of the Plan, this Grant Notice and the Agreement. Participant hereby agrees to accept as binding, conclusive and final all decisions or interpretations of the Administrator upon any questions arising under the Plan, this Grant Notice or the Agreement.

 

AST SPACEMOBILE, INC.   PARTICIPANT
     
By:                       
Name:      
Title:      


 

 

 

 

EXHIBIT A

 

STOCK OPTION AGREEMENT

 

Capitalized terms not specifically defined in this Agreement have the meanings specified in the Grant Notice or, if not defined in the Grant Notice, in the Plan.

 

ARTICLE I.
GENERAL

 

1.1 Grant of Option. The Company has granted to Participant the Option effective as of the grant date set forth in the Grant Notice (the “Grant Date”).

 

1.2 Incorporation of Terms of Plan. The Option is subject to the terms and conditions set forth in this Agreement and the Plan, which is incorporated herein by reference. In the event of any inconsistency between the Plan and this Agreement, the terms of the Plan will control.

 

ARTICLE II.
PERIOD OF EXERCISABILITY

 

2.1 Commencement of Exercisability. The Option will vest and become exercisable according to the vesting schedule in the Grant Notice (the “Vesting Schedule”) except that any fraction of a Share as to which the Option would be vested or exercisable will be accumulated and will vest and become exercisable only when a whole Share has accumulated. Notwithstanding anything in the Grant Notice, the Plan or this Agreement to the contrary, unless the Administrator otherwise determines, the Option will immediately expire and be forfeited as to any portion that is not vested and exercisable as of Participant’s Termination of Service for any reason (after taking into consideration any accelerated vesting and exercisability which may occur in connection with such Termination of Service).

 

2.2 Duration of Exercisability. The Vesting Schedule is cumulative. Any portion of the Option which vests and becomes exercisable will remain vested and exercisable until the Option expires. The Option will be forfeited immediately upon its expiration.

 

2.3 Expiration of Option. The Option may not be exercised to any extent by anyone after, and will expire on, the first of the following to occur:

 

(a) The final expiration date in the Grant Notice, subject to Section 6.3 of the Plan; provided, however, such final expiration date may be extended pursuant to Section 5.5 of the Plan;

 

(b) Except as the Administrator may otherwise approve, the expiration of three months from the date of Participant’s Termination of Service, unless Participant’s Termination of Service is for Cause or by reason of Participant’s death or disability;

 

(c) Except as the Administrator may otherwise approve, the expiration of one year from the date of Participant’s Termination of Service by reason of Participant’s death or disability; and

 

(d) Except as the Administrator may otherwise approve, Participant’s Termination of Service for Cause.

 

1

 

 

As used in this Agreement, “Cause” means any of the following events that the Board has determined, in good faith, has occurred: (i) Participant’s failure to substantially perform Participant’s duties (other than a failure resulting from Participant’s disability), including Participant’s failure to follow any lawful directive from the Board or Participant’s immediate supervisor; (ii) Participant’s violation of any code or standard of behavior generally applicable to Employees or executives of the Company; (iii) engaging in conduct that may reasonably result in reputational, economic or financial injury to the Company or its affiliates; (iv) Participant’s commission of, indictment for or plea of nolo contendere to a felony, any crime involving fraud or embezzlement under federal, state or local laws or a crime involving moral turpitude; (v) Participant’s failure to devote substantially all of Participant’s working time to the business of the Company and its affiliates; (vi) Participant’s unlawful use (including being under the influence) or possession of illegal drugs on the premises of the Company or any of its affiliates or while performing Participant’s duties and responsibilities for the Company or any of its affiliates; (vii) Participant’s commission of an act of fraud, willful misconduct or gross negligence with respect to the Company or its affiliates, or Participant’s material breach of fiduciary duty against the Company or any of its affiliates; (viii) Participant’s engaging in misconduct in connection with the performance of any of Participant’s duties, including by embezzlement or theft from the Company or its affiliates, misappropriating funds from the Company or its affiliates or securing or attempting to secure personally any profit in connection with any transaction entered into on behalf of the Company or its affiliates; or (ix) Participant’s active disloyalty to the Company or its affiliates, including willfully aiding a competitor or improperly disclosing confidential information.

 

ARTICLE III.
EXERCISE OF OPTION

 

3.1 Person Eligible to Exercise. During Participant’s lifetime, only Participant may exercise the Option. After Participant’s death, any exercisable portion of the Option may, prior to the time the Option expires, be exercised by Participant’s designated beneficiary as provided in the Plan.

 

3.2 Partial Exercise. Any exercisable portion of the Option or the entire Option, if then wholly exercisable, may be exercised, in whole or in part, according to the procedures in the Plan at any time prior to the time the Option or portion thereof expires, except that the Option may only be exercised for whole Shares.

 

3.3 Tax Withholding.

 

(a) Unless the Administrator otherwise determines, the Company shall withhold, or cause to be withheld, Shares otherwise vesting or issuable under this Option in satisfaction of any applicable withholding tax obligations. The number of Shares which may be so withheld or surrendered shall be limited to the number of Shares which have a fair market value on the date of withholding no greater than the aggregate amount of such liabilities based on the maximum individual statutory withholding rates in Participant’s applicable jurisdictions for federal, state, local and foreign income tax and payroll tax purposes that are applicable to such taxable income.

 

(b) Participant acknowledges that Participant is ultimately liable and responsible for all taxes owed in connection with the Option, regardless of any action the Company or any Affiliate takes with respect to any tax withholding obligations that arise in connection with the Option. Neither the Company nor any Affiliate makes any representation or undertaking regarding the treatment of any tax withholding in connection with the awarding, vesting or exercise of the Option or the subsequent sale of Shares. The Company and its Affiliates do not commit and are under no obligation to structure the Option to reduce or eliminate Participant’s tax liability.

 

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ARTICLE IV.
OTHER PROVISIONS

 

4.1 Adjustments. Participant acknowledges that the Option is subject to adjustment, modification and termination in certain events as provided in this Agreement and the Plan.

 

4.2 Clawback. The Option and the Shares issuable hereunder shall be subject to any clawback or recoupment policy in effect on the Grant Date or as may be adopted or maintained by the Company following the Grant Date, including the Dodd-Frank Wall Street Reform and Consumer Protection Act and any rules or regulations promulgated thereunder.

 

4.3 Notices. Any notice to be given under the terms of this Agreement to the Company must be in writing and addressed to the Company in care of the Company’s General Counsel at the Company’s principal office or the General Counsel’s then-current email address or facsimile number. Any notice to be given under the terms of this Agreement to Participant must be in writing and addressed to Participant (or, if Participant is then deceased, to the Participant’s designated beneficiary) at Participant’s last known mailing address, email address or facsimile number in the Company’s personnel files. By a notice given pursuant to this Section, either party may designate a different address for notices to be given to that party. Any notice will be deemed duly given when actually received, when sent by email, when sent by certified mail (return receipt requested) and deposited with postage prepaid in a post office or branch post office regularly maintained by the United States Postal Service, when delivered by a nationally recognized express shipping company or upon receipt of a facsimile transmission confirmation.

 

4.4 Titles. Titles are provided herein for convenience only and are not to serve as a basis for interpretation or construction of this Agreement.

 

4.5 Conformity to Securities Laws. Participant acknowledges that the Plan, the Grant Notice and this Agreement are intended to conform to the extent necessary with all Applicable Law and, to the extent Applicable Law permits, will be deemed amended as necessary to conform to Applicable Law.

 

4.6 Successors and Assigns. The Company may assign any of its rights under this Agreement to a single or multiple assignees, and this Agreement will inure to the benefit of the successors and assigns of the Company. Subject to the restrictions on transfer set forth in this Agreement or the Plan, this Agreement will be binding upon and inure to the benefit of the heirs, legatees, legal representatives, successors and assigns of the parties hereto.

 

4.7 Limitations Applicable to Section 16 Persons. Notwithstanding any other provision of the Plan or this Agreement, if Participant is subject to Section 16 of the Exchange Act, the Plan, the Grant Notice, this Agreement and the Option will be subject to any additional limitations set forth in any applicable exemptive rule under Section 16 of the Exchange Act (including any amendment to Rule 16b-3) that are requirements for the application of such exemptive rule. To the extent Applicable Law permits, this Agreement will be deemed amended as necessary to conform to such applicable exemptive rule.

 

4.8 Entire Agreement; Amendment. The Plan, the Grant Notice and this Agreement (including any exhibit hereto) constitute the entire agreement of the parties and supersede in their entirety all prior undertakings and agreements of the Company and Participant with respect to the subject matter hereof. To the extent permitted by the Plan, this Agreement may be wholly or partially amended or otherwise modified, suspended or terminated at any time or from time to time by the Administrator or the Board; provided, however, that except as may otherwise be provided by the Plan, no amendment, modification, suspension or termination of this Agreement shall materially and adversely affect the Option without the prior written consent of Participant.

 

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4.9 Agreement Severable. In the event that any provision of the Grant Notice or this Agreement is held illegal or invalid, the provision will be severable from, and the illegality or invalidity of the provision will not be construed to have any effect on, the remaining provisions of the Grant Notice or this Agreement.

 

4.10 Limitation on Participant’s Rights. Participation in the Plan confers no rights or interests other than as herein provided. This Agreement creates only a contractual obligation on the part of the Company as to amounts payable and may not be construed as creating a trust. Neither the Plan nor any underlying program, in and of itself, has any assets. Participant will have only the rights of a general unsecured creditor of the Company with respect to amounts credited and benefits payable, if any, with respect to the Option, and rights no greater than the right to receive the Shares as a general unsecured creditor with respect to the Option, as and when exercised pursuant to the terms hereof.

 

4.11 Not a Contract of Employment. Nothing in the Plan, the Grant Notice or this Agreement confers upon Participant any right to continue in the employ or service of the Company or any Affiliate or interferes with or restricts in any way the rights of the Company and any Affiliate, which rights are hereby expressly reserved, to discharge or terminate the services of Participant at any time for any reason whatsoever, with or without Cause, except to the extent expressly provided otherwise in a written agreement between the Company or an Affiliate and Participant.

 

4.12 Counterparts. The Grant Notice may be executed in one or more counterparts, including by way of any electronic signature, subject to Applicable Law, each of which will be deemed an original and all of which together will constitute one instrument.

 

4.13 Incentive Stock Options. If the Option is designated as an Incentive Stock Option:

 

(a) Participant acknowledges that to the extent the aggregate fair market value of shares (determined as of the time the option with respect to the shares is granted) with respect to which stock options intended to qualify as “incentive stock options” under Section 422 of the Code, including the Option, are exercisable for the first time by Participant during any calendar year exceeds $100,000 or if for any other reason such stock options do not qualify or cease to qualify for treatment as “incentive stock options” under Section 422 of the Code, such stock options (including the Option) will be treated as non-qualified stock options. Participant further acknowledges that the rule set forth in the preceding sentence will be applied by taking the Option and other stock options into account in the order in which they were granted, as determined under Section 422(d) of the Code. Participant also acknowledges that if the Option is exercised more than three months after Participant’s Termination of Service, other than by reason of death or disability, the Option will be taxed as a Non-Qualified Stock Option.

 

(b) Participant will give prompt written notice to the Company of any disposition or other transfer of any Shares acquired under this Agreement if such disposition or other transfer is made (i) within two years from the Grant Date or (ii) within one year after the transfer of such Shares to Participant. Such notice will specify the date of such disposition or other transfer and the amount realized, in cash, other property, assumption of indebtedness or other consideration, by Participant in such disposition or other transfer.

 

* * * * *

 

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Exhibit 10.8

 

AST SPACEMOBILE, INC.

 

2020 INCENTIVE AWARD PLAN

 

RESTRICTED STOCK Unit Grant Notice

 

AST SpaceMobile, Inc., a Delaware corporation (the “Company”), has granted to the participant listed below (“Participant”) the Restricted Stock Units (the “RSUs”) described in this Restricted Stock Unit Grant Notice (this “Grant Notice”), subject to the terms and conditions of the AST SpaceMobile, Inc. 2020 Incentive Award Plan (as may be amended from time to time, the “Plan”) and the Restricted Stock Unit Agreement attached hereto as Exhibit A (the “Agreement”), both of which are incorporated into this Grant Notice by reference. Capitalized terms not specifically defined in this Grant Notice or the Agreement have the meanings given to them in the Plan.

 

  Participant: [____________]
  Grant Date: [____________]
  Number of RSUs: [____________]
  Vesting Commencement Date: [____________]
  Vesting Schedule: [____________]

 

By accepting (whether in writing, electronically or otherwise) the RSUs, Participant agrees to be bound by the terms of this Grant Notice, the Plan and the Agreement. Participant has reviewed the Plan, this Grant Notice and the Agreement in their entirety, has had an opportunity to obtain the advice of counsel prior to executing this Grant Notice and fully understands all provisions of the Plan, this Grant Notice and the Agreement. Participant hereby agrees to accept as binding, conclusive and final all decisions or interpretations of the Administrator upon any questions arising under the Plan, this Grant Notice or the Agreement.

 

AST SPACEMOBILE, INC.   PARTICIPANT
     
By:      
Name:      
Title:      

 

 
 

 

Exhibit A

 

RESTRICTED STOCK UNIT AGREEMENT

 

Capitalized terms not specifically defined in this Agreement have the meanings specified in the Grant Notice or, if not defined in the Grant Notice, in the Plan.

 

Article I.
general

 

1.1 Award of RSUs. The Company has granted the RSUs to Participant effective as of the Grant Date set forth in the Grant Notice (the “Grant Date”). Each RSU represents the right to receive one Share as set forth in this Agreement. Participant will have no right to the distribution of any Shares until the time (if ever) the RSUs have vested.

 

1.2 Incorporation of Terms of Plan. The RSUs are subject to the terms and conditions set forth in this Agreement and the Plan, which is incorporated herein by reference. In the event of any inconsistency between the Plan and this Agreement, the terms of the Plan will control.

 

1.3 Unsecured Promise. The RSUs will at all times prior to settlement represent an unsecured Company obligation payable only from the Company’s general assets.

 

Article II.
VESTING; forfeiture AND SETTLEMENT

 

2.1 Vesting; Forfeiture. The RSUs will vest according to the vesting schedule in the Grant Notice except that any fraction of an RSU that would otherwise be vested will be accumulated and will vest only when a whole RSU has accumulated. In the event of Participant’s Termination of Service for any reason, all unvested RSUs will immediately and automatically be cancelled and forfeited, except as otherwise determined by the Administrator or provided in a binding written agreement between Participant and the Company.

 

2.2 Settlement.

 

(a) The RSUs will be paid in Shares as soon as administratively practicable after the vesting of the applicable RSU, but in no event later than March 15 of the year following the year in which the RSU’s vesting date occurs.

 

(b) Notwithstanding the foregoing, the Company may delay any payment under this Agreement that the Company reasonably determines would violate Applicable Law until the earliest date the Company reasonably determines the making of the payment will not cause such a violation (in accordance with Treasury Regulation Section 1.409A-2(b)(7)(ii)); provided the Company reasonably believes the delay will not result in the imposition of excise taxes under Section 409A.

 

As used in this Agreement, “Cause” means any of the following events that the Board has determined, in good faith, has occurred: (i) Participant’s failure to substantially perform Participant’s duties (other than a failure resulting from Participant’s disability), including Participant’s failure to follow any lawful directive from the Board or Participant’s immediate supervisor; (ii) Participant’s violation of any code or standard of behavior generally applicable to Employees or executives of the Company; (iii) engaging in conduct that may reasonably result in reputational, economic or financial injury to the Company or its affiliates; (iv) Participant’s commission of, indictment for or plea of nolo contendere to a felony, any crime involving fraud or embezzlement under federal, state or local laws or a crime involving moral turpitude; (v) Participant’s failure to devote substantially all of Participant’s working time to the business of the Company and its affiliates; (vi) Participant’s unlawful use (including being under the influence) or possession of illegal drugs on the premises of the Company or any of its affiliates or while performing Participant’s duties and responsibilities for the Company or any of its affiliates; (vii) Participant’s commission of an act of fraud, willful misconduct or gross negligence with respect to the Company or its affiliates, or Participant’s material breach of fiduciary duty against the Company or any of its affiliates; (viii) Participant’s engaging in misconduct in connection with the performance of any of Participant’s duties, including by embezzlement or theft from the Company or its affiliates, misappropriating funds from the Company or its affiliates or securing or attempting to secure personally any profit in connection with any transaction entered into on behalf of the Company or its affiliates; or (ix) Participant’s active disloyalty to the Company or its affiliates, including willfully aiding a competitor or improperly disclosing confidential information.

 

1
 

 

Article III.
TAXATION AND TAX WITHHOLDING

 

3.1 Representation. Participant represents to the Company that Participant has reviewed with Participant’s own tax advisors the tax consequences of this award of RSUs (the “Award”) and the transactions contemplated by the Grant Notice and this Agreement. Participant is relying solely on such advisors and not on any statements or representations of the Company or any of its agents.

 

3.2 Tax Withholding.

 

(a) Unless the Administrator otherwise determines, the Company shall withhold, or cause to be withheld, Shares otherwise vesting or issuable under this Award (including the RSUs) in satisfaction of any applicable withholding tax obligations. The number of Shares which may be so withheld or surrendered shall be limited to the number of Shares which have a fair market value on the date of withholding no greater than the aggregate amount of such liabilities based on the maximum individual statutory withholding rates in Participant’s applicable jurisdictions for federal, state, local and foreign income tax and payroll tax purposes that are applicable to such taxable income.

 

(b) Participant acknowledges that Participant is ultimately liable and responsible for all taxes owed in connection with the RSUs, regardless of any action the Company or any Affiliate takes with respect to any tax withholding obligations that arise in connection with the RSUs. Neither the Company nor any Affiliate makes any representation or undertaking regarding the treatment of any tax withholding in connection with the awarding, vesting or payment of the RSUs or the subsequent sale of Shares. The Company and its Affiliates do not commit and are under no obligation to structure the RSUs to reduce or eliminate Participant’s tax liability.

 

Article IV.
other provisions

 

4.1 Adjustments. Participant acknowledges that the RSUs and the Shares subject to the RSUs are subject to adjustment, modification and termination in certain events as provided in this Agreement and the Plan.

 

4.2 Clawback. The Award and the Shares issuable hereunder shall be subject to any clawback or recoupment policy in effect on the Grant Date or as may be adopted or maintained by the Company following the Grant Date, including the Dodd-Frank Wall Street Reform and Consumer Protection Act and any rules or regulations promulgated thereunder.

 

2
 

 

4.3 Notices. Any notice to be given under the terms of this Agreement to the Company must be in writing and addressed to the Company in care of the Company’s General Counsel at the Company’s principal office or the General Counsel’s then-current email address or facsimile number. Any notice to be given under the terms of this Agreement to Participant must be in writing and addressed to Participant (or, if Participant is then deceased, to the Participant’s designated beneficiary) at Participant’s last known mailing address, email address or facsimile number in the Company’s personnel files. By a notice given pursuant to this Section, either party may designate a different address for notices to be given to that party. Any notice will be deemed duly given when actually received, when sent by email, when sent by certified mail (return receipt requested) and deposited with postage prepaid in a post office or branch post office regularly maintained by the United States Postal Service, when delivered by a nationally recognized express shipping company or upon receipt of a facsimile transmission confirmation.

 

4.4 Titles. Titles are provided herein for convenience only and are not to serve as a basis for interpretation or construction of this Agreement.

 

4.5 Conformity to Securities Laws. Participant acknowledges that the Plan, the Grant Notice and this Agreement are intended to conform to the extent necessary with all Applicable Law and, to the extent Applicable Law permits, will be deemed amended as necessary to conform to Applicable Law.

 

4.6 Successors and Assigns. The Company may assign any of its rights under this Agreement to a single or multiple assignees, and this Agreement will inure to the benefit of the successors and assigns of the Company. Subject to the restrictions on transfer set forth in this Agreement or the Plan, this Agreement will be binding upon and inure to the benefit of the heirs, legatees, legal representatives, successors and assigns of the parties hereto.

 

4.7 Limitations Applicable to Section 16 Persons. Notwithstanding any other provision of the Plan or this Agreement, if Participant is subject to Section 16 of the Exchange Act, the Plan, the Grant Notice, this Agreement and the RSUs will be subject to any additional limitations set forth in any applicable exemptive rule under Section 16 of the Exchange Act (including any amendment to Rule 16b-3) that are requirements for the application of such exemptive rule. To the extent Applicable Law permits, this Agreement will be deemed amended as necessary to conform to such applicable exemptive rule.

 

4.8 Entire Agreement; Amendment. The Plan, the Grant Notice and this Agreement (including any exhibit hereto) constitute the entire agreement of the parties and supersede in their entirety all prior undertakings and agreements of the Company and Participant with respect to the subject matter hereof. To the extent permitted by the Plan, this Agreement may be wholly or partially amended or otherwise modified, suspended or terminated at any time or from time to time by the Administrator or the Board; provided, however, that except as may otherwise be provided by the Plan, no amendment, modification, suspension or termination of this Agreement shall materially and adversely affect the RSUs without the prior written consent of Participant.

 

4.9 Agreement Severable. In the event that any provision of the Grant Notice or this Agreement is held illegal or invalid, the provision will be severable from, and the illegality or invalidity of the provision will not be construed to have any effect on, the remaining provisions of the Grant Notice or this Agreement.

 

4.10 Limitation on Participant’s Rights. Participation in the Plan confers no rights or interests other than as herein provided. This Agreement creates only a contractual obligation on the part of the Company as to amounts payable and may not be construed as creating a trust. Neither the Plan nor any underlying program, in and of itself, has any assets. Participant will have only the rights of a general unsecured creditor of the Company with respect to amounts credited and benefits payable, if any, with respect to the RSUs, and rights no greater than the right to receive cash or the Shares as a general unsecured creditor with respect to the RSUs, as and when settled pursuant to the terms hereof.

 

3
 

 

4.11 Not a Contract of Employment. Nothing in the Plan, the Grant Notice or this Agreement confers upon Participant any right to continue in the employ or service of the Company or any Affiliate or interferes with or restricts in any way the rights of the Company and any Affiliate, which rights are hereby expressly reserved, to discharge or terminate the services of Participant at any time for any reason whatsoever, with or without Cause, except to the extent expressly provided otherwise in a written agreement between the Company or an Affiliate and Participant.

 

4.12 Counterparts. The Grant Notice may be executed in one or more counterparts, including by way of any electronic signature, subject to Applicable Law, each of which will be deemed an original and all of which together will constitute one instrument.

 

* * * * *

 

4

 

 

Exhibit 10.9

 

AST SPACEMOBILE, INC.
2020 EMPLOYEE STOCK PURCHASE PLAN

 

Article I.
PURPOSE

 

The purpose of this Plan is to assist Eligible Employees of the Company and its Designated Subsidiaries in acquiring a stock ownership interest in the Company.

 

The Plan consists of two components: (i) the Section 423 Component and (ii) the Non-Section 423 Component. The Section 423 Component is intended to qualify as an “employee stock purchase plan” under Section 423 of the Code and shall be administered, interpreted and construed in a manner consistent with the requirements of Section 423 of the Code. The Non-Section 423 Component authorizes the grant of rights which need not qualify as rights granted pursuant to an “employee stock purchase plan” under Section 423 of the Code. Rights granted under the Non-Section 423 Component shall be granted pursuant to separate Offerings containing such sub-plans, appendices, rules or procedures as may be adopted by the Administrator and designed to achieve tax, securities laws or other objectives for Eligible Employees and Designated Subsidiaries but shall not be intended to qualify as an “employee stock purchase plan” under Section 423 of the Code. Except as otherwise determined by the Administrator or provided herein, the Non-Section 423 Component will operate and be administered in the same manner as the Section 423 Component. Offerings intended to be made under the Non-Section 423 Component will be designated as such by the Administrator at or prior to the time of such Offering.

 

For purposes of this Plan, the Administrator may designate separate Offerings under the Plan in which Eligible Employees will participate. The terms of these Offerings need not be identical, even if the dates of the applicable Offering Period(s) in each such Offering are identical, provided that the terms of participation are the same within each separate Offering under the Section 423 Component (as determined under Section 423 of the Code). Solely by way of example and without limiting the foregoing, the Company could, but shall not be required to, provide for simultaneous Offerings under the Section 423 Component and the Non-Section 423 Component of the Plan.

 

Article II.
DEFINITIONS AND CONSTRUCTION

 

Wherever the following terms are used in the Plan they shall have the meanings specified below, unless the context clearly indicates otherwise.

 

2.1 “Administrator” means the entity that conducts the general administration of the Plan as provided in Article XI.

 

2.2 Agent” means the brokerage firm, bank or other financial institution, entity or person(s), if any, engaged, retained, appointed or authorized to act as the agent of the Company or an Employee with regard to the Plan.

 

2.3 Applicable Law” means the requirements relating to the administration of equity incentive plans under U.S. federal and state securities, tax and other applicable laws, rules and regulations, the applicable rules of any stock exchange or quotation system on which Shares are listed or quoted and the applicable laws and rules of any foreign country or other jurisdiction where rights under this Plan are granted.

 

2.4 “Board” means the Board of Directors of the Company.

 

 

 

 

2.5 “Business Combination” means the transaction pursuant to which, among other transactions, (i) New Providence Acquisition Corp. (predecessor to the Company) will acquire a number of membership units in and become the managing member of AST & Science LLC, (ii) the Company will issue to the existing equityholders of AST & Science LLC capital stock in the Company and (iii) the Company will become a publicly-traded holding company of the business of AST & Science LLC, pursuant to that certain transaction agreement, dated as of December 15, 2020, by and among the Company, AST & Science LLC, New Providence Management, LLC, the Existing Equityholders set forth on Annex A thereto and the Equityholder Representative (as defined therein).

 

2.6 “Code” means the U.S. Internal Revenue Code of 1986, as amended, and the regulations issued thereunder.

 

2.7 “Common Stock” means the Class A common stock of the Company and such other securities of the Company that may be substituted therefore.

 

2.8 “Company” means AST SpaceMobile, Inc., a Delaware corporation, or any successor.

 

2.9 “Compensation” of an Eligible Employee means, unless otherwise determined by the Administrator, the gross cash compensation paid by the Company or its Subsidiary (as applicable) to such Eligible Employee as compensation for services to the Company or any Designated Subsidiary, including for clarity, any prior-week adjustments; commissions; cash incentive compensation and one-time bonuses (e.g., retention or sign on bonuses); overtime payments; or compensation paid by the Company or any Designated Subsidiary in respect of periods of absence from work; and excluding any education or tuition reimbursements; travel expenses; business and moving reimbursements; income received in connection with any stock options, stock appreciation rights, restricted stock, restricted stock units or other compensatory equity awards; fringe benefits; other special payments and all contributions made by the Company or any Designated Subsidiary for the Employee’s benefit under any employee benefit plan now or hereafter established.

 

2.10 “Designated Beneficiary” means the beneficiary or beneficiaries the Participant designates, in a manner the Administrator determines, to receive amounts due or exercise the Participant’s rights if the Participant dies or becomes incapacitated. Without a Participant’s effective designation, “Designated Beneficiary” will mean the Participant’s estate.

 

2.11 “Designated Subsidiary” means any Subsidiary designated by the Administrator in accordance with Section 11.2(b), such designation to specify whether such participation is in the Section 423 Component or Non-Section 423 Component. A Designated Subsidiary may participate in either the Section 423 Component or Non-Section 423 Component, but not both; provided that a Subsidiary that, for U.S. tax purposes, is disregarded from the Company or any Subsidiary that participates in the Section 423 Component shall automatically constitute a Designated Subsidiary that participates in the Section 423 Component.

 

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2.12 “Eligible Employee” means an Employee who does not, immediately after any rights under this Plan are granted, own (directly or through attribution) stock possessing 5% or more of the total combined voting power or value of all classes of Shares and other securities of the Company, a Parent or a Subsidiary (as determined under Section 423(b)(3) of the Code). For purposes of the foregoing, the rules of Section 424(d) of the Code with regard to the attribution of stock ownership shall apply in determining the stock ownership of an individual, and stock that an Employee may purchase under outstanding options shall be treated as stock owned by the Employee. Notwithstanding the foregoing, the Administrator may provide in an Offering Document that an Employee shall not be eligible to participate in an Offering Period under the Section 423 Component if: (i) such Employee is a highly compensated employee within the meaning of Section 423(b)(4)(D) of the Code; (ii) such Employee has not met a service requirement designated by the Administrator pursuant to Section 423(b)(4)(A) of the Code (which service requirement may not exceed two years); (iii) such Employee’s customary employment is for twenty hours per week or less; (iv) such Employee’s customary employment is for less than five months in any calendar year; and/or (v) such Employee is a citizen or resident of a foreign jurisdiction and the grant of a right to purchase Shares under the Plan to such Employee would be prohibited under the laws of such foreign jurisdiction or the grant of a right to purchase Shares under the Plan to such Employee in compliance with the laws of such foreign jurisdiction would cause the Plan to violate the requirements of Section 423 of the Code, as determined by the Administrator in its sole discretion; provided, that any exclusion in clauses (i), (ii), (iii), (iv) or (v) shall be applied in an identical manner under each Offering Period to all Employees, in accordance with Treasury Regulation Section 1.423-2(e).

 

Further notwithstanding the foregoing, with respect to the Non-Section 423 Component, the first sentence in this definition shall apply in determining who is an “Eligible Employee,” except (A) the Administrator may further limit eligibility within the Company or within a Designated Subsidiary so as to only designate certain Employees of the Company or of a Designated Subsidiary as “Eligible Employees”, and (B) to the extent the restrictions in the first sentence in this definition are not consistent with any applicable local law, such applicable local law shall control.

 

2.13 “Employee” means any individual who renders services to the Company or any Designated Subsidiary in the status of an employee, and, with respect to the Section 423 Component, a person who is an employee within the meaning of Section 3401(c) of the Code. For purposes of an individual’s participation in, or other rights under the Plan, all determinations by the Company shall be final, binding and conclusive, notwithstanding that any court of law or governmental agency subsequently makes a contrary determination. For purposes of the Plan, the employment relationship shall be treated as continuing intact while the individual is on sick leave or other leave of absence approved by the Company or Designated Subsidiary and meeting the requirements of Treasury Regulation Section 1.421-1(h)(2). Where the period of leave exceeds three months and the individual’s right to reemployment is not guaranteed either by statute or by contract, the employment relationship shall be deemed to have terminated on the first day immediately following such three-month period.

 

2.14 “Enrollment Date” means, unless otherwise determined by the Administrator and set forth in the Offering Document, the first Trading Day of each Offering Period.

 

2.15 “Fair Market Value” means, as of any date, the value of Shares determined as follows: (i) if the Shares are listed on any established stock exchange, its Fair Market Value will be the closing sales price for such Shares as quoted on such exchange for such date, or if no sale occurred on such date, the last day preceding such date during which a sale occurred, as reported in The Wall Street Journal or another source the Administrator deems reliable; (ii) if the Shares are not traded on a stock exchange but are quoted on a national market or other quotation system, the closing sales price on such date, or if no sales occurred on such date, then on the last date preceding such date during which a sale occurred, as reported in The Wall Street Journal or another source the Administrator deems reliable; or (iii) without an established market for the Shares, the Administrator will determine the Fair Market Value in good faith.

 

2.16 “Non-Section 423 Component” means those Offerings under the Plan, together with the sub-plans, appendices, rules or procedures, if any, adopted by the Administrator as a part of this Plan, in each case, pursuant to which rights to purchase Shares during an Offering Period may be granted to Eligible Employees that need not satisfy the requirements for rights to purchase Shares granted pursuant to an “employee stock purchase plan” that are set forth under Section 423 of the Code.

 

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2.17 “Offering” means an offer by the Company under the Plan to Eligible Employees of a right to purchase Shares that may be exercised during an Offering Period, as further described in Article IV hereof. Unless otherwise specified by the Administrator, each Offering to the Eligible Employees of the Company or a Designated Subsidiary shall be deemed a separate Offering, even if the dates and other terms of the applicable Offering Periods of each such Offering are identical, and the provisions of the Plan will separately apply to each Offering. To the extent permitted by Treasury Regulation § 1.423-2(a)(1), the terms of each separate Offering under the Section 423 Component need not be identical, provided that the terms of the Section 423 Component and an Offering thereunder together satisfy Treasury Regulation § 1.423-2(a)(2) and (a)(3).

 

2.18 “Offering Document” has the meaning given to such term in Section 4.1.

 

2.19 “Offering Period” has the meaning given to such term in Section 4.1.

 

2.20 “Parent” means any corporation, other than the Company, in an unbroken chain of corporations ending with the Company if, at the time of the determination, each of the corporations other than the Company owns stock possessing 50% or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.

 

2.21 “Participant” means any Eligible Employee who has executed a subscription agreement and been granted rights to purchase Shares pursuant to the Plan.

 

2.22 “Payday” means the regular and recurring established day for payment of Compensation to an Employee of the Company or any Designated Subsidiary.

 

2.23 Plan” means this 2020 Employee Stock Purchase Plan, including both the Section 423 Component and Non-Section 423 Component and any other sub-plans or appendices hereto, as amended from time to time.

 

2.24 “Purchase Date” means the last Trading Day of each Purchase Period (or, in the event no Purchase Period is designated by the Administrator in the applicable Offering Document, the last day of each Offering Period) or such other date as determined by the Administrator and set forth in the Offering Document.

 

2.25 “Purchase Period” shall refer to one or more specified periods within an Offering Period the last Trading Day of which constitutes a Purchase Date, as designated in the applicable Offering Document; provided, however, that, if no Purchase Period is designated by the Administrator in the applicable Offering Document, the Purchase Period for each Offering Period covered by such Offering Document shall be the same as the applicable Offering Period.

 

2.26 “Purchase Price” means the purchase price designated by the Administrator in the applicable Offering Document (which purchase price, for purposes of the Section 423 Component, shall not be less than 85% of the Fair Market Value of a Share on the Enrollment Date or on the Purchase Date, whichever is lower); provided, however, that, if no purchase price is designated by the Administrator in the applicable Offering Document, the purchase price for the Offering Periods covered by such Offering Document shall be 85% of the Fair Market Value of a Share on the Enrollment Date or on the Purchase Date, whichever is lower; provided, further, that the Purchase Price may be adjusted by the Administrator pursuant to Article VIII and shall not be less than the par value of a Share.

 

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2.27 “Section 423 Component” means those Offerings under the Plan, together with the sub-plans, appendices, rules or procedures, if any, adopted by the Administrator as a part of this Plan or any Offering(s), in each case, pursuant to which rights to purchase Shares during an Offering Period may be granted to Eligible Employees that are intended to satisfy the requirements for rights to purchase Shares granted pursuant to an “employee stock purchase plan” that are set forth under Section 423 of the Code.

 

2.28 “Securities Act” means the U.S. Securities Act of 1933, as amended.

 

2.29 “Share” means a share of Common Stock.

 

2.30 “Subsidiary” means any corporation, other than the Company, in an unbroken chain of corporations beginning with the Company if, at the time of the determination, each of the corporations other than the last corporation in an unbroken chain owns stock possessing 50% or more of the total combined voting power of all classes of stock in one of the other corporations in such chain; provided, however, that a limited liability company or partnership may be treated as a Subsidiary to the extent either (a) such entity is treated as a disregarded entity under Treasury Regulation Section 301.7701-3(a) by reason of the Company or any other Subsidiary that is a corporation being the sole owner of such entity, or (b) such entity elects to be classified as a corporation under Treasury Regulation Section 301.7701-3(a) and such entity would otherwise qualify as a Subsidiary. In addition, with respect to the Non-Section 423 Component, Subsidiary shall include any corporate or non-corporate entity in which the Company has a direct or indirect equity interest or significant business relationship.

 

2.31 “Trading Day” means a day on which national stock exchanges in the United States are open for trading.

 

Article III.
SHARES SUBJECT TO THE PLAN

 

3.1 Number of Shares. Subject to Article VIII, the aggregate number of Shares that may be issued pursuant to rights granted under the Plan shall be 2,000,000 Shares. If any right granted under the Plan shall for any reason terminate without having been exercised, the Shares not purchased under such right shall again become available for issuance under the Plan. Notwithstanding anything in this Section 3.1 to the contrary, the number of Shares that may be issued or transferred pursuant to the rights granted under the Section 423 Component of the Plan shall not exceed an aggregate of 2,000,000 Shares, subject to Article VIII.

 

3.2 Shares Distributed. Any Shares distributed pursuant to the Plan may consist, in whole or in part, of authorized and unissued Shares, treasury shares or Shares purchased on the open market.

 

Article IV.
Offering Periods; Offering Documents; Purchase Dates

 

4.1 Offering Periods. The Administrator may from time to time grant or provide for the grant of rights to purchase Shares under the Plan to Eligible Employees during one or more periods (each, an “Offering Period”) selected by the Administrator. The terms and conditions applicable to each Offering Period shall be set forth in an “Offering Document” adopted by the Administrator from time to time, which Offering Document shall be in such form and shall contain such terms and conditions as the Administrator shall deem appropriate and shall be incorporated by reference into and made part of the Plan. The Administrator shall establish in each Offering Document one or more Purchase Periods within such Offering Period during which rights granted under the Plan shall be exercised and purchases of Shares carried out in accordance with such Offering Document and the Plan. The provisions of separate Offerings or Offering Periods under the Plan may be partially or wholly concurrent and need not be identical.

 

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4.2 Offering Documents. Each Offering Document with respect to an Offering Period shall specify (through incorporation of the provisions of this Plan by reference or otherwise):

 

(a) the length of the Offering Period, which period shall not exceed twenty-seven months;

 

(b) the length of the Purchase Period(s) within the Offering Period, which period(s), in the absence of a contrary designation by the Administrator, shall not exceed six months (or, in the event no Purchase Period is designated by the Administrator in the applicable Offering Document, twenty-seven months);

 

(c) in connection with each Offering Period that contains more than one Purchase Period, any applicable maximum aggregate number of Shares which may be purchased by any Eligible Employee during each Purchase Period (if applicable), subject to the limitations described in Section 5.5 below, which shall apply to all Section 423 Component Offering Periods and, in the absence of a contrary designation by the Administrator, shall be 100,000 Shares;

 

(d) any applicable maximum number of Shares that may be purchased by any Eligible Employee during such Offering Period (if applicable), subject to the limitations described in Section 5.5 below, which shall apply to all Section 423 Component Offering Periods and, in the absence of a contrary designation by the Administrator, shall be 100,000 Shares; and

 

(e) such other provisions as the Administrator determines are appropriate, subject to the Plan.

 

Article V.
ELIGIBILITY AND PARTICIPATION

 

5.1 Eligibility. Any Eligible Employee who shall be employed by the Company or a Designated Subsidiary on a given Enrollment Date for an Offering Period shall be eligible to participate in the Plan during such Offering Period, subject to the requirements of this Article V and, for the Section 423 Component, the limitations imposed by Section 423(b) of the Code.

 

5.2 Enrollment in Plan.

 

(a) Except as otherwise set forth herein or in an Offering Document or determined by the Administrator, an Eligible Employee may become a Participant in the Plan for an Offering Period by delivering a subscription agreement to the Company by such time prior to the Enrollment Date for such Offering Period (or such other date specified in the Offering Document) designated by the Administrator and in such form as the Company provides.

 

(b) Each subscription agreement shall designate a whole percentage of such Eligible Employee’s Compensation to be withheld by the Company or the Designated Subsidiary employing such Eligible Employee on each Payday during the Offering Period as payroll deductions under the Plan. The percentage of Compensation designated by an Eligible Employee may not be less than 1% and may not be more than the maximum percentage specified by the Administrator in the applicable Offering Document (which maximum percentage shall be 15% in the absence of any such designation) as payroll deductions, provided that, in no event shall the actual amount withheld on any Payday hereunder exceed the net amount payable to the Eligible Employee on such Payday after taxes and any other applicable deductions therefrom (and if amounts to be withheld hereunder would otherwise result in a negative payment to the Eligible Employee on such Payday, the amount to be withheld hereunder shall instead be reduced by the least amount necessary to avoid a negative payment amount for the Eligible Employee on such Payday, as determined by the Administrator). The payroll deductions made for each Participant shall be credited to an account for such Participant under the Plan and shall be deposited with the general funds of the Company.

 

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(c) Unless otherwise provided in the terms of an Offering Document, a Participant may increase or decrease the percentage of Compensation designated in his or her subscription agreement, subject to the limits of this Section 5.2, or may suspend his or her payroll deductions, in any case, at any time during an Offering Period; provided, however, that the Administrator may limit or eliminate the type and/or number of changes a Participant may make to his or her payroll deduction elections during each Offering Period in the applicable Offering Document (and in the absence of any specific designation by the Administrator, a Participant shall be allowed to decrease (but not increase)1 or suspend his or her payroll deduction elections, in either case, once during each Offering Period). Any such change or suspension of payroll deductions shall be effective with the first full payroll period starting at least five business days after the Company’s receipt of the new subscription agreement (or such shorter or longer period as may be specified by the Administrator in the applicable Offering Document). If a Participant suspends his or her payroll deductions during an Offering Period: (i) such Participant’s cumulative unapplied payroll deductions prior to the suspension (if any) shall remain in his or her account and shall be applied to the purchase of Shares on the next occurring Purchase Date, and (ii) such Participant shall be deemed to have withdrawn from the Offering Period for all purposes upon such Purchase Date (and shall be eligible to enroll in any Offering Period commencing on or after such Purchase Date if he or she remains an Eligible Employee as of the start of any such subsequent Offering Period and timely submits a valid election to participate). For clarity, if a Participant who suspends participation in an Offering Period ceases to be an Eligible Employee or he or she withdraws from participation in such Offering Period, in either case, prior to the Purchase Date next-following his or her suspension of participation in the Offering Period, in any case, such Participant’s cumulative unapplied payroll deductions shall be returned to him or her in accordance with Article VII.

 

(d) Except as otherwise set forth in herein or in an Offering Document or as otherwise determined by the Administrator, a Participant may participate in the Plan only by means of payroll deduction and may not make contributions by lump sum payment for any Offering Period.

 

5.3 Payroll Deductions. Except as otherwise provided herein or in the applicable Offering Document, payroll deductions for a Participant shall commence on the first Payday following the Enrollment Date and shall end on the last Payday in the Offering Period to which the Participant’s authorization is applicable, unless sooner terminated by the Participant as provided in Article VII or suspended by the Participant or the Administrator as provided in Section 5.2 and Section 5.6, respectively. Notwithstanding any other provisions of the Plan to the contrary, the Administrator may provide, including in any non-U.S. jurisdiction where participation in the Plan through payroll deductions is prohibited, that Eligible Employees may elect to participate through contributions to the Participant’s account under the Plan in a form acceptable to the Administrator in lieu of or in addition to payroll deductions; provided, however, that, for any Offering under the Section 423 Component, the Administrator shall take into consideration any limitations under Section 423 of the Code when applying an alternative method of contribution.

 

5.4 Effect of Enrollment. A Participant’s completion of a subscription agreement or other enrollment in the Offering Period will enroll such Participant in the Plan for each subsequent Offering Period on the terms contained therein until the Participant either submits a new subscription agreement, withdraws from participation under the Plan as provided in Article VII or otherwise becomes ineligible to participate in the Plan.

 

 

1 Note that the ability to increase Compensation deductions can increase accounting charges – accordingly, we have set the default to only permit decreases in contribution levels during an Offering Period (but this can be overridden by the terms of the Offering document).

 

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5.5 Limitation on Purchase of Shares. An Eligible Employee may be granted rights under the Section 423 Component only if such rights, together with any other rights granted to such Eligible Employee under “employee stock purchase plans” of the Company, any Parent or any Subsidiary, as specified by Section 423(b)(8) of the Code, do not permit such employee’s rights to purchase stock of the Company or any Parent or Subsidiary to accrue at a rate that exceeds $25,000 of the fair market value of such stock (determined as of the first day of the Offering Period during which such rights are granted) for each calendar year in which such rights are outstanding at any time. This limitation shall be applied in accordance with Section 423(b)(8) of the Code.

 

5.6 Suspension of Payroll Deductions. Notwithstanding the foregoing, to the extent necessary to comply with Section 423(b)(8) of the Code and Section 5.5 (with respect to the Section 423 Component) or the other limitations set forth in this Plan, a Participant’s payroll deductions may be suspended by the Administrator at any time during an Offering Period. The balance of the amount credited to the account of each Participant that has not been applied to the purchase of Shares by reason of Section 423(b)(8) of the Code, Section 5.5 or the other limitations set forth in this Plan shall be paid to such Participant in one lump sum in cash as soon as reasonably practicable after the Purchase Date.

 

5.7 Foreign Employees. In order to facilitate participation in the Plan, the Administrator may provide for such special terms, rules and procedures applicable to Participants who are citizens or residents of a foreign jurisdiction, or who are employed by a Designated Subsidiary outside of the United States, as the Administrator may consider necessary or appropriate to accommodate differences in local law, tax policy or custom. Except as permitted by Section 423 of the Code, with respect to the Section 423 Component, such special terms may not be more favorable than the terms of rights granted under the Section 423 Component to Eligible Employees who are residents of the United States. Such special terms may be set forth in an addendum to the Plan in the form of an appendix or sub-plan (which appendix or sub-plan may be designed to govern Offerings under the Section 423 Component or the Non-Section 423 Component, as determined by the Administrator). To the extent that the terms and conditions set forth in an appendix or sub-plan conflict with any provisions of the Plan, the provisions of the appendix or sub-plan shall govern except as otherwise set forth therein. The adoption of any such appendix or sub-plan shall be pursuant to Section 11.2(f) and any other applicable provision herein. Without limiting the foregoing, the Administrator is specifically authorized to adopt rules and procedures, with respect to Participants who are foreign nationals or employed in non-U.S. jurisdictions, regarding the exclusion of particular Subsidiaries from participation in the Plan, eligibility to participate, the definition of Compensation, handling of payroll deductions or other contributions by Participants, payment of interest, conversion of local currency, data privacy security, payroll tax, withholding procedures, establishment of bank or trust accounts to hold payroll deductions or contributions.

 

5.8 Leave of Absence. During leaves of absence approved by the Company meeting the requirements of Treasury Regulation Section 1.421-1(h)(2) under the Code, unless otherwise set forth in the terms of an Offering Document, a Participant may continue participation in the Plan by making cash payments to the Company on his or her normal Payday equal to the Participant’s authorized payroll deduction.

 

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Article VI.
grant and Exercise of rights

 

6.1 Grant of Rights. On the Enrollment Date of each Offering Period, each Eligible Employee participating in such Offering Period shall be granted a right to purchase the maximum number of Shares specified under Section 4.2, subject to the limits in Section 5.5, and shall have the right to buy, on each Purchase Date during such Offering Period (at the applicable Purchase Price), such number of whole Shares as is determined by dividing (a) such Participant’s payroll deductions accumulated prior to such Purchase Date and retained in the Participant’s account as of the Purchase Date, by (b) the applicable Purchase Price (rounded down to the nearest Share). The right shall expire on the last day of the Offering Period, or if earlier, the date on which the Participant withdraws in accordance with Section 7.1 or Section 7.3.

 

6.2 Exercise of Rights. On each Purchase Date, each Participant’s accumulated payroll deductions and any other additional payments specifically provided for herein or in the applicable Offering Document will be applied to the purchase of whole Shares, up to the maximum number of Shares permitted pursuant to the terms of the Plan and the applicable Offering Document, at the Purchase Price. No fractional Shares shall be issued upon the exercise of rights granted under the Plan, unless the Offering Document specifically provides otherwise. Any cash in lieu of fractional Shares remaining after the purchase of whole Shares upon exercise of a purchase right will be credited to a Participant’s account and carried forward and applied toward the purchase of whole Shares for the next following Offering Period. Shares issued pursuant to the Plan may be evidenced in such manner as the Administrator may determine and may be issued in certificated form or issued pursuant to book-entry procedures.

 

6.3 Pro Rata Allocation of Shares. If the Administrator determines that, on a given Purchase Date, the number of Shares with respect to which rights are to be exercised may exceed (a) the number of Shares that were available for issuance under the Plan on the Enrollment Date of the applicable Offering Period, or (b) the number of Shares available for issuance under the Plan on such Purchase Date, the Administrator may in its sole discretion provide that the Company shall make a pro rata allocation of the Shares available for purchase on such Enrollment Date or Purchase Date, as applicable, in as uniform a manner as shall be practicable and as it shall determine in its sole discretion to be equitable among all Participants for whom rights to purchase Shares are to be exercised pursuant to this Article VI on such Purchase Date, and shall either (i) continue all Offering Periods then in effect, or (ii) terminate any or all Offering Periods then in effect pursuant to Article IX. The Company may make pro rata allocation of the Shares available on the Enrollment Date of any applicable Offering Period pursuant to the preceding sentence, notwithstanding any authorization of additional Shares for issuance under the Plan by the Company’s stockholders subsequent to such Enrollment Date. The balance of the amount credited to the account of each Participant that has not been applied to the purchase of Shares shall be paid to such Participant without interest in one lump sum in cash as soon as reasonably practicable after the Purchase Date, or such earlier date as determined by the Administrator.

 

6.4 Withholding. At the time a Participant’s rights under the Plan are exercised, in whole or in part, or at the time some or all of the Shares issued under the Plan is disposed of, the Participant must make adequate provision for the Company’s federal, state, or other tax withholding obligations, if any, that arise upon the exercise of the right or the disposition of the Shares. At any time, the Company may, but shall not be obligated to, withhold from the Participant’s compensation or Shares received pursuant to the Plan the amount necessary for the Company to meet applicable withholding obligations, including any withholding required to make available to the Company any tax deductions or benefits attributable to sale or early disposition of Shares by the Participant.

 

6.5 Conditions to Issuance of Shares. The Company shall not be required to issue or deliver any certificate or certificates for, or make any book entries evidencing, Shares purchased upon the exercise of rights under the Plan prior to fulfillment of all of the following conditions: (a) the admission of such Shares to listing on all stock exchanges, if any, on which the Shares are then listed; (b) the completion of any registration or other qualification of such Shares under any state or federal law or under the rulings or regulations of the Securities and Exchange Commission or any other governmental regulatory body, that the Administrator shall, in its absolute discretion, deem necessary or advisable; (c) the obtaining of any approval or other clearance from any state or federal governmental agency that the Administrator shall, in its absolute discretion, determine to be necessary or advisable; (d) the payment to the Company of all amounts that it is required to withhold under federal, state or local law upon exercise of the rights, if any; and (e) the lapse of such reasonable period of time following the exercise of the rights as the Administrator may from time to time establish for reasons of administrative convenience.

 

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Article VII.
WITHDRAWAL; CESSATION OF ELIGIBILITY

 

7.1 Withdrawal. A Participant may withdraw all but not less than all of the payroll deductions credited to his or her account and not yet used to exercise his or her rights under the Plan at any time by giving written notice to the Company in a form acceptable to the Company no later than two weeks prior to the end of the then-applicable Purchase Period (or such shorter or longer period as may be specified by the Administrator in the applicable Offering Document). All of the Participant’s payroll deductions credited to his or her account during such Purchase Period and not yet used to exercise rights under the Plan shall be paid to such Participant as soon as reasonably practicable after receipt of notice of withdrawal, such Participant’s rights for the Offering Period shall be automatically terminated, and no further payroll deductions for the purchase of Shares shall be made for such Offering Period. If a Participant withdraws from an Offering Period (including by virtue of a suspension as described in Section 5.2(c) above), payroll deductions shall not resume at the beginning of any subsequent Offering Period unless the Participant is an Eligible Employee and timely delivers to the Company a new subscription agreement by the applicable enrollment deadline for any such subsequent Offering Period, as determined by the Administrator.

 

7.2 Future Participation. A Participant’s withdrawal from an Offering Period shall not have any effect upon his or her eligibility to participate in any similar plan that may hereafter be adopted by the Company or a Designated Subsidiary or in any subsequent Offering Period that commences on or after the Participant’s withdrawal from any Offering Period.

 

7.3 Cessation of Eligibility. Upon a Participant’s ceasing to be an Eligible Employee for any reason, he or she shall be deemed to have elected to withdraw from the Plan pursuant to this Article VII and the payroll deductions credited to such Participant’s account during the then-current Purchase Period shall be paid to such Participant or, in the case of his or her death, to the Participant’s Designated Beneficiary, as soon as reasonably practicable, and such Participant’s rights for the Offering Period shall be automatically terminated. For clarity, if a Participant transfers employment from the Company or any Designated Subsidiary participating in either the Section 423 Component or Non-Section 423 Component to any Designated Subsidiary that is neither participating in the Section 423 Component nor the Non-Section 423 Component, then, in any case, such transfer shall be treated as a termination of employment under the Plan and the Participant shall be deemed to have withdrawn from the Plan pursuant to this Article VII and the payroll deductions credited to such Participant’s account during the then-current Purchase Period shall be paid to such Participant or, in the case of his or her death, to the Participant’s Designated Beneficiary, as soon as reasonably practicable, and such Participant’s participation in the Offering Period shall be automatically terminated. If a Participant transfers employment from the Company or any Designated Subsidiary participating in the Section 423 Component to any Designated Subsidiary participating in the Non-Section 423 Component, such transfer shall not be treated as a termination of employment under the Plan, but the Participant shall immediately cease to participate in the Section 423 Component; however, any contributions made for the then-current Purchase Period in which such transfer occurs shall be transferred to the Non-Section 423 Component, and such Participant shall immediately join the then-current Offering under the Non-Section 423 Component upon the same terms and conditions in effect for the Participant’s participation in the Section 423 Component, except for such modifications otherwise applicable for Participants in such Offering. A Participant who transfers employment from any Designated Subsidiary participating in the Non-Section 423 Component to the Company or any Designated Subsidiary participating in the Section 423 Component shall not be treated as terminating the Participant’s employment under the Plan and shall remain a Participant in the Non-Section 423 Component until the earlier of (i) the end of the current Offering Period under the Non-Section 423 Component or (ii) the Enrollment Date of the first Offering Period in which the Participant is eligible to participate following such transfer. Notwithstanding the foregoing, the Administrator may establish different rules to govern transfers of employment between entities participating in the Section 423 Component and the Non-Section 423 Component, consistent with the applicable requirements of Section 423 of the Code or other Applicable Law.

 

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Article VIII.
Adjustments upon Changes in SHARES

 

8.1 Changes in Capitalization. Subject to Section 8.3, in the event that the Administrator determines that any dividend or other distribution (whether in the form of cash, Shares, other securities, or other property), change in control, reorganization, merger, amalgamation, consolidation, combination, repurchase, redemption, recapitalization, liquidation, dissolution, or sale, transfer, exchange or other disposition of all or substantially all of the assets of the Company, or sale or exchange of Shares or other securities of the Company, issuance of warrants or other rights to purchase Shares or other securities of the Company, or other similar corporate transaction or event, as determined by the Administrator, affects the Shares such that an adjustment is determined by the Administrator to be appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended by the Company to be made available under the Plan or with respect to any outstanding purchase rights under the Plan, the Administrator shall make equitable adjustments, if any, to reflect such change with respect to (a) the aggregate number and type of Shares (or other securities or property) that may be issued under the Plan (including, but not limited to, adjustments of the limitations in Section 3.1 and the limitations established in each Offering Document pursuant to Section 4.2 on the maximum number of Shares that may be purchased); (b) the class(es) and number of Shares and price per Share subject to outstanding rights; and (c) the Purchase Price with respect to any outstanding rights.

 

8.2 Other Adjustments. Subject to Section 8.3, in the event of any transaction or event described in Section 8.1 or any unusual or nonrecurring transactions or events affecting the Company, any affiliate of the Company, or the financial statements of the Company or any affiliate, or of changes in Applicable Law or accounting principles, the Administrator, in its discretion, and on such terms and conditions as it deems appropriate, is hereby authorized to take any one or more of the following actions whenever the Administrator determines that such action is appropriate in order to prevent the dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan or with respect to any right under the Plan, to facilitate such transactions or events or to give effect to such changes in laws, regulations or principles:

 

(a) To provide for either (i) termination of any outstanding right in exchange for an amount of cash, if any, equal to the amount that would have been obtained upon the exercise of such right had such right been currently exercisable or (ii) the replacement of such outstanding right with other rights or property selected by the Administrator in its sole discretion;

 

(b) To provide that the outstanding rights under the Plan shall be assumed by the successor or survivor corporation, or a parent or subsidiary thereof, or shall be substituted for by similar rights covering the stock of the successor or survivor corporation, or a parent or subsidiary thereof, with appropriate adjustments as to the number and kind of shares and prices;

 

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(c) To make adjustments in the number and type of Shares (or other securities or property) subject to outstanding rights under the Plan and/or in the terms and conditions of outstanding rights and rights that may be granted in the future;

 

(d) To provide that Participants’ accumulated payroll deductions may be used to purchase Shares prior to the next occurring Purchase Date on such date as the Administrator determines in its sole discretion and the Participants’ rights under the ongoing Offering Period(s) shall be terminated; and

 

(e) To provide that all outstanding rights shall terminate without being exercised.

 

8.3 No Adjustment Under Certain Circumstances. Unless determined otherwise by the Administrator, no adjustment or action described in this Article VIII or in any other provision of the Plan shall be authorized to the extent that such adjustment or action would cause the Section 423 Component of the Plan to fail to satisfy the requirements of Section 423 of the Code.

 

8.4 No Other Rights. Except as expressly provided in the Plan, no Participant shall have any rights by reason of any subdivision or consolidation of shares of stock of any class, the payment of any dividend, any increase or decrease in the number of shares of stock of any class or any dissolution, liquidation, merger, or consolidation of the Company or any other corporation. Except as expressly provided in the Plan or pursuant to action of the Administrator under the Plan, no issuance by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, shall affect, and no adjustment by reason thereof shall be made with respect to, the number of Shares subject to outstanding rights under the Plan or the Purchase Price with respect to any outstanding rights.

 

Article IX.
Amendment, modification and termination

 

9.1 Amendment, Modification and Termination. The Administrator may amend, suspend or terminate the Plan at any time and from time to time; provided, however, that approval of the Company’s stockholders shall be required to amend the Plan to increase the aggregate number, or change the type, of shares that may be sold pursuant to rights under the Plan under Section 3.1 (other than an adjustment as provided by Article VIII) or as may otherwise be required under Section 423 of the Code.

 

9.2 Certain Changes to Plan. Without stockholder consent and without regard to whether any Participant rights may be considered to have been adversely affected (and, with respect to the Section 423 Component of the Plan, after taking into account Section 423 of the Code), the Administrator shall be entitled to change the Offering Periods, limit the frequency and/or number of changes in the amount withheld from Compensation during an Offering Period, establish the exchange ratio applicable to amounts withheld in a currency other than U.S. dollars, permit payroll withholding in excess of the amount designated by a Participant in order to adjust for delays or mistakes in the Company’s processing of withholding elections, establish reasonable waiting and adjustment periods and/or accounting and crediting procedures to ensure that amounts applied toward the purchase of Shares for each Participant properly correspond with amounts withheld from the Participant’s Compensation, and establish such other limitations or procedures as the Administrator determines in its sole discretion to be advisable that are consistent with the Plan.

 

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9.3 Actions In the Event of Unfavorable Financial Accounting Consequences. In the event the Administrator determines that the ongoing operation of the Plan may result in unfavorable financial accounting consequences, the Administrator may, in its discretion and, to the extent necessary or desirable, modify or amend the Plan to reduce or eliminate such accounting consequence including, but not limited to:

 

(a) altering the Purchase Price for any Offering Period including an Offering Period underway at the time of the change in Purchase Price;

 

(b) shortening any Offering Period so that the Offering Period ends on a new or earlier Purchase Date, including an Offering Period underway at the time of the Administrator action;

 

(c) allocating Shares; and

 

(d) such other changes and modifications as the Administrator determines are necessary or appropriate.

 

Such modifications or amendments shall not require stockholder approval or the consent of any Participant.

 

9.4 Payments Upon Termination of Plan. Upon termination of the Plan, the balance in each Participant’s Plan account shall be refunded as soon as practicable after such termination, without any interest thereon, or if the Administrator so determines, the Offering Period may be shortened so that the purchase of Shares occurs prior to the termination of the Plan.

 

Article X.
TERM OF PLAN

 

The Plan shall become effective immediately prior to the Business Combination to be effected by the Company and shall continue until terminated by the Board in accordance with Section 9.1. The effectiveness of the Plan shall be subject to approval of the Plan by the Company’s stockholders within twelve months following the date the Plan is first approved by the Board. No right may be granted under the Plan prior to such stockholder approval. No rights may be granted under the Plan during any period of suspension of the Plan or after termination of the Plan.

 

Article XI.
ADMINISTRATION

 

11.1 Administrator. Unless otherwise determined by the Board, the Administrator of the Plan shall be the Compensation Committee of the Board (or another committee or a subcommittee of the Board to which the Board delegates administration of the Plan). The Board may at any time vest in the Board any authority or duties for administration of the Plan. The Administrator may delegate administrative tasks under the Plan to the services of an Agent or Employees to assist in the administration of the Plan, including establishing and maintaining an individual securities account under the Plan for each Participant.

 

11.2 Authority of Administrator. The Administrator shall have the power, subject to, and within the limitations of, the express provisions of the Plan:

 

(a) To determine when and how rights to purchase Shares shall be granted and the provisions of each offering of such rights (which need not be identical).

 

(b) To designate from time to time which Subsidiaries of the Company shall be Designated Subsidiaries, which designation may be made without the approval of the stockholders of the Company.

 

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(c) To impose a mandatory holding period pursuant to which Participants may not dispose of or transfer Shares purchased under the Plan for a period of time determined by the Administrator in its discretion.

 

(d) To construe and interpret the Plan and rights granted under it, and to establish, amend and revoke rules and regulations for its administration. The Administrator, in the exercise of this power, may correct any defect, omission or inconsistency in the Plan, in a manner and to the extent it shall deem necessary or expedient to make the Plan fully effective.

 

(e) To amend, suspend or terminate the Plan as provided in Article IX or otherwise.

 

(f) Generally, to exercise such powers and to perform such acts as the Administrator deems necessary or expedient to promote the best interests of the Company and its Subsidiaries and to carry out the intent that the Plan be treated as an “employee stock purchase plan” within the meaning of Section 423 of the Code for the Section 423 Component.

 

(g) The Administrator may adopt annexes or sub-plans applicable to particular Designated Subsidiaries or locations, which annexes or sub-plans may be designed to be outside the scope of Section 423 of the Code. The rules of such annexes or sub-plans may take precedence over other provisions of this Plan, with the exception of Section 3.1 hereof, but unless otherwise superseded by the terms of such annex or sub-plan, the provisions of this Plan shall govern the operation of such annex or sub-plan.

 

11.3 Decisions Binding. The Administrator’s interpretation of the Plan, any rights granted pursuant to the Plan, any subscription agreement and all decisions and determinations by the Administrator with respect to the Plan are final, binding, and conclusive on all parties.

 

Article XII.
MISCELLANEOUS

 

12.1 Restriction upon Assignment. A right granted under the Plan shall not be transferable other than by will or the Applicable Laws of descent and distribution, and is exercisable during the Participant’s lifetime only by the Participant. Except in the case of a Participant’s death, a right under the Plan may not be exercised to any extent except by the Participant. The Company shall not recognize and shall be under no duty to recognize any assignment or alienation of the Participant’s interest in the Plan, the Participant’s rights under the Plan or any rights thereunder.

 

12.2 Rights as a Stockholder. With respect to Shares subject to a right granted under the Plan, no Participant or Designated Beneficiary shall be deemed to be a stockholder of the Company, and no Participant or Designated Beneficiary shall have any of the rights or privileges of a stockholder, until such Shares have been issued to the Participant or the Designated Beneficiary following exercise of the Participant’s rights under the Plan. No adjustments shall be made for dividends (ordinary or extraordinary, whether in cash securities, or other property) or distribution or other rights for which the record date occurs prior to the date of such issuance, except as otherwise expressly provided herein or as determined by the Administrator.

 

12.3 Interest. No interest shall accrue on the payroll deductions or contributions of a Participant under the Plan.

 

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12.4 Notices. All notices or other communications by a Participant to the Company under or in connection with the Plan shall be deemed to have been duly given when received in the form specified by the Company at the location, or by the person, designated by the Company for the receipt thereof.

 

12.5 Equal Rights and Privileges. Subject to Section 5.7, all Eligible Employees will have equal rights and privileges under the Section 423 Component so that the Section 423 Component of this Plan qualifies as an “employee stock purchase plan” within the meaning of Section 423 of the Code. Subject to Section 5.7, any provision of the Section 423 Component that is inconsistent with Section 423 of the Code will, without further act or amendment by the Company, the Board or the Administrator, be reformed to comply with the equal rights and privileges requirement of Section 423 of the Code. Eligible Employees participating in the Non-Section 423 Component need not have the same rights and privileges as other Eligible Employees participating in the Non-Section 423 Component or as Eligible Employees participating in the Section 423 Component.

 

12.6 Use of Funds. All payroll deductions received or held by the Company under the Plan may be used by the Company for any corporate purpose, and the Company shall not be obligated to segregate such payroll deductions.

 

12.7 Reports. Statements of account shall be given to Participants at least annually, which statements shall set forth the amounts of payroll deductions, the Purchase Price, the number of Shares purchased and the remaining cash balance, if any.

 

12.8 No Employment Rights. Nothing in the Plan shall be construed to give any person (including any Eligible Employee or Participant) the right to employment or service (or to remain in the employ or service) with the Company or any Parent or Subsidiary or affect the right of the Company or any Parent or Subsidiary to terminate the employment or service of any person (including any Eligible Employee or Participant) at any time, with or without cause.

 

12.9 Notice of Disposition of Shares. Each Participant shall give prompt notice to the Company of any disposition or other transfer of any Shares purchased upon exercise of a right under the Section 423 Component of the Plan if such disposition or transfer is made: (a) within two years from the Enrollment Date of the Offering Period in which the Shares were purchased or (b) within one year after the Purchase Date on which such Shares were purchased. Such notice shall specify the date of such disposition or other transfer and the amount realized, in cash, other property, assumption of indebtedness or other consideration, by the Participant in such disposition or other transfer.

 

12.10 Limitations on Liability. Notwithstanding any other provisions of the Plan, no individual acting as a director, officer, other employee or agent of the Company or any Subsidiary will be liable to any Participant, former Participant, Designated Beneficiary or any other person for any claim, loss, liability, or expense incurred in connection with the Plan or any Offering Period, and such individual will not be personally liable with respect to the Plan because of any contract or other instrument executed in his or her capacity as an Administrator, director, officer, other employee or agent of the Company or any Subsidiary. The Company will indemnify and hold harmless each director, officer, other employee and agent of the Company or any Subsidiary that has been or will be granted or delegated any duty or power relating to the Plan’s administration or interpretation, against any cost or expense (including attorneys’ fees) or liability (including any sum paid in settlement of a claim with the Administrator’s approval) arising from any act or omission concerning this Plan unless arising from such person’s own fraud or bad faith.

 

12.11 Lock-Up Period. The Company may, at the request of any underwriter representative or otherwise, in connection with registering the offering of any Company securities under the Securities Act, prohibit Participants from, directly or indirectly, selling or otherwise transferring any Shares or other Company securities during a period of up to 180 days following the effective date of a Company registration statement filed under the Securities Act, or such longer period as determined by the underwriter.

 

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12.12 Data Privacy. As a condition for participation in the Plan, each Participant explicitly and unambiguously consents to the collection, use and transfer, in electronic or other form, of personal data as described in this section by and among the Company and its Subsidiaries and affiliates exclusively for implementing, administering and managing the Participant’s participation in the Plan. The Company and its Subsidiaries and affiliates may hold certain personal information about a Participant, including the Participant’s name, address and telephone number; birthdate; social security, insurance number or other identification number; salary; nationality; job title(s); any Shares held in the Company or its Subsidiaries and affiliates; and participation details, to implement, manage and administer the Plan and any Offering Period(s) (the “Data”). The Company and its Subsidiaries and affiliates may transfer the Data amongst themselves as necessary to implement, administer and manage a Participant’s participation in the Plan and any Offering Period(s), and the Company and its Subsidiaries and affiliates may transfer the Data to third parties assisting the Company with Plan implementation, administration and management. These recipients may be located in the Participant’s country, or elsewhere, and the Participant’s country may have different data privacy laws and protections than the recipients’ country. By participating in any Offering Period under the Plan, each Participant authorizes such recipients to receive, possess, use, retain and transfer the Data, in electronic or other form, to implement, administer and manage the Participant’s participation in the Plan, including any required Data transfer to a broker or other third party with whom the Company or the Participant may elect to deposit any Shares. The Data related to a Participant will be held only as long as necessary to implement, administer, and manage the Participant’s participation in the Plan. A Participant may, at any time, view the Data that the Company holds regarding such Participant, request additional information about the storage and processing of the Data regarding such Participant, recommend any necessary corrections to the Data regarding the Participant or refuse or withdraw the consents in this Section 12.12 in writing, without cost, by contacting the local human resources representative. If the Participant refuses or withdraws the consents in this Section 12.12, and the Company may cancel Participant’s ability to participate in the Plan or any Offering Period(s). For more information on the consequences of refusing or withdrawing consent, Participants may contact their local human resources representative.

 

12.13 Severability. If any portion of the Plan or any action taken under it is held illegal or invalid for any reason, the illegality or invalidity will not affect the remaining parts of the Plan, and the Plan will be construed and enforced as if the illegal or invalid provisions had been excluded, and the illegal or invalid action will be null and void.

 

12.14 Titles and Headings. The titles and headings in the Plan are for convenience of reference only and, if any conflict, the Plan’s text, rather than such titles or headings, will control.

 

12.15 Conformity to Securities Laws. Participant acknowledges that the Plan is intended to conform to the extent necessary with Applicable Laws. Notwithstanding anything herein to the contrary, the Plan and all Offering Periods will be administered only in conformance with Applicable Laws. To the extent Applicable Laws permit, the Plan and all Offering Periods will be deemed amended as necessary to conform to Applicable Laws.

 

12.16 Relationship to Other Benefits. No payment under the Plan will be taken into account in determining any benefits under any pension, retirement, savings, profit sharing, group insurance, welfare or other benefit plan of the Company or any Subsidiary except as expressly provided in writing in such other plan or an agreement thereunder.

 

12.17 Governing Law. The Plan and any agreements hereunder shall be administered, interpreted and enforced in accordance with the laws of the State of Delaware, disregarding any state’s choice of law principles requiring the application of a jurisdiction’s laws other than the State of Delaware.

 

12.18 Electronic Forms. To the extent permitted by Applicable Law and in the discretion of the Administrator, an Eligible Employee may submit any form or notice as set forth herein by means of an electronic form approved by the Administrator. Before the commencement of an Offering Period, the Administrator shall prescribe the time limits within which any such electronic form shall be submitted to the Administrator with respect to such Offering Period in order to be a valid election.

 

* * * * *

 

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Exhibit 10.10

 

INDEMNIFICATION And Advancement AGREEMENT

 

This Indemnification and Advancement Agreement (“Agreement”) is made as of ________ __, 20__ by and between AST SpaceMobile, Inc., a Delaware corporation (the “Company”), and ______________, [a member of the Board of Directors/an officer] of the Company (“Indemnitee”). This Agreement supersedes and replaces any and all previous Agreements between the Company or any of its subsidiaries and Indemnitee covering indemnification and advancement.

 

RECITALS

 

WHEREAS, the Board of Directors of the Company (the “Board”) believes that highly competent persons have become more reluctant to serve publicly-held corporations as directors, officers, or in other capacities unless they are provided with adequate protection through insurance or adequate indemnification and advancement of expenses against inordinate risks of claims and actions against them arising out of their service to and activities on behalf of such corporations;

 

WHEREAS, the Board has determined that, in order to attract and retain qualified individuals, the Company will attempt to maintain on an ongoing basis, at its sole expense, liability insurance to protect persons serving the Company and its subsidiaries from certain liabilities. Although the furnishing of such insurance has been a customary and widespread practice among United States-based corporations and other business enterprises, the Company believes that, given current market conditions and trends, such insurance may be available to it in the future only at higher premiums and with more exclusions. At the same time, directors, officers, and other persons in service to corporations or business enterprises are being increasingly subjected to expensive and time-consuming litigation relating to, among other things, matters that traditionally would have been brought only against the Company or business enterprise itself. The Bylaws and Certificate of Incorporation of the Company require indemnification of the officers and directors of the Company. Indemnitee may also be entitled to indemnification pursuant to the General Corporation Law of the State of Delaware (the “DGCL”). The Bylaws, Certificate of Incorporation, and the DGCL expressly provide that the indemnification provisions set forth therein are not exclusive, and thereby contemplate that contracts may be entered into between the Company and members of the Board, officers and other persons with respect to indemnification and advancement of expenses;

 

WHEREAS, the uncertainties relating to such insurance, to indemnification, and to advancement of expenses may increase the difficulty of attracting and retaining such persons;

 

WHEREAS, the Board has determined that the increased difficulty in attracting and retaining such persons is detrimental to the best interests of the Company and its stockholders and that the Company should act to assure such persons that there will be increased certainty of such protection in the future;

 

WHEREAS, it is reasonable, prudent and necessary for the Company contractually to obligate itself to hold harmless and indemnify, and to advance expenses on behalf of, such persons to the fullest extent permitted by applicable law so that they will serve or continue to serve the Company free from undue concern that they will not be so indemnified;

 

 
 

 

WHEREAS, this Agreement is a supplement to and in furtherance of the Bylaws, Certificate of Incorporation and any resolutions adopted pursuant thereto, and is not a substitute therefor, nor diminishes or abrogates any rights of Indemnitee thereunder; and

 

WHEREAS, Indemnitee does not regard the protection available under the Bylaws, Certificate of Incorporation, DGCL and insurance as adequate in the present circumstances, and may not be willing to serve or continue to serve as an officer or director without adequate additional protection, and the Company desires Indemnitee to serve or continue to serve in such capacity. Indemnitee is willing to serve, continue to serve and to take on additional service for or on behalf of the Company on the condition that Indemnitee be so indemnified and be advanced expenses.

 

NOW, THEREFORE, in consideration of the premises and the covenants contained herein, the Company and Indemnitee do hereby covenant and agree as follows:

 

Section 1. Services to the Company. Indemnitee agrees or has agreed to serve as [a/an] [director/officer] of the Company. Indemnitee may at any time and for any reason resign from such position (subject to any other contractual obligation or any obligation imposed by operation of law). This Agreement does not create any obligation on the Company to continue Indemnitee in such position and is not an employment contract between the Company (or any of its subsidiaries or any Enterprise) and Indemnitee.

 

Section 2. Definitions. As used in this Agreement:

 

(a) “Affiliate” shall have the meaning set forth in Rule 405 under the Securities Act of 1933, as amended (as in effect on the date hereof).

 

(b) “Agent” means any person who is or was a director, officer or employee of the Company or an Enterprise or other person authorized by the Company or an Enterprise to act for or represent the interests of the Company or an Enterprise, respectively.

 

(c) “Bylaws” means the bylaws of the Company.

 

(d) “Certificate of Incorporation” means the Certificate of Incorporation of the Company.

 

(e) A “Change in Control” occurs upon the earliest to occur after the later of (i) the Closing and (ii) the date of this Agreement of any of the following events:

 

i. Acquisition of Stock by Third Party. Any Person (as defined below) is or becomes the Beneficial Owner (as defined below) [other than a Designated Person]1, directly or indirectly, of securities of the Company representing more than fifty percent (50%) or more of the combined voting power of the Company’s then outstanding securities unless the change in relative beneficial ownership of the Company’s securities by any Person results solely from a reduction in the aggregate number of outstanding shares of securities entitled to vote generally in the election of directors;

 

 

1 Note to Form: To remove for agreements where there is no Designated Person.

 

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ii. Change in Board of Directors. During any period of two (2) consecutive years (not including any period prior to the execution of this Agreement), individuals who at the beginning of such period constitute the Board, and any new director (other than a director designated by a person who has entered into an agreement with the Company to effect a transaction described in Sections 2(e)(i), 2(e)(iii) or 2(e)(iv)) whose election by the Board or nomination for election by the Company’s stockholders was approved by a vote of at least two-thirds of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved (the “Initial Board”), cease for any reason to constitute at least a majority of the members of the Board; provided, however, that no change to the composition of the Initial Board shall be considered for the purposes of determining whether a Board Change has occurred to the extent such change resulted from a designation made in accordance with the Stockholders’ Agreement by and among the Company, Abel Avellan (“Avellan”), Invesat LLC, a Delaware limited liability company, Vodafone Ventures Limited, a private limited company incorporated under the Laws of England and Wales, Rakuten Mobile USA Service Inc., a Delaware corporation, ATC TRS II LLC, a Delaware limited liability company, and New Providence Management LLC, a Delaware limited liability company;

 

iii. Corporate Transactions. The consummation by the Company (whether directly involving the Company or indirectly involving the Company through one or more intermediaries) of (x) a merger, consolidation, reorganization, or business combination, (y) a sale or other disposition of all or substantially all of the Company’s assets in any single transaction or series of related transactions or (z) the acquisition of assets or stock of another entity, in each case other than a transaction which results in the Company’s voting securities outstanding immediately before the transaction continuing to represent (either by remaining outstanding or by being converted into voting securities of the Company or the person that, as a result of the transaction, controls, directly or indirectly, the Company or owns, directly or indirectly, all or substantially all of the Company’s assets or otherwise succeeds to the business of the Company (the Company or such person, the “Successor Entity”)) directly or indirectly, at least a majority of the combined voting power of the Successor Entity’s outstanding voting securities immediately after the transaction;

 

iv. Liquidation. The approval by the stockholders of the Company of a complete liquidation of the Company or an agreement for the sale or disposition by the Company of all or substantially all of the Company’s assets; and

 

v. Other Events. There occurs any other event of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A (or a response to any similar item on any similar schedule or form) promulgated under the Exchange Act (as defined below), whether or not the Company is then subject to such reporting requirement.

 

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vi. For purposes of this Section 2(e), the following terms have the following meanings:

 

  1 “Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time.
     
  2 “Person” has the meaning as set forth in Sections 13(d) and 14(d) of the Exchange Act; provided, however, that Person excludes (i) the Company, (ii) any trustee or other fiduciary holding securities under an employee benefit plan of the Company, and (iii) any corporation owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company.
     
  3 “Beneficial Owner” has the meaning given to such term in Rule 13d-3 under the Exchange Act; provided, however, that Beneficial Owner excludes any Person otherwise becoming a Beneficial Owner by reason of the stockholders of the Company approving a merger of the Company with another entity.

 

(f) “Closing” means the closing of the transactions contemplated by the Equity Purchase Agreement, dated December 15, 2020, by and among AST & Science LLC, a Delaware limited liability company, New Providence Acquisition Corp. a Delaware corporation, New Providence Management LLC, a Delaware limited liability company, the Existing Equityholders set forth on Annex A thereto and Abel Avellan as the Existing Equityholder Representative (as defined therein).

 

(g) “Corporate Status” describes the status of a person who is or was acting as a director, officer, employee, fiduciary, or Agent of the Company or an Enterprise.

 

(h) [“Designated Person” means [●] and its Affiliates and Related Parties.]2

 

(i) “Disinterested Director” means a director of the Company who is not and was not a party to the Proceeding in respect of which indemnification is sought by Indemnitee.

 

(j) “Enterprise” means any other corporation, limited liability company, partnership, joint venture, trust, employee benefit plan or other entity for which Indemnitee is or was serving at the request of the Company as a director, officer, employee, or Agent.

 

(k) “Expenses” shall be broadly construed and shall include, without limitation, all reasonable costs, disbursements or expenses incurred in connection with prosecuting, defending, preparing to prosecute or defend, investigating, being or preparing to be a deponent or witness in, or otherwise participating in, a Proceeding (including all reasonable attorneys’ fees, retainers, court costs, mediation fees, transcript costs, fees of experts and other professionals, witness fees, travel expenses, duplicating costs, printing and binding costs, telephone charges, postage, delivery service fees, any federal, state, local or foreign taxes imposed on Indemnitee as a result of the actual or deemed receipt of any payments under this Agreement). Expenses also include (i) Expenses incurred in connection with any appeal resulting from any Proceeding, including without limitation the premium, security for, and other costs relating to any cost bond, supersedeas bond, or other appeal bond or its equivalent, and (ii) for purposes of Section 14(d) only, Expenses incurred by Indemnitee in connection with the interpretation, enforcement or defense of Indemnitee’s rights under this Agreement, by litigation or otherwise. Expenses, however, do not include amounts paid in settlement by Indemnitee or the amount of judgments or fines against Indemnitee.

 

 

2 Note to Form: For each individual signatory, to refer to the Person or entity appointing such person to the Board, if applicable.

 

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(l) “finally adjudged” or “final adjudication” means determined by a final (not interlocutory) judgment or other adjudication of a court or arbitration or administrative body of competent jurisdiction as to which there is no further right or option of appeal or the time within which an appeal must be filed has expired without such filing (and from which there is no further right of appeal).

 

(m) “Independent Counsel” means a law firm, or a member of a law firm, that is experienced in matters of corporation law and neither presently is, nor in the past five years has been, retained to represent: (i) the Company or Indemnitee in any matter material to either such party (other than with respect to matters concerning the Indemnitee under this Agreement, or of other indemnitees under similar indemnification agreements), or (ii) any other party to the Proceeding giving rise to a claim for indemnification hereunder. Notwithstanding the foregoing, the term “Independent Counsel” does not include any person who, under the applicable standards of professional conduct then prevailing, would have a conflict of interest in representing either the Company or Indemnitee in an action to determine Indemnitee’s rights under this Agreement. The Company agrees to pay the reasonable fees and expenses of the Independent Counsel, regardless of the manner in which such Independent Counsel was selected.

 

(n) The term “Proceeding” includes any threatened, pending or completed action, suit, claim, counterclaim, cross claim, arbitration, mediation, alternate dispute resolution mechanism, investigation, inquiry, administrative hearing or any other actual, threatened or completed proceeding, whether brought in the right of the Company or otherwise and whether of a civil, criminal, administrative, legislative, or investigative (formal or informal) nature, including any appeal therefrom, in which Indemnitee was, is or will be involved as a party, potential party, non-party witness or otherwise by reason of Indemnitee’s Corporate Status or by reason of any action taken by Indemnitee (or a failure to take action by Indemnitee) or of any action (or failure to act) on Indemnitee’s part while acting pursuant to Indemnitee’s Corporate Status, in each case whether or not serving in such capacity at the time any liability or Expense is incurred for which indemnification, reimbursement, or advancement of Expenses can be provided under this Agreement. A Proceeding also includes a situation the Indemnitee believes in good faith may lead to or culminate in the institution of a Proceeding.

 

(o) [“Related Party” means, with respect to any Person, (a) any controlling stockholder, controlling member, general partner, subsidiary, spouse or immediate family member (in the case of an individual) of such Person, (b) any estate, trust, corporation, partnership or other entity, the beneficiaries, stockholders, partners or owners of which consist solely of one or more of [●] and [its] Affiliates (other than the Company and its subsidiaries) and Related Parties and/or such other Persons referred to in the immediately preceding clause (a), or (c) any executor, administrator, trustee, manager, director or other similar fiduciary of any Person referred to in the immediately preceding clause (b), acting solely in such capacity.]3

 

 

3 Note to Form: To be included where there is a Designated Person.

 

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Section 3. Indemnity in Third-Party Proceedings. The Company will hold harmless and indemnify Indemnitee in accordance with the provisions of this Section 3 if Indemnitee is, or is threatened to be made, a party to or a participant in any Proceeding, other than a Proceeding by or in the right of the Company to procure a judgment in its favor. Pursuant to this Section 3, the Company will hold harmless and indemnify Indemnitee to the fullest extent permitted by applicable law against all loss and liability suffered, Expenses, judgments, fines and amounts paid in settlement (including all interest, assessments and other charges paid or payable in connection with or in respect of such Expenses, judgments, fines and amounts paid in settlement) actually and reasonably incurred by Indemnitee or on Indemnitee’s behalf in connection with such Proceeding or any claim, issue or matter therein if (a) such Indemnitee acted in good faith and in a manner Indemnitee reasonably believed to be in or not opposed to the best interests of the Company, and (b) in the case of a criminal Proceeding, such Indemnitee had no reasonable cause to believe that Indemnitee’s conduct was unlawful.

 

Section 4. Indemnity in Proceedings by or in the Right of the Company. The Company will hold harmless and indemnify Indemnitee in accordance with the provisions of this Section 4 if Indemnitee is, or is threatened to be made, a party to or a participant in any Proceeding by or in the right of the Company to procure a judgment in its favor. Pursuant to this Section 4, the Company will hold harmless and indemnify Indemnitee to the fullest extent permitted by applicable law against all Expenses actually and reasonably incurred by Indemnitee or on Indemnitee’s behalf in connection with such Proceeding or any claim, issue or matter therein, if Indemnitee acted in good faith and in a manner Indemnitee reasonably believed to be in or not opposed to the best interests of the Company. Notwithstanding the foregoing, the Company will not hold harmless and indemnify Indemnitee for Expenses under this Section 4 related to any claim, issue or matter in a Proceeding for which Indemnitee has been finally adjudged by a court to be liable to the Company, unless, and only to the extent that, the Court of Chancery of the State of Delaware or any court in which the Proceeding was brought determines that, despite the adjudication of liability but in view of all circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery of the State of Delaware or such other court shall deem proper.

 

Section 5. Indemnification for Expenses of a Party Who is Wholly or Partly Successful. Notwithstanding any other provision of this Agreement, to the fullest extent permitted by applicable law, the Company will hold harmless and indemnify Indemnitee against all Expenses actually and reasonably incurred by Indemnitee or on Indemnitee’s behalf in connection with any Proceeding in which Indemnitee is successful, on the merits or otherwise. If Indemnitee is not wholly successful in such Proceeding but is successful, on the merits or otherwise, as to one or more but less than all claims, issues or matters in such Proceeding, the Company will hold harmless and indemnify Indemnitee against all Expenses actually and reasonably incurred by Indemnitee or on Indemnitee’s behalf in connection with or related to each successfully resolved claim, issue or matter to the fullest extent permitted by law. For purposes of this Section 5 and without limitation, the termination of any claim, issue or matter in such a Proceeding by dismissal, with or without prejudice, will be deemed to be a successful result as to such claim, issue or matter.

 

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Section 6. Indemnification For Expenses of a Witness. Notwithstanding any other provision of this Agreement and to the fullest extent permitted by the DGCL, the Company will hold harmless and indemnify Indemnitee against all Expenses actually and reasonably incurred by Indemnitee or on Indemnitee’s behalf in connection with any Proceeding to which Indemnitee, by reason of Indemnitee’s Corporate Status, is not a party but to which Indemnitee is a witness, deponent, interviewee, or otherwise asked to participate.

 

Section 7. Partial Indemnification. If Indemnitee is entitled under any provision of this Agreement to indemnification by the Company for some or a portion of Expenses, but not, however, for the total amount thereof, the Company will hold harmless and indemnify Indemnitee for the portion thereof to which Indemnitee is entitled.

 

Section 8. Additional Indemnification. Notwithstanding any limitation in Sections 3, 4, 5, 6 and 7 of this Agreement, the Company will hold harmless and indemnify Indemnitee to the fullest extent permitted by applicable law (including but not limited to, the DGCL and any amendments to or replacements of the DGCL adopted after the date of this Agreement that expand the Company’s ability to hold harmless and indemnify its officers and directors) if Indemnitee is a party to or threatened to be made a party to any Proceeding (including a Proceeding by or in the right of the Company to procure a judgment in its favor).

 

Section 9. Exclusions. Notwithstanding any provision in this Agreement, the Company is not obligated under this Agreement to make any indemnification payment to Indemnitee in connection with any Proceeding:

 

(a) for which payment has actually been made to or on behalf of Indemnitee under any insurance policy or other indemnity provision, except to the extent provided in Section 16(b) of the Exchange Act and except with respect to any excess beyond the amount paid under any insurance policy or other indemnity provision; or

 

(b) for (i) an accounting of profits made from the purchase and sale (or sale and purchase) by Indemnitee of securities of the Company within the meaning of Section 16(b) of the Exchange Act (as defined in Section 2(b) hereof) or similar provisions of state statutory law or common law, (ii) any reimbursement of the Company by the Indemnitee of any bonus or other incentive-based or equity-based compensation or of any profits realized by the Indemnitee from the sale of securities of the Company, as required in each case under the Exchange Act (including any such reimbursements that arise from an accounting restatement of the Company pursuant to Section 304 of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), or the payment to the Company of profits arising from the purchase and sale by Indemnitee of securities in violation of Section 306 of the Sarbanes-Oxley Act) or (iii) any reimbursement of the Company by Indemnitee of any compensation pursuant to any compensation recoupment or clawback policy adopted by the Board or the compensation committee of the Board, if any, including but not limited to any such policy adopted to comply with stock exchange listing requirements implementing Section 10D of the Exchange Act; or

 

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(c) initiated by Indemnitee, including any Proceeding (or any part of any Proceeding) initiated by Indemnitee against the Company or its directors, officers, employees or other indemnitees, unless (i) the Proceeding or part of any Proceeding is to enforce Indemnitee’s rights to indemnification or advancement, of Expenses, including a Proceeding (or any part of any Proceeding) initiated pursuant to Section 14 of this Agreement, (ii) the Board authorized the Proceeding (or any part of any Proceeding) prior to its initiation or (iii) the Company provides the indemnification, in its sole discretion, pursuant to the powers vested in the Company under applicable law.

 

Section 10. Advances of Expenses.

 

(a) The Company will advance, to the extent not prohibited by law, the Expenses incurred by Indemnitee in connection with any Proceeding (or any part of any Proceeding) not initiated by Indemnitee or any Proceeding (or any part of any Proceeding) initiated by Indemnitee if (i) the Proceeding or part of any Proceeding is to enforce Indemnitee’s rights to obtain indemnification or advancement of Expenses from the Company or Enterprise, including a proceeding initiated pursuant to Section 14 or (ii) the Board authorized the Proceeding (or any part of any Proceeding) prior to its initiation. The Company will advance the Expenses within twenty (20) days after the receipt by the Company of a statement or statements requesting such advances from time to time, whether prior to or after final disposition of any Proceeding.

 

(b) Advances will be unsecured and interest free. Indemnitee undertakes to repay the amounts advanced (without interest) to the extent that it is ultimately determined that Indemnitee is not entitled to be indemnified by the Company, thus Indemnitee qualifies for advances upon the execution of this Agreement and delivery to the Company. No other form of undertaking is required other than the execution of this Agreement. The Company will make advances without regard to Indemnitee’s ability to repay the Expenses and without regard to Indemnitee’s ultimate entitlement to indemnification under the other provisions of this Agreement.

 

Section 11. Procedure for Notification of Claim for Indemnification or Advancement.

 

(a) Indemnitee will notify the Company in writing of any Proceeding with respect to which Indemnitee intends to seek indemnification or advancement of Expenses hereunder as soon as reasonably practicable following the receipt by Indemnitee of written notice thereof. Indemnitee will include in the written notification to the Company a description of the nature of the Proceeding and the allegations underlying the Proceeding and provide such documentation and information as is reasonably available to Indemnitee and is reasonably necessary to determine whether and to what extent Indemnitee is entitled to indemnification following the final disposition of such Proceeding. Indemnitee’s failure to so notify the Company will not relieve the Company from any obligation it may have to Indemnitee under this Agreement, and any delay or defect in so notifying the Company will not constitute a waiver by Indemnitee of any rights under this Agreement. The Secretary of the Company will, promptly upon receipt of such a request for indemnification, advise the Board in writing that Indemnitee has requested indemnification or advancement.

 

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(b) The Company will be entitled to participate in the Proceeding at its own expense, provided, that the Company will not be entitled to assume the defense of such Proceedings on Indemnitee’s behalf without Indemnitee’s prior written consent.

 

(c) The Company will not settle any Proceeding (in whole or in part) if such settlement would attribute to Indemnitee any admission of liability or impose any Expense, judgment, liability, fine, penalty or obligation or limitation on Indemnitee without Indemnitee’s prior written consent, which shall not be unreasonably withheld.

 

Section 12. Procedure Upon Application for Indemnification.

 

(a) Unless a Change in Control has occurred, the determination of Indemnitee’s entitlement to indemnification will be made:

 

i. by a majority vote of the Disinterested Directors, even though less than a quorum of the Board;

 

ii. by a committee of Disinterested Directors designated by a majority vote of the Disinterested Directors, even though less than a quorum of the Board;

 

iii. if there are no such Disinterested Directors or, if such Disinterested Directors so direct, by written opinion provided by Independent Counsel selected by the Board; or

 

iv. if so directed by the Board, by the stockholders of the Company.

 

(b) If a Change in Control has occurred, the determination of Indemnitee’s entitlement to indemnification will be made by written opinion provided by Independent Counsel selected by Indemnitee (unless Indemnitee requests such selection be made by the Board).

 

(c) The party selecting Independent Counsel pursuant to subsection (a)(iii) or (b) of this Section 12 will provide written notice of the selection to the other party. The notified party may, within ten (10) days after receiving written notice of the selection of Independent Counsel, deliver to the selecting party a written objection to such selection; provided, however, that such objection may be asserted only on the ground that the Independent Counsel so selected does not meet the requirements of “Independent Counsel” as defined in Section 2 of this Agreement, and the objection will set forth with particularity the factual basis of such assertion. Absent a proper and timely objection, the person so selected will act as Independent Counsel. If such written objection is so made and substantiated, the Independent Counsel so selected may not serve as Independent Counsel unless and until such objection is withdrawn or the Court of Chancery of the State of Delaware has determined that such objection is without merit. If, within thirty (30) days after the later of submission by Indemnitee of a written request for indemnification pursuant to Section 11(a) hereof and the final disposition of the Proceeding, Independent Counsel has not been selected or, if selected, any objection to has not been resolved, either the Company or Indemnitee may petition the Court of Chancery of the State of Delaware for the appointment as Independent Counsel of a person selected by such court or by such other person as such court designates. Upon the due commencement of any judicial proceeding or arbitration pursuant to Section 14(a) of this Agreement, Independent Counsel will be discharged and relieved of any further responsibility in such capacity (subject to the applicable standards of professional conduct then prevailing).

 

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(d) Indemnitee will cooperate with the person, persons or entity making the determination with respect to Indemnitee’s entitlement to indemnification, including providing to such person, persons or entity upon reasonable advance request any documentation or information which is not privileged or otherwise protected from disclosure and which is reasonably available to Indemnitee and reasonably necessary to such determination. The Company will advance and pay any Expenses incurred by Indemnitee in so cooperating with the person, persons or entity making the indemnification determination irrespective of the determination as to Indemnitee’s entitlement to indemnification and the Company hereby indemnifies and agrees to hold Indemnitee harmless therefrom. The Company promptly will advise Indemnitee in writing of the determination that Indemnitee is or is not entitled to indemnification, including a description of any reason or basis for which indemnification has been denied and providing a copy of any written opinion provided to the Board by Independent Counsel.

 

(e) If it is determined that Indemnitee is entitled to indemnification, the Company will make payment to Indemnitee within ten (10) days after such determination.

 

Section 13. Presumptions and Effect of Certain Proceedings.

 

(a) It is the intent of this Agreement to secure for Indemnitee rights of indemnity that are as favorable as may be permitted under the DGCL and public policy of the State of Delaware. In making a determination with respect to entitlement to indemnification hereunder, the person or persons or entity making such determination will, to the fullest extent not prohibited by law, presume Indemnitee is entitled to indemnification under this Agreement if Indemnitee has submitted a request for indemnification in accordance with Section 11(a) of this Agreement, and the Company will, to the fullest extent not prohibited by law, have the burden of proof to overcome that presumption. Neither the failure of the Company (including by its directors or Independent Counsel) to have made a determination prior to the commencement of any action pursuant to this Agreement that indemnification is proper in the circumstances because Indemnitee has met the applicable standard of conduct, nor an actual determination by the Company (including by its directors or Independent Counsel) that Indemnitee has not met such applicable standard of conduct, will be a defense to the action or create a presumption that Indemnitee has not met the applicable standard of conduct.

 

(b) If the determination of the Indemnitee’s entitlement to indemnification has not made pursuant to Section 12 within sixty (60) days after the later of (i) receipt by the Company of Indemnitee’s request for indemnification pursuant to Section 11(a) and (ii) the final disposition of the Proceeding for which Indemnitee requested Indemnification (the “Determination Period”), the requisite determination of entitlement to indemnification will, to the fullest extent not prohibited by law, be deemed to have been made and Indemnitee will be entitled to such indemnification, absent (i) a misstatement by Indemnitee of a material fact, or an omission of a material fact necessary to make Indemnitee’s statement not materially misleading, in connection with the request for indemnification, or (ii) a prohibition of such indemnification under applicable law. The Determination Period may be extended for a reasonable time, not to exceed an additional thirty (30) days, if the person, persons or entity making the determination with respect to entitlement to indemnification in good faith requires such additional time for the obtaining or evaluating of documentation and/or information relating thereto; and provided, further, the Determination Period may be extended an additional fifteen (15) days if the determination of entitlement to indemnification is to be made by the stockholders pursuant to Section 12(a)(iv) of this Agreement.

 

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(c) The termination of any Proceeding or of any claim, issue or matter therein, by judgment, order, settlement or conviction, or upon a plea of nolo contendere or its equivalent, will not (except as otherwise expressly provided in this Agreement) of itself adversely affect the right of Indemnitee to indemnification or create a presumption that Indemnitee did not act in good faith and in a manner which Indemnitee reasonably believed to be in or not opposed to the best interests of the Company or, with respect to any criminal Proceeding, that Indemnitee had reasonable cause to believe that Indemnitee’s conduct was unlawful.

 

(d) For purposes of any determination of good faith, Indemnitee will be deemed to have acted in good faith if Indemnitee acted based on the records or books of account of the Company, its subsidiaries, or an Enterprise, including financial statements, or on information supplied to Indemnitee by the directors or officers of the Company, its subsidiaries, or an Enterprise in the course of their duties, or on the advice of legal counsel for the Company, its subsidiaries, or an Enterprise or on information or records given or reports made to the Company or an Enterprise by an independent certified public accountant or by an appraiser, financial advisor or other expert selected with reasonable care by or on behalf of the Company, its subsidiaries, or an Enterprise. Further, Indemnitee will be deemed to have acted in a manner “not opposed to the best interests of the Company,” as referred to in this Agreement if Indemnitee acted in good faith and in a manner Indemnitee reasonably believed to be in the best interests of the participants and beneficiaries of an employee benefit plan. Whether or not the foregoing provisions of this Section 13(d) are satisfied, it shall in any event be presumed that Indemnitee has at all times acted in good faith and in a manner Indemnitee reasonably believed to be in or not opposed to the best interests of the Company. Anyone seeking to overcome this presumption shall have the burden of proof and the burden of persuasion. The provisions of this Section 13(d) is not exclusive and does not limit in any way the other circumstances in which the Indemnitee may be deemed to have met the applicable standard of conduct set forth in this Agreement.

 

(e) The knowledge and/or actions, or failure to act, of any director, officer, trustee, partner, managing member, fiduciary, agent or employee of the Enterprise may not be imputed to Indemnitee for purposes of determining Indemnitee’s right to indemnification under this Agreement.

 

Section 14. Remedies of Indemnitee.

 

(a) Indemnitee may commence litigation against the Company in the Court of Chancery of the State of Delaware to obtain indemnification or advancement of Expenses provided by this Agreement in the event that (i) a determination is made pursuant to Section 12 of this Agreement that Indemnitee is not entitled to indemnification under this Agreement, (ii) the Company does not timely advance Expenses pursuant to Section 10 of this Agreement, (iii) the determination of entitlement to indemnification is not made pursuant to Section 12 of this Agreement within the Determination Period, (iv) the Company does not hold harmless and indemnify Indemnitee pursuant to Section 5 or 6 or the second to last sentence of Section 12(d) of this Agreement within ten (10) days after receipt by the Company of a written request therefor, or (v) the Company does not hold harmless and indemnify Indemnitee pursuant to Section 3, 4, 7, or 8 of this Agreement within ten (10) days after a determination has been made that Indemnitee is entitled to indemnification, or (vi) in the event that the Company or any other person takes or threatens to take any action to declare this Agreement void or unenforceable, or institutes any litigation or other action or Proceeding designed to deny, or to recover from, the Indemnitee the benefits provided or intended to be provided to the Indemnitee hereunder.

 

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(b) If a determination is made pursuant to Section 12 of this Agreement that Indemnitee is not entitled to indemnification, any judicial proceeding or arbitration commenced pursuant to this Section 14 will be conducted in all respects as a de novo trial, or arbitration, on the merits and Indemnitee may not be prejudiced by reason of that adverse determination. In any judicial proceeding or arbitration commenced pursuant to this Section 14 the Company will have the burden of proving Indemnitee is not entitled to indemnification or advancement of Expenses, as the case may be, and will not introduce evidence of the determination made pursuant to Section 12 of this Agreement.

 

(c) If a determination is made pursuant to Section 12 of this Agreement that Indemnitee is entitled to indemnification, the Company will be bound by such determination in any judicial proceeding commenced pursuant to this Section 14, absent (i) a misstatement by Indemnitee of a material fact, or an omission of a material fact necessary to make Indemnitee’s statement not materially misleading, in connection with the request for indemnification, or (ii) a prohibition of such indemnification under applicable law.

 

(d) The Company is, to the fullest extent not prohibited by law, precluded from asserting in any judicial proceeding commenced pursuant to this Section 14 that the procedures and presumptions of this Agreement are not valid, binding and enforceable and will stipulate in any such court that the Company is bound by all the provisions of this Agreement.

 

(e) It is the intent of the Company that, to the fullest extent permitted by law, the Indemnitee not be required to incur legal fees or other Expenses associated with the interpretation, enforcement or defense of Indemnitee’s rights under this Agreement by litigation or otherwise because the cost and expense thereof would substantially detract from the benefits intended to be extended to the Indemnitee hereunder. The Company, to the fullest extent permitted by law, will (within thirty (30) days after receipt by the Company of a written request therefor) advance to Indemnitee such Expenses which are incurred by Indemnitee in connection with any action concerning this Agreement, Indemnitee’s right to indemnification or advancement of Expenses from the Company, or concerning any directors’ and officers’ liability insurance policies maintained by the Company, and will indemnify Indemnitee against any and all such Expenses unless the court determines that each of the Indemnitee’s claims in such action were made in bad faith or were frivolous or are prohibited by law.

 

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Section 15. Non-exclusivity; Survival of Rights; Insurance; Subrogation.

 

(a) The indemnification and advancement of Expenses provided by this Agreement are not exclusive of any other rights to which Indemnitee may at any time be entitled under applicable law, the Certificate of Incorporation, the Bylaws, any agreement, a vote of stockholders or a resolution of directors, or otherwise. The indemnification and advancement of Expenses provided by this Agreement may not be limited or restricted by any amendment, alteration or repeal of the Certificate of Incorporation, the Bylaws or this Agreement in any way with respect to any action taken or omitted by Indemnitee in Indemnitee’s Corporate Status occurring prior to any such amendment, alteration or repeal of this Agreement. To the extent that a change in Delaware law, whether by statute or judicial decision, permits greater indemnification or advancement of Expenses than would be afforded currently under the Bylaws, Certificate of Incorporation, or this Agreement, it is the intent of the parties hereto that Indemnitee enjoy by this Agreement the greater benefits so afforded by such change. No right or remedy herein conferred is intended to be exclusive of any other right or remedy, and every other right and remedy is cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, will not prevent the concurrent assertion or employment of any other right or remedy.

 

(b) The Company hereby acknowledges that Indemnitee may have certain rights to indemnification, advancement of Expenses and/or insurance provided by one or more other Persons with whom or which Indemnitee may be associated (including, without limitation, any Designated Person). The relationship between the Company and such other Persons, other than an Enterprise, with respect to the Indemnitee’s rights to indemnification, advancement of Expenses, and insurance is described by this subsection, subject to the provisions of subsection (d) of this Section 16 with respect to a Proceeding concerning Indemnitee’s Corporate Status with an Enterprise.

 

i. The Company hereby acknowledges and agrees:

 

1) the Company is the indemnitor of first resort with respect to any request for indemnification or advancement of Expenses made pursuant to this Agreement concerning any Proceeding arising from or related to Indemnitee’s Corporate Status with the Company;

 

2) the Company is primarily liable for all indemnification and indemnification or advancement of Expenses obligations for any Proceeding arising from or related to Indemnitee’s Corporate Status, whether created by law, organizational or constituent documents, contract (including this Agreement) or otherwise;

 

3) any obligation of any other Persons with whom or which Indemnitee may be associated (including, without limitation, any Designated Person) to hold harmless and indemnify Indemnitee and/or advance Expenses to Indemnitee in respect of any proceeding are secondary to the obligations of the Company’s obligations;

 

4) the Company will hold harmless and indemnify Indemnitee and advance Expenses to Indemnitee hereunder to the fullest extent provided herein without regard to any rights Indemnitee may have against any other Person with whom or which Indemnitee may be associated (including, any Designated Person) or insurer of any such Person; and

 

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ii. the Company irrevocably waives, relinquishes and releases (A) any other Person with whom or which Indemnitee may be associated (including, without limitation, any Designated Person) from any claim of contribution, subrogation, reimbursement, exoneration or indemnification, or any other recovery of any kind in respect of amounts paid by the Company to Indemnitee pursuant to this Agreement and (B) any right to participate in any claim or remedy of Indemnitee against any Designated Person (or former Designated Person), whether or not such claim, remedy or right arises in equity or under contract, statute or common law, including, without limitation, the right to take or receive from any Person (including, without limitation, any Designated Person), directly or indirectly, in cash or other property or by set-off or in any other manner, payment or security on account of such claim, remedy or right.

 

iii. In the event any other Person with whom or which Indemnitee may be associated (including, without limitation, any Designated Person) or their insurers advances or extinguishes any liability or loss for Indemnitee, the payor has a right of subrogation against the Company or its insurers for all amounts so paid which would otherwise be payable by the Company or its insurers under this Agreement. In no event will payment by any other Person with whom or which Indemnitee may be associated (including, without limitation, any Designated Person) or their insurers affect the obligations of the Company hereunder or shift primary liability for the Company’s obligation to hold harmless and indemnify or advance of Expenses to any other Person with whom or which Indemnitee may be associated (including, without limitation, any Designated Person).

 

iv. Any indemnification or advancement of Expenses provided by any other Person with whom or which Indemnitee may be associated (including, without limitation, any Designated Person) is specifically in excess over the Company’s obligation to hold harmless and indemnify and advance Expenses or any valid and collectible insurance (including but not limited to any malpractice insurance or professional errors and omissions insurance) provided by the Company.

 

(c) To the extent that the Company maintains an insurance policy or policies providing liability insurance for directors, officers, employees, or agents of the Company, the Company will obtain a policy or policies covering Indemnitee to the maximum extent of the coverage available for any such director, officer, employee or agent under such policy or policies, including coverage in the event the Company does not or cannot, for any reason, indemnify or advance Expenses to Indemnitee as required by this Agreement. If, at the time of the receipt of a notice of a claim pursuant to this Agreement, the Company has director and officer liability insurance in effect, the Company will give prompt notice of such claim or of the commencement of a Proceeding, as the case may be, to the insurers in accordance with the procedures set forth in the respective policies. The Company will thereafter take all necessary or desirable action to cause such insurers to pay, on behalf of the Indemnitee, all amounts payable as a result of such Proceeding in accordance with the terms of such policies. Indemnitee agrees to make reasonable efforts to assist the Company’s efforts to cause the insurers to pay such amounts and will comply with the terms of such policies, including selection of approved panel counsel, if required.

 

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(d) The Company’s obligation to indemnify or advance Expenses hereunder to Indemnitee for any Proceeding concerning Indemnitee’s Corporate Status with an Enterprise will be reduced by any amount Indemnitee has actually received as indemnification or advancement of Expenses from such Enterprise. The Company and Indemnitee intend that any such Enterprise (and its insurers) be the indemnitor of first resort with respect to indemnification and advancement of Expenses for any Proceeding related to or arising from Indemnitee’s Corporate Status with such Enterprise. The Company’s obligation to indemnify and advance Expenses to Indemnitee is secondary to the obligations the Enterprise or its insurers owe to Indemnitee. Indemnitee agrees to take all reasonably necessary and desirable action to obtain from an Enterprise indemnification and advancement of Expenses for any Proceeding related to or arising from Indemnitee’s Corporate Status with such Enterprise.

 

(e) In the event of any payment made by the Company under this Agreement, the Company will be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee from any Enterprise or insurance carrier. Indemnitee will execute all papers required and take all action necessary to secure such rights, including execution of such documents as are necessary to enable the Company to bring suit to enforce such rights.

 

Section 16. Duration of Agreement. This Agreement and the obligations of the Company hereunder shall continue during the period that Indemnitee has Corporate Status and shall continue thereafter so long as Indemnitee shall be subject to any possible Proceeding (including any rights of appeal thereto and any Proceeding commenced by Indemnitee pursuant to Section 14 of this Agreement) by reason of Indemnitee’s Corporate Status, whether or not Indemnitee is acting in any such capacity at the time any liability or expense is incurred for which indemnification or advancement can be provided under this Agreement. The indemnification and advancement of Expenses rights provided by or granted pursuant to this Agreement are binding upon and be enforceable by the parties hereto and their respective successors and assigns (including any direct or indirect successor by purchase, merger, consolidation or otherwise to all or substantially all of the business or assets of the Company), continue as to an Indemnitee who has ceased to be a director, officer, employee or Agent of the Company or of any other Enterprise, and inure to the benefit of Indemnitee and Indemnitee’s spouse, assigns, heirs, devisees, executors and administrators and other legal representatives. The Company shall require and shall cause any successor (whether direct or indirect by purchase, merger, consolidation or otherwise) of all or substantially all of the business or assets of the Company to, by written agreement, expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform if no such succession had taken place.

 

Section 17. Severability. If any provision or provisions of this Agreement is held to be invalid, illegal or unenforceable for any reason whatsoever: (a) the validity, legality and enforceability of the remaining provisions of this Agreement (including without limitation, each portion of any Section of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that is not itself invalid, illegal or unenforceable) will not in any way be affected or impaired thereby and remain enforceable to the fullest extent permitted by law; (b) such provision or provisions will be deemed reformed to the extent necessary to conform to applicable law and to give the maximum effect to the intent of the parties hereto; and (c) to the fullest extent possible, the provisions of this Agreement (including, without limitation, each portion of any Section of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that is not itself invalid, illegal or unenforceable) will be construed so as to give effect to the intent manifested thereby.

 

-15-
 

 

Section 18. Interpretation. Any ambiguity in the terms of this Agreement will be resolved in favor of Indemnitee and in a manner to provide the maximum indemnification and advancement of Expenses permitted by law. The Company and Indemnitee intend that this Agreement provide to the fullest extent permitted by law for indemnification and advancement in excess of that expressly provided, without limitation, by the Certificate of Incorporation, the Bylaws, vote of the Company stockholders or disinterested directors, or applicable law.

 

Section 19. Enforcement.

 

(a) The Company expressly confirms and agrees that it has entered into this Agreement and assumed the obligations imposed on it hereby in order to induce Indemnitee to serve as a director or officer of the Company, and the Company acknowledges that Indemnitee is relying upon this Agreement in serving or continuing to serve as a director or officer of the Company.

 

(b) This Agreement constitutes the entire agreement between the parties hereto with respect to the subject matter hereof and supersedes all prior agreements and understandings, oral, written and implied, between the parties hereto with respect to the subject matter hereof; provided, however, that this Agreement is a supplement to and in furtherance of the Certificate of Incorporation, the Bylaws and applicable law, and is not a substitute therefor, nor to diminish or abrogate any rights of Indemnitee thereunder.

 

Section 20. Modification and Waiver. No supplement, modification or amendment of this Agreement is binding unless executed in writing by the parties hereto. No waiver of any of the provisions of this Agreement will be deemed or constitutes a waiver of any other provisions of this Agreement nor will any waiver constitute a continuing waiver.

 

Section 21. Notice by Indemnitee. Indemnitee agrees promptly to notify the Company in writing upon being served with any summons, citation, subpoena, complaint, indictment, information or other document relating to any Proceeding or matter which may be subject to indemnification or advancement of Expenses covered hereunder. The failure of Indemnitee to so notify the Company does not relieve the Company of any obligation which it may have to the Indemnitee under this Agreement or otherwise.

 

Section 22. Notices. All notices, requests, demands and other communications under this Agreement will be in writing and will be deemed to have been duly given if (a) delivered by hand to the other party, (b) sent by reputable overnight courier to the other party or (c) sent by facsimile transmission or electronic mail, with receipt of oral confirmation that such communication has been received:

 

(a) If to Indemnitee, at the address indicated on the signature page of this Agreement, or such other address as Indemnitee provides to the Company.

 

(b) If to the Company to:

 

AST SpaceMobile, Inc.

Midland International Air and Space Port

2901 Enterprise Lane

Midland, TX 79706

Attention: Brian Heller

Email: [●]

 

or to any other address as may have been furnished to Indemnitee by the Company.

 

-16-
 

 

Section 23. Contribution. To the fullest extent permissible under applicable law, if the indemnification provided for in this Agreement is unavailable to Indemnitee for any reason whatsoever, the Company, in lieu of indemnifying Indemnitee, will contribute to the amount incurred by Indemnitee, whether for judgments, fines, penalties, excise taxes, amounts paid or to be paid in settlement and/or for Expenses, in connection with any claim relating to an indemnifiable event under this Agreement, in such proportion as is deemed fair and reasonable in light of all of the circumstances of such Proceeding in order to reflect (i) the relative benefits received by the Company and Indemnitee as a result of the event(s) and/or transaction(s) giving cause to such Proceeding; and/or (ii) the relative fault of the Company (and its directors, officers, employees and agents) and Indemnitee in connection with such event(s) and/or transaction(s).

 

Section 24. Applicable Law and Consent to Jurisdiction. This Agreement and the legal relations among the parties are governed by, and construed and enforced in accordance with, the laws of the State of Delaware, without regard to its conflict of laws rules. Except with respect to any arbitration commenced by Indemnitee pursuant to Section 14(a) of this Agreement, the Company and Indemnitee hereby irrevocably and unconditionally (i) agree that any action or Proceeding arising out of or in connection with this Agreement may be brought only in the Court of Chancery of the State of Delaware and not in any other state or federal court in the United States of America or any court in any other country, (ii) consent to submit to the exclusive jurisdiction of the Delaware Court for purposes of any action or Proceeding arising out of or in connection with this Agreement, (iii) waive any objection to the laying of venue of any such action or Proceeding in the Court of Chancery of the State of Delaware, and (iv) waive, and agree not to plead or to make, any claim that any such action or Proceeding brought in the Court of Chancery of the State of Delaware has been brought in an improper or inconvenient forum.

 

Section 25. Identical Counterparts. This Agreement may be executed in one or more counterparts, each of which will for all purposes be deemed to be an original but all of which together constitutes one and the same Agreement. Only one such counterpart signed by the party against whom enforceability is sought needs to be produced to evidence the existence of this Agreement.

 

Section 26. Headings. The headings of this Agreement are inserted for convenience only and do not constitute part of this Agreement or affect the construction thereof.

 

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IN WITNESS WHEREOF, the parties have caused this Agreement to be signed as of the day and year first above written.

 

AST SPACEMOBILE, INC.   INDEMNITEE
                           
By:        
Name:     Name:  
Office:     Address:  
         
         

 

[Signature Page to Indemnification and Advancement Agreement]

 

 

 

Exhibit 10.11

 

AST SPACEMOBILE, Inc.

 

NON-EMPLOYEE DIRECTOR COMPENSATION PROGRAM

 

Eligible Directors (as defined below) on the board of directors (the “Board”) of AST SpaceMobile, Inc. (the “Company”) shall be eligible to receive cash and equity compensation as set forth in this Non-Employee Director Compensation Program (this “Program”). The cash and equity compensation described in this Program shall be paid or be made, as applicable, automatically as set forth herein and without further action of the Board, to each member of the Board who is not (a) an employee of the Company or any of its parents, affiliates or subsidiaries or (b) designated by or affiliated with Invesat LLC, Vodafone Ventures Limited, ATC TRS II LLC and Rakuten Mobile Singapore PTE, or any of their affiliates or successor’s in interest (each, an “Eligible Director”), who may be eligible to receive such cash or equity compensation, unless such Eligible Director declines the receipt of such cash or equity compensation by written notice to the Company.

 

This Program shall become effective immediately prior to the Business Combination to be effected by the Company (the “Effective Date”), subject to adoption of the Program by the Board, and shall remain in effect until it is revised or rescinded by further action of the Board. This Program may be amended, modified or terminated by the Board at any time in its sole discretion. No Eligible Director shall have any rights hereunder, except with respect to equity awards granted pursuant to Section 2 of this Program. “Business Combination” means the transaction pursuant to which, among other transactions, (i) New Providence Acquisition Corp. (predecessor to the Company) will acquire a number of membership units in and become the managing member of AST & Science LLC, (ii) the Company will issue to the existing equityholders of AST & Science LLC capital stock in the Company and (iii) the Company will become a publicly-traded holding company of the business of AST & Science LLC, pursuant to that certain transaction agreement, dated as of December 15, 2020, by and among the Company, AST & Science LLC, New Providence Management, LLC, the Existing Equityholders set forth on Annex A thereto and the Equityholder Representative (as defined therein).

 

1. Cash Compensation.

 

a. Annual Retainers. Each Eligible Director shall be eligible to receive an annual cash retainer of $50,000 for service on the Board.

 

b. Additional Annual Retainers. An Eligible Director shall be eligible to receive the following additional annual retainers, as applicable:

 

(i) Audit Committee. An Eligible Director serving as Chairperson of the Audit Committee shall be eligible to receive an additional annual retainer of $20,000 for such service. An Eligible Director serving as a member of the Audit Committee (other than the Chairperson) shall be eligible to receive an additional annual retainer of $10,000 for such service.

 

(ii) Compensation Committee. An Eligible Director serving as Chairperson of the Compensation Committee shall be eligible to receive an additional annual retainer of $15,000 for such service. An Eligible Director serving as a member of the Compensation Committee (other than the Chairperson) shall be eligible to receive an additional annual retainer of $7,500 for such service.

 

(iii) Nominating and Corporate Governance Committee. An Eligible Director serving as Chairperson of the Nominating and Corporate Governance Committee shall be eligible to receive an additional annual retainer of $10,000 for such service. An Eligible Director serving as a member of the Nominating and Corporate Governance Committee (other than the Chairperson) shall be eligible to receive an additional annual retainer of $5,000 for such service.

 

  1  
 

 

c. Payment of Retainers. The annual cash retainers described in Sections 1(a) and 1(b) shall be earned on a quarterly basis based on a calendar quarter and shall be paid by the Company in arrears not later than 30 days following the end of each calendar quarter. In the event an Eligible Director does not serve as a director, or in the applicable positions described in Section 1(b), for an entire calendar quarter, the retainer paid to such Eligible Director shall be prorated for the portion of such calendar quarter actually served as a director, or in such position, as applicable.

 

2. Equity Compensation.

 

a. General. Eligible Directors shall be granted the equity awards described below. The awards described below shall be granted under and shall be subject to the terms and provisions of the most recently adopted equity incentive plan then-maintained by the Company (such plan pursuant to which an any such equity award is granted, as may be amended from time to time, the “Equity Plan”) and may be granted subject to the execution and delivery of award agreements, including attached exhibits, in substantially the forms approved by the Board prior to or in connection with such grants. All applicable terms of the Equity Plan apply to this Program as if fully set forth herein, and all grants of equity awards hereby are subject in all respects to the terms of the Equity Plan.

 

b. Initial Awards. Each Eligible Director who is initially elected or appointed to serve on the Board after the Effective Date shall be automatically granted a restricted stock unit award under the Equity Plan with a value of $150,000 (the “Initial Equity Award”). The number of restricted stock units subject to an Initial Equity Award will be determined by dividing the value of the Initial Equity Award by the closing price of the Company’s common stock on the grant date. The Initial Equity Award shall be automatically granted on the date on which such Eligible Director is appointed or elected to serve on the Board, and shall vest in full on the earlier to occur of (i) the one-year anniversary of the applicable grant date and (ii) the date of the next annual meeting of the Company’s stockholders (the “Annual Meeting”) following the grant date, subject to such Eligible Director’s continued service through the applicable vesting date (for clarity, if such vesting occurs at the next Annual Meeting following grant, such vesting shall occur without regard to the Eligible Director’s reelection at such Annual Meeting or continued service thereafter).

 

c. Annual Awards. An Eligible Director who is serving on the Board as of the date of the Annual Meeting each calendar year, beginning with the calendar year after the year in which the Effective Date occurs, shall be automatically granted on such Annual Meeting date, a restricted stock unit award under the Equity Plan with a value of $150,000 (an “Annual Award” and together with the Initial Equity Award, the “Director Equity Awards”). The number of restricted stock units subject to an Annual Award will be determined by dividing the value of the Annual Award by the closing price of the Company’s common stock on the grant date. Each Annual Award shall vest in full on the earlier to occur of (i) the one-year anniversary of the applicable grant date and (ii) the date of the next Annual Meeting following the grant date, subject to such Eligible Director’s continued service through the applicable vesting date (for clarity, if such vesting occurs at the next Annual Meeting following grant, such vesting shall occur without regard to the Eligible Director’s reelection at such Annual Meeting or continued service thereafter).

 

d. Accelerated Vesting Events. Notwithstanding the foregoing, an Eligible Director’s Director Equity Award(s) shall vest in full immediately prior to the occurrence of a “change in control” (as defined in the Equity Plan) to the extent outstanding at such time.

 

e. Deferral of Cash Compensation. Each Eligible Director shall be eligible to participate in any deferred compensation plan(s) adopted by the Company for the benefit of Eligible Directors (any such plan(s), as may be amended from time to time, the “DCP”) and to defer cash or other compensation, in each case to the extent permitted by the DCP, in accordance with all terms and conditions of the applicable DCP, if applicable. Participation in the DCP is subject to approval of the DCP by the Board and separate documentation, agreements and elections that will be provided by the Company on request, and may be limited based on applicable tax rules or otherwise.

 

  2  

 

 

Exhibit 10.12

 

 

July 18th, 2018

 

Abel Avellan

 

Dear Abel:

 

You have been performing the duties of your position since June of 2017, and we are pleased to formalize in writing your position as Chairman & Chief Executive Officer for AST & Science, LLC (“AST” or “the Company”).

 

Your compensation package will consist of the following:

 

Cash Compensation – your annual gross salary will be $23,660 and you will begin to receive this cash compensation beginning on July 27th, 2018.

 

Other benefits – you will be eligible to participate in AST health and benefits plans.

 

We are very excited that you arguing to continue helping us execute the vision for AST's future prospects.

 

  AST & Science LLC
     
    /s/ Tom Severson
  By: Tom Severson
  Its: Chief Financial Officer & Operating Officer

 

The forgoing terms and conditions are hereby accepted as of July 18, 2018

 

Signed: /s/ Abel Avellan  
  Abel Avellan  

 

     

 

 

Exhibit 10.13

 

 

March 30, 2018

 

Thomas E. Severson Jr.

3301 NE 1st Avenue, Unit #2706

Miami, Florida 33137

 

Dear Tom,

 

You have been performing the duties of your position since October 1, 2017 and I am pleased to formalize in writing your position as Chief Operating Officer and CFO for AST&Science, LLC (“AST” or “the Company”). Upon acceptance of this offer, you will continue to report directly to me and work from our offices in Miami, Florida.

 

Your compensation package will consist of the following:

 

Cash Compensation – your annual gross salary will be $120,000 and you will begin to receive this cash compensation beginning on April 1, 2018.
Management Stock Options – you will participate in the future AST employee stock option plan. The number, and terms of such options will be at my sole discretion and the grant will be made either prior to or simultaneously with the closing of the Company's Series B round of funding.
Other benefits - Upon successful completion of the Series B round of funding, you will be eligible to participate in AST's health and benefit plans.

 

I am very excited that you are going to help me execute on our shared vision for AST's future prospects.

 

Very truly yours,

  

/s/ Abel Avellan  
Abel Avellan  
Chairman and CEO  
AST & Science LLC  

 

Agreed to and accepted by: /s/ Thomas E. Severson, Jr.   Date: March 30, 2018

 

 

 

 

 

AST&Science Llc

1111 Brickell Avenue, Suite 1100

Miami, Florida, 33131

USA

     

 

 

 

 

 

Exhibit 10.14

 

 

December 17, 2020

Rulfo F. Hernandez, CPA

7100 NW 109 Court

Doral, FL, 33178

 

Dear Mr. Hernandez:

 

On behalf of AST & Science LLC, (the “Company” or “AST”), I am pleased to offer you the position of Chief Accounting Officer. The terms of your employment relationship with the Company are as set forth below.

 

1. Position. Your title will be Chief Accounting Officer and you will be reporting to Thomas Severson, AST CFO/COO (or his successor). This is a regular full-time, exempt position.
     
2. Start Date. Your start date will be no later 31 January 2021, the exact date to be determined by mutual agreement prior to that date.
     
3. Location. Your primary place of employment shall be at your home office in Miami, FL, until such time that the Company opens its Miami corporate group headquarters. Your primary place of employment will be the Miami corporate group headquarters upon the opening of those offices. From time to time, you should anticipate/expect travel, including, but not limited to Company facilities nationwide and worldwide as part of your duties, taking into account all COVID-19 travel restrictions and COVID-19 travel precautions.
     
4. Base Salary. You will be paid a semi-monthly salary in the gross amount of US$10,416.66, which is equivalent to US$250,000.00 gross annual salary. The base salary is subject to reductions to reflect applicable withholdings, payroll taxes and other deductions required by law; and is payable in accordance with the Company’s standard payroll schedule.
     
5. Employee Benefits. As a regular employee of the Company, you will be eligible to participate in Company-sponsored benefits, as in effect from time to time. The Company currently offers a comprehensive employee benefits program, including, but not limited to:

 

Private health, dental and vision insurance plan. As with Company employees generally, you will be eligible for the private health, dental and vision insurance plans we offer, as per Company policy. As a reminder, the cost of these coverage is shared between the employee and the employer. Specific terms and conditions may change upon coverage provider decision or Company policies. While we expect to continue to maintain competitive benefit plan offerings, please understand that nothing contained in this letter or otherwise shall create or be deemed to create any obligation on the part of the Company to adopt or maintain any health, dental, vision, 401(k)/retirement, or other benefit plan or program at any time or to create any limitation on the Company’s ability to modify or terminate any such plan or program
     
Equity Compensation. Subject to the approval of the Board of Directors of the pending AST conversion (“Transaction”) to a US public company (“PubCo”) on the Nasdaq exchange and your commencing and continuing employment through the applicable grant date, you will be granted an equity award (the “Equity Award”) covering a number of shares of Pubco common stock equal to fourteen thousand (14,000) (i.e., the agreed-upon number of common units of AST that would be subject to an equity award grant made today), multiplied by the conversion ratio applied in converting existing AST common units into post-Transaction AST common units (which in turn will bear a 1:1 ratio to PubCo common stock), as determined by the Company in connection with the Transaction. The terms and conditions of the Equity Award, including the type of award, vesting schedule and forfeiture provisions, will be set forth in an award agreement prescribed by PubCo (the “Equity Award Agreement”). The Equity Award will be governed in all respects by the terms of and conditions of the applicable equity incentive plan and the Equity Award Agreement.
     
Retirement Plan. As with Company employees generally, you will be eligible to participate in the Company’s 401K retirement plan, currently administered by Voya Financial.

 

     
     

 

 

 

6. Standard Employee Agreements. Like all Company employees in like positions, as a condition of your employment, you will be expected to sign and comply with a Confidentiality, Assignment of Inventions and Non-Competition and Non-Solicitation Agreement substantially in the form attached hereto as Exhibit A (the “Non-Competition Agreement”). Your employment will be contingent upon and not be deemed effective until you have executed and returned the Non-Competition Agreement to the Company. In addition, you will abide by the Company’s strict policy that prohibits any new employee from using or bringing with him or her from any previous employer any confidential information, trade secrets, or proprietary materials or processes of such former employer.
     
7. Outside Activities. While you render services to the Company, you agree that you will not engage in any other employment, consulting or other business activity without the prior written consent of the Chief Executive Officer.
     
8. Assignment and Successors. This agreement shall be binding upon and inure to the benefit of the Company, you, and the Company’s and your respective successors, assigns, personnel and legal representatives, executors, administrators, heirs, distributees, devisees, and legatees, as applicable. None of your rights or obligations may be assigned or transferred by you, other than your rights to payments hereunder, which may be transferred only by will or by operation of law.
     
9. Employment Eligibility. In compliance with the Immigration Reform and Control Act of 1986, this offer of employment is conditional upon you presenting documents verifying your identity and legal authorization to work in the United States. We ask that you be prepared to present the proper documents as required by the Department of Homeland Security for the Employment Eligibility Verification I-9 form that you will be asked to complete within the first three days of employment.
     
10. Company Policies. As an employee of the Company and as a condition of your continued employment, you will be expected to comply with all Company policies and procedures as adopted from time-to- time, including but not limited to such policies as may be adopted in the Company’s employee handbook and policies relating to the Company’s compliance with applicable laws, rules, and regulations.
     
11. Employment Relationship. Notwithstanding the above provisions, this letter is not to be construed as a contract of employment for any fixed time period; nor modifies or waives the “at will” status of an employee. Either you or the company may terminate the employment relationship, with or without advance notice, with or without just cause, at any time without any obligation for services to be performed or compensation to be paid for any period beyond the effective date of termination. Any contrary representations that may have been made to you are superseded by this letter. Although your job duties, title, compensation and benefits, as well as the Company’s personnel policies and procedures, may change from time to time, the “at will” nature of your employment may only be changed in an express written agreement signed by you and a duly authorized officer of the Company (other than you).

 

     
     

 

 

 

12. Entire Agreement. This agreement, together with the Non-Competition Agreement described in Section 6, constitutes the entire agreement between the parties and supersedes all other agreements or understandings, whether written or oral, regarding your service to the Company.
     
13. Certain Exclusions. Notwithstanding the foregoing or anything herein or in the Non-Competition Agreement to the contrary, you understand that (i) nothing contained herein or in the Non-Competition Agreement will prohibit you from filing a charge with, reporting possible violations of federal law or regulation to, participating in any investigation by, or cooperating with any governmental agency or entity or making other disclosures that are protected under the whistleblower provisions of applicable law or regulation; (ii) nothing herein is intended to or will prevent you from communicating directly with, cooperating with, or providing information (including trade secrets) in confidence to, any federal, state or local government regulator (including, but not limited to, the U.S. Securities and Exchange Commission, the U.S. Commodity Futures Trading Commission, or the U.S. Department of Justice) for the purpose of reporting or investigating a suspected violation of law, or from providing such information to your attorney or in a sealed complaint or other document filed in a lawsuit or other governmental proceeding; and (iii) pursuant to 18 USC Section 1833(b), you will not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret that is made: (A) in confidence to a federal, state, or local government official, either directly or indirectly, or to an attorney, and solely for the purpose of reporting or investigating a suspected violation of law; or (B) in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal.
     
14. Governing Law. This agreement shall be governed, construed, interpreted, and enforced in accordance with its express terms, and otherwise in accordance with the substantive laws of the State of Florida, without giving effect to any principles of conflicts of law, whether of the State of Florida or any other jurisdiction, and where applicable, the laws of the United States, that would result in the application of the laws of any other jurisdiction.

 

You may indicate your agreement with these terms and AST’s pre-employment requirements, by signing and dating both the enclosed original of this letter and the enclosed Non-Competition Agreement, and returning them to the undersigned. By signing this letter, you confirm to the Company that you have no contractual commitments or other legal obligations that would prohibit you from performing your duties for the Company.

 

We look forward to a long and happy association with you and our Company, and we are confident that you will make a significant contribution to our business!

  

  AST & Science LLC
   
    /s/ Thomas Severson
  By: Thomas Severson, CFO & COO

 

The foregoing terms and conditions are hereby accepted as of December 28, 2020.

 

 Signed:

/s/ Rulfo F. Hernandez   
  Rulfo F. Hernandez, CPA  

 

     

 

 

Exhibit 10.15

 

AMENDED AND RESTATED

SERIES B PREFERRED SHARES PURCHASE AGREEMENT

 

[***] Certain identified information has been excluded from this exhibit because it both (i) is not material and (ii) would be competitively harmful if publicly disclosed.

 

     
     

 

TABLE OF CONTENTS

 

    Page
1. Purchase and Sale of Series B Preferred Shares 1
  1.1 Sale and Issuance of Series B Preferred Shares 1
  1.2 Closing; Delivery 1
  1.3 Sale of Additional Series B Preferred Shares 2
  1.4 Use of Proceeds 2
  1.5 Defined Terms Used in this Agreement 2
       
2. Representations and Warranties of the Company 5
  2.1 Organization, Good Standing, Limited Liability Company Power and Qualification 5
  2.2 Capitalization 5
  2.3 Subsidiaries 6
  2.4 Authorization 7
  2.5 Valid Issuance of Shares 7
  2.6 Governmental Consents and Filings 7
  2.7 Litigation 7
  2.8 Intellectual Property 8
  2.9 Compliance with Other Instruments 9
  2.10 Agreements; Actions 9
  2.11 Certain Transactions 10
  2.12 Rights of Registration and Voting Rights 10
  2.13 Property 10
  2.14 Financial Statements 11
  2.15 Changes 11
  2.16 Employee Matters 12
  2.17 Tax Returns and Payments 13
  2.18 Insurance 14
  2.19 Employee and Consulting Agreements 14
  2.20 Compliance with Law; Permits 14
  2.21 Limited Liability Company Documents 14
  2.22 Environmental and Safety Laws 14
  2.23 Real Property Holding Corporation 15
  2.24 Disclosure 15
  2.25 Foreign Corrupt Practices Act 15
  2.26 Data Privacy 16
  2.27 Export Control Laws 16
  2.28 CFIUS 16
       
3. Representations and Warranties of the Purchasers 17
  3.1 Authorization 17
  3.2 Purchase Entirely for Own Account 17
  3.3 Disclosure of Information 17
  3.4 Restricted Securities 17
  3.5 No Public Market 17
  3.6 Legends 18
  3.7 Accredited Investor 18
  3.8 Foreign Investors 18
  3.9 No General Solicitation 18
  3.10 Exculpation Among Purchasers 18
  3.11 Residence 18

 

     
     

 

TABLE OF CONTENTS

(continued)

 

4. Conditions to the Purchasers’ Obligations at Closing 18
  4.1 Representations and Warranties 18
  4.2 Performance 19
  4.3 Qualifications 19
  4.4 Opinion of Company Counsel 19
  4.5 Indemnification Agreements 19
  4.6 Board of Directors 19
  4.7 Investors’ Rights Agreement 19
  4.8 Right of First Refusal and Co-Sale Agreement 19
  4.9 Voting Agreement 19
  4.10 Restated Operating Agreement 19
  4.11 Secretary’s Certificate 19
  4.12 Proceedings and Documents 20
  4.13 Minimum Number of Shares at First Additional Closing 20
  4.14 Anti-dilution and Preemptive Rights Waiver 20
  4.15 CFIUS Approval 20
  4.16 Rakuten Commercial Agreement 20
       
5. Conditions of the Company’s Obligations at Closing 20
  5.1 Representations and Warranties 20
  5.2 Performance 20
  5.3 Qualifications 20
  5.4 Investors’ Rights Agreement 20
  5.5 Right of First Refusal and Co-Sale Agreement 20
  5.6 Voting Agreement 20
       
6. Miscellaneous 21
  6.1 Survival of Warranties 21
  6.2 Publicity 21
  6.3 Commercial Partnership 23
  6.4 Cooperation 23
  6.5 Successors and Assigns 23
  6.6 Governing Law 23
  6.7 Counterparts 24
  6.8 Titles and Subtitles 24
  6.9 Notices 24
  6.10 No Finder’s Fees 24
  6.11 Attorneys’ Fees 24
  6.12 Amendments and Waivers 24
  6.13 Severability 24
  6.14 Delays or Omissions 25
  6.15 Entire Agreement 25
  6.16 Dispute Resolution 25

 

     
     

 

TABLE OF CONTENTS

(continued)

 

Exhibit A - SCHEDULE OF PURCHASERS
   
Exhibit B - FORM OF RESTATED OPERATING AGREEMENT
   
Exhibit C - DISCLOSURE SCHEDULE
   
Exhibit D - FORM OF INVESTORS’ RIGHTS AGREEMENT
   
Exhibit E - FORM OF RIGHT OF FIRST REFUSAL AND CO-SALE AGREEMENT
   
Exhibit F - FORM OF VOTING AGREEMENT
   
Annex 1 - TERMS OF VODAFONE COMMERCIAL AGREEMENTS
   
Annex 2 - RAKUTEN COMMERCIAL AGREEMENTS AND RESTRICTED INVESTOR LIST

 

     
     

 

AMENDED AND RESTATED

SERIES B PREFERRED SHARES PURCHASE AGREEMENT

 

THIS AMENDED AND RESTATED SERIES B PREFERRED SHARES PURCHASE AGREEMENT (this “Agreement”), is made as of the 4th day of February, 2020 by and among AST & Science, LLC, a Delaware limited liability company (the “Company”), and the investors listed on Exhibit A attached to this Agreement (each a “Purchaser” and together the “Purchasers”).

 

WHEREAS, the Company and certain of the Purchasers previously purchased shares of Series B Preferred Shares of the Company (the “Series B Preferred Shares”), set forth opposite each such Purchaser’s name on Exhibit A, at a purchase price of $40.08398 per share, pursuant to that certain Series B Preferred Shares Purchase Agreement dated October 16, 2019 (the “Prior Purchase Agreement”); and

 

WHEREAS, the parties hereto now desire to amend and restate in its entirety the Prior Purchase Agreement and replace it with this Agreement, and set out the respective rights, obligations, and duties of the Purchasers and the Company as set forth herein.

 

NOW, THEREFORE, in consideration of the mutual covenants herein contained and other valuable consideration, the receipt and adequacy of which are hereby acknowledged, the undersigned persons, being (i) the Company, (ii) Purchasers that purchased Series B Preferred Shares at the Initial Closing (as defined below), and (iii) Purchasers purchasing Series B Preferred Shares at the First Additional Closing and any other Additional Closings (each as defined below), hereby agree as follows:

 

The parties hereby agree as follows:

 

1. Purchase and Sale of Series B Preferred Shares.

 

1.1 Sale and Issuance of Series B Preferred Shares.

 

(a) The Company shall adopt on the First Additional Closing (as defined below) the Fourth Amended and Restated Limited Liability Company Operating Agreement of the Company in the form of Exhibit B attached to this Agreement (the “Restated Operating Agreement”).

 

(b) Subject to the terms and conditions of this Agreement, each Purchaser agrees to purchase at the Closing and the Company agrees to sell and issue to each Purchaser at the Closing that number of shares of Series B Preferred Shares of the Company (the “Series B Preferred Shares”), set forth opposite each Purchaser’s name on Exhibit A, at a purchase price of $40.08398 per share. The shares of Series B Preferred Shares issued to the Purchasers pursuant to this Agreement (including any shares issued at the Initial Closing and the First Additional Closing and any Additional Shares, as defined below) shall be referred to in this Agreement as the “Shares.”

 

1.2 Closing; Delivery.

 

(a) The initial purchase and sale of the Shares occurred on October 16, 2019 (the “Initial Closing”).

 

(b) The second purchase and sale of the Shares shall take place remotely via the exchange of documents and signatures, at 10:00 a.m., on the third business day following the Company’s receipt of CFIUS Approval (as defined below), or at such other time and place after receiving CFIUS Approval as the Company and Rakuten Mobile Singapore PTE. LTD. (“Rakuten”) mutually agree upon, orally or in writing (which time and place are designated as the “First Additional Closing”). The term “Closing” shall apply to each such closing or any other closing under this Agreement unless otherwise specified.

 

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(c) At each Closing, the Company shall deliver to each Purchaser a certificate representing the Shares being purchased by such Purchaser at such Closing against payment of the purchase price therefor by check payable to the Company, by wire transfer to the bank account of the Company set forth on Subsection 1.2(b) of the Disclosure Schedules, by cancellation or conversion of indebtedness of the Company to Purchaser, or by any combination of such methods.

 

1.3 Sale of Additional Series B Preferred Shares. After the Initial Closing, the Company may sell, on the same terms and conditions as those contained in this Agreement, additional shares of Series B Preferred Shares (subject to appropriate adjustment in the event of any share dividend, share split, combination or similar recapitalization affecting such shares) (the “Additional Shares”), to one or more purchasers (the “Additional Purchasers”), including to Rakuten, provided that each Additional Purchaser becomes a party to the Transaction Agreements (as defined below) by executing and delivering a counterpart signature page to each of the Transaction Agreements and the Restated Operating Agreement. Rakuten covenants and agrees to purchase 1,966,704 Shares for a total of $78,833,326 at the First Additional Closing. Exhibit A to this Agreement shall be updated to reflect the number of Additional Shares purchased at each such Closing and the parties purchasing such Additional Shares. After the First Additional Closing, the Company may sell, on the same terms and conditions as those contained in this Agreement, additional shares of Series B Preferred Shares to accredited investors reasonably acceptable to Rakuten and Vodafone.

 

1.4 Use of Proceeds. In accordance with the directions of the Company’s Board of Directors, as it shall be constituted in accordance with the Voting Agreement, the Company will use the proceeds from the sale of the Shares to (i) continue the development of the Company’s satellite technology, (ii) manufacture and launch the BlueWalker 3 satellite and build out related ground infrastructure, (iii) build out the Midland, Texas facility and testing capabilities in preparation for high volume satellite manufacturing for the Company’s satellite constellation, (iv) repay that certain Founder Bridge Loan (as defined in the Disclosure Schedule), and (v) pay general business expenses and obligations of the Company.

 

1.5 Defined Terms Used in this Agreement. In addition to the terms defined above, the following terms used in this Agreement shall be construed to have the meanings set forth or referenced below.

 

(a) “Affiliate” means, with respect to any specified Person, any other Person who, directly or indirectly, controls, is controlled by, or is under common control with such Person, including, without limitation, any general partner, managing member, officer, director or trustee of such Person, or any venture capital fund or registered investment company now or hereafter existing that is controlled by one or more general partners, managing members or investment advisers of, or shares the same management company or investment adviser with, such Person.

 

(b) “CFIUS” means the Committee on Foreign Investment in the United States or any U.S. Government agency acting in its capacity as a member of CFIUS or directly involved in CFIUS’s review of the transactions contemplated by this Agreement.

 

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(c) “CFIUS Approval” means that: (i) CFIUS has issued a final written determination that the First Additional Closing does not constitute a “covered transaction,” pursuant to either 31 C.F.R. § 800.207, or a “pilot program covered investment,” pursuant to 31 C.F.R. § 801.209; (ii) CFIUS has issued a written notice to Rakuten and the Company that it has concluded a review or investigation of the First Additional Closing and has concluded all action under the DPA; (iii) CFIUS has issued a written notice to Rakuten and the Company that, pursuant to 31 C.F.R. § 801.407(a)(2), CFIUS is not able to complete action under the DPA with respect to the First Additional Closing; or (iv) CFIUS has sent a report to the President of the United States requesting the President’s decision and the President has announced a decision during the time period specified under the DPA not to take any action or suspend or prohibit the First Additional Closing.

 

(d) “CFIUS Filing” means a pilot program declaration submitted to CFIUS pursuant to 31 C.F.R. Part 801 or a joint voluntary notice submitted to CFIUS pursuant to 31 C.F.R. Part 800.

 

(e) “CFIUS Pilot Program” means the pilot program administered by CFIUS pursuant to FIRRMA and 31 C.F.R. Part 801.

 

(f) “Code” means the Internal Revenue Code of 1986, as amended.

 

(g) “Company Intellectual Property” means all Intellectual Property owned, purported to be owned, or used by the Company in the conduct of the Company’s business as now conducted and as presently proposed to be conducted.

 

(h) “Company Software” means software developed by the Company in connection with the Company’s business.

 

(i) “DPA” means section 721 of Title VII of the Defense Production Act of 1950, as amended (50 U.S.C. § 4565), and all rules and regulations promulgated thereunder, including those codified at 31 C.F.R. § 800-801 et seq.

 

(j) “FIRRMA” means the Foreign Investment Risk Review Modernization Act of 2018.

 

(k) “Incentive Shares” has the meaning ascribed to such term in the Restated Operating Agreement.

 

(l) “Indemnification Agreements” means the agreement between the Company and each director designated by Rakuten, dated as of the date of this Agreement and effective as of the First Additional Closing, in a form reasonably acceptable to Rakuten.

 

(m) “Intellectual Property” means (i) patents, provisional and non-provisional patent applications, patent disclosures and inventions (whether or not patentable and whether or not reduced to practice) and any reissue, continuation, continuation-in-part, division, revision, national stage entry, supplemental protection certificate, extension, continuation, continuation-in-part, or reexamination thereof; (ii) registered and unregistered trademarks, trademark applications, registered and unregistered service marks, service mark applications, tradenames, and other indicia of origin, together with all goodwill associated therewith; (iii) copyrights (including copyrights in software, firmware, databases, and related documentation), registered or unregistered and copyrightable works, works of authorship; (iv) domain names web addresses, websites, uniform resource locators (URLs), tools, and social media accounts; (v) trade secrets, confidential, proprietary, or non-public information (whether or not a trade secret under applicable laws), including ideas, know-how, product development techniques or plans, research and development information, algorithms, concepts, discoveries, improvements, procedures, drawings, specifications, designs, plans, proposals, technical data, financial data, business and marketing plans, pricing policies, operational methods, customer and supplier lists and related information, employee data and new personnel acquisition plans, and consultant arrangements; and (vi) similar or other intellectual property rights, subject matter of any of the foregoing, tangible embodiments of any of the foregoing, licenses in, to and under any of the foregoing, and any and all corresponding rights that, now or hereafter, may be secured throughout the world.

 

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(n) “Investors’ Rights Agreement” means the Second Amended and Restated Investors’ Rights Agreement among the Company and the Purchasers dated as of the date of this Agreement and effective as of the First Additional Closing, in the form of Exhibit D attached to this Agreement.

 

(o) “Key Employee” means any executive-level employee (including division director and vice president-level positions) as well as any employee or consultant who either alone or in concert with others develops, invents, programs or designs any material Company Intellectual Property.

 

(p) “Knowledge” including the phrase “to the Company’s knowledge” shall mean the actual knowledge after reasonable inquiry of the following officers: Abel Avellan, Tom Severson and Dr. Huiwen Yao.

 

(q) “Material Adverse Effect” means a material adverse effect on the business, assets (including intangible assets), liabilities, financial condition, property or results of operations of the Company.

 

(r) “Person” means any individual, corporation, partnership, trust, limited liability company, association or other entity.

 

(s) “Preferred Shares” means the Series B Preferred Shares and the Series A Preferred Shares.

 

(t) “Purchaser” means each of the Purchasers who is initially a party to this Agreement and any Additional Purchaser who becomes a party to this Agreement at a subsequent Closing under Subsection 1.2(b).

 

(u) “Rakuten” means Rakuten Mobile Singapore PTE. LTD.

 

(v) “Right of First Refusal and Co-Sale Agreement” means the Second Amended and Restated Right of First Refusal and Co-Sale Agreement among the Company, the Purchasers, and certain other shareholders of the Company, dated as of the date of this Agreement and effective as of the First Additional Closing, in the form of Exhibit E attached to this Agreement.

 

(w) “Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

 

(x) “Shares” means the shares of Series B Preferred Shares issued at the First Additional Closing and any Additional Shares issued at a subsequent Closing under Subsection 1.2(b).

 

(y) “Subsidiary” means, at any time, any Person of which the shares, membership interests or other equity interests representing fifty percent (50%) or more of the outstanding equity interests or fifty percent (50%) or more of the voting power are owned, directly or indirectly, by the Company or any Subsidiary of the Company.

 

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(z) “Transaction Agreements” means this Agreement, the Restated Operating Agreement, the Investors’ Rights Agreement, the Right of First Refusal and Co-Sale Agreement, and the Voting Agreement.

 

(aa) “Vodafone” means Vodafone Ventures Limited.

 

(bb) “Voting Agreement” means the Second Amended and Restated Voting Agreement among the Company, the Purchasers and certain other shareholders of the Company, dated as of the date of this Agreement and effective as of the First Additional Closing, in the form of Exhibit F attached to this Agreement.

 

2. Representations and Warranties of the Company. The Company hereby represents and warrants to each Purchaser that, except as set forth on the Disclosure Schedule attached as Exhibit C to this Agreement, which exceptions shall be deemed to be part of the representations and warranties made hereunder, the following representations are true and complete as of the date of the First Additional Closing, except as otherwise indicated. The Disclosure Schedule shall be arranged in sections corresponding to the numbered and lettered sections and subsections contained in this Section 2, and the disclosures in any section or subsection of the Disclosure Schedule shall qualify other sections and subsections in this Section 2 only to the extent it is readily apparent from a reading of the disclosure that such disclosure is applicable to such other sections and subsections.

 

For purposes of these representations and warranties (other than those in Subsections 2.2, 2.3, 2.4, 2.5, and 2.6), the term the “Company” shall include any Subsidiaries of the Company, unless otherwise noted herein.

 

2.1 Organization, Good Standing, Limited Liability Company Power and Qualification. The Company is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Delaware and has all requisite limited liability company power and authority to carry on its business as now conducted. The Company is duly qualified to transact business and is in good standing in each jurisdiction in which the failure to so qualify would have a Material Adverse Effect.

 

2.2 Capitalization.

 

(a) The share capital of the Company consists, immediately prior to the First Additional Closing, of:

 

(i) 10,000,000 authorized Common Shares (the “Common Shares”), of which 5,500,000 are issued and outstanding.

 

(ii) 684,932 authorized Series A Preferred Shares, all of which are issued and outstanding immediately prior to the First Additional Closing (the “Series A Preferred Shares”). The rights, privileges and preferences of the Series A Preferred Shares are as stated in the Restated Operating Agreement and as provided by the Delaware Limited Liability Company Act.

 

(iii) 2,765,027 authorized Series B Preferred Shares, 1,991,652 of which are issued and outstanding immediately prior to the First Additional Closing. The rights, privileges and preferences of the Series B Preferred Shares are as stated in the Restated Operating Agreement and as provided by the Delaware Limited Liability Company Act.

 

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(iv) All outstanding Common Shares and Preferred Shares and any other equity interests of the Company were duly authorized, validly issued and were issued in compliance with all applicable federal and state securities laws.

 

(b) The Company has reserved 883,562 Common Shares (which may also be issued as Incentive Shares) for issuance to officers, directors, employees and consultants of the Company pursuant to the Company’s 2019 Equity Incentive Plan duly adopted by the Board of Directors and approved by the Company’s shareholders (the “Share Plan”). 242,832 of such reserved shares remain available for issuance (of which 189,501 are targeted for issuance to designated employee positions and 53,331 are unallocated).

 

(c) Subsection 2.2(c) of the Disclosure Schedule sets forth the capitalization of the Company immediately following the First Additional Closing including the number of shares of the following: (i) issued and outstanding Common Shares, including, with respect to restricted Common Shares, vesting schedule and repurchase price; (ii) granted share options, including vesting schedule and exercise price; (iii) shares of Common Shares reserved for future award grants under the Share Plan; (iv) each series of Preferred Shares; and (v) warrants or share purchase rights, if any. Except for (A) the conversion privileges of the Shares to be issued under this Agreement, (B) the rights provided in Section 4 of the Investors’ Rights Agreement, and (C) the securities and rights described in Subsection 2.2(a)(ii) of this Agreement and Subsection 2.2(c) of the Disclosure Schedule, there are no outstanding options, warrants, rights (including conversion or preemptive rights and rights of first refusal or similar rights) or agreements, orally or in writing, to purchase or acquire from the Company any shares of Common Shares, Series A Preferred Shares, Series B Preferred Shares, or any securities convertible into or exchangeable for shares of Common Shares, Series A Preferred Shares or Series B Preferred Shares. All outstanding shares of the Company’s Common Shares and all shares of the Company’s Common Shares underlying outstanding options are subject to (i) a right of first refusal in favor of the Company upon any proposed transfer (other than transfers for estate planning purposes); and (ii) a lock-up or market standoff agreement of not less than one hundred eighty (180) days following the Company’s initial public offering pursuant to a registration statement filed with the Securities and Exchange Commission under the Securities Act.

 

(d) Except as described in Subsection 2.2(d) of the Disclosure Schedules, none of the Company’s share purchase agreements or share option documents contains a provision for acceleration of vesting (or lapse of a repurchase right) or other changes in the vesting provisions or other terms of such agreement or understanding upon the occurrence of any event or combination of events, including without limitation in the case where the Company’s Share Plan is not assumed in an acquisition. The Company has never adjusted or amended the exercise price of any share options previously awarded, whether through amendment, cancellation, replacement grant, repricing, or any other means. Except as set forth in the Restated Operating Agreement, the Company has no obligation (contingent or otherwise) to purchase or redeem any of its share capital. The Company has obtained valid waivers of any rights by other parties to purchase any of the Shares covered by this Agreement.

 

(e) All of the Preferred Shares convert to Common Shares on a 1:1 basis and there are no anti-dilution adjustments or other similar rights that may be triggered by the Transaction Agreements or any of the transactions contemplated thereby.

 

2.3 Subsidiaries. Except as set forth on Subsection 2.3(i) of the Disclosure Schedule, the Company does not own or control, directly or indirectly, any interest in any other corporation, partnership, trust, joint venture, limited liability company, association, or other business entity. Except as set forth on Subsection 2.3(ii) of the Disclosure Schedule, the Company is not a participant in any joint venture, partnership or similar arrangement. All of the outstanding shares of capital stock of, or other equity interests in, each Subsidiary (i) are owned directly or indirectly by the Company, free and clear of all liens and encumbrances, (ii) are duly and validly authorized and issued, (if applicable) fully paid and nonassessable and (iii) to the Company’s knowledge, were issued in accordance with all applicable laws. There are no outstanding options, warrants, rights (including conversion or preemptive rights) or agreements for the purchase or acquisition from any Subsidiary of any shares of its capital stock or other equity interests.

 

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2.4 Authorization. All limited liability company action required to be taken by the Company’s Board of Directors and shareholders in order to authorize the Company to enter into the Transaction Agreements, and to issue the Shares at the Closing and the Common Shares issuable upon conversion of the Shares, has been taken or will be taken prior to the Closing. All action on the part of the officers of the Company necessary for the execution and delivery of the Transaction Agreements, the performance of all obligations of the Company under the Transaction Agreements to be performed as of the Closing, and the issuance and delivery of the Shares has been taken or will be taken prior to the Closing. The Transaction Agreements, when executed and delivered by the Company, shall constitute valid and legally binding obligations of the Company, enforceable against the Company in accordance with their respective terms except (i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance, or other laws of general application relating to or affecting the enforcement of creditors’ rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief, or other equitable remedies, or (iii) to the extent the indemnification provisions contained in the Investors’ Rights Agreement may be limited by applicable federal or state securities laws.

 

2.5 Valid Issuance of Shares. The Shares, when issued, sold and delivered in accordance with the terms and for the consideration set forth in this Agreement, will be validly issued, fully paid and nonassessable and free of restrictions on transfer other than restrictions on transfer under the Transaction Agreements, applicable state and federal securities laws and liens or encumbrances created by or imposed by a Purchaser. Assuming the accuracy of the representations of the Purchasers in Section 3 of this Agreement and subject to the filings described in the Voting Agreement, the Shares will be issued in compliance with all applicable federal and state securities laws. The Common Shares issuable upon conversion of the Shares has been duly reserved for issuance, and upon issuance in accordance with the terms of the Restated Operating Agreement, will be validly issued, fully paid and nonassessable and free of restrictions on transfer other than restrictions on transfer under the Transaction Agreements, applicable federal and state securities laws and liens or encumbrances created by or imposed by a Purchaser. Based in part upon the representations of the Purchasers in Section 3 of this Agreement and in the Voting Agreement, the Common Shares issuable upon conversion of the Shares will be issued in compliance with all applicable federal and state securities laws.

 

2.6 Governmental Consents and Filings. Assuming the accuracy of the representations made by the Purchasers in Section 3 of this Agreement, no consent, approval, order or authorization of, or registration, qualification, designation, declaration or filing with, any federal, state or local governmental authority is required on the part of the Company in connection with the consummation of the transactions contemplated by this Agreement, except for (i) the submission of the CFIUS Filing and receipt of CFIUS Approval with respect to the First Additional Closing, and (ii) filings pursuant to Regulation D of the Securities Act, and applicable state securities laws, which have been made or will be made in a timely manner.

 

2.7 Litigation. There is no claim, action, suit, proceeding, arbitration, complaint, charge or investigation pending or to the Company’s knowledge, currently threatened in writing (i) against the Company or any officer, director or Key Employee of the Company arising out of their employment or board relationship with the Company; (ii) to the Company’s knowledge, that questions the validity of the Transaction Agreements or the right of the Company to enter into them, or to consummate the transactions contemplated by the Transaction Agreements; or (iii) to the Company’s knowledge, that would reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect. Neither the Company nor, to the Company’s knowledge, any of its officers, directors or Key Employees is a party or is named as subject to the provisions of any order, writ, injunction, judgment or decree of any court or government agency or instrumentality (in the case of officers, directors or Key Employees, such as would affect the Company). There is no action, suit, proceeding or investigation by the Company pending or which the Company intends to initiate. The foregoing includes, without limitation, actions, suits, proceedings or investigations pending or threatened in writing (or any basis therefor known to the Company) involving the prior employment of any of the Company’s employees, their services provided in connection with the Company’s business, any information or techniques allegedly proprietary to any of their former employers or their obligations under any agreements with prior employers.

 

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2.8 Intellectual Property. The Company Intellectual Property constitutes all of the Intellectual Property necessary for or used by the Company in the ordinary operation of the Company’s business as presently conducted, and the Company owns or possesses valid and sufficient legal rights to all Company Intellectual Property without any conflict with, or infringement of, the rights of others, including prior employees or consultants, with which the Company may be affiliated now or may have been affiliated in the past. No product or service marketed or sold (or proposed to be marketed or sold) by the Company, nor the conduct of the Company’s business as currently conducted or as proposed to be conducted, violates or will violate any the terms and conditions of any license or misappropriates, dilutes, infringes or otherwise violates or will misappropriate, dilute, infringe, or otherwise violate any intellectual property rights of any other party. Other than with respect to commercially available software products under standard end-user object code license agreements, there are no outstanding options, licenses, agreements, claims, encumbrances or shared ownership interests of any kind relating to the Company Intellectual Property, nor is the Company bound by or a party to any options, licenses or agreements of any kind with respect to the Intellectual Property of any other Person. The Company has not received any communications alleging that the Company has misappropriated, diluted, infringed, or otherwise violated, or by conducting its business, would misappropriate, dilute, infringe, or otherwise violate any Intellectual Property rights of any other Person. To the Company’s knowledge, no Person is no Person is infringing, misappropriating, diluting, or otherwise violating any of the Owned Intellectual Property. The Company has obtained and possesses valid licenses to use all of the software programs present on the computers and other software-enabled electronic devices that it owns or leases or that it has otherwise provided to its employees for their use in connection with the Company’s business. To the Company’s knowledge, it will not be necessary to use any inventions of any of its employees or consultants (or Persons it currently intends to hire) made prior to their employment by the Company, including prior employees or consultants, with which any of them may be affiliated now or may have been affiliated in the past. Each employee and consultant has assigned to the Company all intellectual property rights he or she owns that are related to the Company’s business as now conducted and as presently proposed to be conducted and all intellectual property rights that he, she or it solely or jointly conceived, reduced to practice, developed or made during the period of his, her or its employment or consulting relationship with the Company that (a) relate, at the time of conception, reduction to practice, development, or making of such intellectual property right, to the Company’s business as then conducted or as then proposed to be conducted, (b) were developed on any amount of the Company’s time or with the use of any of the Company’s equipment, supplies, facilities or information or (c) resulted from the performance of services for the Company. The Company has taken commercially reasonable measures to maintain in confidence all trade secrets and confidential information of the Company, and has required recipients of any such information to execute a valid, binding and written confidentiality agreement that adequately protects the Company’s rights therein. To the Company’s knowledge, there has been no unauthorized disclosure or use of any trade secrets or other confidential information of the Company, whether or not in the possession or control of the Company. Subsection 2.8 of the Disclosure Schedule is a true, complete and correct list of all Intellectual Property, in each case owned by the Company (“Owned Intellectual Property”). The Company is the sole owner of and possesses all right, title, and interest in and to all of the Owned Intellectual Property, free and clear of all liens. All Owned Intellectual Property that has been registered, or for which an application for registration has been submitted, is valid, subsisting, unexpired, in good standing, and recorded in the name of the Company. The Company has not embedded any open source, copyleft or community source code in any of its products generally available or in development or any software developed by the Company in connection with the Company’s business, including but not limited to any libraries or code licensed under any General Public License, Lesser General Public License or similar license arrangement. Except as set forth in Subsection 2.8 of the Disclosure Schedule, (i) no source code for any Company Software has been delivered, licensed, or made available; (ii) the Company does not have a duty or obligation (whether present, contingent, or otherwise) to deliver, license, or make available the source code for any Company Software; and (iii) no event has occurred, and no circumstance or condition exists, that (with or without notice or lapse of time) will, or could reasonably be expected to, result in the delivery, license or disclosure of the source code for any Company Software, in each case of (i)-(iii) above, to any Person who is not an employee of the Company. For purposes of this Subsection 2.8, the Company shall be deemed to have knowledge of a patent right if the Company has actual knowledge of the patent right or would be found to be on notice of such patent right as determined by reference to United States patent laws. No government funding, facilities of a university, college, other educational institution or research center, or funding from third parties was used in the development of any Company Intellectual Property. No Person who was involved in, or who contributed to, the creation or development of any Company Intellectual Property, has performed services for the government, university, college, or other educational institution or research center in a manner that would affect Company’s rights in the Company Intellectual Property.

 

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2.9 Compliance with Other Instruments. The Company is not in violation or default (i) of any provisions of its Restated Operating Agreement or certificate of formation filed with the office of the Secretary of State of the State of Delaware on May 31, 2017 (the “Certificate of Formation”), (ii) of any instrument, judgment, order, writ or decree, (iii) under any note, indenture or mortgage, or (iv) under any lease, agreement, contract or purchase order to which it is a party or by which it is bound that is required to be listed on the Disclosure Schedule, or (v) to its knowledge, of any provision of federal or state statute, rule or regulation applicable to the Company. The execution, delivery and performance of the Transaction Agreements and the consummation of the transactions contemplated by the Transaction Agreements will not result in any such violation or be in conflict with or constitute, with or without the passage of time and giving of notice, either (i) a default under any such provision, instrument, judgment, order, writ, decree, contract or agreement; or (ii) an event which results in the creation of any lien, charge or encumbrance upon any assets of the Company or the suspension, revocation, forfeiture, or nonrenewal of any material permit or license applicable to the Company.

 

2.10 Agreements; Actions.

 

(a) Except for the Transaction Agreements, there are no agreements, understandings, instruments, contracts or proposed transactions to which the Company is a party or by which it is bound that involve (i) obligations (contingent or otherwise) of, or payments to, the Company in excess of $250,000, (ii) the license of any Company Intellectual Property to or from the Company, or (iii) the grant of rights to manufacture, produce, assemble, license, market, or sell its products to any other Person that limit the Company’s exclusive right to develop, manufacture, assemble, distribute, market or sell its products.

 

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(b) The Company has not (i) declared or paid any dividends, or authorized or made any distribution upon or with respect to any class or series of its share capital, (ii) incurred any indebtedness for money borrowed or incurred any other liabilities individually in excess of $100,000 or in excess of $250,000 in the aggregate, (iii) made any loans or advances to any Person, other than ordinary advances for travel expenses, or (iv) sold, exchanged or otherwise disposed of any of its assets or rights, other than the sale of its inventory in the ordinary course of business. For the purposes of (a) and (b) of this Subsection 2.10, all indebtedness, liabilities, agreements, understandings, instruments, contracts and proposed transactions involving the same Person (including Persons the Company has reason to believe are affiliated with each other) shall be aggregated for the purpose of meeting the individual minimum dollar amounts of such subsection.

 

(c) The Company is not a guarantor or indemnitor of any indebtedness of any other Person.

 

2.11 Certain Transactions.

 

(a) Other than (i) standard employee benefits generally made available to all employees, (ii) standard director and officer indemnification agreements that may be approved by the Board of Directors, and (iii) the purchase of shares of the Company’s share capital and the issuance of options to purchase shares of the Company’s Common Shares, in each instance, approved in the written minutes of the Board of Directors (previously provided to the Purchasers or their counsel), there are no agreements, understandings or proposed transactions between the Company and any of its officers, directors, consultants or Key Employees, or any Affiliate thereof.

 

(b) The Company is not indebted, directly or indirectly, to any of its directors, officers or employees or to their respective spouses or children or to any Affiliate of any of the foregoing, other than in connection with expenses or advances of expenses incurred in the ordinary course of business or employee relocation expenses and for other customary employee benefits made generally available to all employees. None of the Company’s directors, officers or employees, or any members of their immediate families, or any Affiliate of the foregoing are, directly or indirectly, indebted to the Company or, to the Company’s knowledge, have any (i) material commercial, industrial, banking, consulting, legal, accounting, charitable or familial relationship with any of the Company’s customers, suppliers, service providers, joint venture partners, licensees and competitors, (ii) direct or indirect ownership interest in any firm or corporation with which the Company is affiliated or with which the Company has a business relationship, or any firm or corporation which competes with the Company except that directors, officers, employees or shareholders of the Company may own stock in (but not exceeding two percent (2%) of the outstanding capital stock of) publicly traded companies that may compete with the Company; or (iii) financial interest in any contract with the Company.

 

2.12 Rights of Registration and Voting Rights. Except as provided in the Investors’ Rights Agreement, the Company is not under any obligation to register under the Securities Act any of its currently outstanding securities or any securities issuable upon exercise or conversion of its currently outstanding securities. To the Company’s knowledge, except as contemplated in the Voting Agreement, no shareholder of the Company has entered into any agreements with respect to the voting of capital shares of the Company.

 

2.13 Property. The property and assets that the Company owns are free and clear of all mortgages, deeds of trust, liens, loans and encumbrances, except for statutory liens for the payment of current taxes that are not yet delinquent and encumbrances and liens that arise in the ordinary course of business and do not materially impair the Company’s ownership or use of such property or assets. With respect to the property and assets it leases, the Company is in compliance with such leases and holds a valid leasehold interest free of any liens, claims or encumbrances other than those of the lessors of such property or assets. The Company does not own any real property.

 

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2.14 Financial Statements. The Company has delivered to each Purchaser its unaudited financial statements for the fiscal year ended December 31, 2018 and its unaudited financial statements (including balance sheet, income statement and statement of cash flows) as of September 30, 2019 (the “Balance Sheet Date”) (collectively, the “Financial Statements”). The Financial Statements fairly present in all material respects the financial condition and operating results of the Company as of the dates, and for the periods, indicated therein. Except as set forth in the Financial Statements, the Company has no material liabilities or obligations, contingent or otherwise, other than (i) liabilities incurred in the ordinary course of business subsequent to the Balance Sheet Date; (ii) obligations under contracts and commitments incurred in the ordinary course of business; (iii) liabilities and obligations of a type or nature not required under generally accepted accounting principles to be reflected in the Financial Statements; and (iv) liabilities set forth on the Subsection 2.14 of the Disclosure Schedules.

 

2.15 Changes. Since the Balance Sheet Date, there has not been:

 

(a) any change in the assets, liabilities, financial condition or operating results of the Company from that reflected in the Financial Statements, except changes in the ordinary course of business that have not caused, in the aggregate, a Material Adverse Effect;

 

(b) any damage, destruction or loss, whether or not covered by insurance, that would have a Material Adverse Effect;

 

(c) any waiver or compromise by the Company of a valuable right or of a material debt owed to it;

 

(d) any satisfaction or discharge of any lien, claim, or encumbrance or payment of any obligation by the Company, except in the ordinary course of business and the satisfaction or discharge of which would not have a Material Adverse Effect;

 

(e) any material change to a material contract or agreement by which the Company or any of its assets is bound or subject;

 

(f) any material change in any compensation arrangement or agreement with any employee, officer, director or shareholder;

 

(g) any resignation or termination of employment of any officer or Key Employee of the Company;

 

(h) any mortgage, pledge, transfer of a security interest in, or lien, created by the Company, with respect to any of its material properties or assets, except liens for taxes not yet due or payable and liens that arise in the ordinary course of business and do not materially impair the Company’s ownership or use of such property or assets;

 

(i) any loans or guarantees made by the Company to or for the benefit of its employees, officers or directors, or any members of their immediate families, other than travel advances and other advances made in the ordinary course of its business;

 

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(j) any declaration, setting aside or payment or other distribution in respect of any of the Company’s share capital, or any direct or indirect redemption, purchase, or other acquisition of any of such shares by the Company;

 

(k) any sale, assignment or transfer of any Company Intellectual Property that could reasonably be expected to result in a Material Adverse Effect;

 

(l) receipt of notice that there has been a loss of, or material order cancellation by, any major customer of the Company;

 

(m) to the Company’s knowledge, any other event or condition of any character, other than events affecting the economy or the Company’s industry generally, that could reasonably be expected to result in a Material Adverse Effect; or

 

(n) any arrangement or commitment by the Company to do any of the things described in this Subsection 2.15.

 

2.16 Employee Matters.

 

(a) Subsection 2.16(a) of the Disclosure Schedule sets forth a list of all employees, consultants and independent contractors of the Company, including a description of all compensation, including salary, bonus, severance obligations and deferred compensation paid or payable for each officer, employee, consultant and independent contractor of the Company who received compensation for the fiscal year ended 2018 or is anticipated to receive compensation in excess of $10,000 for the fiscal year ending 2019.

 

(b) To the Company’s knowledge, none of its employees is obligated under any contract (including licenses, covenants or commitments of any nature) or other agreement, or subject to any judgment, decree or order of any court or administrative agency, that would materially interfere with such employee’s ability to promote the interest of the Company or that would conflict with the Company’s business. Neither the execution or delivery of the Transaction Agreements, nor the carrying on of the Company’s business by the employees of the Company, nor the conduct of the Company’s business as now conducted and as presently proposed to be conducted, will, to the Company’s knowledge, conflict with or result in a breach of the terms, conditions, or provisions of, or constitute a default under, any contract, covenant or instrument under which any such employee is now obligated.

 

(c) The Company is not delinquent in payments to any of its employees, consultants, or independent contractors for any wages, salaries, commissions, bonuses, or other direct compensation for any service performed for it to the date hereof or amounts required to be reimbursed to such employees, consultants or independent contractors. The Company has complied in all material respects with all applicable state and federal equal employment opportunity laws and with other laws related to employment, including those related to wages, hours, worker classification and collective bargaining. The Company has withheld and paid to the appropriate governmental entity or is holding for payment not yet due to such governmental entity all amounts required to be withheld from employees of the Company and is not liable for any arrears of wages, taxes, penalties or other sums for failure to comply with any of the foregoing.

 

(d) To the Company’s knowledge, no Key Employee intends to terminate employment with the Company or is otherwise likely to become unavailable to continue as a Key Employee. The Company does not have a present intention to terminate the employment of any of the foregoing. The employment of each employee of the Company is terminable at the will of the Company. Except as set forth in Subsection 2.16(d) of the Disclosure Schedule or as required by law, upon termination of the employment of any such employees, no severance or other payments will become due. Except as set forth in Subsection 2.16(d) of the Disclosure Schedule, the Company has no policy, practice, plan or program of paying severance pay or any form of severance compensation in connection with the termination of employment services.

 

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(e) The Company has not made any representations regarding equity incentives to any officer, employee, director or consultant that are inconsistent with the share amounts and terms set forth in the minutes of meetings of the Company’s board of directors.

 

(f) Each former Key Employee whose employment was terminated by the Company has entered into an agreement with the Company providing for the full release of any claims against the Company or any related party arising out of such employment.

 

(g) Subsection 2.16(g) of the Disclosure Schedule sets forth each employee benefit plan maintained, established or sponsored by the Company, or which the Company participates in or contributes to, which is subject to the Employee Retirement Income Security Act of 1974, as amended (“ERISA”). The Company has made all required contributions and has no liability to any such employee benefit plan, other than liability for health plan continuation coverage described in Part 6 of Title I(B) of ERISA, and has complied in all material respects with all applicable laws for any such employee benefit plan.

 

(h) The Company is not bound by or subject to (and none of its assets or properties is bound by or subject to) any written or oral, express or implied, contract, commitment or arrangement with any labor union, and no labor union has requested or, to the knowledge of the Company, has sought to represent any of the employees, representatives or agents of the Company. There is no strike or other labor dispute involving the Company pending, or to the Company’s knowledge, threatened, which could have a Material Adverse Effect, nor is the Company aware of any labor organization activity involving its employees.

 

(i) To the Company’s knowledge, none of the Key Employees or directors of the Company has been (a) subject to voluntary or involuntary petition under the federal bankruptcy laws or any state insolvency law or the appointment of a receiver, fiscal agent or similar officer by a court for his or her business or property; (b) convicted in a criminal proceeding or named as a subject of a pending criminal proceeding (excluding traffic violations and other minor offenses); (c) subject to any order, judgment or decree (not subsequently reversed, suspended, or vacated) of any court of competent jurisdiction permanently or temporarily enjoining him or her from engaging, or otherwise imposing limits or conditions on his or her engagement in any securities, investment advisory, banking, insurance, or other type of business or acting as an officer or director of a public company; or (d) found by a court of competent jurisdiction in a civil action or by the Securities and Exchange Commission or the Commodity Futures Trading Commission to have violated any federal or state securities, commodities, or unfair trade practices law, which such judgment or finding has not been subsequently reversed, suspended, or vacated.

 

2.17 Tax Returns and Payments. There are no federal, state, county, local or foreign taxes due and payable by the Company which have not been timely paid. There are no accrued and unpaid federal, state, county, local or foreign taxes of the Company which are due, whether or not assessed or disputed. There have been no examinations or audits of any tax returns or reports by any applicable federal, state, local or foreign governmental agency. The Company has duly and timely filed all federal, state, county, local and foreign tax returns required to have been filed by it and there are in effect no waivers of applicable statutes of limitations with respect to taxes for any year.

 

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2.18 Insurance. Except as set forth on Subsection 2.18 of the Disclosure Schedules, the Company has in full force and effect insurance policies concerning such casualties as would be reasonable and customary for companies like the Company, with extended coverage, sufficient in amount (subject to reasonable deductions) to allow it to replace any of its properties that might be damaged or destroyed.

 

2.19 Employee and Consulting Agreements. Each current and former employee, consultant and officer of the Company has executed an agreement with the Company regarding confidentiality and proprietary information substantially in the form or forms delivered to the counsel for the Purchasers (the “Confidential Information Agreements”). At all times, each Person who has been involved in the creation, modification, reduction to practice, or development of any Owned Intellectual Property has executed and delivered a valid, binding, written agreement (i) pursuant to which such Person agrees to maintain the confidentiality of the confidential and proprietary information of the Company; and (ii) that includes a valid, present assignment to the Company of all Owned Intellectual Property created, modified, reduced to practice, or developed by such Person. Except as set forth on Subsection 2.19 of the Disclosure Schedules, no current or former Key Employee has excluded works or inventions from his or her assignment of inventions pursuant to such Key Employee’s Confidential Information Agreement. Each of Abel Avellan, as the Chief Executive Officer of the Company, and Tom Severson, as the Chief Financial Officer of the Company, have executed a noncompetition and non-solicitation agreement substantially in the form or forms delivered to counsel for the Purchasers. The Company is not aware that any of its Key Employees is in violation of any agreement covered by this Subsection 2.19.

 

2.20 Compliance with Law; Permits. The Company is not, and since its January 1, 2014 has not been, in violation of any federal, state or foreign statute, rule or regulation applicable to the Company, including, without limitation, the U.S. Foreign Corrupt Practices Act of 1977, as amended (the “FCPA”) and the UK Bribery Act of 2010 (“UK Bribery Act”). The Company has all franchises, permits, licenses and any similar authority necessary for the conduct of its business, the lack of which could reasonably be expected to have a Material Adverse Effect. The Company is not in default in any material respect under any of such franchises, permits, licenses or other similar authority.

 

2.21 Limited Liability Company Documents. The Restated Operating Agreement and the Certificate of Formation are in the form provided to the Purchasers.

 

2.22 Environmental and Safety Laws. Except as could not reasonably be expected to have a Material Adverse Effect, (a) the Company is and has been in compliance with all Environmental Laws; (b) there has been no release or to the Company’s knowledge threatened release of any pollutant, contaminant or toxic or hazardous material, substance or waste or petroleum or any fraction thereof (each a “Hazardous Substance”), on, upon, into or from any site currently or heretofore owned, leased or otherwise used by the Company; (c) there have been no Hazardous Substances generated by the Company that have been disposed of or come to rest at any site that has been included in any published U.S. federal, state or local “superfund” site list or any other similar list of hazardous or toxic waste sites published by any governmental authority in the United States; and (d) there are no underground storage tanks located on, no polychlorinated biphenyls (“PCBs”) or PCB-containing equipment used or stored on, and no hazardous waste as defined by the Resource Conservation and Recovery Act, as amended, stored on, any site owned or operated by the Company, except for the storage of hazardous waste in compliance with Environmental Laws. The Company has made available to the Purchasers true and complete copies of all material environmental records, reports, notifications, certificates of need, permits, pending permit applications, correspondence, engineering studies and environmental studies or assessments.

 

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For purposes of this Subsection 2.22, “Environmental Laws” means any law, regulation, or other applicable requirement relating to (a) releases or threatened release of Hazardous Substance; (b) pollution or protection of employee health or safety, public health or the environment; or (c) the manufacture, handling, transport, use, treatment, storage, or disposal of Hazardous Substances.

 

2.23 Real Property Holding Corporation. The Company is not now and has never been a “United States real property holding corporation” as defined in the Code and any applicable regulations promulgated thereunder. The Company has filed with the Internal Revenue Service all statements, if any, with its United States income tax returns which are required under such regulations.

 

2.24 Disclosure. The Company has made available to the Purchasers all the information reasonably available to the Company that the Purchasers have requested for deciding whether to acquire the Shares, including certain of the Company’s projections describing its proposed business plan, which is attached to Subsection 2.14 of the Disclosure Schedules (the “Business Plan”). No representation or warranty of the Company contained in this Agreement, as qualified by the Disclosure Schedule, and no certificate furnished or to be furnished to Purchasers at the Closing contains any untrue statement of a material fact or, to the Company’s knowledge, omits to state a material fact necessary in order to make the statements contained herein or therein not misleading in light of the circumstances under which they were made. The Business Plan was prepared in good faith; however, the Company does not warrant that it will achieve any results projected in the Business Plan. It is understood that this representation is qualified by the fact that the Company has not delivered to the Purchasers, and has not been requested to deliver, a private placement or similar memorandum or any written disclosure of the types of information customarily furnished to purchasers of securities.

 

2.25 Foreign Corrupt Practices Act. Neither the Company nor any of its Subsidiaries nor any of their respective directors, officers, employees or agents have, directly or indirectly, made, offered, promised or authorized any payment or gift of any money or anything of value to or for the benefit of any “foreign official” (as such term is defined in the FCPA), foreign political party or official thereof or candidate for foreign political office (x) for the purpose of (i) influencing any official act or decision of such official, party or candidate, (ii) inducing such official, party or candidate to use his, her or its influence to affect any act or decision of a foreign governmental authority, or (iii) securing any improper advantage, in the case of (i), (ii) and (iii) above in order to assist the Company or any of its affiliates in obtaining or retaining business for or with, or directing business to, any person or (y) otherwise in violation of the FCPA, or any other applicable antibribery or anticorruption law including, to its knowledge, the U.K. Bribery Act. Neither the Company nor any of its Subsidiaries nor any of their respective directors, officers, employees or agents have made or authorized any bribe, rebate, payoff, influence payment, kickback or other unlawful payment of funds or received or retained any funds in violation of any law, rule or regulation. The Company further represents that it has maintained, and has caused each of its Subsidiaries and affiliates to maintain, systems of internal controls (including, but not limited to, accounting systems, purchasing systems and billing systems) and written policies to ensure compliance with the FCPA, or any other applicable anti-bribery or anti-corruption law including, to its knowledge, the U.K. Bribery Act, and to ensure that all books and records of the Company and its Subsidiaries accurately and fairly reflect, in reasonable detail, all transactions and dispositions of funds and assets. Neither the Company nor, to the Company’s knowledge, any of its officers, directors or employees are the subject of any allegation, voluntary disclosure, investigation, prosecution or other enforcement action related to the FCPA, or any other anticorruption law including, to its knowledge, the U.K. Bribery Act.

 

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2.26 Data Privacy. In connection with its collection, storage, transfer (including, without limitation, any transfer across national borders) and/or use of any personally identifiable information from any individuals, including, without limitation, any customers, prospective customers, employees and/or other third parties (collectively “Personal Information”), the Company is and has been in compliance in all material respects with all applicable laws in all relevant jurisdictions, the Company’s privacy policies and the requirements of any contract or codes of conduct to which the Company is a party. The Company has commercially reasonable physical, technical, organizational and administrative security measures and policies in place to protect all Personal Information collected by it or on its behalf from and against unauthorized access, use and/or disclosure. To the extent the Company maintains or transmits protected health information, as defined under 45 C.F.R. § 160.103, the Company is in compliance with the applicable requirements of the Health Insurance Portability and Accountability Act of 1996, as amended by the Health Information Technology for Economic and Clinical Health Act, including all rules and regulations promulgated thereunder. The Company is and has been in compliance in all material respects with all laws relating to data loss, theft and breach of security notification obligations. The information technology systems used in the operation of the Company’s business, including all computer hardware, software, firmware, process automation and telecommunications systems (“IT Systems”), perform reliably and are in material conformance with the applicable specifications and documentation for such systems. Since January 1, 2014, there have been no failures, breakdowns, data security breaches or other incidents adversely affecting any such IT Systems or any software, data, information or materials contained therein, other than events or conditions that occurred in the ordinary course of business and did not materially disrupt the operations of the Company. The Company maintains commercially reasonable security, disaster recovery and business continuity plans and procedures and has taken commercially reasonable measures to protect the security and integrity of the IT Systems and of the software and data stored or contained therein or transmitted thereby.

 

2.27 Export Control Laws. The Company has conducted all export transactions in accordance with applicable provisions of United States export control laws and regulations, including the Export Administration Regulations, the International Traffic in Arms Regulations, the regulations administered by the Office of Foreign Assets Control of the U.S. Treasury Department, and the export control laws and regulations of any other applicable jurisdiction. Without limiting the foregoing: (a) the Company has obtained all export licenses and other approvals, timely filed all required filings and has assigned the appropriate export classifications to all products, in each case as required for its exports of products, software and technologies from the United States and any other applicable jurisdiction; (b) the Company is in compliance with the terms of all applicable export licenses, classifications, filing requirements or other approvals; (c) there are no pending or threatened claims against the Company with respect to such exports, classifications, required filings or other approvals; (d) there are no pending investigations related to the Company’s exports; and (e) there are no actions, conditions, or circumstances pertaining to the Company’s export transactions that would reasonably be expected to give rise to any material future claims.

 

2.28 CFIUS. The Company warrants and represents that, as of the date of the Initial Closing: (i) it was not a “Pilot Program U.S. Business” as that term is defined in 31 C.F.R. § 801.213 under the CFIUS Pilot Program and associated regulations; (ii) it was not producing, designing, testing, manufacturing, fabricating, or developing products, services, software, technology, or technical data that constituted “Critical Technologies” as that term is defined in 31 C.F.R. § 801.204 under the CFIUS Pilot Program; and (iii) it did not have any business activity in (or otherwise design Critical Technologies for) any of the twenty-seven (27) “pilot program industry(s)” as that term is defined in 31 C.F.R. § 801.212 under the CFIUS Pilot Program. The Company warrants and represents that, as of the date of the First Additional Closing, the Company is a “Pilot Program U.S. Business,” as that term is defined in 31 C.F.R. § 801.213.

 

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3. Representations and Warranties of the Purchasers. Each Purchaser hereby represents and warrants to the Company as to itself, severally and not jointly as to any other Purchaser, that:

 

3.1 Authorization. The Purchaser has full power and authority to enter into the Transaction Agreements. The Transaction Agreements to which the Purchaser is a party, when executed and delivered by the Purchaser, will constitute valid and legally binding obligations of the Purchaser, enforceable in accordance with their terms, except (a) as limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance and any other laws of general application affecting enforcement of creditors’ rights generally, and as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies, or (b) to the extent the indemnification provisions contained in the Investors’ Rights Agreement may be limited by applicable federal or state securities laws.

 

3.2 Purchase Entirely for Own Account. This Agreement is made with the Purchaser in reliance upon the Purchaser’s representation to the Company, which by the Purchaser’s execution of this Agreement, the Purchaser hereby confirms, that the Shares to be acquired by the Purchaser will be acquired for investment for the Purchaser’s own account, not as a nominee or agent, and not with a view to the resale or distribution of any part thereof, and that the Purchaser has no present intention of selling, granting any participation in, or otherwise distributing the same. By executing this Agreement, the Purchaser further represents that the Purchaser does not presently have any contract, undertaking, agreement or arrangement with any Person to sell, transfer or grant participations to such Person or to any third Person, with respect to any of the Shares. The Purchaser has not been formed for the specific purpose of acquiring the Shares.

 

3.3 Disclosure of Information. The Purchaser has had an opportunity to discuss the Company’s business, management, financial affairs and the terms and conditions of the offering of the Shares with the Company’s management and has had an opportunity to review the Company’s facilities. The foregoing, however, does not limit or modify the representations and warranties of the Company in Section 2 of this Agreement or the right of the Purchasers to rely thereon.

 

3.4 Restricted Securities. The Purchaser understands that the Shares have not been, and will not be, registered under the Securities Act, by reason of a specific exemption from the registration provisions of the Securities Act which depends upon, among other things, the bona fide nature of the investment intent and the accuracy of the Purchaser’s representations as expressed herein. The Purchaser understands that the Shares are “restricted securities” under applicable U.S. federal and state securities laws and that, pursuant to these laws, the Purchaser must hold the Shares indefinitely unless they are registered with the Securities and Exchange Commission and qualified by state authorities, or an exemption from such registration and qualification requirements is available. The Purchaser acknowledges that the Company has no obligation to register or qualify the Shares, or the Common Shares into which it may be converted, for resale except as set forth in the Investors’ Rights Agreement. The Purchaser further acknowledges that if an exemption from registration or qualification is available, it may be conditioned on various requirements including, but not limited to, the time and manner of sale, the holding period for the Shares, and on requirements relating to the Company which are outside of the Purchaser’s control, and which the Company is under no obligation and may not be able to satisfy.

 

3.5 No Public Market. The Purchaser understands that no public market now exists for the Shares, and that the Company has made no assurances that a public market will ever exist for the Shares.

 

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3.6 Legends. The Purchaser understands that the Shares and any securities issued in respect of or exchange for the Shares, may be notated with one or all of the following legends:

 

“THE SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. NO SUCH TRANSFER MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL IN A FORM SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933.”

 

(a) Any legend set forth in, or required by, the other Transaction Agreements.

 

(b) Any legend required by the securities laws of any state to the extent such laws are applicable to the Shares represented by the certificate, instrument, or book entry so legended.

 

3.7 Accredited Investor. The Purchaser is an accredited investor as defined in Rule 501(a) of Regulation D promulgated under the Securities Act.

 

3.8 Foreign Investors. If the Purchaser is not a United States person (as defined by Section 7701(a)(30) of the Code), the Purchaser hereby represents that it has satisfied itself as to the full observance of the laws of its jurisdiction in connection with any invitation to subscribe for the Shares or any use of this Agreement, including (i) the legal requirements within its jurisdiction for the purchase of the Shares, (ii) any foreign exchange restrictions applicable to such purchase, (iii) any governmental or other consents that may need to be obtained, and (iv) the income tax and other tax consequences, if any, that may be relevant to the purchase, holding, redemption, sale, or transfer of the Shares. The Purchaser’s subscription and payment for and continued beneficial ownership of the Shares will not violate any applicable securities or other laws of the Purchaser’s jurisdiction.

 

3.9 No General Solicitation. Neither the Purchaser, nor any of its officers, directors, employees, agents, stockholders or partners has either directly or indirectly, including, through a broker or finder (a) engaged in any general solicitation, or (b) published any advertisement in connection with the offer and sale of the Shares.

 

3.10 Exculpation Among Purchasers. The Purchaser acknowledges that it is not relying upon any Person, other than the Company and its officers and directors, in making its investment or decision to invest in the Company. The Purchaser agrees that neither any Purchaser nor the respective controlling Persons, officers, directors, partners, agents, or employees of any Purchaser shall be liable to any other Purchaser for any action heretofore taken or omitted to be taken by any of them in connection with the purchase of the Shares.

 

3.11 Residence. If the Purchaser is an individual, then the Purchaser resides in the state or province identified in the address of the Purchaser set forth on Exhibit A; if the Purchaser is a partnership, corporation, limited liability company or other entity, then the office or offices of the Purchaser in which its principal place of business is identified in the address or addresses of the Purchaser set forth on Exhibit A.

 

4. Conditions to the Purchasers’ Obligations at Closing. The obligations of each Purchaser to purchase Shares at the First Additional Closing or any subsequent Closing are subject to the fulfillment, on or before such Closing, of each of the following conditions, unless otherwise waived:

 

4.1 Representations and Warranties. The representations and warranties of the Company contained in Section 2 shall be true and correct in all respects as of the First Additional Closing.

 

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4.2 Performance. The Company shall have performed and complied with all covenants, agreements, obligations and conditions contained in this Agreement that are required to be performed or complied with by the Company on or before such Closing.

 

4.3 Qualifications. All (i) authorizations, approvals or permits, if any, of any governmental authority or regulatory body of the United States or of any state that are required in connection with the lawful issuance and sale of the Shares pursuant to this Agreement and (ii) consents or other approvals of third parties, including the shareholders of the Company, required in connection with the transactions contemplated by this Agreement or the transactions contemplated by the other Transaction Agreements (including, without limitation, the Company’s issuance of the Additional Shares to the Purchasers at any Closing subsequent to the First Additional Closing), in each case, shall be obtained and effective as of such Closing.

 

4.4 Opinion of Company Counsel. The Purchasers shall have received from Foley & Lardner LLP, an opinion, dated as of the First Additional Closing, in a form acceptable to Rakuten.

 

4.5 Indemnification Agreements. The Company shall have executed and delivered the Indemnification Agreements.

 

4.6 Board of Directors. As of the First Additional Closing, the authorized size of the Board of Directors of the Company shall be nine (9), and the Board of Directors shall be comprised of Abel Avellan, Tom Severson, Adriana Cisneros, Luke Ibbetson, Hiroshi Mikitani and Tareq Amin and three (3) directorships initially vacant.

 

4.7 Investors’ Rights Agreement. The Company and each Purchaser (other than the Purchaser relying upon this condition to excuse such Purchaser’s performance hereunder) and the other shareholders of the Company named as parties thereto shall have executed and delivered the Investors’ Rights Agreement.

 

4.8 Right of First Refusal and Co-Sale Agreement. The Company, each Purchaser (other than the Purchaser relying upon this condition to excuse such Purchaser’s performance hereunder), and the other shareholders of the Company named as parties thereto shall have executed and delivered the Right of First Refusal and Co-Sale Agreement.

 

4.9 Voting Agreement. The Company, each Purchaser (other than the Purchaser relying upon this condition to excuse such Purchaser’s performance hereunder), and the other shareholders of the Company named as parties thereto shall have executed and delivered the Voting Agreement.

 

4.10 Restated Operating Agreement. The Company shall have prepared the Restated Operating Agreement for execution on or prior to the First Additional Closing, which shall continue to be in full force and effect as of the Closing, and at the First Additional Closing, shall have been entered into among the Company, the Purchasers at the First Additional Closing and the other shareholders of the Company named as parties thereto.

 

4.11 Secretary’s Certificate. The Secretary of the Company shall have delivered to the Purchasers at the Closing a certificate certifying (i) the Certificate of Formation, (ii) resolutions of the Board of Directors of the Company approving the Transaction Agreements and the transactions contemplated under the Transaction Agreements, and (iii) resolutions of the shareholders of the Company approving the Restated Operating Agreement.

 

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4.12 Proceedings and Documents. All limited liability company and other proceedings in connection with the transactions contemplated at the Closing and all documents incident thereto shall be reasonably satisfactory in form and substance to each Purchaser, and each Purchaser (or its counsel) shall have received all such counterpart original and certified or other copies of such documents as reasonably requested. Such documents may include good standing certificates.

 

4.13 Minimum Number of Shares at First Additional Closing. At minimum 1,966,704 Shares must be sold to the Purchasers (including Rakuten) at the First Additional Closing.

 

4.14 Anti-dilution and Preemptive Rights Waiver. The Company shall have obtained enforceable waivers in respect of any anti-dilution rights or adjustments or preemptive rights under the Operating Agreement or otherwise, which would be or have been triggered by or would directly or indirectly affect, the transactions contemplated by this Agreement or the transactions contemplated by the other Transactions Documents (including, without limitation, the Company’s issuance of the Additional Shares to the Purchasers at any Closing subsequent to the First Additional Closing) or shall provide evidence reasonably satisfactory to the Purchasers that no such rights or adjustments will be triggered or have been triggered by, or will not, directly or indirectly, affect such transactions.

 

4.15 CFIUS Approval. The Company shall have received CFIUS Approval.

 

4.16 Rakuten Commercial Agreement. The Company and Rakuten have entered into the Rakuten Commercial Agreements.

 

5. Conditions of the Company’s Obligations at Closing. The obligations of the Company to sell Shares to the Purchasers at the First Additional Closing or any subsequent Closing are subject to the fulfillment, on or before the Closing, of each of the following conditions, unless otherwise waived:

 

5.1 Representations and Warranties. The representations and warranties of each Purchaser contained in Section 3 shall be true and correct in all respects as of such Closing.

 

5.2 Performance. The Purchasers shall have performed and complied with all covenants, agreements, obligations and conditions contained in this Agreement that are required to be performed or complied with by them on or before such Closing.

 

5.3 Qualifications. All authorizations, approvals or permits, if any, of any governmental authority or regulatory body of the United States or of any state that are required in connection with the lawful issuance and sale of the Shares pursuant to this Agreement shall be obtained and effective as of the Closing.

 

5.4 Investors’ Rights Agreement. Each Purchaser and the other shareholders of the Company parties thereto shall have executed and delivered the Investors’ Rights Agreement.

 

5.5 Right of First Refusal and Co-Sale Agreement. Each Purchaser and the other shareholders of the Company named as parties thereto shall have executed and delivered the Right of First Refusal and Co-Sale Agreement.

 

5.6 Voting Agreement. Each Purchaser and the other shareholders of the Company named as parties thereto shall have executed and delivered the Voting Agreement.

 

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6. Miscellaneous.

 

6.1 Survival of Warranties. Unless otherwise set forth in this Agreement, the representations and warranties of the Company and the Purchasers contained in or made pursuant to this Agreement shall survive the execution and delivery of this Agreement and the Closing and shall in no way be affected by any investigation or knowledge of the subject matter thereof made by or on behalf of the Purchasers or the Company. With respect to the Purchasers party to the Prior Purchase Agreement, the representations and warranties made by the Company on the Initial Closing Date in Section 2 of the Prior Purchase Agreement shall survive, and such Purchasers’ recourse under the Prior Purchase Agreement shall in no way be affected by, the amendment and restatement of the Prior Purchase Agreement pursuant to, or the execution and delivery of, this Agreement and/or any subsequent Closing, and shall in no way be affected by any investigation or knowledge of the subject matter thereof made by or on behalf of the Purchasers party to the Prior Purchase Agreement or the Company. Nothing in this Agreement shall release the Company from any liability arising from its breach of any term, condition or provision of the Prior Purchase Agreement.

 

6.2 Publicity.

 

(a) Except as required by law, the Company will not, without the written consent of Vodafone, make any disclosures or public announcements relating to Vodafone’s purchase of the Shares pursuant to this Agreement or any discussions relating hereto or thereto or discuss the terms of this Agreement or the other Transaction Agreements, or its ownership interest in the Company, with any person other than (i) the Company’s key employees and officers, (ii) members of the Board of Directors of the Company, (iii) the Company’s accountants, professional advisors or attorneys or (iv) the Company’s investors, prospective investors in the Company’s securities or any prospective acquirer in connection with a change of control, provided that such prospective investor or acquirer is bound by an obligation of confidentiality with respect to such information. In addition, neither the Company, its Subsidiaries nor any of their respective representatives shall (x) use Vodafone’s name or the name of any of its affiliates in any manner or format (including reference on or links to websites, press releases, etc.) without the prior approval of Vodafone or (y) issue any statement or communication to any third party (other than to their legal, accounting and financial advisors) regarding Vodafone’s investment in the Company without the consent of Vodafone. Notwithstanding the foregoing, the Company may, (A) if Vodafone’s investment in the Company has been publicly disclosed by or with the prior consent of Vodafone, from then forward confirm and/or disclose in public and non-public communications that Vodafone has invested in the Company, without disclosing the terms or amount of such investment, and (B) without the prior approval of Vodafone, disclose the terms and/or amount of Vodafone’s investment as required by law, rule, regulation or listing standard, in which case the Company (1) shall promptly notify Vodafone of such requirement to the extent legally permitted and will cooperate with Vodafone to the extent practicable to limit the information disclosed to only such information that the Company, as advised by counsel, is required by law to be disclosed and (2) will, to the extent practicable and at the request and expense of Vodafone, seek to obtain a protective order over, or confidential treatment of, such information.

 

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(b) Except as required by law, the Company will not, without the written consent of Rakuten, make any disclosures or public announcements relating to Rakuten’s purchase of the Shares pursuant to this Agreement or any discussions relating hereto or thereto or discuss the terms of this Agreement or the other Transaction Agreements, or its ownership interest in the Company, with any person other than (i) the Company’s key employees and officers, (ii) members of the Board of Directors of the Company, (iii) the Company’s accountants, professional advisors or attorneys or (iv) the Company’s investors, prospective investors in the Company’s securities or any prospective acquirer in connection with a change of control, provided that such prospective investor or acquirer is bound by an obligation of confidentiality with respect to such information. In addition, neither the Company, its Subsidiaries nor any of their respective representatives shall (x) use Rakuten’s name or the name of any of its affiliates in any manner or format (including reference on or links to websites, press releases, etc.) without the prior approval of Rakuten or (y) issue any statement or communication to any third party (other than to their legal, accounting and financial advisors) regarding Rakuten’s investment in the Company without the consent of Rakuten. Notwithstanding the foregoing, the Company may, (A) if Rakuten’s investment in the Company has been publicly disclosed by or with the prior consent of Rakuten, from then forward confirm and/or disclose in public and non-public communications that Rakuten has invested in the Company, without disclosing the terms or amount of such investment, and (B) without the prior approval of Rakuten, disclose the terms and/or amount of Rakuten’s investment as required by law, rule, regulation or listing standard, in which case the Company (1) shall promptly notify Rakuten of such requirement to the extent legally permitted and will cooperate with Rakuten to the extent practicable to limit the information disclosed to only such information that the Company, as advised by counsel, is required by law to be disclosed and (2) will, to the extent practicable and at the request and expense of Rakuten, seek to obtain a protective order over, or confidential treatment of, such information.

 

6.3 Commercial Partnerships.

 

(a) Following the Initial Closing, Vodafone and the Company shall each cooperate in good faith and use their respective commercially reasonable efforts to, as promptly as practicable after the Initial Closing, enter into one or more definitive agreements pursuant to which Vodafone or its Affiliate(s) and the Company enter into a commercial partnership that is currently anticipated to use the Company’s space platform to provide mobile services to areas unserved and/or inconsistently served by terrestrial network coverage (the “Vodafone Commercial Agreements”). The Vodafone Commercial Agreements shall include the terms set forth on Annex 1 attached hereto, including the Company’s grant of certain [***] rights and protections to Vodafone in the Vodafone Markets (as defined in Annex 1 attached hereto) as set forth on Annex 1. The Company shall not (and shall cause its Subsidiaries and Affiliates not to) enter into any agreement (or any term sheet, letter of intent or other document or commitment, in which the Company or its Subsidiaries or Affiliates agrees to enter into any agreement or otherwise) that grants any other Person rights related to the provision of mobile services in the Vodafone Markets or Vodafone Partner Markets (each as defined in Annex 1 attached hereto) prior to execution of all of the Vodafone Commercial Agreements by Vodafone or its Affiliate(s) and the Company.

 

(b) Upon the First Additional Closing, Rakuten (or its Affiliate(s), if such agreement is assigned by Rakuten to an Affiliate(s)) and the Company shall have entered into a commercial partnership to use the Company’s space platform to provide mobile services in Japan on the terms set forth in Annex 2 attached hereto (the “Rakuten Commercial Agreements”). The Rakuten Commercial Agreements include the terms set forth on Annex 2. Subject to the consummation of the First Additional Closing, the Company shall not (and shall cause its Subsidiaries and Affiliates not to) enter into any agreement (or any term sheet, letter of intent or other document or commitment, in which the Company or its Subsidiaries or Affiliates agrees to enter into any agreement or otherwise) that grants any other Person rights that would prohibit the parties from fulfilling its respective obligations of the Rakuten Commercial Agreements. In addition and following the First Additional Closing, the Company shall not receive investment from, or enter into a strategic partnership with, certain companies identified on Annex 2 without the prior written consent of Rakuten.

 

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6.4 Cooperation.

 

(a) Notwithstanding any other provision contained in this Agreement, with respect to a current or future direct or indirect investment in the Shares or other interest in the Company (collectively, the “Investment”) by Vodafone (i) the Company shall reasonably cooperate with Vodafone and its Affiliates and representatives in good faith to determine whether the submission of a filing is required pursuant to the CFIUS Pilot Program or otherwise warranted and to file a CFIUS Filing if the submission of a CFIUS Filing is required pursuant to the CFIUS Pilot Program or if, at any time after the date hereof, (A) CFIUS requests, recommends or mandates the submission of a CFIUS Filing or (B) CFIUS poses questions to Vodafone or the Company with respect to the Investment, and Vodafone determines that the submission of a CFIUS Filing is warranted, and (ii) the Company shall take all other reasonable steps, in compliance with applicable law or regulations, as agreed by Vodafone, that are necessary to obtain and/or retain CFIUS Approval with respect to the Investment.

 

(b) Rakuten and the Company have determined that the First Additional Closing contemplated by this Agreement is subject to the CFIUS Pilot Program. Rakuten and the Company (collectively, “First Additional Closing Parties”, for purposes of this section) shall promptly provide all necessary information within their respective control to complete a CFIUS Filing, and shall do so with the degree of factual detail requested or required by CFIUS. Rakuten and the Company shall keep each other apprised of communications with, and any requests for additional information from, CFIUS with respect to the First Additional Closing contemplated in this Agreement. Rakuten and the Company shall, and shall cause their Affiliates to, use commercially reasonable efforts to obtain CFIUS Approval as promptly as practicable and shall consult with the other First Additional Closing Party on strategic, timing, and factual matters related to obtaining CFIUS Approval. If either Rakuten or the Company receive any request from CFIUS for supplemental information with respect to the CFIUS Filing, the requested First Additional Closing Party shall provide any such requested information to the other First Additional Closing Party as far in advance of the disclosure to CFIUS as is reasonably practicable, but only to the extent that such information does not constitute confidential or proprietary information of the requested First Additional Closing Party exempt from disclosure to the other parties hereto. If, at any time after the date hereof, the Company requests or CFIUS requests, recommends or mandates the submission of an additional CFIUS Filing (including a joint voluntary notice), or if CFIUS poses questions to Rakuten or the Company with respect to Rakuten’s Investment, the Company and Rakuten will submit a CFIUS Filing. Each party shall be responsible for its preparation costs and other expenses (including attorneys’ fees) in connection with the CFIUS Filing and associated CFIUS proceedings.

 

6.5 Successors and Assigns. The terms and conditions of this Agreement shall inure to the benefit of and be binding upon the respective successors and assigns of the parties. Nothing in this Agreement, express or implied, is intended to confer upon any party other than the parties hereto or their respective successors and assigns any rights, remedies, obligations or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement.

 

6.6 Governing Law. This Agreement shall be governed by the internal law of the State of Delaware, without regard to conflict of law principles that would result in the application of any law other than the law of the State of Delaware.

 

6.7 Counterparts. This Agreement may be executed in two (2) or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Counterparts may be delivered via facsimile, electronic mail (including pdf or any electronic signature complying with the U.S. federal ESIGN Act of 2000, e.g., www.docusign.com) or other transmission method and any counterpart so delivered shall be deemed to have been duly and validly delivered and be valid and effective for all purposes.

 

23

 

 

6.8 Titles and Subtitles. The titles and subtitles used in this Agreement are used for convenience only and are not to be considered in construing or interpreting this Agreement.

 

6.9 Notices. All notices and other communications given or made pursuant to this Agreement shall be in writing and shall be deemed effectively given upon the earlier of actual receipt, or (a) personal delivery to the party to be notified, (b) when sent, if sent by electronic mail or facsimile during normal business hours of the recipient, and if not sent during normal business hours, then on the recipient’s next business day, (c) five (5) days after having been sent by registered or certified mail, return receipt requested, postage prepaid, or (d) one (1) business day after deposit with a nationally recognized overnight courier, freight prepaid, specifying next business day delivery, with written verification of receipt. All communications shall be sent to the respective parties at their address as set forth on the signature page or Exhibit A, or to such e-mail address, facsimile number or address as subsequently modified by written notice given in accordance with this Subsection 6.9. If notice is given to the Company, a copy shall also be sent to David Kantaros, Esq., c/o Foley & Lardner LLP, 111 Huntington Avenue, Suite 2500, Boston, Massachusetts 02199, Email: [●], and if notice is given to the Purchasers, copies shall also be given to Vodafone Group General Counsel and Company Secretary, via Email: [●] and to Rakuten’s outside legal counsel, Terrence M. Kerwin, Esq. of Fox Rothschild LLP, at [●].

 

6.10 No Finder’s Fees. Each party represents that it neither is nor will be obligated for any finder’s fee or commission in connection with this transaction, except as set forth in the Disclosure Schedules. Each Purchaser agrees to indemnify and to hold harmless the Company from any liability for any commission or compensation in the nature of a finder’s or broker’s fee arising out of this transaction (and the costs and expenses of defending against such liability or asserted liability) for which each Purchaser or any of its officers, employees or representatives is responsible. The Company agrees to indemnify and hold harmless each Purchaser from any liability for any commission or compensation in the nature of a finder’s or broker’s fee arising out of this transaction (and the costs and expenses of defending against such liability or asserted liability) for which the Company or any of its officers, employees or representatives is responsible.

 

6.11 Attorneys’ Fees; Counsel and Expenses. If any action at law or in equity (including, arbitration) is necessary to enforce or interpret the terms of any of the Transaction Agreements, the prevailing party shall be entitled to reasonable attorneys’ fees, costs and necessary disbursements in addition to any other relief to which such party may be entitled. The Company will pay all legal and due diligence costs of Rakuten and its advisors, upon the consummation of the First Additional Closing, not to exceed $150,000.

 

6.12 Amendments and Waivers. Except as set forth in Subsection 1.3 of this Agreement, any term of this Agreement may be amended, terminated or waived only with the written consent of the Company and the holders of at least seventy-five percent (75%) of the then-outstanding Shares issued and sold pursuant to this Agreement provided that any amendment to the last sentence of Subsection 1.3, Subsection 1.4, Subsection 2.28, Subsection 6.2, Subsection 6.3 (including Annex 1 and Annex 2), this proviso of Subsection 6.12 and any definitions relevant to any of the foregoing, shall also require the prior written consent of Vodafone and Rakuten. Any amendment or waiver effected in accordance with this Subsection 6.12 shall be binding upon the Purchasers and each transferee of the Shares (or the Common Shares issuable upon conversion thereof), each future holder of all such securities, and the Company.

 

6.13 Severability. The invalidity or unenforceability of any provision hereof shall in no way affect the validity or enforceability of any other provision.

 

24

 

 

6.14 Delays or Omissions. No delay or omission to exercise any right, power or remedy accruing to any party under this Agreement, upon any breach or default of any other party under this Agreement, shall impair any such right, power or remedy of such non-breaching or non-defaulting party nor shall it be construed to be a waiver of any such breach or default, or an acquiescence therein, or of or in any similar breach or default thereafter occurring; nor shall any waiver of any single breach or default be deemed a waiver of any other breach or default theretofore or thereafter occurring. Any waiver, permit, consent or approval of any kind or character on the part of any party of any breach or default under this Agreement, or any waiver on the part of any party of any provisions or conditions of this Agreement, must be in writing and shall be effective only to the extent specifically set forth in such writing. All remedies, either under this Agreement or by law or otherwise afforded to any party, shall be cumulative and not alternative.

 

6.15 Entire Agreement. This Agreement (including the Exhibits hereto), the Restated Operating Agreement and the other Transaction Agreements constitute the full and entire understanding and agreement between the parties with respect to the subject matter hereof, and any other written or oral agreement relating to the subject matter hereof existing between the parties are expressly canceled.

 

6.16 Dispute Resolution. The parties (a) hereby irrevocably and unconditionally submit to the jurisdiction of the state courts of Delaware and to the jurisdiction of the United States District Court for the District of Delaware for the purpose of any suit, action or other proceeding arising out of or based upon this Agreement, (b) agree not to commence any suit, action or other proceeding arising out of or based upon this Agreement except in the state courts of Delaware or the United States District Court for the District of Delaware, and (c) hereby waive, and agree not to assert, by way of motion, as a defense, or otherwise, in any such suit, action or proceeding, any claim that it is not subject personally to the jurisdiction of the above-named courts, that its property is exempt or immune from attachment or execution, that the suit, action or proceeding is brought in an inconvenient forum, that the venue of the suit, action or proceeding is improper or that this Agreement or the subject matter hereof may not be enforced in or by such court.

 

WAIVER OF JURY TRIAL: EACH PARTY HEREBY WAIVES ITS RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT, THE OTHER TRANSACTION AGREEMENTS, THE SECURITIES OR THE SUBJECT MATTER HEREOF OR THEREOF. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS TRANSACTION, INCLUDING, WITHOUT LIMITATION, CONTRACT CLAIMS, TORT CLAIMS (INCLUDING NEGLIGENCE), BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. THIS SECTION HAS BEEN FULLY DISCUSSED BY EACH OF THE PARTIES HERETO AND THESE PROVISIONS WILL NOT BE SUBJECT TO ANY EXCEPTIONS. EACH PARTY HERETO HEREBY FURTHER WARRANTS AND REPRESENTS THAT SUCH PARTY HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL, AND THAT SUCH PARTY KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL.

 

[Signature Page Follows.]

 

25

 

 

IN WITNESS WHEREOF, the parties have executed this Amended and Restated Series B Preferred Shares Purchase Agreement as of the date first written above.

 

  COMPANY:
   
  AST & SCIENCE, LLC
     
  By: /s/ Abel Avellan
  Name: Abel Avellan
  Title: Chief Executive Officer
     
  Address:
  Midland Intl. Air & Space Port 2901 Enterprise Lane
  Midland, TX 79706

 

Signature Page To Amended And Restated Series B Preferred Shares Purchase Agreement

 

     
     

 

IN WITNESS WHEREOF, the parties have executed this Amended and Restated Series B Preferred Shares Purchase Agreement as of the date first written above.

 

  PURCHASER:
   
  For and on behalf of
  Vodafone Ventures Limited
     
  By: /s/ Edward Verner
  Name: Edward Verner
  Title: M&A Executive
     
  Address: Vodafone Group Services Limited
  Attn: Vodafone Group General Counsel & Company Secretary
  One Kingdom Street, Paddington Central, London W2 6BY

 

Signature Page To Amended And Restated Series B Preferred Shares Purchase Agreement

 

     
     

 

IN WITNESS WHEREOF, the parties have executed this Amended and Restated Series B Preferred Shares Purchase Agreement as of the date first written above.

 

  PURCHASER:
   
  ATC TRS II LLC
     
  By: /s/ Michael John McCormack
  Name:  
  Title:  
     
  Address: 116 Huntington Avenue – 11th Floor Boston, MA 02116

 

Signature Page To Amended And Restated Series B Preferred Shares Purchase Agreement

 

     
     

 

IN WITNESS WHEREOF, the parties have executed this Amended and Restated Series B Preferred Shares Purchase Agreement as of the date first written above.

 

  PURCHASER:
   
  RAKUTEN MOBILE SINGAPORE PTE. LTD.
     
  By: /s/ Takashi Watanabe
  Name: Takashi Watanabe
  Title: Director
     
  Address:
  c/o Rakuten Mobile Singapore PTE. LTD.
  Attn: Mitsuru Koyama
  1-14-1 Tamagawa, Setagaya-kn
  Tokyo 158-0094 Japan

 

Signature Page To Amended And Restated Series B Preferred Shares Purchase Agreement

 

     
     

 

EXHIBITS

 

Exhibit A - SCHEDULE OF PURCHASERS
   
Exhibit B - FORM OF RESTATED AGREEMENT
   
Exhibit C - DISCLOSURE SCHEDULE
   
Exhibit D - FORM OF INVESTORS’ RIGHTS AGREEMENT
   
Exhibit E - FORM OF RIGHT OF FIRST REFUSAL AND CO-SALE AGREEMENT
   
Exhibit F - FORM OF VOTING AGREEMENT
   
Annex 1 - TERMS OF VODAFONE COMMERCIAL AGREEMENTS
   
Annex 2 - RAKUTEN COMMERCIAL AGREEMENTS AND RESTRICTED INVESTOR LIST

 

     
     

 

EXHIBIT A

 

[Intentionally Omitted]

 

     
     

 

EXHIBIT B

 

[Intentionally omitted]

 

     
     

 

 

EXHIBIT C

 

[Intentionally omitted]

 

     
     

 

EXHIBIT D

 

[Intentionally omitted]

 

     
     

 

 

EXHIBIT E

 

[Intentionally omitted]

 

     
     

 

 

EXHIBIT F

 

FORM OF VOTING AGREEMENT

 

     
     

 

ANNEX 1

 

TERMS OF VODAFONE COMMERCIAL AGREEMENTS

 

1. Mutual exclusivity within all Vodafone operated markets set forth on Appendix A to this Annex 1 (the “Vodafone Markets”) for a period of five years. The five-year period starts from the launch of commercial service based on the Phase 3 constellation anticipated in Q2 2023. As a requirement for Vodafone to receive or maintain its exclusivity in any given Vodafone Market, Vodafone will make the service available to all Vodafone customers in such Vodafone Market and promote the service to its customers upon the initial launch and also promote the service as an element of its normal course of business customer acquisition efforts through the exclusivity period.
   
2. For reference, Phase 1 comprises 18 satellites, low band 700-950 MHz for maximum coverage, 38 countries (including Vodafone Markets in [***]), Phase 2 constellation will be deployed approximately [***] later, adding 45 satellites and EU coverage including all of Vodafone’s Markets and will target 1800MHz spectrum. Phase 3 will add a further 45 satellites and full global coverage up to +/- 60 degrees latitude. Subsequent launch of a further 45 satellites (not yet scheduled) will add further capacity, resilience and MIMO service. The above launch campaign sequence shall be subject to change in coordination with the lead MNO.
   
3. Renewal of mutual exclusivity after the initial 5-year period is subject to further negotiation.
   
4. Preferential commercial terms will be offered in the Vodafone partner markets set forth on Appendix B to this Annex 1 (the “Vodafone Partner Markets”), [***] offered to the primary mobile operator in the Vodafone Partner Markets. [***]
   
5. In Vodafone Markets where Vodafone has exclusivity, there will be a 50/50 revenue share for all services enabled by the Company’s SpaceMobile satellite segment. End-user pricing where Vodafone has exclusivity will be set maximizing Vodafone SpaceMobile (pricing times volume) and set jointly by the Company and Vodafone on a market by market basis.
   
6. Vodafone will procure, build and operate the mobile network aspects of the Company’s ground stations as required to support the Company’s operation in Vodafone Markets at a mutually agreed upon cost. This will be a commercial service provided by Vodafone to the Company. Additional ground stations covering non-Vodafone Markets will be built and operated by a different provider.
   
7. The Vodafone commercial agreements shall contain appropriate indemnities and recourse against the Company in the event of any breach by the Company of its roll out in the Vodafone markets and partner markets as contemplated by the Vodafone commercial agreements and the terms of the Series B purchase agreement among the Company, Vodafone and the other parties thereto.

 

     

 

 

 

Exhibit 10.16

 

AST & SCIENCE, LLC

 

December 15, 2020

 

Vodafone Ventures Limited

c/o Vodafone Group Services Limited

One Kingdom Street

Paddington Central, London W2 6BY

Attn: Vodafone Group General Counsel

& Company Secretary

 

Re: Commercial Agreement

 

Vodafone Ventures Limited:

 

Reference is made to that certain Amended & Restated Series B Preferred Shares Purchase Agreement dated as of February 4, 2020 (the “Series B Purchase Agreement”) by and among AST & Science, LLC (the “Company”) and certain “Purchasers” party thereto, including Vodafone Ventures Limited (“VVL”). Capitalized terms used without definition hereunder shall have the meanings ascribed to such terms in the Series B Purchase Agreement.

 

As you know, the Series B Purchase Agreement, which remains in full force and effect, including in relation to Annex 1, contemplates in Section 6.3(a) that VVL and the Company will negotiate and enter into the Vodafone Commercial Agreements, which agreements will include the matters specified on Annex 1 to the Series B Purchase Agreement. As you also know, concurrently with the execution of this letter agreement, the Company and certain of its existing equity holders are entering into an Equity Purchase Agreement (the “Equity Purchase Agreement”) with New Providence Acquisition Corp. (“NPA”) and New Providence Management LLC (“NPA Sponsor”). The Equity Purchase Agreement contemplates a series of transactions the consummation of which will result in (i) NPA becoming the managing member of the Company and a publicly listed and traded holding company for the Company’s business (NPA after the closing of the Equity Purchase Agreement, “PubCo”), (ii) each of PubCo and the Company undergoing a recapitalization transaction to structure the ongoing business into an “UP-C” structure and receive up to $400 million of new investment capital from NPA investors in a concurrent private offering of PubCo equity and (iii) in connection with the foregoing, the amendment and restatement of the Company’s limited liability company operating agreement, the adoption of a new charter and bylaws for PubCo (which will be renamed “AST SpaceMobile, Inc.”), entry into a stockholders’ agreement among the PubCo, NPA Sponsor and certain of AST’s existing equity holders, among other ancillary agreements facilitative to the foregoing (the transactions and agreements contemplated by the Equity Purchase Agreement, collectively, the “Going Public Transactions”).

 

 
 

 

As a result of Going Public Transactions, at the closing of the Equity Purchase Agreement, each of the Investors’ Rights Agreement, Right of First Refusal and Co-Sale Agreement and Voting Agreement entered into in connection with the Series B Purchase Agreement will be terminated. Those agreements contemplated, among other things, a series of VVL governance rights which relate principally to VVL’s commercial dealings with the Company. In connection with the Going Public Transactions, and in light of the termination of the aforementioned VVL governance rights, the parties hereto hereby agree that (i) the Vodafone Commercial Agreements, which will include all covenants of the Company specified in this letter agreement as integral terms thereof, will be negotiated and entered into between the Company, on the one hand, and Vodafone Group Services Limited, or its applicable affiliate, rather than VVL, on the other hand, (ii) all references to “Vodafone” in Annex 1 to the Series B Purchase Agreement shall be understood for all purposes to be references to Vodafone Group Services Limited or its applicable affiliates (other than VVL), and (iii) VVL shall have no liability to the Company or its affiliates relating to or in connection with the Vodafone Commercial Agreements or the negotiation, entry into, delivery or performance of the Vodafone Commercial Agreements.

 

In addition, the parties hereto hereby agree that the Vodafone Commercial Agreements shall contain the following additional covenants, which are intended to facilitate achieving the mutual business goals of the parties and their affiliates and which shall be binding on the Company and its affiliates unless otherwise agreed to by Vodafone Group Services Limited in writing in advance:

 

  (1) neither the Company nor its subsidiaries will enter into any material corporate strategic relationship or material commercial agreement with a party other than Vodafone Group Services Limited or its affiliates that would be reasonably expected to materially frustrate the Company’s ability to enter into, or satisfy its obligations under, the Vodafone Commercial Agreements; provided, however, that the foregoing shall in no event limit the ability of the Company or its subsidiaries to enter into (x) the Rakuten Commercial Agreements, (y) ordinary course agreements, or (z) any other agreements contemplated by the then-current business plan (“Business Plan”) for PubCo and the Company adopted by the board of directors of PubCo from time-to-time;
     
  (2) subject to compliance with applicable law, the Company will allocate sufficient funds in the capital budget for PubCo and the Company, including amendments thereof, to facilitate compliance with the Company’s obligations under the Vodafone Commercial Agreements or the Company’s obligations with respect the Vodafone Commercial Agreements under the Series B Purchase Agreement; and
     
  (3) subject to compliance with applicable law, the Company will not alter the Business Plan in a manner that is materially detrimental to the Company’s ability to promptly enter into, deliver, or satisfy its obligations under, the Vodafone Commercial Agreements.

 

 
 

 

In furtherance of the foregoing, the parties hereto hereby agree that prior to the execution and delivery of the Vodafone Commercial Agreements and the effectiveness thereof, each of the Company, PubCo, and their applicable subsidiaries shall comply with, or cause its subsidiaries to comply with, each of the covenants set forth in clauses (1) through (3) above unless otherwise agreed to by Vodafone Group Services Limited in writing in advance.

 

This letter agreement shall take effect upon the closing of the Equity Purchase Agreement. Following such effectiveness (if any), this letter agreement shall terminate and be of no further force or effect upon the execution of the Vodafone Commercial Agreements. This letter agreement may not be amended or any provision hereof waived or modified except by an instrument in writing signed by each of the parties hereto. This letter agreement, the rights and duties of the parties hereunder, any disputes (whether in contract, tort or statute), and the legal relations among the parties arising hereunder shall be governed by and interpreted and enforced in accordance with the laws of the State of Delaware without reference to its provisions or principles of conflicts of laws. Each party to this letter agreement hereby irrevocably submits to the exclusive jurisdiction of any state or federal court sitting in the State of Delaware in any action or proceeding arising out of or relating to this Agreement, and each party hereby irrevocably agrees that all claims asserted in such action or proceeding shall be heard and determined in any such court. Each party further irrevocably waives any objection which such party may now or hereafter have to the venue of the state or federal court in the State of Delaware having jurisdiction, and irrevocably agrees not to assert that such court is an inconvenient forum. This letter agreement may be executed in any number of counterparts with the same effect as if the parties hereto had signed the same document. All counterparts will be construed together and will constitute one instrument.

 

[signature page to follow]

 

 
 

 

IN WITNESS WHEREOF, the parties hereto have executed this Letter Agreement on the date first written above, to be effective as of and conditioned on the Closing as defined in the Equity Purchase Agreement.

 

  Very truly yours,
   
  AST & SCIENCE, LLC
   
  /s/ Thomas E. Severson, Jr.
  Thomas E Severson, Jr., CFO

 

 
 

 

AGREED AND ACCEPTED:

 

VODAFONE VENTURES LIMITED  
   
By: /s/ Edward Verner  
Name: Edward Verner  
Title: Authorized Signatory  
     
VODAFONE GROUP SERVICES LIMITED  
   
By: /s/ Johan Wibergh  
Name: Johan Wibergh  
Title: Group CTO  

 

 

 

 

Exhibit 10.17

 

AST & SCIENCE, LLC

 

December 15, 2020

 

ATC TRS IV LLC

116 Huntington Avenue, 11th Floor

Boston, MA 02116

Attention: Jason Hirsch

 

Re: Additional Agreements

 

ATC TRS IV LLC:

 

This letter agreement (this “Amended and Restated Letter Agreement”) amends and restates that certain letter (the “Original Letter”) from AST & Science, LLC, a Delaware limited liability company (the “Company”) to ATC TRS II LLC, a Delaware limited liability company and predecessor in interest to ATC TRS IV LLC, a Delaware limited liability company (“you” or the “Investor” and, together with the Company, the “Parties,” and each, a “Party”), dated October 16, 2019 in connection with the acquisition by the Investor of 149,685 Series B Preferred Shares (the “Preferred Shares”) of the Company, pursuant to that certain Series B Preferred Shares Purchase Agreement, dated as of October 16, 2019 (the “Purchase Agreement,” and such sale of Series B Preferred Shares pursuant to the Purchase Agreement, the “Series B Financing”).

 

As you also know, concurrently with the execution of this Amended and Restated Letter Agreement, the Company and certain of its existing equity holders are entering into an Equity Purchase Agreement (the “Equity Purchase Agreement”) with New Providence Acquisition Corp. (“NPA”) and New Providence Management LLC (“NPA Sponsor”). The Equity Purchase Agreement contemplates a series of transactions the consummation of which will result in (i) NPA becoming the managing member of the Company and a publicly listed and traded holding company for the Company’s business (NPA after the closing of the Equity Purchase Agreement, “PubCo”), (ii) each of PubCo and the Company undergoing a recapitalization transaction to structure the ongoing business into an “UP-C” structure and receive up to $250 million of new investment capital from NPA investors in a concurrent private offering of PubCo equity (the “PIPE Offering”) and (iii) in connection with the foregoing, the amendment and restatement of the Company’s limited liability company operating agreement, the adoption of a new charter and bylaws for PubCo (which will be renamed “AST SpaceMobile, Inc.”), entry into a stockholders’ agreement among the PubCo, NPA Sponsor and certain of AST’s existing equity holders, among other ancillary agreements facilitative to the foregoing (the transactions and agreements contemplated by the Equity Purchase Agreement, collectively, the “Going Public Transactions”).

 

As a result of Going Public Transactions, and for other commercial reasons, the Company and the Investor hereby enter into this Amended and Restated Letter Agreement pursuant to which the Parties agree as follows:

 

  1. Sale of Shares to Competitor. As long as the Investor, together with its affiliated entities, owns no less than all of the Preferred Shares purchased by it pursuant to the Purchase Agreement, the Company agrees not to issue and/or sell equity securities in the PIPE Offering to a “Cellular Tower Company” defined as any person or company which is primarily engaged in the neutral host business, which shall include the operation of telecommunications systems through infrastructure or the erection, maintenance and/or provision of space on, or leasing of, telecommunications towers, whether ground based towers, rooftop towers, poles or other types of towers or communications systems, including fiber optic cables, or the communications facilities situated at various tower or communications sites; for the avoidance of doubt, the expression “Cellular Tower Company” will not include wireless mobile network operators or financial sponsors.

 

 
 

 

  2. Press Release. Section 2 of the Original Letter is hereby terminated and void effective upon the closing of the Equity Purchase Agreement.
     
  3. Commercial Agreement. See Annex A hereto which is incorporated herein by reference.

 

This Amended and Restated Letter Agreement is effective as of the date first above written.

 

  Very truly yours,
   
  AST & SCIENCE, LLC
   
  /s/ Abel Avellan
  Abel Avellan, CEO

 

AGREED AND ACCEPTED:  
   
ATC TRS IV LLC  
     
By: /s/ Edmund DiSanto  
Name: Edmund DiSanto  
Title: EVP, Chief Administration Officer and General Counsel  

 

 
 

 

ANNEX A

 

ATC TRS IV LLC (“American tower”) and AST&Science LLC (“AST”) Operational Agreement Terms

 

The terms below amend and restate Annex A to the Original Letter and are effective as of the date of the Amended and Restated Letter Agreement, to which these terms are attached and incorporated into by reference. These terms are predicated on the availability of suitable American Tower facilities on a Market (defined below) by Market basis to serve as AST’s terrestrial gateway facilities (such facilities, including the feeder link equipment, hosted operator cellular radio access equipment and software, and all other reasonable or necessary equipment or software, collectively, the “Gateway Facilities” and each, a “Gateway Facility”). Each capitalized term or expression used but not otherwise defined in this annex shall have the meaning attributed to such term or expression in the Amended and Restated Letter Agreement.

 

Context:

 

AST’s space platform and Gateway Facilities will provide mobile network operators (each, an “MNO”) mobile services infrastructure to areas unserved and/or inconsistently served by terrestrial network coverage.

 

Each Gateway Facility may serve (a) a single MNO or (b) multiple MNOs in each country (each, a “Market”).

 

The Parties shall negotiate, in good faith, commercial agreements for the placement of Gateway Facilities on a Market by Market basis, as provided for herein.

 

The Markets in which Vodafone operates are set forth on Appendix A which, for the avoidance of doubt, shall not be modified other than by mutual written agreement of the parties (the “Vodafone Markets” and, the Markets where Vodafone does not operate, the “Carrier Neutral Markets”).

 

A. Vodafone Markets

 

In Vodafone Markets, each American Tower Gateway Facility may serve a single MNO provided that American Tower has local Market operations with assets that meet AST’s and the MNO’s Service Level Agreement (each, an “SLA”) requirements, technical requirements and availability. AST shall work with Vodafone and American Tower to evaluate and plan deployments with preferred vendor status to also offer such facilities in the Vodafone Markets. In Vodafone Markets, the usage of any American Tower services shall be subject to Vodafone’s, AST’s and American Tower’s mutual technical and commercial agreement in addition to acquisition, zoning and permitting know-how on a Market by Market basis.

 

B. Carrier Neutral Markets

 

In all Markets, American Tower Gateway Facilities may serve multiple MNOs and other service providers provided that American Tower has local Market operations that meet AST’s and its customers’ SLA requirements, technical requirements and carrier neutral availability. AST shall work with American Tower to evaluate and plan such deployments on existing or new properties, or in new Markets. Such deployments shall be subject to the Right of First Bid process set forth herein and the mutual written agreement of the Parties.

 

 
 

 

In Carrier Neutral Markets, American Tower may at its sole discretion and upon written commercial and technical agreement with AST, manage the operation of the AST deployed Gateway Facilities, including access points e/Node B / gNode B transport (the “Managed Services”) and, where applicable, in connection with AST’s space platform and mobile network. Each Gateway Facility in each Market will define the services, technical requirements and SLA to be agreed to between AST and American Tower subject to the Right of First Bid process set forth in Section C herein.

 

C. Operational Agreement Terms

 

Term: Five (5) years starting with the initial launch of Bluewalker 3 commercial mobile services by AST from its space platform for mobile, which date shall be confirmed in writing by AST to American Tower.

 

American Tower Preferred Vendor Rights: In the event AST requires a third party service provider of a Gateway Facility or services in a Carrier Neutral Market, AST shall provide detailed requirements, schedules and desired locations in advance in writing to American Tower. American Tower shall provide an initial estimate to provide such Gateway Facility or services. Should AST reasonably deem such initial estimate acceptable, AST shall proceed to contract with American Tower. If AST does not, in its reasonable estimation, deem such estimate acceptable, AST shall put to open bid such Gateway Facility or services, to which process American Tower shall be invited, in its sole discretion, to participate, but in no case shall AST accept any bid that, all things being equal, is inferior to American Tower’s best and final proposal. Any such choice of an alternative bidder shall be subject upon American Tower’s request to a confidential third-party audit to validate such decision. For the avoidance of doubt, this preferred vendor process shall apply (i) in all markets not set forth on Appendix A and (ii) with respect to any single MNO launches in Carrier Neutral Markets.

 

American Tower Preferred Gateway Facility Vendor Status: If in (i) Vodafone Markets where Vodafone elects not to use its own single MNO facilities, (ii) all Markets not set forth in Appendix A, or (iii) instances where AST requires a third party vendor, American Tower’s existing or proposed facilities are technically and commercially feasible for the AST’s space mobile services, then AST will use commercially reasonable efforts to utilize American Tower facilities for AST’s global network and mutually agree to financial terms. In all cases, the written consent of all AST customers, including the local MNO partners or Vodafone in Vodafone Markets, shall be a requirement for the use of American Tower facilities or services on a Market by Market basis.

 

Carrier Neutral Hosting Facilities in Equatorial Markets:

 

AST shall immediately commence work with American Tower to evaluate and plan Gateway Facility and radio access network data center deployments with preferred vendor status to offer carrier-neutral hosting facilities in the initial launch Markets set forth on Appendix B (each, an “Equatorial Market”). In Equatorial Markets, the usage of American Tower Gateway Facilities, acquisition, zoning and permitting know-how, as well as construction, and operational services shall be subject to the Parties’ mutual technical and commercial agreement, on an Equatorial Market by Equatorial Market basis.

 

Carrier Neutral Hosting Facilities

 

During space mobile network deployments in the initial Equatorial Markets, (subject to the Vodafone Markets) as well as all other future Markets inclusive of 5G (subject to the Vodafone Markets), American Tower will serve as the preferred vendor for carrier neutral hosting facilities. Each such carrier neutral hosting facility shall have the ability to serve all MNOs in such Markets. American Tower’s provision of a carrier neutral hosting facility to AST may include but not be limited to (i) operation of such carrier-neutral hosting facility, (ii) all ground infrastructure and hosting capabilities necessary to operate such carrier neutral hosting facility, (iii) the locations for each carrier neutral hosting facility, (iv) all power/electricity and other equipment needed to operate such carrier-neutral hosting facility, (v) radio and associated computing and networking equipment, and (vi) appropriate security for each carrier-neutral hosting facility.

 

 
 

 

For the use of a carrier neutral hosting facility, AST shall pay American Tower a fair market monthly fee (the “Monthly Connection Fee”) determined by the Parties on a facility-by-facility basis for the use and operation of the applicable carrier neutral hosting facility. The Monthly Connection Fee will be an amount determined by the size of the facility, the number of AST MNO partners utilizing the applicable carrier neutral hosting facility and any local Market requirements. AST will negotiate to charge each MNO partner its pro rata share of the Monthly Connection Fee for the use of the applicable carrier-neutral hosting facility and such amounts will be paid to American Tower as the Monthly Connection Fee.

 

Should American Tower and AST mutually agree to construct a new carrier neutral hosting facility or construct improvements required to an existing carrier neutral hosting facility in order to deliver the SpaceMobile Service in any Market, American Tower may choose in its sole discretion to incur all such capital expenditures and manage the construction for such improvements (the “American Tower Investments”). To the extent American Tower Investments are incurred, American Tower will provide AST a fair market, long-term lease arrangement whereby the underlying lease construct will be based on the return of capital relating to the American Tower Investments and at a market rate of return for the capital invested (the “Hosting Facility Lease”). AST will negotiate to charge each MNO partner its pro rata share of the Hosting Facility Lease for the use of the applicable carrier-neutral hosting facility and such amounts will be paid to American Tower in satisfaction of the payments required by the Hosting Facility Lease.

 

**Remainder of Page Intentionally Left Blank – Counterpart Signature Pages to Follow**

 

 
 

 

AST & SCIENCE, LLC  
     
By: /s/ Abel Avellan  
Name: Abel Avellan  
Title: CEO  
     
ATC TRS IV LLC  
     
By: /s/ Edmund DiSanto  
Name: Edmund DiSanto  
Title: EVP, Chief Administration Officer and General Counsel  

 

Signature Page to Annex A – Operational Agreement Terms

 

 

 

Exhibit 10.18

 

[***] Certain identified information has been excluded from this exhibit because it both (i) is not material and (ii) would be competitively harmful if publicly disclosed.

 

AMENDED AND RESTATED COMMERCIAL AGREEMENT

 

This AMENDED AND RESTATED COMMERCIAL AGREEMENT (this “Agreement”) is entered into as of December 15, 2020 (the “Effective Date”), by and between AST & Science, LLC, a Delaware limited liability company, on behalf of itself and its Affiliates (as defined below) (individually or collectively, as the context requires, “Company”), and Rakuten Mobile Singapore Pte. Ltd., a Singapore private limited company (“Rakuten”). Company and Rakuten shall each be referred to herein as a “Party” and collectively as the “Parties”.

 

Background

 

WHEREAS, the Parties previously entered into that certain Commercial Agreement, dated as of February 14, 2020 (the “Initial Commercial Agreement”);

 

WHEREAS, the Company has entered into a letter of intent with New Providence Acquisition Corp., a Delaware corporation (“NPA”), providing for a business combination between the Company and NPA to be structured as an “Up-C” reorganization (the “Reorganization”), that, if consummated, will result in shares in a new parent entity of the Company being publicly traded;

 

WHEREAS, the Initial Commercial Agreement does not contemplate the Reorganization (or any future reorganization if the Reorganization is not consummated) and the Parties believe that certain adjustments are required to the Initial Commercial Agreement in the event of any such reorganization;

 

WHEREAS, in addition, the Initial Commercial Agreement provides, among other things, that Rakuten will have the option to require the Company to redeem a percentage of its equity interests in the Company under certain conditions, and the Parties desire to modify such conditions and replace the redemption structure with a penalty payment provision, and to make such other changes to the Initial Commercial Agreement as reflected below; and

 

WHEREAS, in connection with the foregoing, the Parties desire to amend and restate the Initial Commercial Agreement in its entirety as set forth herein.

 

 
 

 

Agreement

 

NOW, THEREFORE, in consideration of the premises and of the undertakings and covenants set forth herein, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound hereby, the Parties hereby amend and restate the Initial Commercial Agreement in its entirety and hereby agree as follows:

 

1. Network Capabilities; Ground Assets.

 

(a) Company shall sufficiently invest in building network capabilities in Japan compatible with the mobile network of Rakuten and its Affiliates. Company shall collaborate closely with Rakuten to ensure network compatibility with Rakuten’s licensed frequencies, including providing full coverage in Japan within 3GPP Band 3 frequencies with MIMO capability. Any changes to Company’s network design impacting coverage for Japan will require the prior written consent of Rakuten, and Rakuten will receive unlimited [***] rights and usage of capacity for its frequencies in Japan. Rakuten will pay the Company a $500,000 annual maintenance fee payable to Company or its successors commencing upon the launch of such coverage.

 

(b) Company, at Rakuten’s direction, shall have the responsibility for set up of ground communication assets in Japan (“Ground Assets”) (the specifics of which shall be mutually agreed upon by the Parties in writing), which shall be owned by Rakuten. Company shall provide $5 million (or such lesser amount as mutually agreed upon the Parties) towards the design, construction, acquisition and implementation of Ground Assets. Rakuten shall have unlimited rights and usage of the Ground Assets for its operations, including, but not limited to, satellite and other telecommunication communications. Company may utilize the ground assets to service customers in the air or waters over and around Japan, to extract data for maintenance and monitoring purposes, and to meet its obligations in Section 1(a) above and the KPIs in Section 2 below. Company shall not use the Ground Assets to the extent such use limits in any manner Rakuten’s rights or usage of such Ground Assets or capacity for its frequencies in Japan, and shall not sublicense any rights to the Ground Assets without Rakuten’s prior written consent. For purposes of this Agreement, “Affiliates” means any other party which directly or indirectly through one or more intermediaries controls, is controlled by, or is under common control with, such specified party; provided, however, that for purposes of this definition, (i) “control”, as used with respect to any party, means the power to, directly or indirectly, direct the management or policies of such party, whether through the ownership of voting securities, by agreement or otherwise, and (ii) the terms “controls” and “controlled” have correlative meanings.

 

2. Key Performance Indicators; Redemption Option.

 

(a) Company shall adhere to the following commercial roadmap key performance indicators (“KPIs”): [***] 

 

2
 

 

(b) In the event that (i) Company does not meet the applicable KPIs in either Phase 3 or Phase 4 above by the deadline for all commercially available devices which support Band 3 frequencies, or (ii) Company voluntarily or involuntarily becomes subject to any bankruptcy proceedings, is declared insolvent by a court of competent jurisdiction, or makes an assignment for the benefit of creditors (collectively “Bankruptcy”), then the Company shall pay to Rakuten a penalty amount of USD $10 million (the “Penalty Payment”); provided, that, (a) the Penalty Payment shall not be triggered if (x) the Company’s failure to meet the above KPIs arises or results from any failure or delay in the Company’s receipt of any governmental or third party approval, consent, or waiver, or despite Company’s reasonable best efforts, failure by any governmental authority or third party to take any other action, required in connection with the Rakuten rollout or above KPIs and (y) the requirement for the Company to receive any governmental or third party approval, consent or waiver or for any governmental authority or third party to take any other action in connection with the Rakuten rollout or KPIs is triggered by the identity of Rakuten, Rakuten’s business or operations in a particular jurisdiction, Rakuten’s affiliation with the Company, or Rakuten’s action or inaction with respect to any information or cooperation requested by the Company that is necessary or appropriate to obtain any such approval, consent, waiver or other government action, (b) subject to the foregoing clause (a) the Penalty Payment shall be extended as reasonably appropriate (the “Extension Period”) if Company’s failure to meet the above KPIs arises or results from any failure or delay in the Company’s or Rakuten’s receipt of any governmental or third party approval, consent, or waiver, or despite Company’s reasonable best efforts, failure by any governmental authority or third party to take any other action, required in connection with the Rakuten rollout or above KPIs (with 6 months to be a maximum Extension Period with respect to delays in the Company’s receipt of any such approvals, consents or waivers) and (c) in no event shall the Company (or, for sake of clarity, any other person or entity) be required to pay the Penalty Payment on more than one occasion, it being agreed that, subject only to the incremental interest potentially payable in accordance with the immediately following sentence, the maximum amount payable in respect of any failure to meet Phase 3 or 4 KPIs under this Agreement shall be the one-time Penalty Payment of USD $10 million (resulting from the first to occur of Company’s failure to meet the Phase 3 or Phase 4 KPIs under this Agreement) and no subsequent Penalty Payment would be required in the event of a Bankruptcy). In the event that Company is unable to make the Penalty Payment, the Penalty Payment amount shall convert into a promissory note with 8% accruing interest and, unless prohibited by Delaware law, paid in 12 quarterly installments over a 3 year term (able to be prepaid at Company’s election) and which will accelerate upon any “Change of Control” (as defined below) of Company. For purposes of this Agreement, a “Change of Control” shall mean any event constituting a “Deemed Liquidation Event” or similar term in Company’s Fourth Amended and Restated Limited Liability Company Operating Agreement, as amended from time to time, or Company’s Certificate of Incorporation if Company converts from a limited liability company into a corporation, or the governing charter document of any successor entity in the event of a reorganization.

 

3
 

 

3. Partner Markets. Preferential commercial terms shall be offered in Rakuten Partner Markets (as defined below) to the extent permissible under applicable economic sanctions and export control laws, which shall be at a minimum “as good as” the terms offered to the primary mobile operator in those markets. Exceptions, where exclusivity is desirable, may be negotiated on a good faith basis by the Parties, on a case by case basis. For purposes herein, the “Rakuten Partner Markets” means: [***].

 

4. Restricted Investors. Without the prior written consent of Rakuten, Company shall not receive investment from, or enter into a strategic partnership with, the following parties: [***], and all their respective Affiliates, and any other company that operates a fixed line or mobile business in Japan that has its headquarters in Japan (each such party, a “Restricted Investor”); provided, however, that the foregoing will not limit in any way (i) acquisitions of any publicly traded securities by any Restricted Investor, (ii) acquisition of securities by any Restricted Investor in a bona fide underwritten offering of such securities, or (iii) receipt by any Restricted Investor of securities by way of dividend, distribution or otherwise (e.g., a stock dividend, or distribution of rights pursuant to any “poison pill” or similar plan).

 

5. No Conflicting Agreements. The Company shall not (and shall cause its Affiliates not to) enter into any agreement (or any term sheet, letter of intent or other document or commitment, in which the Company or its Affiliates agrees to enter into any agreement or otherwise) that grants any other party rights that would prohibit the Company and its Affiliates from fulfilling its obligations under this Agreement.

 

6. Term. The term of this Agreement shall commence on the Effective Date and shall continue for so long as Rakuten or its Affiliates own a majority of the Series B Shares purchased by Rakuten upon the Effective Date or the equity interests into which the Series B Shares convert or are exchanged for and including issuances in respect of any such shares including in respect of any reorganization of Company; provided, however, that if Rakuten no longer owns such Series B Shares or equity interests as a result of a Change of Control of Company, all provisions of this Agreement shall remain in effect other than Sections 2 and 4 above and Company’s successor shall fulfil the obligations of Company hereunder. For purposes of clarity, no transfer of such Series B Shares or equity interests by Rakuten to an Affiliate shall cause the termination of this Agreement.

 

7. Further Assurances. Each Party shall do and perform, or cause to be done and performed, all such further acts and things, and shall execute and deliver all such other agreements, certificates, instruments and documents, as the other Party may reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby.

 

4
 

 

8. Notices. All notices and other communications given or made pursuant to this Agreement shall be in writing and shall be deemed effectively given upon the earlier of actual receipt, or (a) personal delivery to the party to be notified, (b) when sent, if sent by electronic mail or facsimile during normal business hours of the recipient, and if not sent during normal business hours, then on the recipient’s next business day, (c) five (5) days after having been sent by registered or certified mail, return receipt requested, postage prepaid, or (d) one (1) business day after deposit with a nationally recognized overnight courier, freight prepaid, specifying next business day delivery, with written verification of receipt. All communications shall be sent to the respective parties at their address as set forth on the signature page hereto, or to such e-mail address, facsimile number or address as subsequently modified by written notice given in accordance with this Section 8. If notice is given to the Company, a copy shall also be sent to David Kantaros, Esq., c/o Foley & Lardner LLP, 111 Huntington Avenue, Suite 2500, Boston, Massachusetts 02199, Email: [●], and if notice is given to Rakuten, a copy shall also be sent to Rakuten’s outside legal counsel, Terrence M. Kerwin, Esq. of Fox Rothschild LLP, at [●].

 

9. Miscellaneous.

 

(a) This Agreement constitutes the entire agreement between the Parties pertaining to the subject matter hereof, and merges all prior negotiations and drafts of the Parties with regard to the transactions contemplated herein and therein. Any and all other written or oral agreements existing between the Parties hereto regarding such transactions are expressly canceled.

 

(b) Any term of this Agreement may be amended or waived with the written consent of the Parties or their respective successors and assigns. Any amendment or waiver affected in accordance with this section shall be binding upon the Parties and their respective successors and assigns. Any waiver of a breach of this Agreement shall not be deemed to be a waiver of any subsequent breach. No delay or omission to exercise any right, power or remedy accruing to any party under this Agreement, upon any breach or default of any other party under this Agreement, shall impair any such right, power or remedy of such non-breaching or non-defaulting party nor shall it be construed to be a waiver of any such breach or default, or an acquiescence therein, or of or in any similar breach or default thereafter occurring.

 

(c) The terms and conditions of this Agreement shall inure to the benefit of and be binding upon the respective successors and assigns of the Parties. Nothing in this Agreement, express or implied, is intended to confer upon any party other than the Parties hereto or their respective successors and assigns any rights, remedies, obligations, or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement.

 

(d) If any action at law or in equity is necessary to enforce or interpret the terms of any of this Agreement, the prevailing Party shall be entitled to reasonable attorneys’ fees, costs and necessary disbursements in addition to any other relief to which such Party may be entitled.

 

(e) This Agreement shall be governed by the internal law of the State of Delaware, without regard to conflict of law principles that would result in the application of any law other than the law of the State of Delaware. The Parties (i) hereby irrevocably and unconditionally submit to the jurisdiction of the state courts of Delaware and to the jurisdiction of the United States District Court for the District of Delaware for the purpose of any suit, action or other proceeding arising out of or based upon this Agreement, (ii) agree not to commence any suit, action or other proceeding arising out of or based upon this Agreement except in the state courts of Delaware or the United States District Court for the District of Delaware, and (iii) hereby waive, and agree not to assert, by way of motion, as a defense, or otherwise, in any such suit, action or proceeding, any claim that it is not subject personally to the jurisdiction of the above-named courts, that its property is exempt or immune from attachment or execution, that the suit, action or proceeding is brought in an inconvenient forum, that the venue of the suit, action or proceeding is improper or that this Agreement or the subject matter hereof may not be enforced in or by such court.

 

5
 

 

(f) This Agreement may be executed in counterparts, each of which shall be deemed an original and all of which together shall constitute one instrument.

 

(g) Except as otherwise provided herein, any and all remedies herein expressly conferred upon a Party will be deemed cumulative with and not exclusive of any other remedy conferred hereby or by law or equity on such Party, and the exercise of any one remedy will not preclude the exercise of any other.

 

Waiver of Jury Trial: EACH PARTY HEREBY WAIVES ITS RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT, THE OTHER TRANSACTION AGREEMENTS, THE SECURITIES OR THE SUBJECT MATTER HEREOF OR THEREOF. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS TRANSACTION, INCLUDING, WITHOUT LIMITATION, CONTRACT CLAIMS, TORT CLAIMS (INCLUDING NEGLIGENCE), BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. THIS SECTION HAS BEEN FULLY DISCUSSED BY EACH OF THE PARTIES HERETO AND THESE PROVISIONS WILL NOT BE SUBJECT TO ANY EXCEPTIONS. EACH PARTY HERETO HEREBY FURTHER WARRANTS AND REPRESENTS THAT SUCH PARTY HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL, AND THAT SUCH PARTY KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL.

 

[signature page follows]

 

6
 

 

IN WITNESS WHEREOF, the Parties hereto have entered into this Commercial Agreement on the day and year first above written.

 

  AS&T SCIENCE, LLC
     
  By: /s/ Abel Avellan
  Name: Abel Avellan
  Title: Chairman & CEO

 

  Address:
  Midland Intl. Air & Space Port
  2901 Enterprise Lane
  Midland, TX 79706
  Attn: Tom Severson, CFO

 

  Rakuten Mobile Singapore PTE. LTD.
     
  By: /s/ Takashi Watanabe
  Name: Takashi Watanabe
  Title: Director

 

  Address:
  c/o Rakuten Mobile Singapore PTE. LTD.
  Attn: Mitsuru Koyama
  1-14-1 Tamagawa, Setagaya-ku
  Tokyo 158-0094 Japan

 

 

 

Exhibit 10.19

 

Patent and know-how licence agreement

 

between

 

SRS Space Limited

 

and

 

AST & Science LLC

 

[***] Certain identified information has been excluded from this exhibit because it both (i) is not material and (ii) would be competitively harmful if publicly disclosed.

 

AST & Science LLC Confidential Information

1

 

 

CONTENTS

 

 

CLAUSE

 

1. Interpretation 4
2. Grant of licence 7
3. Provision of further know-how 7
4. Provision of technical assistance 8
5. Improvements; Major Enhancements 8
6. Confidentiality 9
7. Recordal of licence 11
8. Equity Award, Annual Licence Fee and Royalty 11
9. Protection of the Patents and Licensed Know-how 12
10. Liability, indemnity and insurance 14
11. Additional licensee obligations 16
12. Sub-licensing 17
13. Warranties 17
14. Assignment and other dealings 18
15. Duration and termination 18
16. Consequences of termination 19
17. Further assurance 20
18. Waiver 20
19. Entire agreement 20
20. Variation 21
21. Severance 21
22. Counterparts 21
23. Third party rights 21
24. No partnership or agency 22

 

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25. Force majeure 22
26. Notices 22
27. Inadequacy of damages 24
28. Multi-tiered dispute resolution procedure 24
29. Governing law 24
30. Jurisdiction 24

 

SCHEDULE  
     
Schedule 1 The Patents
Schedule 2 Common Share Option Certificate
     
ANNEX  
     
ANNEX A Document identifying Licensed Know-how

 

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This Licence Agreement is dated June 21, 2019

 

Parties

 

(1) SRS SPACE LIMITED incorporated and registered in Ireland whose registered office is at 12 The Ceders, Castlejane Woods, Glanmire, Cork (Licensor).
   
(2) AST & Science LLC incorporated and registered in the State of Delaware, USA whose registered office is at 2901 Enterprise Lane, Midland, Texas 79706 (Licensee)

 

RECITALS

 

WHEREAS, the Parties entered into a letter agreement dated August 22, 2018 (the “Letter Agreement”) that describes Licensor’s obligation to modify its intellectual property for use by Licensee in the Field of Use (as that term is defined below). Upon Final Acceptance (as that term is defined herein) of such modifications by Licensee in accordance with Section 1(f)(iii) of the Letter Agreement, Licensee agrees to pay Licensor the remaining balance of the Fees (as that term is defined in the Letter Agreement) due thereunder.

 

WHEREAS, such modifications by the Licensor will produce the Patents and Licensed Know-how (as such terms are defined below). The Licensor is the owner of the Patents and Licensed Know-how.

 

WHEREAS, the Licensee wishes to use the Patents and Licensed Know-how in the Territory in relation to the Products (as such terms are defined below), and the Licensor is willing to grant the Licensee an exclusive license to use the Patents and Licensed Know-how on the terms and subject to the conditions of this license agreement (the “License Agreement”).

 

NOW, THEREFORE, in consideration of the covenants and agreements set forth herein below and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties, by their authorized signatures below, hereby agree to the terms and conditions set forth below. AGREED TERMS

 

1. Interpretation
   
  The following definitions and rules of interpretation apply in this License Agreement.
   
1.1 Definitions:
   
  Acceptance Date: the date on which Licensee provides Final Acceptance of the Modified Software to Licensor.
   
  Annual Licence Fee: the sum of US$[***] payable by the Licensee to the Licensor in each Contract Year in accordance with Section 8.2.

 

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Business Day: a day other than a Saturday, Sunday or public holiday in Ireland.

 

Contract Year: for the first Contract Year, means the period commencing on the Acceptance Date and ending on the last calendar day of the twelfth (12th) full month after the Acceptance Date; for all subsequent Contract Years, means a one (1) year period commencing on the first (1st) calendar day of the first (1st) full month following the anniversary of the Acceptance Date.

 

Effective Date: the date of this License Agreement.

 

Field of Use: [***]

 

Final Acceptance: has the meaning set forth in Section 8.2.

 

Group: in relation to a company, that company, any subsidiary or holding company from time to time of that company, and any subsidiary from time to time of a holding company of that company.

 

Group Company: in relation to a company, any member of its Group.

 

Improvement: any improvement, enhancement or modification to the technology that is the subject of the Patents or the Licensed Know-how.

 

Licensed Know-how: the know-how identified at ANNEX A, signed by the Parties to this License Agreement and annexed to this License Agreement.

 

Modified Software: has the meaning ascribed in the Letter Agreement.

 

Monthly Royalty Amount: has the meaning given to it in Section 8.3.

 

Licensed User: means any person to whom a sub-licence to use the Patents must be granted to allow them to operate a network incorporating the Products accessed by Subscribed Users.

 

Party: Licensor or Licensee individually, and collectively the “Parties.”

 

Patents: the patents and patent applications, short particulars of which are set out in the Schedule 1, including any future divisionals, re-issues, re-examinations (including patents certified under any post-grant review), continuations and continuations-in-part thereof and any other patent or patent application throughout the world claiming priority through unbroken lineage to any of the foregoing.

 

“Patent Challenge” means any challenge to the validity, patentability, enforceability and/or non-infringement of any of the Patents or otherwise opposing any of the Patents through a legal or administrative proceeding.

 

Products: means a global satellite network for cellular services in the Field of Use which utilises technology within the claim of the Patents and any other products or services which utilise technology falling within the scope of any of the claims of any of the Patents.

 

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Quarterly Periods: means the four (4) periods of three (3) consecutive full months during a Contract Year. The first Quarterly Period for the first Contract Year shall commence on the first (1st) calendar day of the first (1st) full month following the Acceptance Date.

 

Subscribed User: means an individual who is entitled to access the Products pursuant to a subscription for which a fee (whether up front or on-going) is paid.

 

Territory: Worldwide

 

1.2 Clause, Schedule and paragraph headings shall not affect the interpretation of this License Agreement.
   
1.3 A person includes a natural person, corporate or unincorporated body (whether or not having separate legal personality).
   
1.4 The Schedules form part of this License Agreement and shall have effect as if set out in full in the body of this License Agreement. Any reference to this License Agreement includes the Schedules.
   
1.5 A reference to a company shall include any company, corporation or other body corporate, wherever and however incorporated or established.
   
1.6 A reference to a holding company or a subsidiary means a holding company or a subsidiary (as the case may be) as defined in the Section 7 and Section 8 of the Companies Act 2014.
   
1.7 References to Sections and Schedules are to the Sections and Schedules of this License Agreement.
   
1.8 Unless the context otherwise requires, words in the singular include the plural and in the plural include the singular.
   
1.9 Unless the context otherwise requires, a reference to one gender shall include a reference to the other genders.
   
1.10 This License Agreement shall be binding on, and enure to the benefit of, the Parties to this License Agreement and their respective personal representatives, successors and permitted assigns, and references to any Party shall include that Party’s personal representatives, successors and permitted assigns.
   
1.11 A reference to a statute or statutory provision is a reference to it as amended, extended or re-enacted from time to time.

 

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1.12 A reference to a statute or statutory provision shall include all subordinate legislation made from time to time under that statute or statutory provision.
   
1.13 A reference to writing or written includes email.
   
1.14 Any words following the terms including, include, in particular, for example or any similar expression shall be construed as illustrative and shall not limit the sense of the words, description, definition, phrase or term preceding those terms.
   
2. Grant of licence
   
2.1 Subject to Section 2(b) of the Letter Agreement and Section 8.4, the Licensor hereby grants to the Licensee an exclusive licence under the Patents and the Licensed Know-how in the Field of Use to integrate in the manufacture of, use, and resell or otherwise supply, Products in the Territory.
   
2.2 The Licensee shall not enter into negotiations with any other party for the license of the Patents and/or the Licensed Know-how (including any Improvements to the Patents and/or Licensed Know-how) in the Field of Use without prior written approval from Licensor.
   
2.3 It is agreed by the Parties that nothing in this License Agreement shall confer any interest in the Licensor’s background intellectual property (“Background IP”) on Licensee other than a license to use the Background IP to the extent necessary to use the Patents and Licensed Know-how in accordance with this License Agreement. Licensor shall be free to transfer, license, or otherwise deal in the Background IP as it sees fit and to defend, settle, or compromise any claims in relation to the same.
   
3. Provision of further know-how
   
3.1 The Licensor shall make available to the Licensee such further know-how relating to the integration in the manufacture, use, and resale of the Products as the Licensor is at liberty to disclose and, in the opinion of the Licensor, is reasonably necessary for such purposes.
   
3.2 The know-how supplied by the Licensor pursuant to Section 3.1 shall be used by the Licensee only for the purpose of the manufacture of Products in the Territory and shall be subject to the provisions of Section 6.
   
3.3 The know-how supplied by the Licensor under Section 3.1 shall, where it has been identified by describing and recording it when provided to the Licensee, be deemed to be part of the Licensed Know-how.

 

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3.4 Nothing in this License Agreement shall constitute any representation or warranty that the Licensed Know-how or any other know-how supplied to the Licensee pursuant to Section 3 is accurate, up to date, complete, or relevant to the Patents or the manufacture of the Products.
   
4. Provision of technical assistance
   
4.1 As part of the Annual License Fee paid to Licensor as set forth in Section 8.2, Licensor shall provide such commercial and technical support as is reasonably required by Licensee for the use of the Patents and Licensed Know-how, including maintenance of the Patents and Licensed Know-how and all related support during LTE release changes. At the direction of Licensor, Licensee shall work with Licensor’s third party eNobe provider to implement the Patents and Licensed Know-how, including delivering to such third party the Patents and Licensed Know-how and any authorization codes and Documentation needed by Licensor to utilize the licenses granted hereunder.
   
4.2 Nothing in this License Agreement shall constitute any representation or warranty that the technical assistance made available to the Licensee pursuant to Section 4.1 shall result in the Licensee being successful in the creation of the Products or achieving any particular rate, cost or quality of production.
   
5. Improvements; Major Enhancements
   
5.1 If either Party makes, devises, discovers, or otherwise acquires rights in, any Improvement, such Party shall, to the extent that it is not prohibited by law or by any obligation to any other person (other than to a Group Company), promptly notify the other Party in writing giving details of the Improvement, and shall, if the other Party so requests, provide such further information as is reasonably required to be able to evaluate the Improvement effectively.
   
5.2 Information provided by the Licensor to the Licensee under Section 5.1 shall be subject to the provisions of Section 6.
   
5.3 If either Party makes, devises, discovers or otherwise acquires rights in any Improvement, it shall enter into good faith negotiations with a view to granting to the other Party a right to use such Improvement in the Territory on terms to be agreed between the Parties.
   
5.4 In the event that Licensee desires for Licensor to modify the Patents and/or Licensed Know-how in a material manner beyond Licensor’s maintenance obligations set forth in Section 4.1, the Parties shall execute a separate statement of work for such modifications.

 

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6. Confidentiality
   
6.1 “Confidential Information” means all confidential information (however recorded or preserved) disclosed by one Party or its Representatives (as defined below) to the other Party or its Representatives in connection with this License Agreement, including:
   
    (a) the terms of this License Agreement;
       
    (b) the Licensed Know-how and any Improvements;
       
    (c) all other know-how relating to the manufacture or sale of the Products;
       
    (d) any information (whether or not technical) that would be regarded as confidential by a reasonable business person.
   
  “Representatives” means, in relation to a Party, its employees, officers, representatives and advisers.
   
6.2 The provisions of this Section 6 shall not apply to any Confidential Information that:
   
    (a) is or becomes generally available to the public (other than as a result of its disclosure by the one Party or its Representatives in breach of this Section);
       
    (b) was available to the non-disclosing Party on a non-confidential basis before disclosure by the disclosing Party;
       
    (c) was, is or becomes available to one Party on a non-confidential basis from a person who, to such Party’s knowledge, is not bound by a confidentiality agreement with the other Party or otherwise prohibited from disclosing such information;
       
    (d) the Parties agree in writing is not confidential or may be disclosed; or
       
    (e) a Party is required to disclose in order to comply with, or take the benefit of, Section 7.
   
6.3 Each Party shall keep the other Party’s Confidential Information confidential and shall not:
   
    (a) use such Confidential Information except for the purpose of exercising or performing its rights and obligations under or in connection with this License Agreement (the “Permitted Purpose”); or
       
    (b) disclose such Confidential Information in whole or in part to any third party, except as expressly permitted by this Section 6.

 

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6.4 A Party may disclose the Confidential Information to those of its Representatives who need to know such Confidential Information for the Permitted Purpose, provided that:
   
    (a) it informs such Representatives of the confidential nature of the Confidential Information before disclosure; and
       
    (b) it procures that its Representatives shall, in relation to any Confidential Information disclosed to them, comply with the obligations set out in this Section 6 as if they were a party to this License Agreement,
   
  and at all times, it is liable for the failure of any Representatives to comply with the obligations set out in this Section 6.
   
6.5 A Party may disclose Confidential Information to the extent such Confidential Information is required to be disclosed by law, by any governmental or other regulatory authority or by a court or other authority of competent jurisdiction provided that, to the extent it is legally permitted to do so, it gives the other Party as much notice of such disclosure as possible and, where notice of disclosure is not prohibited and is given in accordance with this Section 6.5, it takes into account the reasonable requests of the non-disclosing Party in relation to the content of such disclosure.
   
6.6 Each Party reserves all rights in its Confidential Information. No rights or obligations in respect of the Confidential Information other than those expressly stated in this License Agreement are granted to the other Party, or to be implied from this License Agreement.
   
6.7 On termination or expiration of this License Agreement, each Party shall:
   
    (a) destroy or return to the other Party all documents and materials (and any copies) containing, reflecting, incorporating or based on the Confidential Information;
       
    (b) erase all the Confidential Information from its computer and communications systems and devices used by it, including such systems and data storage services provided by third parties (to the extent technically and legally practicable); and
       
    (c) certify in writing to the other Party that it has complied with the requirements of this Section, provided that it may retain documents and materials containing, reflecting, incorporating or based on the Confidential Information to the extent required by law or any applicable governmental or regulatory authority. The provisions of this Section shall continue to apply to any such documents and materials retained by such Party, subject to Section 15.
   
6.8 The provisions of this Section 6 shall continue to apply after the expiry or earlier termination of this License Agreement.

 

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7. Recordal of licence
   
7.1 The Licensee shall, at its own cost, promptly record the licence granted to it in Section 2 in the relevant registries in the Territory.
   
7.2 The Licensor shall provide reasonable assistance, at the Licensee’s cost, to enable the Licensee to comply with Section 7.1.
   
8. Equity Award, Annual Licence Fee and Royalty
   
8.1 Promptly following the Effective Date, the Licensee will provide the Licensor with equity compensation in a form of a share option for [***] common shares (“Equity Compensation”). The Equity Compensation will represent approximately [***]% of the Licensee’s outstanding shares (as of the date of the Letter Agreement) (Founder Shares and the conversion of Series A Preferred Shares) and Licensee’s share option pool. Such Equity Compensation shall vest in accordance with the timing set forth in the Common Share Option Certificate, attached herein as Schedule 2.
   
  The Licensee does not warrant the ultimate value of this Equity Compensation, if and when realized.
   
8.2 Notwithstanding the Section 2(a)(i) of the Letter Agreement, within sixty (60) days after Final Acceptance of the Modified Software by Licensee, Licensee shall pay to the Licensor [***] ([***]%) of the Annual License Fee. “Final Acceptance” means Licensee acceptance, in Licensee sole discretion, that the Modified Software has successfully demonstrated in testing conducted by Licensee (with cooperation as needed from Licensor) that the Modified Software will operate with Licensee’s Blue Walker 1 satellite. For the remainder of the first Contract Year, Licensee will pay the remaining [***] ([***]%) of the Annual License Fee in three (3) equal instalments by the last day of the next three (3) Quarterly Periods following the initial payment. For all subsequent Contract Years, AST shall pay the Licensor the Annual License Fee of $[***] in four (4) equal instalments by the last day of each Quarterly Period during such Contract Year.
   
8.3 The Licensee shall pay to the Licensor a royalty fee during the license period term (the “Monthly Royalty Amount”). The Monthly Royalty Amount will be calculated by [***].
   
8.4 In the event that Licensee does not pay Licensor the Annual License Fee when it falls due for payment as set forth in Section 8.2, the license granted to Licensee in Section 2 shall convert to a non-exclusive license. For the avoidance of doubt, the Annual Licence Fee shall continue to be payable by the Licensee following the conversion to a non-exclusive license and the Licensor shall continue to have the remedies available to it under Section 15.2.

 

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8.5 Royalties and any other sums payable under this License Agreement shall be paid in US$ to the credit of a bank account to be designated in writing by the Licensor.
   
8.6 Royalties payable under this License Agreement shall be paid within forty-five (45) days of the end of each successive Quarterly Period.
   
8.7 At the same time as payment of the Monthly Royalty Amount, the Licensee shall submit or cause to be submitted to the Licensor a statement in writing recording the calculation of such Monthly Royalty Amount payable and in particular: [***]
   
8.8 The Licensee shall keep proper records and books of account showing [***]. Such records and books shall be kept separate from any records and books not relating solely to the Products and Subscribed Users and be open during normal business hours to inspection and audit by the Licensor (or its authorised representative), who shall be entitled to take copies of or extracts from them. If such inspection or audit should reveal a discrepancy in the Monthly Royalty Amount paid from those payable under this License Agreement, the Licensee shall make up the shortfall and reimburse the Licensor in respect of any professional charges incurred for such audit or inspection. Such right of inspection of the Licensor shall remain in effect for a period of one year after the termination of this License Agreement. The inspection and audit rights described herein are subject to the following: (1) Licensor shall only be permitted to conduct one inspection/audit per year commencing on the first anniversary of the Effective Date; (2) Licensor shall give Licensee thirty (30) days written notice prior to any inspection/audit; (3) any authorised representative used by Licensor to conduct an inspection/audit must execute a confidentiality agreement acceptable to Licensee and shall not be a competitor of Licensee (as determined by Licensee in its sole discretion); and (4) Licensor (or its authorised representative) shall not disrupt Licensee’s business operations during an inspection/audit.
   
8.9 The provisions of this Section 8 shall remain in effect notwithstanding termination or expiry of this License Agreement until the settlement of all subsisting claims by the Licensor in effect prior to termination or expiration of this License Agreement.
   
9. Protection of the Patents and Licensed Know-how
   
9.1 The Licensee shall promptly notify the Licensor in writing, giving full particulars, if any, of the following matters come to its attention:
   
    (a) any actual, suspected or threatened infringement of any of the Patents;

 

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    (b) any actual, suspected or threatened unauthorised disclosure, misappropriation or misuse of the Licensed Know-how;
       
    (c) any actual or threatened claim that any of Patents is invalid;
       
    (d) any actual or threatened opposition to any of the Patents;
       
    (e) any claim made or threatened that exploitation of any of the Patents or the Licensed Know-how infringes the rights of any third party;
       
    (f) any person applies for, or is granted, a patent by reason of which that person may be, or has been, granted, rights which conflict with any of the rights granted to the Licensee under this agreement;
       
    (g) any application is made for a compulsory licence under any Patent; or
       
    (h) any other form of attack, charge or claim to which the Patents or Licensed Know-how may be subject.
   
9.2 In respect of any of the matters listed in Section 9.1:
   
    (a) the Licensor and the Licensor shall seek to agree what action, if any, to take;
       
    (b) the Parties shall jointly have control over, and conduct of, all claims and proceedings;
       
    (c) each Party shall provide the other Party with all assistance that it may reasonably require in the conduct of any claims or proceedings; and
       
    (d) the Parties shall bear the cost of any proceedings and shall be entitled to retain all sums recovered in any action in equal proportions.
   
9.3 If the Parties cannot agree on the course of action to take in relation to a third party infringement of any of the Patents in the Territory which interferes materially in Licensee’s business in the Products, subject to receiving advice from experienced patent counsel that infringement proceedings stand a reasonable chance of success, Licensee may commence proceedings and may require Licensor to lend its name to such proceedings and provide reasonable assistance. Licensor shall promptly reimburse Licensee for all such reasonable costs and expenses incurred by Licensee, including reasonable attorneys’ fees. The Licensor shall obtain and maintain a global intellectual property and trade secret insurance policy in relation to the Patents and Licensed Know-How and shall have the Licensee noted on the policy as a beneficiary. The Licensor shall provide a copy of the certificate of insurance to the Licensee on request. The Parties shall bear the cost of the insurance in equal proportions and the Licensee shall pay the Licensor its share of the insurance premium within 30 days of the Licensor providing the Licensee with a statement from the insurer setting out the premium. The Licensee’s obligation to pay the Monthly Royalty Amount to the Licensor shall be suspended during any period in which there is no insurance policy in place in accordance with the terms of this Clause.

 

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9.4 Nothing in this License Agreement shall constitute any representation or warranty that:
   
    (a) any Patent is valid or relevant to the Products;
       
    (b) any Patent (if a patent application) shall proceed to grant or, if granted, shall be valid; or
       
    (c) the exercise by the Licensee of rights granted under this License Agreement will not infringe the rights of any person.
   
9.5 In the event that the Patents and Licensed Know-how include Licensee intellectual property, including but not limited to Doppler compensation, delay equalization or the overall system, both Parties will work in good faith to protect and coordinate the defense of the Patents, Licensed Know-how, and Licensee intellectual property, and to enhance enforcement of the Patents and Licensed Know-how in coordination with Licensee patents and trade secrets. All publication or announcement of the Patents and Licensed Know-how requires mutual consent and coordination, and if any, shall clearly indicate the nature of the exclusive license agreement of the Patents and Licensed Know-how to Licensee.
   
10. Liability, indemnity and insurance
   
10.1 EXCEPT FOR LICENSOR’S OBLIGATIONS AS SET FORTH IN SECTION 10.2 (INDEMNITY) AND EACH PARTY’S OBLIGATIONS AS SET FORTH IN SECTION 6 (CONFIDENTIALITY), NEITHER PARTY SHALL BE LIABLE FOR ANY SPECIAL, PUNITIVE, INDIRECT OR CONSEQUENTIAL DAMAGES ARISING OUT OF OR IN CONNECTION WITH THEIR RESPECTIVE OBLIGATIONS UNDER THIS AGREEMENT AND NEITHER PARTY’S LIABILITY UNDER THIS AGREEMENT SHALL EXCEED THE GREATER OF TWO TIMES THE AMOUNT FEES PAID BY LICENSEE TO LICENSOR UNDER THIS AGREEMENT.
   
10.2 Indemnity.
   
    (a) Infringement Indemnity. Licensor agrees to defend, indemnify and hold harmless Licensee, Licensee’s Affiliates and their employees, directors, shareholders and Agents (collectively the “Indemnified Group”) from and against any expense, cost, damage, loss, fine, penalty, liability or judgment, and settlements thereof, including reasonable attorneys’ fees, suffered or incurred by the Indemnified Group as a result of any claim, demand, action, arbitration, suit or similar proceeding brought or asserted against one or more members of the Indemnified Group by any third party (hereafter “Claim”) alleging that the Patents and/or Licensed Know-how, or the use of the Patents and/or Licensed Know-how by Licensee or a Licensee affiliate in accordance with the license granted under this License Agreement infringes or misappropriates any patent, trademark, copyright, trade secret or other proprietary right of such third party.

 

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    (b) Infringement Remedies. If a third party Claim causes Licensee’s or a Licensee affiliate’s quiet enjoyment and use of the Patents and/or Licensed Know-how to be endangered or disrupted, Licensor shall, in a timely manner, at its sole expense and in addition to its obligations under Section 10.2(a):
         
      (i) modify or replace the Patents and/or Licensed Know-how so that the Patents and/or Licensed Know-how as a whole are no longer infringing, provided that the Patents and/or Licensed Know-how (as so modified or replaced) is functionally equivalent in all material respects and is not changed adversely in any material respect; or
         
      (ii) procure for Licensee and Licensee’s affiliates the right to continue using the Patents and/or Licensed Know-how; or
         
      (iii) if neither of the foregoing is, in Licensor’s reasonable opinion, commercially reasonable, request Licensee to remove the Patents and/or Licensed Know-how and promptly reimburse the Indemnified Group for all amounts paid hereunder for and in connection with the Patents and/or Licensed Know-how, its use, maintenance, and cessation of use, including all monies paid or reasonable expenses incurred by Licensee and Licensee’s affiliates.
   
10.3 If any third party makes a claim, or notifies an intention to make a claim, against the Licensee which may reasonably be considered likely to give rise to a liability under this indemnity (a Claim), the Licensee shall:
   
    (a) as soon as reasonably practicable, give written notice of the Claim to the Licensor, specifying the nature of the Claim in reasonable detail;
       
    (b) not make any admission of liability, agreement or compromise in relation to the Claim without the prior written consent of the Licensor (such consent not to be unreasonably conditioned, withheld or delayed);
       
    (c) give the Licensor and its professional advisers access at reasonable times (on reasonable prior notice) to its premises and its officers, directors, employees, agents, representatives or advisers, and to any relevant assets, accounts, documents and records within the power or control of the Licensee, so as to enable the Licensor and its professional advisers to examine them and to take copies (at the Licensor’s expense) for the purpose of assessing the Claim; and

 

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    (d) take such action as the Licensor may reasonably request to avoid, dispute, compromise or defend the Claim.
   
  Failure to give such notice shall not abrogate or diminish Licensor’s obligations under Section 10.2 if Licensor has or receives knowledge of the existence of such Claim by any other means, or if such failure does not materially prejudice Licensor’s ability to defend the same.
   
10.4 The Licensee shall, at its expense, carry premises liability insurance, comprehensive general liability insurance coverage of US$[***] per occurrence with a $[***] limit for a total amount of $[***]. The Licensee shall ensure that such insurance policy remains in effect throughout the duration of this License Agreement, and shall supply the Licensor with a copy of such policy on request.
   
10.5 Nothing in this License Agreement shall have the effect of excluding or limiting any liability for death or personal injury caused by negligence.
   
11. Additional licensee obligations
   
11.1 The Licensee shall:
   
    (a) obtain at its own expense all licences, permits and consents necessary for the provision of the Products in the Territory;
       
    (b) only make use of the Patents and the Licensed Know-how for the purposes authorised in this License Agreement;
       
    (c) comply with all regulations and practices in force or use in the Territory to safeguard the Licensor’s rights in the Patents and the Licensed Know-how; and
       
    (d) obtain any Government approval required for this License Agreement in any country in the Territory or the country of the Licensee, before the Effective Date and shall provide the Licensor with a copy of such approval.
   
11.2 The Licensee shall not, nor directly or indirectly assist any other person to do or omit to do anything to diminish the rights of the Licensor in the Patents or the Licensed Know-how or impair any registration of the Patents.
   
11.3 The Licensee acknowledges and agrees that the exercise of the licence granted to the Licensee under this License Agreement is subject to all applicable laws, enactments, regulations and other similar instruments in the Territory, and the Licensee understands and agrees that it shall at all times be solely liable and responsible for such due observance and performance.

 

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12. Sub-licensing
   
  The Licensee shall have the right to grant to Licensed Users a sub-licence of any of its rights under this License Agreement solely to the extent necessary for them to access and use the Products provided that all sub-licences granted shall terminate automatically on termination or expiry of this License Agreement.
   
13. Warranties
   
13.1 Authority. Each Party represents and warrants that it has: (a) all requisite legal and corporate power to execute and deliver this License Agreement, (b) taken all corporate action necessary for the authorization, execution and delivery of this License Agreement, (c) no agreement or understanding with any third party that interferes with or will interfere with its performance of its obligations under this License Agreement, (d) obtained and will maintain all rights, approvals and consents necessary to perform its obligations and grant all rights and licenses granted under this License Agreement, and (e) taken all action required to make this License Agreement a legal, valid and binding obligation of such Party, enforceable against such Party in accordance with its terms.
   
13.2 Performance. Licensor represents and warrants that the Patents and License Know-how will conform to the specifications and Documentation of Licensor (incorporated herein) and the Acceptance Criteria.
   
13.3 No Infringement. Licensor represents and warrants to Licensee that:
   
    (a) Licensor owns all right, title and interest in and to the Patents and License Know-how and has the full legal right to grant the License in accordance with this License Agreement;
       
    (b) entering into and carrying out the terms and conditions of this License Agreement will not violate or constitute a breach of any agreement binding upon Licensor;
       
    (c) as of the date on which Licensor delivers the Patents and License Know-how (and also on the date of delivery of each update and upgrade) there is no claim, litigation or proceeding pending or (to the best of Licensor’s knowledge) threatened against Licensor with respect to the Patents and License Know-how or any component thereof alleging infringement or misappropriation of any patent, trademark, copyright or any trade secret or other proprietary right of any person or entity; and

 

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    (d) neither the Patents and License Know-how nor any use by Licensee or Licensee’s affiliates of the Patents and License Know-how does or will infringe or misappropriate in any respect any patent, trademark, copyright, trade secret or other proprietary right of any third party.
   
13.4 Compliance with Laws. Licensor represents and warrants that in the performance of this License Agreement, Licensor, and the Patents and License Know-how provided hereunder, will comply with applicable laws, rules and regulations of applicable jurisdictions that are applicable to Licensor in performing its obligations to Licensee or that would be applicable to Licensee if Licensee were performing those obligations using its own employees and assets.
   
13.5 Personnel. Licensor warrants that each of its employees, agents or representatives assigned to perform hereunder (“Personnel”) shall have proper skill, training and background and shall perform in a competent and professional manner.
   
14. Assignment and other dealings
   
14.1 Reserved.
   
14.2 Subject to the Licensee’s written consent, which shall not be unreasonably withheld, the Licensor may at any time assign, mortgage, charge, declare a trust over or deal in any other manner with any or all of its rights and obligations under this License Agreement provided that the Licensor gives written notice of such dealing to the Licensee.
   
14.3 Subject to the Licensee’s written consent, which shall not be unreasonably withheld, the Licensor may sub-contract or delegate in any manner any or all of its obligations under this License Agreement to any third party.
   
14.4 The Licensee shall, at the Licensor’s request, execute any agreements or other instruments (including any supplement or amendment to this License Agreement) which may be required in order to give effect to or perfect any assignment, transfer, mortgage, charge or other dealing referred to in Section 14.2.
   
15. Duration and termination
   
15.1 This License Agreement shall come into force on the Effective Date and, unless terminated earlier in accordance with Section 15.2, shall remain in force until Licensee notifies Licensor of its intent to terminate the License Agreement and does not pay the Annual License Fee for the upcoming Contract Year.

 

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15.2 Without prejudice to any rights that have accrued under this License Agreement or any of its rights or remedies, the Licensor may terminate this License Agreement immediately by giving written notice to the Licensee if any of the following circumstances occurs:
   
    (a) the Licensee fails to pay any undisputed amount due under this License Agreement on the due date for payment and remains in default not less than thirty (30) days after being notified in writing to make such payment;
       
    (b) the Licensee commits a breach of any other material term of this agreement which breach is irremediable or (if such breach is remediable) fails to remedy that breach within a period of sixty (60) days after being notified in writing to do so;
       
    (c) the Licensee suspends, or threatens to suspend, payment of its debts or is unable to pay its debts as they fall due or admits inability to pay its debts;
       
    (d) the Licensee takes any step or action for or in connection with its entering administration, provisional liquidation or any composition or arrangement with its creditors (other than in relation to a solvent amalgamation or restructuring), being wound up (whether voluntarily or by order of the court, unless for the purpose of a solvent amalgamation or restructuring), having a receiver appointed to any of its assets or ceasing to carry on business, or, if the step or action is taken in another jurisdiction, in connection with any analogous procedure in the relevant jurisdiction;
       
    (e) the Licensee suspends or ceases, or threatens to suspend or cease, carrying on all or a substantial part of its business; or
       
    (f) the Licensee brings forth a Patent Challenge.
   
16. Consequences of termination
   
16.1 On expiry or termination of this License Agreement for any reason and subject to any express provisions set out elsewhere in this License Agreement:
   
    (a) all outstanding sums payable by the Licensee to the Licensor shall immediately become due and payable;
       
    (b) all rights and licences granted pursuant to this License Agreement shall cease;
       
    (c) subject to Section 16.2, the Licensee shall cease all exploitation of the Patents, the Licensed Know-how and any other know-how provided by the Licensor to the Licensee, except insofar as such Licensed Know-how and other know-how ceases or has ceased to be confidential, unless this is or was as a consequence of the default of the Licensee;

 

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    (d) the Licensee shall co-operate with the Licensor in the cancellation of any licences registered pursuant to this License Agreement and shall execute such documents and do all acts and things as may be necessary to effect such cancellation.
   
16.2 On expiry or termination of this License Agreement for any reason other than termination by the Licensor under any right provided by Section 15.2 the Licensee shall for a period of 30 days after the date of termination have the right to continue to supply the Products, provided that any additional royalty payable under the provisions of Section 8 (Royalty) is paid to the Licensor within 60 days after termination.
   
16.3 Any provision of this License Agreement that expressly or by implication is intended to come into or continue in force on or after termination or expiry of this License Agreement shall remain in full force and effect.
   
16.4 Termination or expiry of this License Agreement shall not affect any rights, remedies, obligations or liabilities of the Parties that have accrued up to the date of termination or expiry, including the right to claim damages in respect of any breach of the License Agreement which existed at or before the date of termination or expiry.
   
17. Further assurance
   
  Each Party shall, and shall use all reasonable endeavours to procure that any necessary third party shall, promptly execute and deliver such documents and perform such acts as may reasonably be required for the purpose of giving full effect to this License Agreement.
   
18. Waiver
   
  No failure or delay by a Party to exercise any right or remedy provided under this License Agreement or by law shall constitute a waiver of that or any other right or remedy, nor shall it prevent or restrict the further exercise of that or any other right or remedy. No single or partial exercise of such right or remedy shall prevent or restrict the further exercise of that or any other right or remedy.
   
19. Entire agreement
   
19.1 This License Agreement and the Letter Agreement constitute the entire agreement between the parties and supersedes and extinguishes all previous agreements, promises, assurances, warranties, representations and understandings between them, whether written or oral, relating to its subject matter. In the event of a conflict between the terms of this License Agreement and the Letter Agreement, this License Agreement shall control.

 

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19.2 Each party agrees that it shall have no remedies in respect of any statement, representation, assurance or warranty (whether made innocently or negligently) that is not set out in this License Agreement or the Letter Agreement. Each Party agrees that it shall have no claim for innocent or negligent misrepresentation or negligent misstatement based on any statement in this License Agreement or the Letter Agreement.
   
20. Variation
   
  No variation of this License Agreement shall be effective unless it is in writing and signed by the Parties (or their authorised representatives).
   
21. Severance
   
21.1 If any provision or part-provision of this License Agreement is or becomes invalid, illegal or unenforceable, it shall be deemed modified to the minimum extent necessary to make it valid, legal and enforceable. If such modification is not possible, the relevant provision or part-provision shall be deemed deleted. Any modification to or deletion of a provision or part-provision under this Section shall not affect the validity and enforceability of the rest of this License Agreement.
   
21.2 If one Party gives notice to the other of the possibility that any provision or part-provision of this License Agreement is invalid, illegal or unenforceable, the Parties shall negotiate in good faith to amend such provision so that, as amended, it is legal, valid and enforceable, and, to the greatest extent possible, achieves the intended commercial result of the original provision.
   
22. Counterparts
   
  This License Agreement may be executed in any number of counterparts, each of which when executed shall constitute a duplicate original, but all the counterparts shall together constitute the one agreement.
   
23. Third party rights
   
  No one other than a Party to this License Agreement, their successors and permitted assignees, shall have any right to enforce any of its terms.

 

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24. No partnership or agency
   
24.1 Nothing in this License Agreement is intended to, or shall be deemed to, establish any partnership or joint venture between any of the Parties, constitute either Party the agent of the other Party, or authorise either Party to make or enter into any commitments for or on behalf of the other Party.
   
24.2 Each Party confirms it is acting on its own behalf and not for the benefit of any other person.
   
25. Force majeure
   
  Neither Party shall be in breach of this License Agreement nor liable for delay in performing, or failure to perform, any of its obligations under this License Agreement if such delay or failure result from events, circumstances or causes beyond its reasonable control. In such circumstances the time for performance shall be extended by a period equivalent to the period during which performance of the obligation has been delayed or failed to be performed. If the period of delay or non-performance continues for 12 weeks, the Party not affected may terminate this License Agreement by giving 14 days’ written notice to the affected Party.
   
26. Notices
   
26.1 A notice given to a Party under or in connection with this License Agreement:
   
    (a) shall be in writing
       
    (b) shall be signed by or on behalf of the Party giving it;
       
    (c) shall be sent to the Party for the attention of the contact and at the address, email address, listed in Section 26.2, or such other address, email address, as that Party may notify in accordance with Section 26.3;
       
    (d) shall be sent by a method listed in Section 26.4; and
       
    (e) unless proved otherwise is deemed received as set out in Section 26.4 if prepared and sent in accordance with this Section.

 

26.2 The addresses, and email addresses for service of notices are:
   
  Licensor
       
    Address: 12 The Ceders, Castlejane Woods, Glanmire
       
    For the attention of: Paul Sutton

 

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    Email address:
     
  Licensee
     
    Address: 2901 Enterprise Lane, Midland, Texas 79706
       
    For the attention of: Abel Avellan
       
    Email address:

 

26.3 A Party may change its details given in Section 26.2 by giving notice, the change taking effect for the Party notified of the change at 9.00am on the later of:
   
    (a) the date, if any, specified in the notice as the effective date for the change; or
       
    (b) the date five Business Days after deemed receipt of the notice.
   
26.4 This Section sets out the delivery methods for sending a notice to a Party under this License Agreement and, for each delivery method, the date and time when the notice is deemed to have been received, provided that all other requirements of this Section have been satisfied and subject to the provisions in Section 26.5:
   
    (a) if delivered by hand, on signature of a delivery receipt or at the time the notice is left at the address;
       
    (b) if sent by pre-paid airmail providing proof of postage, at 9.00am on the fifth Business Day after posting; or
       
    (c) if sent by email, at the time of transmission.
   
26.5 For the purpose of Section 26.4 and calculating deemed receipt:
   
    (a) all references to time are to local time in the place of deemed receipt; and
       
    (b) if deemed receipt would occur outside ordinary business hours, at 9.00am on the next Business Day.
   
26.6 This Section does not apply to the service of any proceedings or other documents in any legal action or, where applicable, any arbitration or other method of dispute resolution.
   
26.7 A notice given under or in connection with this License Agreement is not valid if sent by email.

 

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27. Inadequacy of damages
   
  Without prejudice to any other rights or remedies that the Licensor may have, the Licensee acknowledges and agrees that damages alone would not be an adequate remedy for any breach of the terms of this License Agreement by the Licensee. Accordingly, the Licensor shall be entitled to the remedies of injunction, specific performance or other equitable relief for any threatened or actual breach of the terms of this License Agreement.
   
28. Multi-tiered dispute resolution procedure
   
28.1 Subject as may be provided elsewhere in this License Agreement, all disputes, differences or questions arising in relation to this License Agreement shall be referred in the first instance to the managing director of the Licensor and the managing director of the Licensee, who shall meet together and attempt to settle the dispute between themselves (acting in good faith) within one calendar month.
   
28.2 If the managing directors fail to resolve the matter within one calendar month, the Parties will attempt to settle it by mediation and the mediation will start, unless otherwise agreed between the Parties, within 28 days of one Party issuing a request to mediate to the other.
   
28.3 Unless otherwise agreed between the Parties, the mediator will be nominated by Irish Commercial Mediation Association. The mediation will take place in Cork and the language of the mediation will be English. Any Mediation Agreement shall be governed by, and construed and take effect in accordance with, the substantive laws of the United Kingdom.
   
28.4 No Party may commence any court proceedings under Section 30 in relation to the whole or part of the Dispute until 48 days after service of the ADR notice, provided that the right to issue proceedings is not prejudiced by a delay.
   
28.5 If the dispute is not settled by mediation within 14 days of commencement of the mediation or within such further period as the Parties may agree in writing, either Party may issue court proceedings in accordance with Section 30 in this License Agreement.
   
29. Governing law
   
  This licence and any dispute or claim (including non-contractual disputes or claims) arising out of or in connection with its subject matter or formation shall be governed by and construed in accordance with the laws of England.
   
30. Jurisdiction
   
  Each Party irrevocably agrees that the courts of the United Kingdom shall have exclusive jurisdiction to settle any dispute or claim (including non-contractual disputes or claims) arising out of or in connection with this License Agreement or its subject matter or formation.

 

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This License Agreement has been entered into on the date stated at the beginning of it.

 

SRS Space Limited   AST & Science, LLC
     
By: /s/ Paul Sutton   By: /s/ Abel Avellan
Name: Paul Sutton     Abel Avellan, President & CEO
Title: Director    

 

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Exhibit 10.20

 

 

[***] Certain identified information has been excluded from this exhibit because it both (i) is not material and (ii) would be competitively harmful if publicly disclosed.

 

LAUNCH SERVICES CONTRACT
FOR BLUEWALKER-3
SPACECRAFT LAUNCH ON SOYUZ-2
No GK-AST-015/05-20

 

“17” July 2020

 

 
 

 

TABLE OF CONTENTS

 

Clause 1. DEFINITIONS 4
Clause 2. SUBJECT OF CONTRACT AND CONTRACTUAL DOCUMENTS 6
Clause 3. UNDERTAKINGS OF GK 7
Clause 4. UNDERTAKINGS OF CUSTOMER 8
Clause 5. CLAUSE 5. LAUNCH SCHEDULE 10
Clause 6. CLAUSE 6. CHANGES OF LAUNCH SCHEDULE 10
Clause 7. ACCEPTANCE 11
Clause 8. LAUNCH OF [***] PAYLOAD 12
Clause 9. RIGHT OF OWNERSHIP 12
Clause 10. TERMINATION OF CONTRACT BY CUSTOMER 12
Clause 11. TERMINATION OF CONTRACT BY GK 13
Clause 12. LAUNCH FAILURE 14
Clause 13. ADDITIONAL SERVICES 14
Clause 14. CLAUSE 14. MANAGEMENT AND NOTICES 15
Clause 15. CLAUSE 15. PRICE AND PAYMENTS 16
Clause 16. LIABILITY, INDEMNIFICATION AND RELEASES 17
Clause 17. INSURANCE 18
Clause 18. INTELLECTUAL PROPERTY 19
Clause 19. CONFIDENTIALITY AND PUBLIC RELEASE OF INFORMATION 19
Clause 20. FORCE MAJEURE 20
Clause 21. APPLICABLE LAW AND ARBITRATION 21
Clause 22. MISCELLANEOUS 21

 

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LIST OF APPENDICES

 

Appendix 1 - Statement of Work
 
Appendix 2 - Interface Requirements Document
 
Appendix 3 - Data and Certificates to be Provided by Customer
 
Appendix 4 - Certificate of Acceptance of Launch Services
 
Appendix 5 - List of GK Main Subcontractors
 
Appendix 6 - List of Delivered Equipment
 
Appendix 7 - Work Acceptance Certificate
 
Exhibit A – GK Representations
 

 

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PREAMBLE

 

This Launch Services Contract No. GK-AST-015/05-20 is entered into force on July 17,2020 by and between:

 

AST & Science, LLC, a limited liability company, organized and existing under the laws of the state of Delaware, USA, with its registered office at 7901 Enterprise Lane, Midland, TX 79706, hereinafter referred to as “AST” or “Customer”, represented by Mr. Abel Avellan, its Chief Executive Officer, on the one part,

 

and

 

Joint Stock Company “GK Launch Services”, organized and existing under the laws of the Russian Federation, main state registration number 1177746422655, with its registered office at: 26/1 Prospekt Mira Ave., Moscow, 129090, Russia, hereinafter referred to as “GK” or “Contractor”, represented by Mr. Alexander Serkin, its Chief Executive Officer, on the other part,

 

AST and GK jointly and each of them severally may be hereinafter referred to as “Parties” or “Party”.

 

NOW THEREFORE the Parties have agreed as follows:

 

Clause 1. DEFINITIONS

 

Unless the context of this Contract otherwise requires, the following terms shall have the meaning given in this Clause.

 

Acceptance of Launch Services: has the meaning ascribed to it in paragraph 7.2.

 

Additional Services: the services as described in more detail in Clause 13, which may be requested by Customer from GK and formalized by the Parties in an amendment(s) hereto and paid for in addition to the Contract Price.

 

Affiliate: any person or legal entity, other than the Parties hereto, who or which shall, directly or indirectly, control, be controlled by or act on behalf of a Party, perform works or render services to a Party in the performance of this Contract, including but not limited to contractors and subcontractors of any tier, directors, employees, owners, shareholders, subsidiaries and agents.

 

Airport: Airport of Launch Site.

 

Confidential Information: has the meaning ascribed to it in paragraph 19.1.

 

Contract: this Launch Services Contract and all Appendices hereto and all amendments that may be agreed by the Parties in accordance with the terms and conditions of this Contract.

 

Contract Price: the firm fixed price as specified in Clause 15 hereof for the provision of Launch Services by GK to Customer.

 

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Customer’s Equipment: Customer’s ground support equipment provided by Customer for preparation and implementation of Launch.

 

Event of Force Majeure: has the meaning ascribed to it in paragraph 20.1.

 

ICD: Interface Control Document, a principal document which contains launch services characteristics under control and determines the order of preparation, integration and launch of the Payload.

 

Intentional Ignition: ignition of the engines of both first and second stages of Launch Vehicle, implemented by command to lift-off from the Launch control console.

 

IRD: Interface Requirements Document(s) as described in Appendix 2.

 

Launch: process designed for injection of Payload into an orbit with the intention to complete Launch Mission which begins from the Lift-off Moment.

 

Launch Campaign: the complex of activities to be carried out by Parties’ representatives during shipment of Payload and Customer’s Equipment to Launch Site, and at Launch Site for preparation and implementation of Launch as well as after Launch. Start of Launch Campaign shall be defined as arrival of Payload and Customer’s Equipment at Airport.

 

Launch Day: a calendar day within Launch Period on which Launch is scheduled in accordance with Paragraph 5.3.

 

Launch Failure: (1) unsuccessful orbital injection of Payload by Launch Vehicle that causes (i) Payload to be destroyed or lost, or (ii) Payload could not be separated from Launch Vehicle; (2) injection of Payload into an orbit with the parameters which exceed maximum allowable deviations specified in ICD.

 

Launch Mission: the transportation of Payload by means of Launch Vehicle from the surface of the Earth into operational orbit with the parameters specified in ICD.

 

Launch Period: [***].

 

Launch Services: all services (works) as described in paragraph 2.2., which are to be provided by GK to Customer under this Contract with the purpose to achieve Launch Mission.

 

Launch Site: Baikonur Cosmodrome, Republic of Kazakhstan being the primary Launch Site and Vostochny Cosmodrome, Amur Region, Russia being the back-up Launch Site.

 

Launch Slot: has the meaning ascribed to it in paragraph 5.2.

 

Launch Time: the scheduled time for Launch defined in hours, minutes and seconds of UTC.

 

Launch Vehicle: a three-stage Soyuz-2 launch vehicle equipped with Fregat Upper Stage to be utilized to perform Launch, the technical details of which will be defined in the ICD.

 

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Lift-off Moment: moment of positive operation of the “lift-off” command, if this event follows the Intentional Ignition, defined in hours, minutes, seconds UTC.

 

Main Subcontractors: GK’s subcontractors as listed in Appendix 5.

 

Milestone: has the meaning ascribed to it in paragraph 15.4.

 

Payload: Bluewalker-3 satellite of the maximum mass of [***] kg, of non-military and non-dual use nature supplied by Customer and designated for Launch in accordance with this Contract, which meets the interface requirements as specified in Interface Requirements Document (Appendix 2).

 

Payload Dummy: a model of Bluewalker-3 as more fully described in Appendix 1, which Customer provides for performance of ground tests in Russia and which will be kept by GK to be used for Launch instead of Payload in case of impossibility of Payload Launch or Customer’s postponement of the established Launch Period, which exceeds [***].

 

[***].

 

Port of Entry/Exit: the physical location in Russia to be defined by GK depending on the selected Launch Site, for entry and exit of the Payload, Payload Dummy and Customer’s Equipment, and their customs clearance during transportation to and from Russia and the Launch Site as may be applicable.

 

Primary Payload: [***] designed and built by [***].

 

Secondary Payload(s): means other (non-Customer) payloads, as may be applicable, to be launched by the Launch Vehicle.

 

Statement of Work (SOW): document containing the description of Launch Services, being Appendix 1 hereto.

 

Successful Launch: has the meaning ascribed to it in paragraph 7.2.

 

Terminated Launch: subsequent to Intentional Ignition, the shutdown of the first and second stage engines prior to the Launch Vehicle attaining lift-off and the declaration of the launch pad safe by the launch authority.

 

Upper Stage: upper stage “Fregat” functionally being the fourth (upper) stage of Soyuz-2 Launch Vehicle.

 

Clause 2. SUBJECT OF CONTRACT AND CONTRACTUAL DOCUMENTS

 

2.1. GK provides the Customer with Launch Services in accordance with the terms and conditions of this Contract.

 

2.2. The scope of Launch Services are described in greater detail in Appendix 1, but include without limitation (i) provision and preparation of Launch Vehicle for Launch, (ii) preparation of Payload for Launch by Customer, (iii) Successful Launch and orbital injection of Payload into the required orbit.

 

2.2.1. Appendix 2 will be superseded by the ICD once agreed.

 

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2.3. This Contract consists of the following documents, which are listed in the order of precedence in case of any conflict or inconsistency:

 

  (a) The main body of this Contract;
     
  (b) Appendix 1 – Statement of Work and any documents referred to and incorporated therein; and Appendix 2 – Interface Requirements Document; and
     
  (c) Appendices 3-7 and Exhibit A on the same level of precedence.

 

Clause 3. UNDERTAKINGS OF GK

 

3.1. GK: (i) undertakes to provide Launch Services as described in Statement of Work; (ii) confirms it possesses the skills, abilities and qualifications necessary to provide the Launch Services and will exercise the degree of care, skill and diligence exercised by professionals performing similar services; (iii) confirms it will perform the Launch Services diligently, honestly and in good faith and in accordance with any accepted industry practices and standards; and (iv) confirms it possesses, and will possess at all times during the performance of the Launch Services, all required licenses, consents, approvals and permits necessary to perform the Launch Services and will comply with all statutes, laws, regulations and industry standards which are applicable to the Launch Services.

 

3.2. GK shall be responsible for performance of this Contract by its subcontractors, including Main Subcontractors as specified in Appendix 5 hereto, including without limitation all of the items set out in this Clause 3.

 

3.3. GK will be responsible for obtaining all licenses, approvals, certificates and authorizations of the Government of the Russian Federation as required in accordance with the Russian law for provision of Launch Services. For certainty, Customer agrees to assist and support GK in obtaining such licenses, approvals, certificates and authorizations.

 

3.4. GK shall inform Customer in advance, with a reasonable margin of time for Customer to prepare the list of delivered equipment under paragraph 4.2., of any requirements for the preparation of all necessary shipment documentation for entry of Payload, Payload Dummy and Customer’s Equipment into Russia and Launch Site and exit of Payload, Payload Dummy and Customer’s Equipment (as applicable) from Russia and Launch Site to ensure timely and smooth customs clearance. GK or its Subcontractor(s), as the case may be, will be the recipient (for an import into Russian Federation) and forwarder (for an export from Russian Federation) of Payload, Payload Dummy and Customer’s Equipment (as applicable) and will carry out customs clearance in Russia at GK’s own cost and on GK’s own responsibility.

 

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3.5. GK shall transport Payload and Customer’s Equipment from Airport to Launch Site, and Customer’s Equipment and Payload (if applicable) from Launch Site to Airport after Launch, subject to the provisions of Clauses 10 and 11. GK shall also transport Payload and Customer’s Equipment within the Launch Site as may be required during the Launch Campaign.

 

3.6. GK shall transport Payload Dummy and its associated equipment from Port of Entry to a ground test location in Russia and transport Payload Dummy and its associated equipment from the ground test location in Russia back to Port of Exit after it is confirmed that the Payload Dummy is not required for Launch instead of Payload. If it is established by GK that the Payload Dummy will need to be launched instead of Payload, GK will transport Payload Dummy and its associated equipment from the ground test location in Russia to Launch Site and within the Launch Site as may be required during the Launch Campaign. After Launch GK will transport the Payload Dummy’s associated equipment back to Airport. If Payload Dummy is manufactured by GK as defined in Clause 4.7., GK will be responsible for all necessary transportations of the Payload Dummy in Russia and to/from and within the Launch Site.

 

3.7. GK shall arrange logistical support for air transportation of Customer’s and its Affiliates’ personnel from Port of Entry to the Launch Site and their return to Port of Exit as well as local transportation within the Launch Site, accommodations, meals, long distance telephone calls, Internet and other reasonable associated services. All costs of the abovementioned services shall be borne by Customer in addition to the Launch Price. Customer may also request GK to provide these services pursuant to paragraph 13.1.2.

 

3.8. In the event Launch is cancelled at any time after Payload has been installed in Launch Vehicle and Payload needs to be removed from Launch Vehicle, GK shall provide Customer with all necessary assistance to detach Payload and, if necessary, to reassemble, re-test and reinstall in Launch Vehicle. The costs for detaching the Payload, reassembly and re-tests shall be borne by the Party cancelling Launch.

 

3.9. Customer may request GK to provide Additional Services as detailed in Clause 13.

 

Clause 4. UNDERTAKINGS OF CUSTOMER

 

Customer undertakes to perform the following:

 

4.1. To timely provide GK with Payload, Payload Dummy and Customer’s Equipment as per invoice, packing list and the list of delivered equipment to be mutually agreed by Parties pursuant to this paragraph 4.1. Customer will be a forwarder (for an import into Russian Federation) / recipient (for an export from Russian Federation) of Payload, Payload Dummy and Customer’s Equipment (as applicable);

 

4.2. To provide for each shipment the list of delivered equipment to be mutually agreed by Parties. The list of delivered equipment shall be sent in form of letter according to Appendix 6 hereto. The letter shall be sent to GK and/or its Subcontractor(s), as may be applicable, by Customer at least forty five (45) days prior to the expected dates of entry of Customer’s Equipment into the Russian Federation, unless other timing is mutually agreed to by the Parties prior to shipment. After Parties agreed on the list of delivered equipment, no data in the list can be changed. Photos with readable identification numbers and technical descriptions of each item and material safety data sheet (MSDS) for dangerous goods, if any, shall be enclosed to the letter;

 

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4.3. To ensure that items delivered by Customer have no commercial value or the value of imported items in the aforementioned letter under paragraph 4.2. is specified for the purposes of customs clearance only;

 

4.4. To provide, upon GK’s request, all the documentation and information as necessary for customs clearance in Russia; not to implement any shipment of Payload, Payload Dummy and Customer’s Equipment until receipt of GK written notice that all the required documentation and information has been provided and GK is ready to receive Payload, Payload Dummy and Customer’s Equipment;

 

4.5. To import Payload and Customer’s Equipment in Russia on the terms DAP – Airport (INCOTERMS 2010) with a stop-over at Port of Entry for customs clearance, subject to paragraph 4.4.

 

4.6. To export Customer’s Equipment and Payload (if applicable) from Russia on the terms FCA – Airport (INCOTERMS 2010) with a stop-over at Port of Exit for customs clearance, subject to paragraph 4.4.;

 

4.7. To provide Payload Dummy for the ground tests in Russia and/or Launch instead of Payload as may be applicable. If GK informs Customer in writing pursuant to paragraph 3.6 that the Payload Dummy will be launched instead of Payload and needs to be separated from Launch Vehicle, Customer shall register the Payload Dummy after Launch. If the Payload Dummy is not provided by Customer for the ground tests in Russia and/or Launch instead of Payload, as may be applicable, GK will manufacture the Payload Dummy based on Customer supplied information and make it available for the ground tests and/or Launch instead of Payload, and Customer shall pay GK an amount of up to USD [***] (based on actual costs justified by GK) for manufacturing and making the Payload Dummy available for the ground tests and/or Launch instead of Payload.

 

4.8. To import Payload Dummy and its associated equipment in Russia on the terms DAP – Port of Entry (INCOTERMS 2010), subject to paragraph 4.4.;

 

4.9. To export Payload Dummy and its associated equipment (as applicable) from Russia on the terms FCA – Airport (INCOTERMS 2010) with a stop-over at Port of Exit for customs clearance, subject to paragraph 4.4.;

 

4.10. The customs clearance location for import/export of Payload, Payload Dummy and Customer’s Equipment (as applicable) will be the Port of Entry/Exit;

 

4.11. To provide GK with the official letters and certificates set forth in Appendix 3 as required for obtaining the approval of the Government of the Russian Federation with regard to Launch;

 

4.12. To ensure the timely and successful completion of Payload frequencies registration in the International Telecommunication Union (ITU), to ensure that Payload will not cause any interference with the satellite networks of the Russian Federation or other country.

 

4.13. To ensure the proper registration of Payload or Payload Dummy (as may be applicable) after Launch in the national register of space objects;

 

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4.14. To provide all necessary technical support and ensure participation of Customer’s representatives in the required tests and in Launch Campaign;

 

4.15. To ensure preparation of Payload for integration with Launch Vehicle, including removal from Payload of all non-flight elements in accordance with the Launch Campaign plan;

 

4.16. To timely pay GK in accordance with this Contract; and

 

4.17. To be responsible for obtaining and maintaining all licenses, approvals, certificates and authorizations from Customer’s and other countries authorities (if applicable and other than those required to be obtained by GK) (i) to export the Payload, Payload Dummy and Customer’s Equipment (as applicable) to Russia and Launch Site for the purpose of Launch, and (ii) to provide GK with such technical data and services as are necessary for GK to fulfill its obligations under this Contract and the scope and timing of which shall be agreed by the Parties. GK shall provide Customer with all necessary and available assistance in obtaining such licenses, approvals, certificates and authorizations.

 

Clause 5. LAUNCH SCHEDULE

 

5.1. The established Launch Period is [***].

 

5.2. No later than [***] prior to the first day of the established Launch Period, a Launch Slot of [***] duration shall be determined by GK and Customer by no later than [***] by good faith mutual written agreement. The date that the Parties mutually agree upon the Launch Slot shall be the “Launch Slot Agreement Date”,

 

5.3. The Launch Day within the established Launch Slot shall be determined by good faith mutual agreement in writing of GK and Customer, no later than [***] prior to the first day of the Launch Slot.

 

Clause 6. CHANGES OF LAUNCH SCHEDULE

 

6.1. Postponement requested by Customer:

 

6.1.1. Customer shall have the right, for any reason whatsoever, to postpone the established Launch Slot or Launch Day, as may be applicable, within the established Launch Period without cost or penalty.

 

6.1.2. Customer shall give written notice to GK of any desired postponement of the Launch Slot as soon as possible but in any case no later than [***] before the established Launch Slot together with a proposed new Launch Slot, which new Launch Slot proposal shall not be unreasonably denied by GK. The Parties will then make a joint decision in good faith on the new Launch Slot.

 

6.1.3. Customer shall give written notice to GK of any desired postponement of the Launch Day as soon as possible but in any case no later than [***] before the established Launch Day together with a proposed new Launch Date, which new Launch Date proposal shall not be unreasonably denied by GK. The Parties will then make a joint decision in good faith on the new Launch Day.

 

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6.1.4. [***].

 

6.1.5. If Customer requests postponement of the Launch Day beyond the established Launch Period, Customer shall pay to GK a postponement fee of USD [***] of the postponement past the last day of the Launch Period, payable starting on the [***] after the last day of the Launch Period, and to be calculated pro rata by the number of days of the actual postponement.

 

6.1.6. In the event that any postponement by Customer under Paragraph 6.1.5 . exceeds [***]from the last day of the established Launch Period, the Payload Dummy, to be provided by Customer or GK as the case may be, shall be launched instead of Payload and the price and terms of the Launch Services shall be subject to good faith renegotiation by the Parties, including a possible (mutually agreed) transfer of Payload to another GK’s Launch Mission. Customer will receive full credit for all amounts paid to GK under Clause 15.4 towards the other GK Launch Mission.

 

6.1.7. Postponement fees due by Customer hereunder shall be paid to GK within thirty (30) days of the settlement of a postponement.

 

6.1.8. Notwithstanding any provision in this Clause 6.1., no postponement fees shall be payable by Customer for a postponement caused by an Event of Force Majeure.

 

6.2. Postponement requested by GK.

 

6.2.1. GK shall have a right to postpone the Launch due to [***].

 

6.2.2. In the event that any postponement by GK under this Clause 6.2. exceeds [***] (“Postponement Window”) (either consecutively or combined) from the last day of the established Launch Period, the Parties will discuss in good faith a possibility of transferring the Payload to another GK’s Launch Mission (“Delayed Mission”), which decision to transfer is ultimately in the Customer’s discretion. Customer will receive reimbursement of its monies paid to GK under Section 15.4. if the Parties cannot agree to a new Launch Day for the Delayed Mission by the last date of the [***] Postponement Window.

 

Clause 7. ACCEPTANCE

 

7.1. Launch Services shall be considered completed upon Successful Launch as described in paragraph 7.2 below.

 

7.2. Launch shall be considered as Successful Launch if the intentional release of Payload undamaged from Launch Vehicle at the requisite time and required orbit in order to achieve the required final orbital characteristics as specified in ICD has been achieved as verified by telemetry received either from Payload or Launch Vehicle. Upon achievement of Successful Launch, Parties shall sign Certificate of Acceptance of Launch Services as presented in Appendix 4 to certify the completion of Launch Services.

 

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Clause 8. LAUNCH OF [***] PAYLOAD

 

8.1. Manifesting of [***] Payload

 

No later than [***] after the Launch of Payload hereunder, Customer may request launching the [***] Payload, as a Secondary Payload, on one of GK’s subsequent Launch Missions. The Parties’ respective obligations with respect to the Launch of the [***] Payload shall arise after Customer has requested its Launch and the Parties have signed a separate agreement for its Launch on one of GK’s subsequent Launch Missions.

 

8.2. Specifics of [***] Payload and its Orbit

 

8.2.1. The [***] Payload dimensions shall not exceed the envelope of [***] mm and its mass shall be within the range of [***] kg.

 

8.2.2. The [***] Payload will be launched into a LEO orbit; specific orbit parameters to be consistent with the Launch Mission it will be manifested on.

 

8.3. [***] Payload Launch Price

 

The price for launching the [***] Payload will be USD [***] for the mass of [***] kg and USD [***] for the maximum mass of [***] kg. Any increase of the [***] Payload mass in excess of [***] kg will be priced at USD [***] per each kilogram of extra mass.

 

Clause 9. RIGHT OF OWNERSHIP

 

9.1. Customer acknowledges that it shall not have any right of ownership of, or any other right to, or title to the property of GK and its Affiliates, including, but not limited to Launch Vehicle, which shall at all times be considered the property of GK or its Affiliates, as applicable.

 

9.2. GK acknowledges that notwithstanding that it may from time to time have possession and control of Payload and Customer’s Equipment, it shall not have any right of ownership of, or any other right to, or title to Payload and Customer’s Equipment, which shall at all times be considered the property of Customer or its Affiliates, as applicable.

 

Clause 10. TERMINATION OF CONTRACT BY CUSTOMER

 

10.1. Customer has the right to unilaterally terminate this Contract by thirty (30) day prior written notice to GK in the following cases:

 

10.1.1. at its sole discretion at any time prior to Launch of Payload;

 

10.1.2. if Customer fails to obtain timely any license, approval, certificate or authorization for which Customer is responsible according to this Contract, as necessary for implementation of this Contract;

 

10.1.3. if GK becomes bankrupt or insolvent, or takes the benefit of any statute relating to bankruptcy or insolvency, or if an order is made or resolution passed for the winding up of GK.

 

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10.2. In case of termination of this Contract under paragraphs 10.1.1. or 10.1.2.:

 

  (a) GK shall be entitled to retain all payments received by GK for all the services and works performed as of the date of the termination of this Contract, including a pro-rata portion of the Milestone (as per paragraph 15.4.) that is in process as of the date of termination (as determined by calendar month);
     
  (b) if applicable, GK will dismantle and transport, at Customer’s cost, Payload and Customer’s Equipment to Airport;
     
  (c) Customer shall be responsible for export if applicable, at Customer’s cost, of Payload and Customer’s Equipment from the Russian Territory (Airport).

 

In addition, Customer or GK, as the case may be, shall make available Payload Dummy for Launch instead of Payload.

 

10.3. In case of termination of this Contract under paragraph 10.1.3.:

 

  (a) GK will refund to Customer all payments (with no interest) received by GK as of the date of termination;
     
  (b) if applicable, GK will dismantle and transport, at GK’s cost, Payload and Customer’s Equipment to Airport;
     
  (c) Customer shall be responsible for export, if applicable, at GK’s cost, of Payload and Customer’s Equipment from the Russian Territory (Airport).

 

Clause 11. TERMINATION OF CONTRACT BY GK

 

11.1. GK has the right to unilaterally terminate this Contract by a thirty (30)-day prior written notice to Customer in the following cases:

 

  (a) if Customer is in breach of its payment obligations for a period of more than sixty (60) days;
     
  (b) if Customer becomes bankrupt or insolvent, or takes the benefit of any statute relating to bankruptcy or insolvency, if an order is made or resolution passed for the winding up of Customer.

 

11.2. In case of termination of this Contract in accordance with paragraph 11.1.:

 

  (a) Customer will pay GK for (i) all the services and works performed as of to the date of termination of this Contract, including a pro-rata portion of the Milestone (as per paragraph 15.4.) that is in process as of the date of termination (as determined by calendar month);
     
  (b) if applicable, GK will dismantle and transport, at Customer’s cost, Payload and Customer’s Equipment from Launch Site to Airport. Customer will pay for dismantling of and transportation of Payload and Customer’s Equipment from Launch Site to Airport; and

 

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  (c) if applicable, Customer will export Payload and Customer’s Equipment from the Russian Territory (Airport); and
     
  (d) Customer or GK, as the case may be, shall make available Payload Dummy for Launch instead of Payload.

 

Clause 12. LAUNCH FAILURE

 

12.1. In case of Launch Failure:

 

12.1.1. with the exception of provisions of paragraph 12.2. and sub-section (c) below neither Party has a commitment to the other Party, and specifically:

 

  (a) Customer shall not be obliged to make the post-launch payment;
     
  (b) GK shall not be obliged to reimburse any damages to Customer, including any claims of Customer’s insurance companies;
     
  (c) The Parties may negotiate in good faith a contract for another GK Launch Mission (“Replacement Mission”) on substantially similar financial terms and conditions as the failed Launch.

 

12.2. In case of Launch Failure:

 

12.2.1. GK shall be responsible for transportation, of Customer’s Equipment from Launch Site to Airport.

 

12.2.2. Customer shall be responsible, for export of Customer’s Equipment from the Russian Territory (Airport).

 

Clause 13. ADDITIONAL SERVICES

 

13.1. Customer may request GK to provide Additional Services to be agreed in an amendment to this Contract and paid for in addition to the Contract Price defined in Clause 15.1. The tentative list of additional services is identified below and may be expanded upon Customer’s request.

 

13.1.1. Transportation services

 

1) GK may transport Payload and Customer’s Equipment from Customer’s facility in the USA to Airport and Customer’s Equipment and Payload (if applicable) from Airport to Customer’s facility in the USA after Launch with a stop-over at Port of Entry/Exit for customs clearance to be performed by GK at its own expense. In this case, Customer shall assist GK or its Subcontractor(s), as the case may be, with performance of customs clearance in the USA at Customer’s expense. This service can be requested no later than three (3) months prior to the start of Launch Campaign and shall be priced upon request subject to Customer’s provision of cargo related information. If requested, the provision of this service will be formalized via an amendment to this Contract.

 

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2) GK may transport Payload Dummy and its associated equipment from Customer’s facility in the USA to a ground test location in Russia and back of Payload Dummy (if applicable) and its associated equipment to Customer’s facility in the USA after Launch with a stop-over at Port of Entry/Exit for customs clearance to be performed by GK at its own expense. In this case, Customer shall assist GK or its Subcontractor(s), as the case may be, with performance of customs clearance in the USA at Customer’s expense. This service can be requested no later than three (3) months prior to the start of ground tests and shall be priced upon request subject to Customer’s provision of cargo related information. If requested, the provision of this service will be formalized via an amendment to this Contract.

 

13.1.2. Launch Campaign Related Services

 

1) GK may provide air transportation of Customer’s and its Affiliates’ personnel from Port of Entry to the Launch Site and their return to Port of Exit, local transportation within the Launch Site, accommodations, meals, long distance telephone calls, Internet and other associated services. These services can be requested no later than three (3) months prior to the start of Launch Campaign and shall be priced upon request subject to Customer’s provision of information on the number of its and its Affiliates’ personnel participating in Launch Campaign activities. If requested, the provision of these services will be formalized via an amendment to this Contract.

 

13.1.3. Payload Fit-check and Separation Shock Testing

 

1) GK may provide the necessary equipment and support to perform a fit check and separation shock test of the flight model Payload with the engineering model adapter and flight identical separation system at Customer’s facility in the USA as described in more detail in Appendix 1. The price of this service will be quoted upon request and if so requested, its provision will be formalized via an amendment to this Contract.

 

Clause 14. CLAUSE 14. MANAGEMENT AND NOTICES

 

14.1. All notices issued by the authorized representative of one Party shall be in writing and addressed to the authorized representatives of the other Party.

 

The contact persons of the Parties under this Contract (the “Contact Persons”):

 

For GK:

 

Mr. Alexander Serkin, CEO

Tel.:

Email:

 

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For AST:

 

Mr. Abel Avellan, CEO

Tel:

Email:

 

14.2. The notice shall be deemed as duly delivered: (i) on the date of delivery if delivered in person, (ii) on the date of delivery if delivered by overnight international courier with internationally recognized reputation, (iii) on the date of dispatch if sent by e-mail from Contact Person of one Party, subject to receipt of automatic confirmation of delivery of mail at the electronic address of the Contact Person of the other Party specified in paragraph 14.1. above or subject to receipt of confirmation of receipt email from the Contact Person of the other Party.

 

14.3. Each Party may change its address and Contact Persons details by informing the other in writing in the manner set forth above in paragraph 14.2,

 

14.4. The Parties will arrange for meetings to coordinate their activities under this Contract, the schedule of such meetings is set forth in Appendix 1.

 

Clause 15. PRICE AND PAYMENTS

 

15.1. Contract price

 

The price of the Launch of Payload of the maximum mass of [***] kg amounts to:

 

7,750,000.00 USD (Seven million, seven hundred and fifty thousand United States Dollars).

 

Any increase of the Payload mass in excess of [***] kg will be paid by Customer at USD [***] per each kilogram of extra mass.

 

15.2. Contract Price is the firm fixed price and shall include any and all applicable taxes and duties (including any value added tax) levied in the Russian Federation, however, shall exclude any and all taxes and duties levied outside the Russian Federation which shall be borne by Customer.

 

15.3. Price for Additional Services is not included into Contract Price and shall be additionally paid by Customer against GK invoices.

 

15.4. Payment Schedule

 

Payments under this Contract shall be effected according to the following payment schedule:

 

  (1) Milestone 1: (20% of Contract Price) - upon signature of the Contract (TO);
  (2) Milestone 2: (15% of Contract Price) - upon TO+2 months;
  (3) Milestone 3: ([***]% of Contract Price) - upon [***];
  (4) Milestone 4: ([***]% of Contract Price) - upon [***];
  (5) Milestone 5: ([***]% of Contract Price) - upon [***];
  (6) Milestone 6: ([***]% of Contract Price) - upon [***];
  (7) Milestone 7: ([***]% of Contract Price) - upon [***];
  (8) Milestone 8: ([***]% of Contract Price) - upon [***].

 

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15.5. All payments by Parties under this Contract shall be made to the bank account of other Party according to bank details stated in the invoice.

 

15.6. Invoices for payments shall be issued in U.S. Dollars. All payments by Parties under this Contract shall be made in U.S. Dollars or in Euros at the exchange rate reported by European Central Bank on the previous business day of the date of payment.

 

15.7. Payment Procedure

 

15.7.1. All invoices shall be presented by GK to Customer and shall be due for payment within thirty (30) days upon receipt by Customer of the invoice.

 

15.7.2. All banking charges incurred in Russia shall be borne by GK, and those charges incurred outside Russia shall be borne by Customer.

 

15.7.3. The payment date shall be the date on which the GK’s account is credited with the full payment amount of the corresponding invoice.

 

15.7.4. GK shall present invoices to Customer in accordance with payment schedule in paragraph 15.4. by fax or e-mail (scan copy of an original) followed by one (1) original to be delivered by international courier. Customer shall confirm the receipt of the invoice by fax or e-mail.

 

15.8. If so agreed by the Parties, completion of any of or several Milestones set forth in paragraph 15.4. may be confirmed by a relevant Work Acceptance Certificate(s). Completion of all works under this Contract shall be confirmed by a Work Acceptance Certificate in the form set out in Appendix 7 and signed by the authorized representatives of both Parties. The signed Work Acceptance Certificate shall be sent by GK to the Customer for signature via express mail. Upon signature, the Customer shall send the signed Work Acceptance Certificate back to GK via express mail. The works performed by GK and submitted to the Customer as per the Work Acceptance Certificate shall be deemed accepted by the Customer, if during ten (10) working days after the receipt of the Work Acceptance Certificate, the Customer did not assert in writing any justified claims with regard to the quality of the works performed.

 

Clause 16. LIABILITY, INDEMNIFICATION AND RELEASES

 

16.1. Neither Party shall be liable to the other Party as a result of the improper or late performance or non-performance of this Contract, except as expressly provided herein, and all claims for damages or any other damages not expressly provided herein are waived and excluded.

 

16.2. The Parties agree that neither Party shall make any claim against the other Party or its Affiliate with respect to (i) injury, bodily harm or death and all consequences therefrom (illness, temporary or permanent loss of general or special ability to work) with regard to its employees or employees of its Affiliate involved in activities under this Contract, including but not limited to Launch Campaign or (ii) loss or damage to its own property or property of its Affiliate involved in the performance of this Contract, except to the extent caused by or arising from the gross negligence or willful misconduct of the other Party or its Affiliate. Each Party shall be solely responsible for direct and indirect loss and damages with respect to (i) injury, bodily harm or death and all consequences therefrom (illness, temporary or permanent loss of general or special ability to work) with regard to its employees and employees of its Affiliate involved in activities related to this Contract, including but not limited to Launch Campaign, and (ii) loss or damages to its own property or property of its Affiliate, that is caused by any activity in connection with this Contract, except to the extent caused by or arising from the gross negligence or willful misconduct of the other Party or its Affiliate. The Party shall indemnify, hold harmless and defend the other Party and its Affiliates from and against any claims for damages, arising from any legal proceedings initiated by itself or by its Affiliates in connection with this Contract and shall pay all expenses and satisfy all judgments which may result from such legal proceedings, except to the extent caused by or arising from the gross negligence or willful misconduct of the other Party or its Affiliate.

 

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16.3. Customer shall indemnify and hold GK and its Affiliates harmless with respect to any claims for infringement of the intellectual property rights of third parties, including, but not limited to, patent rights, which may arise from the design, manufacture or use of Payload or Customer’s Equipment or by GK compliance with specifications provided by Customer with respect to ICD. GK shall indemnify and hold Customer and its Affiliates harmless with respect to any claims for infringement of the intellectual property rights of third parties, including, but not limited to, patent rights, which may arise from the design, manufacture or use of GK equipment, including, but not limited to, Launch Vehicle or from use of GK services under this Contract.

 

16.4. Customer hereby expressly releases GK and its Affiliates from any and all liability due to loss or damage to Payload and Customer’s Equipment and any other tangible property, regardless of cause, except if GK or its Affiliates is determined to have acted with willful misconduct or gross negligence.

 

16.5. GK hereby expressly releases Customer and its Affiliates from any and all liability due to loss or damage to Launch Vehicle or any other GK property, regardless of cause, except if Customer is determined to have acted with willful misconduct or gross negligence.

 

Clause 17. INSURANCE

 

17.1. GK shall arrange for the standard third party liability insurance for launch of Payload in accordance with the Convention of International Liability for Damage Caused by Space Objects with the combined limit of liability amounting to [***] US dollars (US$ [***]), the insurance contract will name Customer and its Affiliates as additional insureds. Not later than three (3) months prior to Launch Period, Customer shall provide GK with a final list of Customer’s Affiliates to be included by GK into the list of additional insureds, GK will provide Customer with a copy of such insurance contract at least seven (7) days before Launch Date. Such insurance shall provide that the insurers shall waive all rights of subrogation against the insureds and additional insureds.

 

17.2. Customer shall be responsible for obtaining, at its own cost, insurances covering Payload and Customer’s Equipment during transportation from Customer’s country to Launch Site and back to Customer’s country, and stay in the territory of the Russian Federation including while under GK custody. In the event Payload is dismantled from Launch Vehicle and returned to Customer, Customer’s insurance shall remain in effect until Payload is returned to Customer’s country. Customer shall provide GK with a copy of each such insurance within seven (7) days after its obtaining, however, in any case, not later than three (3) days prior to the date of start of transportation.

 

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17.3. Customer shall be responsible for obtaining and maintaining, at its own cost, for the duration of this Contract, all necessary insurance for Customer’s and their Affiliates’ employees during their travelling, stay and activities under this Contract in Russia, including while at Launch Site.

 

Customer shall provide GK with a copy of each of such insurance policies within seven (7) days upon their purchase but in any way no later than three (3) days prior to their arrival to the territory of Russia.

 

17.4. Insurances obtained by Customer in relation to this Contract shall provide that the insurers shall waive all rights of subrogation against GK and its Affiliates.

 

17.5. In case Customer fails to obtain a waiver of subrogation rights in any of the insurance contracts referred to in this Clauses 17.2.-17.3., Customer shall indemnify and hold harmless GK and its Affiliates, from any claims on the part of Customer’s insurers, and at Customer’s expense shall defend GK and its Affiliates against such claims, pay all expenses and satisfy all judgments which may be incurred by or rendered against GK or its Affiliates.

 

Clause 18. INTELLECTUAL PROPERTY

 

18.1. Each Party shall retain all the intellectual property rights which it had possessed before the effective date of this Contract.

 

18.2. All the intellectual property rights developed by either Party in the course of implementation of this Contract shall belong to such Party.

 

18.3. None of provisions of this Contract can be construed as basis for transfer of intellectual property rights from one Party to another Party.

 

Clause 19. CONFIDENTIALITY AND PUBLIC RELEASE OF INFORMATION

 

19.1. Any information exchanged by the Parties during the performance of this Contract, including, but not limited to, any specifications, drawings, sketches, models, samples, computer programs, reports, financial and technical data, know-how, designs, codes, documentation, shall be considered as confidential that is disclosed in written or oral form regardless of whether such written disclosure is marked as “Confidential” or “Proprietary” (“Confidential Information”).

 

19.2. Except as the disclosing Party gives the prior written consent, the receiving Party shall not disclose the Confidential Information to any third party. Each Party agrees to use at least the same degree of care and discretion as it uses to protect its own Confidential Information. Notwithstanding above, either Party may disclose Confidential Information to its employees, contractors, consultants, investors and insurers for the purposes of performance of the work and its obligations under this Contract.

 

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19.3. The obligations of confidentiality specified in this Clause 19 shall not apply to any information that:

 

  (a) is already lawfully in the possession of the receiving Party without obligations of confidentiality at the time of disclosure;
     
  (b) is independently developed by the receiving Party prior to disclosure as evidenced by appropriate documents or records;
     
  (c) is or becomes available to the public other than by way of disclosure by the receiving Party or without its fault;
     
  (d) is lawfully received by the receiving Party from a third party, unless the receiving Party is notified by the disclosing Party of misappropriation by a third party;
     
  (e) is released for public disclosure by the disclosing Party in writing prior to such disclosure;
     
  (f) is required by law or by any securities exchange or regulator or governmental body to which either Party is subject, wherever situated, whether or not the requirement for information has the force of law; or
     
  (g) is necessary or desirable for the conduct of any arbitration pursuant to Clause 21.

 

19.4. Each Party shall obtain the prior written approval of the other Party concerning the content and timing of news releases, articles, brochures, advertisements, speeches and other information releases concerning this Contract, such approval shall not be unreasonably delayed or withheld.

 

19.5. The provisions of this Clause 19 shall survive the expiration or termination of this Contract for whatever cause for a period of five (5) years.

 

Clause 20. FORCE MAJEURE

 

20.1. For purposes of this Contract, the “Coronavirus” (also referred to as COVID-19) does not constitute a Force Majeure event or an excusable delay. This Contract is being entered into after the onset of the Coronavirus outbreak and event, and the Parties have entered into this Contract with knowledge of the impacts and potential impacts of this event and has agreed to deliver the Launch services and Payload in the manner and time, and for the price agreed in the Contract.

 

For purposes of this Contract, the following events are to be considered as force majeure events (“Event of Force Majeure”):

 

  (a) hurricanes, earthquakes, tsunami, floods and other natural phenomena of catastrophic character;
     
  (b) fires, explosions, radioactive contamination and other man-made phenomena of catastrophic character;
     
  (c) pandemics, epidemics, quarantines, (except COVID-19 referenced in paragraph 20.1.);
     
  (d) embargo, blockades, military actions and other hostilities;

 

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  (e) terrorist attacks, sabotages and other manifestations of terrorism;
     
  (f) revolutions, uprisings, strikes and other social commotions of mass character.

 

20.2. The Parties shall inform each other as soon as possible, but not later, than within fifteen (15) days after a Party has first learned about commencement or cessation of an Event of Force Majeure.

 

20.3. Neither Party shall be liable for the direct or indirect consequences either due to or resulting from occurrence of an Event of Force Majeure. However, if an Event of Force Majeure occurs and lasts for more than six (6) months upon expiry of the established Launch Period either Party may terminate this Contract without any full or partial restitution and/or further liability by giving a 30-day written notice to the other Party. Notwithstanding the foregoing, prior to such termination the Parties may negotiate in good faith, the terms and conditions of such termination, including a possible transfer of Payload to another GK’s Launch Mission (“Re-planned Mission”) on substantially the same financial terms and conditions as the Force-Majeure delayed Launch. For the avoidance of doubt, the price of the Re-planned Mission shall not be higher than the Contract Price described in Clause 15.1, and Customer will receive full credit for all amounts paid to GK under Clause 15.4 towards the Re-planned Mission price.

 

Clause 21. APPLICABLE LAW AND ARBITRATION

 

21.1. This Contract shall be governed by the English law.

 

21.2. Any dispute, controversy or claim arising out of or in connection with this Contract, or the breach, termination or invalidity thereof, shall be finally settled by arbitration in accordance with the Arbitration Rules of the International Chamber of Commerce (ICC) effective as of the date of the commencement of the arbitration procedure. Unless otherwise agreed by the Parties, the arbitral tribunal shall be composed of one arbitrator. The seat of arbitration shall be London, England. The language to be used in the arbitral proceedings shall be English. The award of arbitration shall be final and binding upon the Parties. Neither Party shall appeal the award of arbitration.

 

Clause 22. MISCELLANEOUS

 

22.1. This Contract takes effect upon its signature by both Parties and shall remain effective until either terminated pursuant to Clauses 10 and/or 11, or complete fulfillment of mutual obligations of the Parties.

 

22.2. All the documents to be used in the cause of this Contract shall use the standard International System of Measurements (SI).

 

22.3. This Contract, including its Appendices, which form an integral part hereof, constitutes the entire agreement between the Parties in respect to its subject matter and supersedes all prior arrangements, agreements, memoranda and representations, both oral and written, with respect to the subject matter of this Contract, including correspondence of the Parties and their negotiations.

 

22.4. No amendment to this Contract shall be effective unless it is in writing and signed by the duly authorized representatives of the Parties.

 

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22.5. If any term or provision of this Contract shall be held to be illegal or unenforceable, in whole or in part, the Parties shall negotiate in good faith to agree on such term or provision be replaced by another term or provision which, being legal and enforceable, comes closest to the intention of the Parties. Where this is not possible, then such a provision shall be deemed not to form a part of this Contract. In any event, the validity and enforceability of the remainder of this Contract shall not be affected.

 

22.6. Neither Party has the right to assign all or any parts of its rights and/or obligations under this Contract to a third party without the prior written approval of the other Party, such approval shall not be unreasonably withheld or delayed.

 

22.7. No course of conduct by either Party shall constitute a waiver of any provision, condition or requirement of this Contract in case of breach hereof by the other Party unless such waiver is executed in writing and signed by a duly authorized representative of that Party. Such waiver shall not affect the rights of the Party not in breach with respect to any other or future breach of the other Party.

 

22.8. No agency or partnership is created by this Contract; neither Party shall act or describe itself as the agent of the other, nor shall it make, or represent that it has authority to make, any commitments on the other’s behalf.

 

22.9. All documents and correspondence related to this Contract shall be in English.

 

22.10. This Contract is executed in two English language originals, one original for each of the Parties.

 

[Signature page follows]

 

22
 

 

On behalf of AST & Science:   On behalf of GK Launch Services:
     
/s/ Abel Avellan   /s/ Alexander Serkin
Position: CEO   Position: CEO
Date: July 17, 2020   Date: July 17, 2020

 

23

 

 

Exhibit 10.21

 

 

Final Execution Version

 

DIALOG SEMICONDUCTOR OPERATIONS SERVICES LIMITED

 

AND

 

AST & SCIENCE LLC

 

 

 

DESIGN AND MANUFACTURING AGREEMENT

 

 

 

 

 

 
 

 

 

THIS DESIGN AND MANUFACTURING AGREEMENT is entered into as of September 23, 2020 (“Commencement Date”) by and between:

 

1. DIALOG SEMICONDUCTOR OPERATIONS SERVICES LIMITED, a company incorporated under the laws of ENGland, whose principal place of business is at 100 Longwater Avenue, GREEN PARK, READING RG2 6GP, UNITED KINGDOM ACTING ALSO ON BEHALF OF ITS affiliates (“S3 Semi”); and
   
2. AST & SCIENCE LLC, WHOSE PRINCIPAL PLACE OF BUSINESS IS AT 2901 ENTERPRISE LANE, MIDLAND, TEXAS 79706 (“Buyer” or “AST”).

 

WHEREAS

 

(A) S3 Semi is a provider of electronic design and manufacturing services, including integrated circuit, software and hardware systems design and manufacturing
   
(B) Buyer wishes to retain the services of S3 Semi to design, develop, and provide certain manufacturing services and technologies for products that Buyer is developing and producing.
   
(C) S3 Semi has agreed to provide certain design and manufacturing services and technologies to Buyer upon the terms and conditions of this Design and Manufacturing Agreement.

 

AGREED

 

OPERATIVE PROVISIONS

 

Definitions

 

In this Design and Manufacturing Agreement the following expressions shall have the following meanings, unless the context otherwise requires:

 

  “Acceptance” or “Accepted”   Means the determination, in accordance with the Acceptance Criteria agreed by the Parties, following performance, implementation, installation and testing, the Services and/or other Deliverables are in Compliance. In the case of Production Units, “Acceptance” or “Accepted” means the determination, in accordance with the Acceptance Criteria that Production Units are in Compliance. The Acceptance Criteria for Production Units shall include, along with any other criteria set forth in the SOW, visual inspection of Production Unit packaging and the review by AST of sample testing data provided by S3 Semi for such Production Unit shipments as described in the SOW.
       
  “Acceptance Criteria”   Means the acceptance criteria specified and agreed in a SOW.
       
  “ASIC(S)”   Means application specific integrated circuits.

  

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  “Affiliates”   In this Agreement, “Affiliate” means a legal entity that controls, is controlled by or is under common control of a Party, where “control” means that the controlling entity, directly or indirectly, has (a) beneficial ownership of more than 50% of the controlled entity’s voting shares, or (b) an ownership interest entitling the controlling entity to direct or cause the direction of the general management of the controlled entity. An entity will be an Affiliate only during the period when such control exists.
       
  “Agreement”   Means this Design and Manufacturing Agreement along with all Statements of Work under this Design and Manufacturing Agreement, which have been accepted and confirmed in writing by the Parties hereto, as well as any documentation expressly incorporated by reference therein including, but not limited to any Change Requests (as defined hereinafter) and further shall include any amendments to such documents as may be subsequently expressly agreed to in writing between the Parties.
       
  “Background Intellectual Property” or “BIP”   Means any and all Intellectual Property Rights that are (i) developed, owned, or licensed by a Party on or before the Commencement Date; or (ii) developed or acquired by a Party independently after the Commencement Date and not in connection with the performance of its obligations hereunder.
       
  “Business Day”   Means a day, other than a Saturday or Sunday, when the main clearing banks in Dublin are open for a full range of transactions.
       
 

“Change Control

Board Personnel”

  Means the individual representatives of S3 Semi and Buyer, as detailed in a related Statement of Work (as defined hereinafter).
       
  “Compliance” and “Comply”   Means, with respect to the Services or other Deliverables to be implemented, designed, developed, maintained, modified, enhanced, delivered, integrated, installed and/or tested by S3 Semi, compliance in all material respects with the Validation Plan.

  

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  “Confidential Information”   Means any and all knowledge, data or information of, or delivered by, a Party that has been designated as confidential by such Party, or under the circumstances should reasonably be considered confidential by the Party receiving such information (the “Recipient”), in tangible or intangible form whether or not in writing and whether or not labeled or identified as confidential or proprietary, including, without limitation, (a) corporate information, including plans, strategies, business forecasts, methods, policies, resolutions, negotiations or litigation; (b) sales and marketing information, including plans, strategies, methods, customer identities or other information about customers, prospect identities or other information about prospects, or market analyses or projections; (c) financial information, including cost and performance data, debt arrangements, equity structure, investors and holdings, purchasing and sales data and price lists; (d) technological information, including patents, except those that have been published copyrights, trade secrets, techniques, sketches, drawings, models, inventions, know how, processes, apparatus, equipment, algorithms, software programs, software source documents, formulae, research, experimental work, development, design details and specifications, plans, manuals, forms, templates, pre-clinical and clinical testing data and strategies, designs, methods, procedures, formulas, discoveries, inventions, improvements, concepts and ideas; (e) operational information, including, procurement, purchasing and manufacturing requirements; and (f) personnel information, including personnel lists, reporting or organizational structure, resumes, personnel data, compensation structure, performance evaluations and termination arrangements or documents.
       
  “Buyer Deliverables”   Means such assistance and relevant data and information from Buyer which the Parties agree is required by S3 Semi prior to the performance by S3 Semi of any Services.
       
  “Deliverable”   Means a Developed Material that is identified as a deliverable in the Agreement, or in a Statement of Work, project plan, or other writing by or between the Parties.
       
  “Design Services”   Means the design services provided by S3 Semi for purposes of S3 Semi’s Product manufacturing.
       
  “Design Re-spin”   Means a redesign of a Product to remedy a Prototype Non-Conformance that cannot be remedied using additional engineering services solely.
       
  “Field of Use”   Means [***].

  

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  “Intellectual Property Rights”   Means any (i) ideas, inventions, discoveries, designs, development, specifications, software, devices, techniques, methods or processes (whether or not patentable or reduced to practice) and related patents and patent applications and reissues, re-examinations, renewals, continuations-in-part, continuations, and divisions thereof, rights to inventions, (ii) utility models, (iii) copyright and related rights including related registrations and applications for registration, (iv) trademarks, service marks, trade, business and domain names, rights in trade dress or get-up, rights in designs, rights in goodwill or to sue for passing off rights in computer software, database right, topography rights, moral rights, rights in confidential information (including know-how and trade secrets) and any other intellectual property rights, and (v) improvements, updates and modifications of the foregoing made from time to time, in each case whether registered or unregistered and including all applications for and renewals or extensions of such rights, and all similar or equivalent rights or forms of protection in any part of the world.
       
  “Licensed Technology”   Means the materials and technology owned, controlled or otherwise provided by Buyer to S3 Semi which S3 Semi reasonably requires to perform the requested Services. Licensed Technology may include AST Background Intellectual Property.
       
  “Minimum Order
Quantity”
  Means the minimum quantity (or integer multiple thereof) of Production Units as specified in the SOW that Buyer must order for a Purchase Order to be valid.
       
  “Parties”   Means both S3 Semi and Buyer together.
       
  “Party”   Means either S3 Semi or Buyer.
       
  “Product”   Means an ASIC described or referenced in a Statement of Work, and unless otherwise specified, refers to Production Units and Prototypes.
       
  “Production Units”   Means product manufactured after Prototype Acceptance and Release to Production. Production Units do not include Prototypes or Unapproved Product.
       
  “Project Intellectual Property”   Means Intellectual Property Rights created by either Party pursuant to this Agreement, either separately or as a result of a joint effort with the other Party.
       
  “Prototypes”   Means the preliminary implementations on silicon of a specified Product, which are intended for internal use, and are not yet qualified and approved for production.
       
  “Prototype Acceptance”   Means Buyer’s written approval that the Prototype evaluation demonstrates Prototype substantial conformance to the Validation Plan.
       
  “Purchase Order Lead Time”   Means the required minimum amount of time between S3 Semi’s receipt of the Purchase Order issued by Buyer and the requested shipment date necessary to accommodate manufacturing cycle time, as specified in the SOW.
       
  “Qualification”   Means the agreed set of qualification tests and pass criteria as set out in the relevant Statement of Work.
       
  “Qualification Acceptance”   Means that the Deliverables meet Qualification in all material aspects.

  

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  “Release to
Production”
  Means Buyer’s completion and delivery to S3 Semi of the Manufacturing Release Form attached to the SOW at Appendix 1.
       
  “Residuals”   Means any expertise, residual knowledge and any know-how retained in the unaided memories of the employees and contractors of S3 Semi who have had access to the Confidential Information of Buyer pursuant to this Agreement. An employee’s or contractor’s memory is unaided if the employee or contractor has not intentionally memorised the information for the purpose of retaining and subsequently using it or disclosing it to a third party.
       
  “RFIC”   Means radio frequency integrated chip.
       
  “Statement of
Work” or “SOW”
  Means a statement of work as set forth in Appendix A that identifies the respective obligations that the Parties agree to complete for the development and manufacturing of particular Products, including any deliverables of S3 Semi (“Deliverables”), as well as any documentation expressly incorporated by reference therein including, but not limited to any change requests and further shall include any amendments to such documents as may be subsequently expressly agreed to in writing between the Parties.
       
  “Services”   Means the ASIC design and manufacturing services described in this Agreement and Statements of Work attached hereto.
       
  “Specifications”   Means the technical and other specifications as specified and mutually agreed between the Parties in a Statement of Work.
       
  “Term”   Means the initial term described in Section 10 (Term) plus any extensions.
       
  “Third Party Materials”   Means Intellectual Property Rights or other materials that are owned by third parties and provided under license to S3 Semi or its subcontractors and that have been or shall be used, or are required to be used, in connection with the provision of, or receipt or use of, the Services. As between the Parties, Third Party Materials include materials owned by S3 Semi subcontractors and used in the performance of the Services.
       
  “Validation Plan”   Means the agreed test or measurement process based on the Verification Plan to ensure that the Prototypes are materially consistent with the agreed requirements and Specifications, and may include electrical parameters, logical functions, performance requirements and tolerances.
       
  “Verification Plan”   Means the description of the agreed verification process that will be carried out by S3 Semi pursuant to a Statement of Work and its related schedule(s) (if any) to ensure that the GDSII are materially consistent with the agreed requirements and Specifications, and may include electrical parameters, logical functions, performance requirements and tolerances.

 

1. INTERPRETATION

 

In this Agreement

 

  1.1 the masculine shall include the feminine and the neuter and the singular shall include the plural and vice versa;

  

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  1.2 the expression “person” shall include any individual, firm, company, unincorporated association, partnership or joint venture;
     
  1.3 the headings to clauses and schedules shall not affect their construction;
     
  1.4 any reference to a statute or statutory provision shall be construed as a reference to it as from time to time amended, consolidated, modified, extended, re-enacted or replaced;
     
  1.5 any reference to a clause or schedule is a reference to a clause of or a schedule to this Agreement and a reference to a paragraph is a reference to a paragraph of the schedule in which such reference appears; and
     
  1.6 use of the word “includes” or “including” is without prejudice to the generality.

 

2. APPLICATION OF THIS AGREEMENT

 

  2.1 This Agreement establishes the framework under which S3 Semi and Buyer will work together. It sets out terms and conditions that will apply to and be deemed to be incorporated by reference into all Statements of Work agreed between S3 Semi and Buyer which are expressed to be supplemental to this Design and Manufacturing Agreement. If there is any conflict between this Design and Manufacturing Agreement and the relevant Statement of Work, the Design and Manufacturing Agreement will prevail, unless a derogation from the said terms in the Design and Manufacturing Agreement is expressly agreed by the Parties in said Statement of Work.

 

3. SCOPE OF WORK/ ASIC DEVELOPMENT AND PRODUCTION

 

  3.1 Each Statement of Work (and its related schedules, if any) shall contain a description of the Services to be carried out by S3 Semi for Buyer and the Product to be delivered to Buyer by S3 Semi. Design Services carried out by S3 Semi for Buyer up until the delivery of the Prototypes shall be paid for by Buyer in accordance with the milestones set out in the relevant Statement of Work. If a Statement of Work provides for a Committed Order, the Statement of Work shall only be considered valid if such Purchase Order is issued. The initial SOW for Blue Bird 1 FEM RFIC’s is attached to this Agreement as Exhibit 4. As set forth in the initial Statement of Work attached hereto, AST agrees to proceed with Stage 3 if and when it receives its next round of funding, if any.
     
  3.2 Any changes to the scope or subject matter of a Statement of Work will be the subject of a mutually agreed change control process. S3 Semi shall obtain written approval from Buyer’s Change Control Board Personnel on any additional costs (if any) and time consequences. Agreed upon changes shall be integrated into the corresponding Statement of Work by way of a Change Request form. Electronic mail correspondence between the Change Control Board Personnel of each Party as specified in a particular Statement of Work shall suffice for the purposes of recording and agreeing minor changes which shall not involve any additional charge to Buyer or which fall beneath a financial and/or schedule threshold to be specified in the relevant Statement of Work.
     
  3.3 Where Buyer, in consultation with S3 Semi, requests any change to an expressly agreed Statement of Work (the “Change Request”) the Parties’ Change Control Board Personnel shall discuss and agree the details, consequences and cost and time-schedule implications of any such Change Request.

  

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  3.4 Parties acknowledge that any Change Request initiated by Buyer will result in:

 

  3.4.1 Buyer issuing to S3 Semi a request for a quotation (the “RFQ”) in respect of the costs and time consequences involved in implementing any such Change Request.

 

  3.5 Parties acknowledge that any Change Request initiated by S3 Semi will result in:

 

  3.5.1 S3 Semi issuing to Buyer a proposal in respect of the costs and time consequences involved in implementing any such Change Request.

 

  3.6 Where the Parties’ Change Control Board Personnel cannot reach agreement on any matter arising out of or relating to a Statement of Work including, without limitation, any changes and associated cost and time-schedule implications of any changes, nominated representatives of the Parties shall meet in good faith and attempt to resolve any such dispute or controversy in writing. In the event the Change Control Boards are unable to resolve a dispute, and such dispute arises from a material Change Request proposed by S3 Semi which has a price impact that exceeds 20% of SOW value, Buyer shall be entitled to terminate for convenience the relevant SOW without payment of any penalties or termination-related fees. If Buyer terminates a SOW in accordance with this Section 3.6, Buyer shall pay S3 Semi the remaining payment due for the current Payment Milestone in progress as of the effective date of termination.
     
  3.7 In the event that multiple Products are developed under this Design and Manufacturing Agreement or this Design and Manufacturing Agreement is amended to include other Products, each such Product shall be developed under and subject to a separate SOW and separate Product pricing.

 

4. PROTOTYPES AND QUALIFICATION

 

  4.1 Prototypes

 

  4.1.1 Delivery of Prototypes. Upon completion of the engineering milestones specified in the SOW, S3 Semi will manufacture, screen, and deliver the Prototypes to Buyer as stated in the SOW. Buyer acknowledges the Prototypes are delivered and intended for evaluation purposes only and are not intended for other use or resale for use in any system or application. No warranties are made in respect of the Prototypes.
     
  4.1.2 Prototype Evaluation. Buyer will promptly evaluate the Prototypes and advise S3 Semi in writing whether the Prototypes substantially conform to the Specifications set out in the SOW as evidenced by the results of the Validation Plan. Unless otherwise set forth in a SOW, the prototype evaluation period shall not exceed sixty (60) days after shipment of initial prototypes (the “Prototype Evaluation Period”). If Buyer concludes during the Prototype Evaluation Period, that the Prototypes have a substantial non-conformance with the Specifications set out in the SOW as evidenced by the Validation Plan (“Prototype Non-Conformance”), then Buyer will submit a written notice of rejection (“Notice of Prototype Rejection”) to S3 Semi fully describing the perceived Prototype Non-Conformance. If the Buyer does not submit a Notice of Prototype Rejection to S3 Semi during the Prototype Evaluation Period, the Prototypes will be deemed to have passed Prototype Acceptance.

  

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  4.1.3 Effect of Notice of Prototype Rejection. If Buyer submits a Notice of Prototype Rejection, the Parties will mutually co-operate to determine the source of the Prototype Non-Conformance stated in the Notice of Prototype Rejection. Further, Buyer and S3 Semi will co-operate to resolve and, as appropriate, to develop and implement a corrective action plan, to remedy the Prototype Non-Conformance. If additional engineering work is necessary to remedy a Prototype Non-Conformance, the Parties will contribute additional resources as mutually agreed in writing in accordance with Section 4.4.
     
  4.1.4 Corrections. If Buyer submits a Notice of Prototype Rejection, S3 Semi will evaluate the information provided by Buyer. Except as may be otherwise provided in a SOW, if the Prototype Non-Conformance was substantially caused by the Services, and was not caused by Buyer, a Buyer Subcontractor, or any other third party (other than S3 Semi’s subcontractors), Buyer’s sole and exclusive remedy and S3 Semi’s sole obligation will be for S3 Semi to use commercially reasonable efforts, including a Design Re-Spin, to correct the error, or if S3 Semi is unable to correct the error after using commercially reasonable efforts, terminate the project relating to the applicable Product and refund to Buyer the amounts paid by Buyer for such project. Except as may be otherwise provided in a SOW, if a Design Re-spin is required for any other reason, including without limitation, any error in Buyer’s design or any intellectual property included in the design, Buyer will be liable for the costs associated with the Design Re-spin.

 

  4.2 Qualification

 

  4.2.1 Delivery of Qualification Report. Upon completion of the Qualification tests specified in the SOW, S3 Semi will provide a qualification report to Buyer for evaluation for Qualification Acceptance.
     
  4.2.2 Qualification Evaluation. Buyer will promptly evaluate the qualification report and advise S3 Semi in writing whether the qualification substantially conform to the qualification objectives and the qualification plan set out in the SOW. Unless otherwise set forth in a SOW, the qualification report review and evaluation period shall not exceed fourteen (14) days after submission of the report. If Buyer concludes during the Qualification Review and Evaluation Period, that the Qualification has a substantial non-conformance with the qualification objectives set out in the SOW and the qualification plan, then Buyer will submit a written notice of rejection (“Notice of Qualification Rejection”) to S3 Semi fully describing the perceived Qualification Non-Conformance. If the Buyer does not submit a Notice of Qualification Rejection to S3 Semi during the Qualification Evaluation Period, the Qualification Acceptance will be deemed to be successful.
     
  4.2.3 Effect of Notice of Qualification Rejection. If Buyer submits a Notice of Qualification Rejection, the Parties will mutually co-operate to determine the source of the Qualification Non-conformance stated in the Notice of Qualification Rejection. Further, Buyer and S3 Semi will co-operate to resolve and, as appropriate, to develop and implement a corrective action plan, to remedy the Qualification Non-Conformance. If additional engineering work is necessary to remedy a Qualification Non-Conformance, the Parties will contribute additional resources as mutually agreed in writing in accordance with Section 4.4.

  

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  4.2.4 Corrections. If Buyer submits a Notice of Qualification Rejection, S3 Semi will evaluate the information provided by Buyer. Except as may be otherwise provided in a SOW, if the Qualification Non-Conformance was substantially caused by the Services, and was not caused by Buyer, a Buyer Subcontractor, or any other third party (other than S3 Semi’s subcontractors), Buyer’s sole and exclusive remedy and S3 Semi’s sole obligation will be for S3 Semi to use commercially reasonable efforts to correct the design or test, or if S3 Semi is unable to correct the design or test after using commercially reasonable efforts, terminate the project relating to the applicable Product and refund to Buyer the amounts paid by Buyer for such project.

 

  4.3 Unapproved Product. Prior to Release to Production, Buyer may request the Release to Production of Products for which there has been no Prototype Acceptance and/or Qualification Acceptance (“Unapproved Product”). No warranties are made in respect of Unapproved Product, and S3 Semi shall have no obligations under Section 14 related to Unapproved Product. For the avoidance of doubt Unapproved Product is delivered at Buyer’s sole risk. Buyer agrees to hold harmless, defend and indemnify S3 Semi from any claims, damages, liabilities, penalties, interest, and expenses (including attorneys’ fees and costs) arising from or related to Buyer or any third party’s use of Unapproved Product.
     
  4.4 Acceptance Prior to Manufacturing. S3 Semi will not commence production of Products until Buyer confirms the Release to Production of the Product by signing and submitting a Release to Production Form attached hereto as Appendix B to this Agreement. Buyer shall submit a Release to Production and accompanying Purchase Order and make payment for the Committed Order within (fourteen) 14 days of Prototype Acceptance and/or Qualification Acceptance. Such Release to Production shall contain Buyer’s authorization to ship the Committed Order.
     
  4.5 NO WARRANTIES ARE MADE BY S3 SEMI IN RESPECT OF PROTOTYPES OR UNAPPROVED PRODUCT. BUYER ACKNOWLEDGES AND AGREES THAT PROTOTYPES ARE PROVIDED FOR TEST PURPOSES ONLY AND UNAPPROVED PRODUCT IS MANUFACTURED SOLELY AS AN ACCOMMODATION TO BUYER. BOTH WILL BE PROVIDED “AS IS” AND “WITH ALL FAULTS”, WITHOUT ANY WARRANTY OF ANY KIND, WHETHER EXPRESS, IMPLIED OR STATUTORY, INCLUDING BUT NOT LIMITED TO THE IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, TITLE, AND NON-INFRINGEMENT OF THIRD PARTY RIGHTS, AND QUALITY, AND ALL WARRANTIES ARISING FROM A COURSE OF DEALING, USAGE, OR TRADE PRACTICE. BUYER ASSUMES FULL RESPONSIBILITY AND LIABILITY FOR PROTOTYPES AND UNAPPROVED PRODUCT, INCLUDING BUT NOT LIMITED TO ALL WORK IN PROCESS (WIP) WITHOUT REGARD TO ISSUES OF DESIGN OR PERFORMANCE.

  

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5. FORECASTING AND ORDERS FOR PRODUCTION UNITS.

 

  5.1 Forecasts. Following Release to Production, Buyer shall provide S3 Semi with a non-binding six (6) month forecast of its purchase requirements for the Production Units (“Forecast”). Each month thereafter, Buyer shall provide a rolling six (6) month Forecast of its purchase requirements. Any Forecasts provided by Buyer are for planning purposes only and do not constitute a Purchase Order or commitment by Buyer. Buyer shall have no obligation with respect to the purchase of Products under this Design and Manufacturing Agreement until a Release to Production or Purchase Order is received by S3 Semi.
     
  5.2 Purchase Orders. After the initial Release to Production, Buyer may order further Production Units by issuing a Purchase Order to S3 Semi. Such Purchase Order shall not request delivery inconsistent with the Purchase Order Lead Time without a line item for the appropriate expedite fees. Buyer’s Purchase Orders and Forecasts may not request delivery of less than the Minimum Order Quantity for Production Units set forth in the applicable SOW. S3 Semi will not be obligated to make shipments of less than such Minimum Order Quantity. Any Buyer Purchase Order received and accepted by S3 Semi (a “Purchase Order”) shall be binding on Buyer and S3 Semi, subject to the terms and conditions of this Design and Manufacturing Agreement.

 

6. WARRANTY

 

  6.1 S3 Semi warrants solely to Buyer for the period from commencement of Design Services until Release to Production (after which for the avoidance of doubt, this warranty terminates) that all work in providing the Design Services under this Design and Manufacturing Agreement were performed in a workman-like manner with reasonable skill, care and diligence and using generally accepted industry standards and practices. S3 Semi further warrants solely to Buyer that for one (1) year starting on the date of Acceptance by Buyer of the applicable item, including Production Units and Deliverables (the “Warranty Period”), (ii) the Production Units delivered hereunder, if used in accordance with their Purpose as defined in the relevant SOW, will conform in material respects to the Specifications and be free from defects in material and workmanship. S3 Semi does not warrant that Production Units to be delivered hereunder will be free from design defects or errors. Buyer acknowledges that the functionality and performance of the Production Units delivered hereunder is contingent upon Buyer’s design, plans, Specifications, instructions, and Functional Requirements as specified in the SOW, and on other materials provided by Buyer to S3 Semi (as well as third-party intellectual property included therein or therewith). S3 Semi represents, warrants and covenants that it is either the owner of, or authorized to use, any and all materials provided and used by or on behalf of S3 Semi in providing the Services. S3 Semi warrants that to the best of its knowledge at the time of Delivery that the Production Units do not include any open source materials that contain ** “copy-left” licenses and will not knowingly or deliberately introduce any open source materials without prior written consent from Buyer. S3 Semi makes no further warranty with respect to any Services, Prototypes, or Unapproved Product. S3 Semi makes no warranty to any third parties.

  

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  6.2 If, during the Warranty Period: (i) a Production Unit is returned by Buyer to S3 Semi and Buyer provides an explanation of its belief that there is a breach of the warranty at Section 6.1; and (ii) S3 Semi’s examination of such Production Unit confirms that such Production Unit is in breach of the warranty set out at Section 6.1 and such breach was not caused by improper handling after delivery, accident, abuse, misuse, neglect, improper installation, storage, operation, use or packaging, repair or alteration by someone other than S3 Semi, or improper testing performed by Buyer or on behalf of Buyer by a third party other than subcontractors of S3 Semi, or use contrary to any instructions given by S3 Semi, then S3 Semi shall, at its option and at no cost to Buyer, either use commercially reasonable efforts to repair or replace the Product such that there is no breach of warranty for any such Production Unit which fails during the applicable Warranty Period, provided that: (a) such Production Unit is returned, either to S3 Semi’s service facility or to such other facility designated by S3 Semi at Buyer’s risk and expense; and (b) the claimed breach of warranties exist and were not caused by improper handling after delivery, accident, misuse, neglect, alteration, repair, improper installation, packaging, repair or alteration by someone other than S3 Semi or working on behalf of S3 Semi in providing the Services, or improper testing performed by Buyer or by a third party authorized to work on behalf of Buyer (all of which will operate to void the warranties provided herein). If such Production Unit is defective, and S3 Semi elects to repair or replace it, the transportation charges for the repaired or replaced Production Unit from S3 Semi to Buyer will be paid by Buyer, and for the avoidance of doubt the remedy provided in this Section 6.2 excludes all costs of shipping or other space or aeronautical related transportation costs, duty, customs clearance, and other related charges. A repaired or replaced Production Unit will continue to be warranted for the longer of one (1) year from the original shipment date of the Production Unit or thirty (30) days from the shipment date of the replacement Production Unit. S3 Semi will have a reasonable time to make repairs or to replace the Production Unit, not to exceed such timeframe as may be mutually agreed in good faith by the Parties after receipt of the Production Unit from Buyer. All Production Units returned to S3 Semi shall be returned in accordance with S3 Semi’s reasonable returns procedure. Any replacement Production Units shall be delivered to Buyer’s premises in Texas, USA. If S3 Semi is unable to repair or replace a defective Production Unit after using commercially reasonable efforts, S3 Semi will refund the purchase price paid by Buyer for such defective Production Unit. IN NO EVENT WILL S3 SEMI BE LIABLE FOR ANY OTHER COSTS ASSOCIATED WITH THE REPAIR OR REPLACEMENT OF PRODUCTS OR PRODUCTION UNITS, INCLUDING LABOR, INSTALLATION, REMOVAL OR RETURN TO SPACE OR OTHER COSTS INCURRED BY BUYER AND, IN PARTICULAR, ANY COSTS RELATING TO THE REMOVAL OR REPLACEMENT OF ANY PRODUCTION UNITS OR PRODUCTS SOLDERED OR OTHERWISE PERMANENTLY AFFIXED TO ANY PRODUCT, ASSEMBLY, OR COMPONENT. THE REMEDY SET FORTH IN THIS SECTION 6.1 (“REMEDY”) IS BUYER’S SOLE AND EXCLUSIVE REMEDY FOR ANY BREACH OF THE WARRANTIES AT SECTION 6.1 OF THIS AGREEMENT.
     
  6.3 The Services and Products are provided without warranty of any other kind except as specified in Sections 6.1 and Section 14.1 of this Design and Manufacturing Agreement.

  

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  6.4 Buyer acknowledges and accepts that the express warranties set forth in sections 6.1 and 14.1 of this DESIGN AND MANUFACTURING Agreement or any expressly agreed warranties provided in any attachment to this DESIGN AND MANUFACTURING Agreement are in lieu of and operate to the exclusion of, to the fullest extent permitted by any applicable law, any other warranty, condition, term, undertaking, collateral undertaking or representation of any kind, express or implied, statutory or otherwise or arising from any proposal, specification, sample, course of dealing, trade usage or trade practice relating to any Deliverables supplied or Services rendered pursuant to this DESIGN AND MANUFACTURING Agreement including (by way of illustration and not by way of limitation) as to the condition, Non-infringement, quality, performance, merchantability or fitness for a particular purpose of any Deliverables supplied or Services rendered hereunder. S3 SEMI disclaims all liabilities arising from any services provided by a third party (OTHER THAN SUBCONTRACTORS OF S3 SEMI) or the use or incorporation in Buyer’s design of any products provided by a third party, including without limitation, any circuitry design components, intellectual property, IP Cells, or design library elements. Except as specifically provided in this Section 6 all Services, Prototypes, UNAPPROVED PRODUCTS, PRODUCTION UNITS and Products (as well as any third party products and services) are provided “as is” and “with all faults”, and S3 SEMI makes no warranties or representations, whether express, implied, or statutory concerning the foregoing, and (b) S3 semi disclaims all warranties with respect to the Services, Prototypes, UNAPPROVED PRODUCTS, and Products AND PRODUCTION UNITS including but not limited to any implied warranty of merchantability, fitness for any particular purpose, title, or noninfringement, or any warranty otherwise arising out of any proposal, specification, sample, or course of dealing, usage, or trade practice.
     
  6.5 Buyer acknowledges that Buyer is solely responsible for determining and obtaining any and all licenses lawfully required by it with respect to the lawful import, export, re-export, use, sales, manufacture, distribution or other disposal by Buyer of Product. Buyer will fully verify all third party technology that is not provided by S3 SEMI and used or included with the Product to ensure that such technology is compatible with, and suitable for, Buyer’s intended purposes and applications.
     
  6.6 Authorization. Each Party represents, warrants and covenants to the other that:

 

  6.6.1 Corporate Existence. It is a corporation duly incorporated, validly existing and in good standing under the laws and regulations of its place of incorporation;
     
  6.6.2 Corporate Power and Authority. It has the requisite corporate power and authority to execute, deliver and perform its obligations under this Agreement;
     
  6.6.3 Legal Authority. It has obtained and shall maintain all licenses, authorizations, approvals, consents or permits required to perform its obligations under this Agreement under all applicable Laws, except to the extent the failure to obtain any such license, authorizations, approvals, consents or permits is, in the aggregate, immaterial subject to the following: in respect of S3 Semi this section section shall not apply to patent licences or any licenses authorizations, approvals, consents or permits concerning export control.

  

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  6.6.4 Due Authorization. The execution, delivery and performance of this Agreement and the consummation of the transactions contemplated by this Agreement have been duly authorized by the requisite corporate action on the part of such Party;
     
  6.6.5 No Violation or Conflict. The execution, delivery, and performance of this Agreement shall not constitute a violation of any judgment, order, or decree; a material default under any material contract by which it or any of its material assets are bound; or an event that would, with notice or lapse of time, or both, constitute such a default. In respect of S3 Semi this section shall not apply in respect of any intellectual property infringement judgements, orders or decrees; and
     
  6.6.6 Compliance with Laws. The performance of any of its obligations under this Agreement, is and shall be in compliance in all material respects with all applicable Laws during the Term.

 

  6.7 Exclusivity: During the Exclusivity Period, S3 Semi shall not enter into any new agreements with third parties to provide services to such third parties which S3 Semi knows or reasonably should know are for the Field of Use. For purposes of this provision, the “Exclusivity Period” means [***].

 

7. PRICE AND PAYMENT

 

  7.1 Services/Deliverables

 

  7.1.1 The price and the payment terms shall be set out in the relevant Statement of Work. For the purposes of this Section 7 “Undisputed” means that the invoice contains no typographical errors and that the sums stated on the invoice correspond to the quoted figures in the relevant SOW as may have been amended by the relevant Change Requests.
     
  7.1.2 It is a material condition of this Design and Manufacturing Agreement that Buyer shall pay S3 Semi all sums properly due and payable pursuant to this Design and Manufacturing Agreement in accordance with the expressly agreed terms of payment provided for in the relevant Statement of Work.
     
  7.1.3 Unless otherwise expressly provided for in a relevant Statement of Work, all Undisputed payments due to S3 Semi pursuant to such Statement of Work shall be payable within thirty (30) days from the date of Delivery of the Production Units to Buyer and within thirty (30) days from the date of Acceptance of the Deliverables by Buyer (or the date of performance of the Services) or the issue date of the relevant invoice, whichever is later.

  

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  7.2 If the payment of any Undisputed sums due pursuant to this Design and Manufacturing Agreement are delayed other than in accordance with prior express agreement between the Parties, Buyer shall be liable for and make payment to S3 Semi for any interest payments as would accrue on such owed sums between the date at which payment was due and the date at which payment is actually made. The rate at which Buyer shall be liable to S3 Semi shall be of one per cent (1%) per month. The Parties agree that this figure represents a genuine and reasonable pre-estimate of the financial damage that is borne by S3 Semi in the event of any default by Buyer in paying to S3 Semi any sums properly due under this Design and Manufacturing Agreement. At all times, S3 Semi may suspend performance toward the next milestone until receipt of Undisputed payment for the most recently completed milestone.
     
  7.3 Taxes. Buyer is responsible for and will pay any tax, import duty or tariff (and any related interest or penalty), however designated, imposed with respect to the activities contemplated by this Design and Manufacturing Agreement (including without limitation, the Services, Prototypes, Production Units and Unapproved Product), except for taxes based on S3 Semi’s net income. The prices specified in each applicable quote and/or SOW excludes all duties, taxes and excises and specifically excludes value-added tax (VAT). In addition and for clarification, Buyer will make all payments to S3 Semi free and clear of, and without reduction for or withholding of, any taxes or other assessments described in this Section 7.3. S3 Semi will reasonably cooperate with Buyer to take advantage of benefits provided by any tax treaties. If S3 Semi is required by law to pay or collect any local, value-added, goods and services or any other similar taxes or duties based on the Services, Products, Prototypes or Unapproved Product, then S3 Semi shall separately state such taxes in addition to the price for Services, Prototypes or Risk Product, and Buyer agrees to pay such amounts, as well as to indemnify and hold S3 Semi harmless from and against any claims, damages, liabilities, penalties, interest, and expenses (including attorneys’ fees and costs) arising out of or related to Buyer’s failure to comply with this Section 7.3.
     
  7.4 Travel

 

  7.4.1 Unless otherwise agreed in writing (including by electronic mail correspondence) by the Parties in a Statement of Work, the payments due to S3 Semi pursuant to this Design and Manufacturing Agreement do include any costs and expenses related to travel by any S3 Semi personnel to any locations specified or requested by Buyer.
     
  7.4.2 However, Buyer shall reimburse S3 Semi for all travelling, subsistence and out-of-pocket expenses pre-approved by Buyer in writing and incurred by S3 Semi in performing Services. Further, any prior approval required by S3 Semi hereunder will be provided to S3 Semi without undue delay.

  

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8. Title and Delivery.

 

  8.1 Deliveries. All shipments to delivery destinations are made Ex-Works (EXW as per Incoterms 2016) at the point of shipment (factory, redistribution center, or other designated point). All Products shall be deemed accepted by Buyer upon delivery at point of shipment, subject to the product warranty set forth in this Design and Manufacturing Agreement. Title to Production Units and risk of loss pass to Buyer, or in the case of a Drop Shipment (as defined below), to the receiving party of the shipment (unless such receiving party is serving as Buyer’s agent, in which event, title and risk of loss will pass to Buyer), upon delivery to the carrier at the shipping point. In the absence of written instructions from Buyer, all Products shall be packed and prepared for shipment in a manner that: (i) follows good commercial practice; (ii) is acceptable to common carriers for shipment at the lowest rate; and (iii) is adequate to ensure safe arrival. S3 Semi shall mark all containers with Purchase Order number, lot tracking information, date of shipment, and Buyer’s and S3 Semi’s names, provided in the event that any shipments to Buyer’s buyers (“Drop Shipments”) are made, upon Buyer’s request S3 Semi’s name may be omitted from the containers.
     
  8.2 Delivery Timeframes. S3 Semi will make reasonable efforts to deliver in accordance with the delivery dates estimated in S3 Semi’s acknowledgement of Buyer’s Purchase Order; however: if the dates in S3 Semi’s acknowledgement differ from those in Buyer’s original Purchase Order, the Purchase Order shall only be binding on both parties once Buyer has expressly agreed, in writing, to the newly proposed dates. Shipment of Production Units may originate from either S3 Semi or its authorized subcontractors or distributors. S3 Semi will give Buyer notice if it reasonably expects a delay in meeting a delivery date or that only a portion of the Products will be available for shipment to meet a delivery date, and S3 Semi will specify the reasons therefor. For partial shipments, S3 Semi will ship the available Products unless directed by Buyer to reschedule a shipment. Buyer may specify a delivery destination other than its own premises (e.g. Drop Shipment), in order to facilitate delivery directly to its Buyers. S3 Semi does not require that delivery be made directly to Buyer. For the avoidance of doubt, Buyer will be responsible for all costs relating to shipment.

 

9. TIMETABLE

 

  9.1 The timetable for carrying out Services and providing the Products shall be set out in the relevant Statement of Work (and its related schedules, if any). The development activities for Products covered by this Design and Manufacturing Agreement shall be set forth in one or more SOWs developed and mutually agreed to by the Parties. Each SOW shall set forth the responsibilities and deliverables of each Party, specify any risks and assumptions regarding the development of the Products, and describe S3 Semi’s mitigation plans to minimize the negative impact of such risks and assumptions. Each Party will perform its obligations and deliver its deliverables as set forth in the applicable SOW, and each Party will cooperate with the other for the timely achievement of project milestones.
     
  9.2 The Parties recognise that, owing to the sophistication and complexity of the Services and Products to be provided hereunder, delays may occur. S3 Semi shall take reasonable measures to avoid any such delays, as far as is reasonably practicable. S3 Semi shall inform Buyer within three (3) Business Days after S3 Semi becomes actually aware of any such delay, of the causes of the delay, the expected duration of the delay and the measures S3 Semi proposes to take to remedy and mitigate the effects of any such delay.
     
  9.3 Under no circumstances will S3 Semi be liable or responsible in any way for delays to the timetable of a Statement of Work unless such a delay is primarily due to the failure of S3 Semi to comply with the terms of Section 9.1 of this Design and Manufacturing Agreement.

  

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  9.4 Under no circumstances will S3 Semi be liable or responsible in any way for delays to the timetable of a Statement of Work where such delays are caused, directly or indirectly, by:

 

  9.4.1 circumstances which are outside the responsibility or control of S3 Semi including without limitation the Risks and Assumptions specified in the relevant SOW; or
     
  9.4.2 any failure on the part of Buyer to promptly provide the Buyer Deliverables or Licensed Technology.

 

10. TERM

 

  10.1 The present Design and Manufacturing Agreement shall enter into force on the Commencement Date and, unless earlier terminated by either Party in accordance with this Design and Manufacturing Agreement, shall remain in effect for [***] years after the Commencement Date. Unless either Party has given the other at least six (6) months written notice prior to the expiry of the aforementioned term of its intention not to renew this Design and Manufacturing Agreement, then the term of this Design and Manufacturing Agreement shall be extended automatically for an indeterminate time during which either Party can terminate this Design and Manufacturing Agreement upon at least six (6) months prior written notice provided that all Undisputed payments specified in Purchase Orders have been discharged.

 

11. TERMINATION

 

  11.1 Notwithstanding any other right or remedy that it may have, either Party may terminate this Design and Manufacturing Agreement and/or any Statement of Work forthwith by notice if the other Party commits a material breach of this Design and Manufacturing Agreement or of such Statement of Work, which breach a) cannot be remedied or b) can be remedied, but for which a commercially reasonable plan to effect a remedy has not been made within 30 Business Days of receipt of notice of such breach.
     
  11.2 If this Design and Manufacturing Agreement is terminated by S3 Semi for material breach by Buyer in accordance with Section 11.1, S3 Semi shall have the option of terminating all Statements of Work that remain in force and Section 11.3 shall not apply.
     
  11.3 Subject to 11.2, if this Design and Manufacturing Agreement is terminated at such time as any Statements of Work remain in force, then those Statements of Work shall continue in force, incorporating the relevant terms of this Design and Manufacturing Agreement notwithstanding the termination of this Design and Manufacturing Agreement. It will be possible for individual Statements of Work to be terminated pursuant to this Design and Manufacturing Agreement without prejudice to the continuation in force of this Design and Manufacturing Agreement and other Statements of Work.
     
  11.4 Any terms of this Design and Manufacturing Agreement which by their nature extend beyond the expiration or termination of this Design and Manufacturing Agreement, and shall bind the Parties and their successors, heirs and assigns.
     
  11.5 Reserved.
     
  11.6 This Agreement and all SOWs hereunder may be terminated immediately by either Party in the event that the other Party files or has filed against it a petition in bankruptcy or seeking re-organization and such filing shall not be removed within forty-five (45) days, or has a receiver appointed and such appointment is not revoked within forty-five (45) days, or institutes any proceedings for liquidation or winding up. If any Party elects to terminate this Agreement due to the insolvency of the other Party, such termination shall be deemed to be a termination for cause hereunder.

  

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  11.7 In the event that Buyer terminates this Design and Manufacturing Agreement in accordance with Sections 11.1 or 11.6, S3 Semi shall use commercially reasonable efforts to provide reasonable termination assistance services at Buyer’s cost to transition the Services to Buyer or another provider designated by Buyer provided that such other provider shall not have access to the Confidential Information of S3 Semi. Upon expiration or termination of the Agreement, S3 Semi shall upon request promptly destroy all Confidential information of Buyer in the possession of S3 Semi.

 

12. CONFIDENTIALITY

 

  12.1 Neither Party shall, without written permission, use, employ or disclose, other than as expressly permitted or required by law, any Confidential Information received from the other Party whether orally, in writing, by demonstration or otherwise, to any third party, unless and to the extent that the disclosing Party can prove by written record that:

 

  12.1.1 it already had knowledge of the information prior to disclosure without breaching this Section 12 (Confidentiality) or any other confidentiality agreement; or
     
  12.1.2 the information was already known or becomes publicly known through no fault of the disclosing Party; or
     
  12.1.3 information identical to the disclosed information was already in its possession or was lawfully obtained without restriction to its use from a third party who is free to disclose same; or
     
  12.1.4 the information is subsequently independently developed by either Party without use of the disclosed information.

 

  12.2 The Recipient shall use the Confidential Information exclusively for the purpose of performing its obligations under this Agreement and shall not (a) reverse engineer, decompile, or disassemble any prototypes, software, or other tangible or intangible objects which embody Confidential Information, and (b) attempt to derive the composition or underlying information, structure or idea of any Confidential Information. In protecting a Party’s Confidential Information, both Parties must disclose Confidential Information only to their Affiliates or their Affiliates’ employees or consultants, or agreed third party subcontractors who are bound by terms no less restrictive than those in this Design and Manufacturing Agreement and on a strict need to know basis and must take all necessary precautions and shall treat such Confidential Information received pursuant to this Design and Manufacturing Agreement in the same manner and with the same degree of care as it applies to its own Confidential Information of a similar nature, but with at least a reasonable degree of care. A disclosure by the Recipient of Confidential Information either in response to an order by a court or other governmental body or as otherwise required by law shall not be considered to be a breach of this Agreement by the Recipient or a waiver of confidentiality for other purposes; provided, however, to the extent possible, the Recipient shall provide prompt prior written notice thereof to the disclosing Party to enable the disclosing Party to seek a protective order or otherwise prevent such disclosure.

  

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  12.3 The provisions of this Section 12 shall remain in force for the duration of this Design and Manufacturing Agreement. The Recipient shall immediately give notice to the disclosing Party of any unauthorized use or disclosure of Confidential Information. The Recipient agrees to assist the disclosing Party in remedying any such unauthorized use or disclosure of Confidential Information.
     
  12.4 An obligation of confidentiality regarding any Confidential Information disclosed under this Agreement shall survive the expiration or the termination of this Agreement for a period of ten (10) years.
     
  12.5 Both Parties acknowledge and agree that due to the unique nature of the Confidential Information, there can be no adequate remedy at law for any breach or threatened breach of Section 12 of this Design and Manufacturing Agreement, that monetary damages alone would be insufficient to compensate either Party for a breach or threatened breach of the confidentiality provisions contained herein and both Parties hereby consent to the entering of an order for injunctive relief to prevent or stop any breach or threatened breach of such provisions, and the entering of an order for specific performance to compel performance of any obligations under this Design and Manufacturing Agreement.
     
  12.6 All Confidential Information, created or provided by Buyer to S3 Semi, shall remain the property of Buyer, and no license or other rights to Buyer Confidential Information is granted or implied hereby. S3 Semi shall not file for intellectual property protection on Confidential Information.
     
  12.7 At Buyer’s written request and no later than five (5) days after such request, S3 Semi shall promptly destroy or deliver to Buyer (i) all materials furnished to S3 Semi by Buyer (ii) all tangible media of expression in S3 Semi’s possession or control to the extent that such tangible media incorporate any Confidential Information and any derivatives thereof that is not derived from S3 Semi Background Intellectual Property and (iii) written certification of S3 Semi’s compliance with such S3 Semi’s obligations under this sentence; provided however that copies of Confidential Information stored on backup media in accordance with the Recipient’s standard archive procedures or necessary to comply with any of the Recipient’s obligations under applicable laws and regulations, regulatory or stock exchange requirements, or bona fide compliance policies relating to document retention, need not be returned or destroyed, provided that such retained copies shall remain subject to the confidentiality obligation herein for an unlimited time. If any tangible media described in Section 12.7(iii) contains Confidential Information of both parties (including derivatives thereof), S3 Semi shall destroy (and not deliver to Buyer) such tangible media in accordance with the timeframes herein.

 

13. INTELLECTUAL PROPERTY RIGHTS

 

  13.1 Buyer hereby grants S3 Semi, at no cost to S3 Semi, the rights to use and practice the Licensed Technology solely in order for S3 Semi to perform Services, and to develop or prepare the Deliverables solely during the term of this Design and Manufacturing Agreement. Buyer agrees to obtain for S3 Semi the right to use, for the purpose of performing the Services and preparing the Products, indispensable third party information, materials and technology, and the Intellectual Property Rights therein, as S3 Semi upon signature of the corresponding Statement of Work reasonably requires in order to perform Services and/or provide Deliverables. Buyer represents that to the extent Buyer provides to S3 Semi any Buyer or third party Intellectual Property Rights or Licensed Technology hereunder, it has to its reasonable knowledge obtained all necessary permissions, licenses, consents and has the authority and right to provide such technology and associated rights to S3 Semi. Buyer agrees to hold harmless, defend and indemnify S3 Semi from any claims, damages, liabilities, penalties, interest, and expenses (including attorneys’ fees and costs) arising from or related to (i) Buyer’s breach of this Section 13.1, and/or (ii) claims that the Licensed Technology infringes or misappropriates any third party’s Intellectual Property Rights.

  

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  13.2 Except as otherwise set forth herein, neither this Design and Manufacturing Agreement, nor the provision of Services hereunder, shall give either S3 Semi or Buyer any ownership interest in or rights to the Intellectual Property Rights of the other Party, including ownership interest in or right in the Background Intellectual Property of the other Party. All Intellectual Property Rights that are owned or controlled by a Party at the Commencement Date shall remain under the unencumbered ownership or control of such Party throughout the term of this Design and Manufacturing Agreement and thereafter. Each Party hereby acknowledges and agrees that it does not, and will not, assert that it has any ownership claim to any Intellectual Property Rights of the other Party, including the other Party’s BIP. To the extent that Buyer’s BIP contains Confidential Information of Buyer, S3 Semi shall protect such BIP in accordance with Section 12 (Confidentiality).
     
  13.3 Except as may be expressly agreed in the relevant SOW, S3 Semi will own and retain all patents, copyrights, trade secrets and other Intellectual Property rights in any circuitry design components and process technology furnished or developed by S3 Semi, alone or jointly with others, in connection with the design, development, or manufacture of Products (collectively, the “S3 Semi-furnished Technology”) subject to Buyer’s or third party’s ownership of any Licensed Technology contained therein. For the avoidance of doubt S3 Semi shall own the masks produced under this Design and Manufacturing Agreement, subject to Buyer’s or third party’s ownership of any Licensed Technology contained in the masks. S3 Semi agrees that such masks shall not be used for any purpose other than manufacture of Products for Buyer unless otherwise agreed by Buyer in writing. Provided that Buyer has paid S3 Semi all moneys due it under this Design and Manufacturing Agreement, S3 Semi shall destroy such masks upon written request from Buyer and certify to Buyer the destruction thereof
     
  13.4 Reserved.
     
  13.5 Reserved.
     
  13.6 BIP. Subject to the payment of all Undisputed fees due through Payment Milestone 6.2 (Qualification) under the initial SOW, or as agreed otherwise under a future SOW, S3 Semi hereby grants to Buyer at no additional charge, a perpetual, non-exclusive, world-wide, royalty free, perpetual, irrevocable subject to the payment of fees due, right and license to distribute, use and perform, and sell, the S3 Semi Background Intellectual Property incorporated in the Production Units. S3 Semi shall not license, rent, assign, sell, or make available within the Field of Use any Deliverable or S3 Semi Background Intellectual Property as delivered to Buyer to a third party in violation of Section 6.7. The permitted license to S3 Semi BIP hereunder shall permit such third party to execute, use, and perform such S3 Semi BIP included in such Chips solely as necessary to enable such third party to use such purchased Chips for the purpose they were intended. All S3 Semi Background Intellectual Property as of the Commencement Date is set forth on Exhibit 1. All Buyer patents as of the Commencement Date are set forth on Exhibit 2 and shall be considered Buyer Background Intellectual Property hereunder.

  

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  13.7 Third Party Materials. Prior to using any Third Party Materials to provide the Services or include in any Deliverables and subject to the licensor of such Third Party Materials executing a non-disclosure agreement with Buyer, S3 Semi shall obtain Buyer’s prior written approval to use such Third Party Materials. Unless Buyer otherwise agrees in advance, with respect to Third Party Materials licensed by S3 Semi or S3 Semi subcontractors and used by them to provide the Services, S3 Semi shall ensure Buyer has the rights to use, distribute, and sell such Third Party Materials, solely to the extent necessary to deploy, sell, distribute, and use the Prototypes and Production Units in satellites). All Third Party Materials to be used by S3 Semi as of the Commencement Date are set forth on Exhibit 3, which shall be amended during the Term accordingly.
     
  13.8 Unless Buyer has otherwise agreed in advance, Buyer (and, to the extent applicable, Buyer’s third party contractors) shall not be obligated to pay any fees, such as third party license, termination, or pass-through fees in connection with its receipt of the licenses, sublicenses and other rights specified in Section 13.7 (Third Party Materials) and Section 13.8. In addition, if agreed in advance in the relevant SOW, S3 Semi shall deliver to Buyer a copy of all Third Party Materials and related documentation that Buyer reasonably needs for the use and maintenance of Production Units.
     
  13.9 To the extent Buyer has agreed in advance to pay any fees in connection with its receipt of such licenses, sublicenses or other rights, S3 Semi shall, at Buyer’s request, identify the licensing and sublicensing options available to Buyer and the license or transfer fees associated with each. S3 Semi shall not commit Buyer to paying any such fees or expenses without Buyer’s prior approval. If the licensor offers more than one form of license, Buyer (not S3 Semi) shall select the form of license to be received by Buyer and its designee(s).

 

14. INFRINGEMENT

 

  14.1 When performing Services S3 Semi warrants (i) that it will take reasonable care to avoid the infringement of any trademark or copyright of a third party or misappropriate the trade secrets of a third party; and (ii) that it was not aware, of the Effective Date, of any infringement of any third party’s United States patent. Where S3 Semi is in breach of the warranty at Section 14.1 and the normal operation, possession or use of any Production Units or Deliverables, as applicable infringe the Intellectual Property Rights or trade secrets of a third party, S3 Semi will defend and indemnify Buyer against any related third party claims, liabilities, judgements, damages and expenses that may be incurred or sustained by Buyer (“Claim”), and provided that Buyer shall promptly notify S3 Semi in writing of any such Claim and (insofar as permitted under applicable law) grants S3 Semi full authority to defend and settle such claims. This warranty is in lieu of and operates to the exclusion of any other warranty, express or implied, statutory or otherwise with respect to the infringement of any Intellectual Property Rights of a third party or misappropriation of the trade secrets of such third party. This section 14 sets out the exclusive remedy of Buyer for a breach of the warranties in this Section 14.1.
     
  14.2 Where S3 Semi is in breach of the warranty at Section 14.1 and the normal operation, possession or use of any Production Units or Deliverables, as applicable, infringe the Intellectual Property Rights or trade secrets of a third party, S3 Semi shall (at the expense of S3 Semi) either:

 

  14.2.1 procure the right for Buyer to continue using any such infringing Production Unit or Deliverable, as applicable; or

  

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  14.2.2 make such alterations, modifications or adjustments to the Production Unit or Deliverable, as applicable so that it becomes non-infringing without incurring a material diminution in performance or functionality; or
     
  14.2.3 replace the infringing Production Unit or Deliverable, as applicable with a non-infringing substitute, provided that such substitute does not result in a material diminution in performance or functionality.

 

  14.3 Where S3 Semi is in breach of the warranty at Section 14.1 and the normal operation, possession or use of the Production Unit or Deliverable, as applicable infringes the Intellectual Property Rights or trade secret rights of a third party, if S3 Semi, exercising reasonable commercial judgement, is not able to exercise any of the options set out, respectively, at Sections 14.2.1, 14.2.2 or 14.2.3 of this Design and Manufacturing Agreement within forty (40) Business Days of the date it receives notice of the infringement of any third party’s Intellectual Property Rights, then S3 Semi shall accept the return of any infringing Production Units or Deliverable, as applicable and refund to Buyer monies paid under the relevant Statement of Work, subject to the Limitation of Liability outlined in Section 28.
     
  14.4 S3 Semi shall have no liability of any type to Buyer in respect of the infringement or violation of third party’s Intellectual Property Rights if any such liability arises from any breach of a material term by Buyer of its obligations under this Design and Manufacturing Agreement or from any Unapproved Product. Further, S3 Semi will have no obligation to indemnify Buyer, and Buyer agrees to indemnify S3 Semi with respect to any claim of infringement or violation of third party’s Intellectual Property Rights arising out of or related to:

 

  14.4.1 compliance by S3 Semi or its suppliers with any instructions, designs, plans, Specifications, instructions, and/or Functional Requirements received from Buyer or its suppliers; or
     
  14.4.2 modifications of any S3 BIP, Production Unit, or Deliverable made by Buyer, if such claim would not have arisen but for such modifications; or
     
  14.4.3 combination or use of any S3 BIP, Production Unit or Deliverable with Buyer technology or products, if such claim would not have arisen but for such combination or use; or
     
  14.4.4 any materials or technology furnished other than by S3 Semi or an S3 Semi Subcontractor, including but not limited to, by Buyer, Buyer’s Subcontractor, or any other third party, including without limitation third party circuitry design components, IP Cells, Intellectual Property or design library elements; or
     
  14.4.5 any claim made following an initial claim by Buyer against the claimant; or
     
  14.4.6 failure of Buyer to comply with section 13.1; or
     
  14.4.7 any alleged infringement based on protocols established by standards bodies.

 

  14.5 In the event of any claim, suit or proceeding brought against S3 Semi arising out of any act or condition described in Sections 14.4.1 to 14.4.7, S3 Semi shall immediately notify Buyer in writing of such claim. S3 Semi grants Buyer full authority to defend and settle any such claims and offers, upon request by Buyer, all reasonable assistance to Buyer (at Buyer’s expense).

  

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  14.6 Indemnity by S3 Semi. S3 Semi shall indemnify, defend and hold harmless Buyer and its respective officers, directors, employees, agents, representatives, successors, and assigns from any and all direct losses (excluding any indirect or consequential loss, such as, losses associated with, resulting from, or comprised of loss of profits, loss of use or revenue and any special or punitive losses), including reasonable legal fees (including fees for threatened claims) and disbursements and reasonable costs of investigation, litigation, experts, judgment, interest and penalties owing, sustained or incurred by Buyer due to non-Party claims arising from or in connection with any of the following:

 

  14.6.1 Personal Injury and Property Damage. Any act or omission of S3 Semi, its affiliates, or their respective personnel resulting in bodily injury, including death, or damage to real property; and
     
  14.6.2  Affiliate Claims. Any claim, other than an indemnification claim under this Agreement, initiated by a S3 Semi Affiliate asserting rights under this Agreement.

 

  14.7 The provisions of this Section 14 state the entire liability and obligations of either Party to the non-defaulting Party, and the sole and exclusive rights and remedies of the non-defaulting Party, with respect to any proceeding or claims relating to the infringement of Intellectual Property Rights of third parties.

 

15. ACCEPTANCE OF DELIVERABLES

 

The details of the Validation Plan in respect of Deliverables shall be set out in the relevant Statement of Work and/or its related schedules (if any) pursuant to which such Deliverables are provided.

 

16. ASSIGNMENT

 

Neither Party shall be entitled to assign the benefit of this Agreement without the prior written consent of the other Party which shall not be unreasonably withheld or delayed; provided, however, that either Party shall be entitled to assign this Agreement without such consent to a successor to its business resulting from a change in control, sale of assets, merger, or similar transaction.

 

17. MUTUAL NON-SOLICITATION OF EMPLOYEES

 

S3 Semi and Buyer agree that during the term of this Agreement and for a period of twelve (12) months thereafter, neither Party will, directly or indirectly, on its own behalf or on behalf of another person or entity, recruit, solicit, or induce or attempt to recruit, solicit or induce any employee of the other Party with whom that Party’s employees, agents or subcontractors had contact with the other during the course of providing or receiving services under this Agreement, to leave his or her employment to go to work, as an employee, consultant or independent contractor, for the other Party or any Affiliates of the other Party

 

18. SUCCESSORS

 

This Agreement shall be binding on and shall inure to the benefit of each Party to this Agreement and its successors and assigns in title.

 

19. CONTRACTUAL INTERPRETATION

 

Both Parties shall be deemed to have jointly prepared this Agreement.

  

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20. RELATIONSHIP OF THE PARTIES

 

The relationship between the Parties hereto is that of independent contractors. Nothing contained in this Agreement and no action taken by the Parties under this Agreement shall be deemed to constitute a relationship between the parties of partnership, joint venture, principal and agent or employer and employee.

 

21. Non-Restrictive Relationship

 

Subject to Section 6.7 (Field of Use), Buyer agrees that S3 Semi and its employees may provide design consulting services similar in nature to the Services for any third parties both during and after the term of this Agreement, provided that S3 Semi does neither infringe Buyer’s Intellectual Property Rights nor use, employ or disclose Buyer’s Confidential Information.

 

22. Invalidity

 

If any term, section or part of this Agreement is found by any court, tribunal, administrative body or authority of competent jurisdiction to be illegal, invalid or unenforceable then that provision, shall, to the extent required, be severed from this Agreement and shall be ineffective without, as far as is possible, modifying any other clause or part of this Agreement and this shall not affect any other provision of this Agreement which shall remain in full force and effect.

 

23. Entire Agreement

 

This Agreement and any SOW’s executed hereunder shall constitute the entire agreement between S3 Semi and Buyer relating to the subject matter hereof and supersedes any and all prior written or oral agreements, representations or understandings between the Parties relating to this subject matter.

 

24. Waiver AND AMENDMENTS

 

  24.1 Neither Party’s failure or delay to exercise any right, power or remedy will operate as a waiver of it nor will any partial exercise preclude any further exercise of the same or of some other right, power or remedy.
     
  24.2 No addition to, amendment, modification or waiver of any provision of this Agreement shall be binding upon either Party unless in writing and signed by duly authorized representatives of both Parties to this Agreement.

 

25. Export Control

 

S3 Semi and Buyer shall adhere to all applicable laws, regulations and rules relating to the export of technical data. Buyer shall not export or re-export any technical data incorporated in Deliverables to any proscribed country listed in such applicable laws, regulations and rules.

 

26. Notices

 

  26.1 Any notice under this Agreement shall be in writing and may be delivered by pre-paid registered post addressed to the recipient at the address set out below or such other address as may be notified in writing to the other Party.
     
  26.2 Notices shall be deemed to have been duly served if sent by pre-paid registered post, on the seventh Business Day after being posted.

  

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  26.3 The addresses for the parties are as follows:

 

If to S3 Semi:

 

Dialog Semiconductor Operations Services Limited,

Attn: Legal Department

100 Longwater Avenue, Green Park,

Reading, RG2 6GP, United Kingdom

 

with a requited copy to:

 

Dialog Semiconductor (UK) Limited

Attn: Legal Department

100 Longwater Avenue, Green Park,

Reading, RG2 6GP, United Kingdom

 

If to Buyer:

 

AST&Science

2901 Enterprise Lane

Midland, Texas 79706

Attn: Abel Avellan

Chairman & CEO

 

27. Governing Law and ARBITRATION

 

  27.1 This Agreement and any and all Statements of Work shall be governed by and construed in accordance with the laws of Ireland.
     
  27.2 The Parties agree that any dispute, controversy or claim, arising or relating to any part of this Agreement and/or any of the Statements of Work (including any question regarding its existence, validity or termination thereof, shall first be referred to one or more, but maximal three, equal number of executive level employees of Buyer and S3 Semi. Such employees will meet and negotiate in good faith in an attempt to amicably resolve such dispute, controversy or claim, with such escalation path ending at a Chief Executive Officer level in the case of S3 Semi and Buyer.
     
    Notwithstanding the foregoing, if the Parties fail to resolve any dispute, controversy or claim by way of mutual negotiation within four (4) weeks as of the first negotiations between the executive level employees of Buyer and S3 Semi, such dispute, controversy or claim shall be settled by arbitration in accordance with the Rules of Arbitration of the International Chamber of Commerce (ICC) in force on the date on which the notice of arbitration is submitted in accordance with these Rules, except that a Party may seek injunctive relief from any ordinary court where appropriate, according to the local laws. The number of arbitrators shall be three. The seat of the arbitration shall be in Dublin. The arbitral proceedings shall be conducted in English.

  

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28. LimitED liability

 

  28.1 S3 Semi does not exclude or limit its liability to Buyer for (i) death or personal injury caused by the negligence of S3 Semi and (ii) losses occasioned by S3 Semi’s breach of its obligations under Section 6.7 (Field of Use). Neither party excludes or limits its liability to the other for (a) losses occasioned by any breach of a Party’s obligations under Section 12 (Confidentiality).
     
  28.2 Subject always to Section 28.1, the liability of S3 Semi to Buyer under or in connection with this Agreement, whether arising from negligent error or omission, breach of contract, or otherwise pursuant to any other legal theory shall be as set out in this Section 28.2:

 

  28.2.1 WITH THE EXCEPTION OF BUYER’S OBLIGATION TO PAY S3 SEMI THE SUMS SPECIFIED IN THE RELEVANT SOW AND THE LIABILITY AMOUNTS SET FORTH IN SECTION 28.2.2, THE AGGREGATE LIABILITY OF EACH PARTY FOR ALL LOSSES, DAMAGES, LIABILITIES, OBLIGATIONS, OR OTHERWISE ARISING OUT OF OR CONNECTED TO THIS AGREEMENT SHALL NOT EXCEED THE GREATER OF (A) FIVE MILLION DOLLARS (USD$5 MILLION), OR (B) ONE HUNDRED PER CENT (100%) OF THE SUMS PAID BY BUYER TO S3 SEMI FOR THE PRODUCT CAUSING LOSS DURING THE TWELVE (12) MONTH PERIOD IMMEDIATELY PRECEDING THE CLAIM.
     
  28.2.2 THE AGGREGATE LIABILITY OF S3 SEMI FOR ALL LOSSES, DAMAGES, LIABILITIES, OBLIGATIONS, OR OTHERWISE ARISING OUT OF OR CONNECTED TO ITS INDEMNIFCATION OBLIGATIONS SET FORTH IN SECTION 14.1 SHALL NOT EXCEED THE GREATER OF (A) TEN MILLION DOLLARS (USD$10 MILLION), OR (B) ONE HUNDRED PER CENT (100%) OF THE SUMS PAID BY BUYER TO S3 SEMI FOR THE PRODUCT CAUSING LOSS DURING THE THREE (3) YEAR PERIOD IMMEDIATELY PRECEDING THE CLAIM.

 

  28.3 Except for fraud and wilful misconduct, in no event shall S3 Semi be liable to Buyer for:

 

  28.3.1 ANY INCIDENTAL, PUNITIVE, INDIRECT, OR CONSEQUENTIAL DAMAGES WITH RESPECT TO PERFORMANCE OF ITS OBLIGATIONS UNDER THIS AGREEMENT, SPACE TRANSPORTATION COSTS, SATELLITE LAUNCH OR RETRIEVAL AND RELATED COSTS, INCLUDING WITHOUT LIMITATION LOST PROFITS, INTERRUPTION OF BUSINESS, OR COST OF PROCUREMENT OF ANY SUBSTITUTE GOODS OR SERVICES, REGARDLESS OF WHETHER S3 SEMI HAS ADVANCE NOTICE OF THE POSSIBILITY OF SUCH DAMAGES. IN ADDITION, S3 SEMI WILL NOT BE LIABLE FOR: (A) AMOUNTS ASSESSED OR AWARDED ON THE VALUE OF SERVICES OR AN ASSEMBLY OF PRODUCTS, DEVICES, OR COMPONENTS THAT INCLUDES A PRODUCT, SUBJECT TO A CLAIM UNDER SECTION 14, WHERE THAT CLAIM INCLUDES A DEMAND FOR DAMAGES ASSOCIATED WITH THE ENTIRE ASSEMBLY (E.G., DAMAGES BASED UPON THE “ENTIRE MARKET VALUE” RULE, OR THOSE BASED ON BUYER’S PRODUCTS INCLUDING THE PRODUCTS); OR (B) AMOUNTS ASSESSED OR AWARDED BASED ON THE VALUE OR SALES PRICE OF ANY PRODUCTS, DEVICES, COMPONENTS OR SERVICES OTHER THAN A PRODUCT INDEMNIFIED UNDER THIS AGREEMENT, WHEN AN ASSESSMENT OR AWARD INCLUDES AN ALLEGATION THAT THOSE ITEMS WOULD HAVE BEEN SOLD TOGETHER WITH, OR AS SPARE PARTS SOLD FOR, A PRODUCT SUBJECT TO A CLAIM UNDER SECTION 14 (E.G., “CONVOYED SALES” OR “DERIVATIVE SALES”).

  

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  28.3.2 loss or damage due to Buyer’s failure to fulfil its responsibilities set out in the Agreement or any matter under the control of Buyer which shall include, but is not limited to, the installation, storage, back up and safekeeping of Deliverables provided to Buyer pursuant to this Agreement.

 

  28.4 The Parties expressly agree that should any limitation or provision contained in this Section 28 be held to be invalid under any applicable statute or rule of law it shall to that extent be deemed omitted, but if any party thereby becomes liable for loss or damage which would otherwise have been excluded such liability shall be subject to the other limitations and provisions set out in this Section 28.
     
  28.5 Excluding claims involving Confidential Information and Intellectual Property Rights, to the fullest extent permitted by any applicable law, the Parties expressly agree that no action, regardless of form or legal theory, arising from the provision of Services or Deliverables may be brought by either Party more than two (2) years after the cause of action has accrued, except that an action for non-payment of the price may be brought within two (2) years after the later of the date of last payment or the date such unpaid amount should have been paid.
     
  28.6 Production Units are not manufactured, designed or authorised for use, and shall not be used, sold or incorporated into modules or devices for use, in any medical application (including, without limitation, any body-implantable device) or life support or safety equipment or any application where performance of the Production Unit (either by itself or in conjunction with other components) can result in personal injury or death (together, the “Excluded Applications”). Any use or sale or incorporation into modules or devices of the Production Units in respect of Excluded Applications shall be solely at Buyer’s risk. Buyer shall defend, indemnify and hold harmless S3 Semi and its Affiliates and their respective directors, officers and employees from and against all claims, liabilities, damages, losses, judgments, authorized settlements, costs and expenses (including without limitation, reasonable attorney’s fees) relating to the use or sale or incorporation of Production Units in respect of Excluded Applications

 

29. Restricted Use

 

Buyer acknowledges and agrees that the Products are not designed, intended, or certified for use in components of systems intended for, or in relation to [***] may occur, and Buyer shall not use, sell, or otherwise distribute the Products for said uses.

  

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30. Force Majeure

 

Neither Party will be liable for any failure to perform any obligations undertaken hereunder and/or under a Statement of Work due to unforeseen circumstances or causes beyond reasonable control, including, but not limited to, acts of God, war, riot, embargoes, acts of civil or military authorities, earthquakes, fire, flood and pandemics. Time for performance agreed in a Statement of Work will be extended by Force Majeure. In the event that the delay or non-performance of either Party hereto continues for a period of sixty (60) days due to events of Force Majeure, then the other Party shall have the right to terminate the affected Statement of Work with immediate effect without liability towards the other Party. The Party subject to the Force Majeure event shall resume the performance of its obligations as soon as possible after the Force Majeure event shall have ceased, but shall exercise commercially reasonable efforts to perform its obligations hereunder notwithstanding such Force Majeure event. For purposes of this Agreement, the COVID-19 pandemic shall not be considered a Force Majeure event. Notwithstanding, if, after the Commencement Date, the COVID-19 pandemic creates a material impact on either Party’s ability to perform its obligations under this Agreement, the Parties shall work in good faith to mitigate such material impact.

 

31. Signature

 

IN WITNESS WHEREOF this Agreement has been signed and its terms and conditions have been accepted by the duly authorised representatives of each Party hereto.

 

Dialog Semiconductor Operations Services Limited, - S3 Semi

 

By: /s/ Colin Sturt  
     
Printed Name: Colin Sturt  
     
Title: Director  
     
Date: 24 September, 2020  

 

AST & SCIENCE, LLC - Buyer

 

By: /s/ Tom Severson  
     
Printed Name: Tom Severson  
     
Title: CFO  
     
Date: 20-Sep-2020  

  

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Exhibit 10.22

 

SUBLEASE
AGREEMENT
BETWEEN THE MIDLAND DEVELOPMENT
CORPORATION AND AST & SCIENCE, LLC

 

THIS SUBLEASE AGREEMENT (“Sublease”) is made and effective this 13th day of November, 2018, by and between the Midland Development Corporation (“MDC” or “Landlord”), a Type A corporation existing under the authority of Chapter 504 of the Texas Local Government Code, and AST & Science, LLC, a Delaware limited liability company (“Lessee”).

 

RECITALS

 

WHEREAS, the City of Midland, Texas (“City”) owns and operates Midland International Air & Space Port (the “Airport”) at which Lessee desires to locate its corporate headquarters satellite manufacturing, antenna site and network operations center; and

 

WHEREAS, MDC has leased from City certain existing hangar space and land at the Airport, which is further described herein; and

 

WHEREAS, MDC and Lessee desire to set forth the terms and conditions under which Lessee will sublease said existing hangar space and land from MDC for purposes of said business;

 

WHEREAS, MDC and City have executed a second amendment that certain Commercial Hangar Lease Agreement, dated July 10, 2012. Said second amendment being attached hereto as Exhibit A and incorporated herein for all purposes; and

 

WHEREAS, MDC and Lessee will simultaneously with the execution of this Sublease, enter into an Economic Development Agreement (the “Development Agreement”, which is attached hereto as Exhibit B and incorporated herein for all purposes)

 

NOW, THEREFORE, for and in consideration of the covenants and conditions herein stated, City and Lessee agree as follows:

 

The Recitals above are incorporated into, and made part of, this Sublease for all purposes.

 

LEASE INFORMATION

 

Lessee: AST & Science, LLC

 

Lessee Address: Abel Avellan, Chairman and CEO at 1111 Brickell Ave., Ste. 1100, Miami, FL 33131

 

Telephone: 1-305-913-7106

 

Landlord: Midland Development Corporation

 

Landlord’s Address: at 200 N. Loraine Street, Suite 610, Midland, TX 79701 City Manager, P.O. Box 1152, 300 North Loraine, Midland, Texas 79702

 

Telephone:

 

Lessee’s Proportionate Share of the Leased Premises: 100%

 

Lessee’s Proportionate Share of the Spaceport Business Park (the “Park”): TBD

 

Security Deposit: One Hundred Fifty Thousand and No/100 Dollars ($150,000)

 

 

 

 

Article 1.
GRANT OF LEASE

 

1.01 Leased Premises: MDC agrees to lease to Lessee Hangars S-11A and S-11B, and Tracts 4-A and 4-B, located in Lot 1, Block 13, Industrial Park Regional Air Terminal, Unit 12, Midland, Midland County, Texas, and being more particularly described on Exhibit C attached hereto and incorporated by reference. Hangars S-11A and S-11B, and Tracts 4-A and 4-B, are hereinafter collectively referred to as the “Leased Premises.” The parties hereby agree that any adjacent real property MDC subsequently leases from City through an option agreement may be included as part of the Leased Premises upon written approval of such inclusion by both parties. Any such real property included as part of the Leased Premises shall be subject to the terms and conditions of this Sublease.
   
1.02 Easements: This Sublease shall be subject to such easements, rights-of way, drill sites, or other rights or reservations affecting the Leased Premises which are of record or are clearly visible as of the date of this Sublease, or which are shown on Exhibit C.
   
1.03 Acceptance of Leased Premises: Subject to the requirements of Article 6.01, BY EXECUTING THIS SUBLEASE LESSEE AGREES AND ACKNOWLEDGES THAT LESSEE IS TAKING OR LEASING THE LEASED PREMISES “AS IS” WITH ANY AND ALL LATENT AND PATENT DEFECTS AND THAT THERE IS NO WARRANTY, EXPRESS OR IMPLIED BEING MADE BY THE MDC OR CITY THAT THE LEASED PREMISES ARE FIT FOR A PARTICULAR PURPOSE. LESSEE ACKNOWLEDGES, BY EXECUTING THIS SUBLEASE, THAT LESSEE IS NOT RELYING UPON ANY REPRESENTATION MADE BY MDC OR CITY WITH RESPECT TO THE CONDITION OF THE LEASED PREMISES (INCLUDING, WITHOUT LIMITATION, THE WATER, SOIL, AND GEOLOGY), BUT IS RELYING UPON LESSEE’S EXAMINATION OF THE LEASED PREMISES. LESSEE ALSO RECOGNIZES BY EXECUTING THIS SUBLEASE THAT LESSEE IS AGREEING TO ACCEPT THE LEASED PREMISES “AS IS,” THAT LESSEE AGREES TO MAKE LESSEE’S OWN APPRAISAL OF THE LEASED PREMISES AND TO ACCEPT THE RISK THAT LESSEE MAY BE WRONG. MDC GIVES NO ASSURANCES, EXPRESS OR IMPLIED CONCERNING THE VALUE OR CONDITION OF THE LEASED PREMISES. IN NO EVENT SHALL THE LESSEE OR LANDLORD HAVE A RIGHT TO RECOVER CONSEQUENTIAL DAMAGES. THEREFORE, LESSEE WILL TAKE THE LEASED PREMISES UNDER THE EXPRESS UNDERSTANDING THE LEASED PREMISES ARE ACCEPTED “AS IS” AND WITH ALL FAULTS, EXCLUDING EXPRESS OR IMPLIED WARRANTIES. FURTHER, LESSEE COVENANTS AND AGREES THAT MDC HAS NOT MADE, DOES NOT MAKE, AND SPECIFICALLY DISCLAIMS ANY REPRESENTATIONS, WARRANTIES, COVENANTS OR GUARANTEES OF ANY KIND WHATSOEVER REGARDING THE DISPOSAL OR EXISTENCE OF ANY HAZARDOUS SUBSTANCE, AS DEFINED BY THE COMPREHENSIVE ENVIRONMENTAL RESPONSE, COMPENSATION, AND LIABILITY ACT, AS AMENDED, OR APPLICABLE STATE LAWS.

 

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Article 2.
TERM OF SUBLEASE

 

2.01 Sublease Term: The term of this Sublease shall commence on November 21, 2018, and terminate on November 20, 2033, (the “Sublease Term”) unless terminated earlier pursuant to the provisions of this Sublease.

 

Article 3.
RENT

 

3.01 Amount of Base Rent:
Basic Rental (“Base Rent”):
Months 1-12

$15.00/SF for Office Space (44,988 sq. ft.)

$ 9.00 /SF for Hanger A (28,480 sq. ft.)

$ 7.00 /SF for Hanger B (11,900 sq. ft.)

$ 0.45/SF for Land Lease

(Approximately 238,000 square feet of additional land, as determined by a future mutually-approved survey, which is incorporated herein by reference.)

 

Lessee will pay Landlord the Base Rent of Eighty One Thousand Three Hundred Eighty-Seven and No/100 Dollars ($81,387.00) per month plus CAM charges (defined herein) on or before the 10th business day of each month as a fixed rent for the next month’s rent. Rent for any fractional month at the beginning or end of the Sublease Term will be prorated on a per-day basis (also see Article 15 below).

 

It is agreed and understood that provision must be made herein for an adjustment of rentals annually. Therefore, as of November 1, 2019, all payments made by Lessee to MDC shall be increased only in the same proportion or percentage by which the cost of living has been increased as reflected by the Consumer Price Index for All Items, as maintained by the United States Government’s Department of Labor, Bureau of Labor Statistics for the Dallas/Fort Worth SMA; such increase being measured by comparison with such cost-of-living indices at the end of the immediately preceding 12-month period of this Sublease, as compared with the indices at the commencement of the immediately preceding 12-month period of this Sublease.

 

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3.02 Delivery of Rent: Lessee shall timely pay to Landlord Rent, without deduction or set off, at Landlord’s Address (or such other address as Landlord may from time to time designate in writing to Lessee). Base Rent shall be payable monthly in advance (including any partial month). Monthly installments of Base Rent shall be due on the first day of the first full calendar month of the Sublease Term with a ten (10) day grace period and continuing the first day of each succeeding calendar month during the Sublease Term. Base Rent for any fractional month at the beginning of the Sublease Term shall be prorated based on 1/365 of the current annual Base Rent for each day of the partial month this Sublease is in effect and shall be due on the commencement date of this Sublease. All sums payable by Lessee under this Sublease, whether or not expressly denominated as rent, will constitute rent for the purposes of Section 502(b)(6) of the Bankruptcy Code and for all other purposes. In addition, Lessee shall pay its Proportionate Share of electricity and other utility charges at the end of each month.

The wiring instructions for all payments to Landlord are as follows:

 

  Account Name: ______________
  Bank Name: ______________
  Account Number: ______________
  ABA Routing Number: ______________

 

The wiring instructions for all payments to Lessee are as follows:

 

  Account Name: ______________
  Bank Name: ______________
  Account Number: ______________
  ABA Routing Number: ______________

 

3.03 Triple Net Rent: The rent paid by Lessee will be on a triple net basis. Lessee agrees to pay as additional rent an amount equal to Lessee’s Pro Rata Share of the following, collectively called “Additional Rent”: (a) all ad valorem taxes on the Leased Premises and all improvements thereon (including, without limitation, the Leased Premises (b) all premiums for insurance carried by Landlord on the improvements and operations situated on the Park and/or Leased Premises (c) Common Area Maintenance Charges, and all expenses and liabilities incurred by Landlord in connection with its possession of the Park and/or Leased Premises, including without limitation, deductibles on insured claims, and for the purposes of the foregoing, the amount of the said deductible(s) shall be passed through to the Lessee in the year of the occurrence of the event causing such claim based on the amount of the deductible set forth in the policy. For purposes of this Sublease, the phrase “Common Area Maintenance Charges” (“CAM”) shall mean for each calendar year, or portion thereof, during the Sublease Term, the aggregate of all costs, expenses and liabilities of every kind or nature paid or incurred by Landlord to operate, manage, maintain and repair the common area and all other improvements on the Park and/or Leased Premises, including, without limitation, those paid or incurred in connection with the sweeping, cleaning, removing of debris from, maintaining, re-striping, and repairing the common areas; the cost of supplying water, electricity, gas, sewer disposal and/or garbage pickup and disposal, and monitoring and security services with respect to the common areas (all of which Landlord is obligated to furnish; providing the Park and/or Leased Premises identification signs and the repair and maintenance of the pylons and all signs thereon: providing traffic control, if any; constructing, maintaining and repairing any on-site and off-site utilities necessary or appropriate for operation of the common areas; maintaining, repairing and renovating the Park and/or Leased Premises; plus all other costs and expenses of every kind or nature paid or incurred by Landlord relative to maintaining, managing, repairing, renovating, and equipping the common areas in the Park and/or Leased Premises. The portion of CAM attributable to Lessee herein for the replacement of any HVAC system or component thereof, any roof or portion thereof, or any other system or component for which Landlord must replace pursuant to this Sublease shall be limited to the cost of the replacement divided by the total expected service life of the item so replaced (in months) multiplied by the number of months that have passed since the Effective Date of the Sublease, which number shall then be further multiplied by the product of the total square footage of the Park and/or Leased Premises, as the case may be, divided by the square footage of the Park and/or Leased Premises leased by Lessee. Common areas of the Park and/or Leased Premises are those parts of the Park and/or Leased Premises designated by Landlord for the common and non-exclusive use of all Lessees, including, among other facilities, the parking areas, sidewalks, landscaped areas, curbs, loading areas, private streets and alleys, lighting facilities, signs erected or maintained by Landlord advertising or identifying the Park and/or Leased Premises and service drives, all of which shall be subject to the Landlord’s sole management and control.

 

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3.04 Real Estate Tax Protest: Lessee has no right to protest the real estate tax rate assessed against the Leased Premises and/or the appraised value of the Leased Premises determined by any appraisal review board or other taxing entity with authority to determine tax rates and/or appraised values (each a “Taxing Authority”). Lessee hereby knowingly, voluntarily and intentionally waives and releases any right, whether created by law or otherwise, to (a) file or otherwise protest before any Taxing Authority any such rate or value determination even though Landlord may elect not to file any such protest; (b) receive, or otherwise require Landlord to deliver, a copy of any reappraisal notice received by Landlord from any Taxing Authority; and (e) appeal any order of a Taxing Authority that determines any such protest. The foregoing waiver and release covers and includes any and all rights, remedies and recourse of Lessee, now or at any time hereafter, under Section 41.413 and Section 42.015 of the Texas Tax Code (as currently enacted or hereafter modified) together with any other or further laws, rules or regulations covering the subject matter thereof Lessee acknowledges and agrees that the foregoing waiver and release was bargained for by Landlord and Landlord would not have agreed to enter into this Sublease in the absence of this waiver and release. If, notwithstanding any such waiver and release, Lessee files or otherwise appeals any such protest, then Lessee will be in default under this Sublease and, in addition to Landlord’s other rights and remedies, Lessee must pay or otherwise reimburse Landlord for all costs, charges and expenses incurred by, or otherwise asserted against, Landlord as a result of any tax protest or appeal by Lessee, including, appraisal costs, tax consultant charges and attorneys’ fees (collectively, the “Tax Protest Costs”). If as a result of Lessee’s tax protest or appeal, the appraised value for the Leased Premises is increased above that previously determined by the Taxing Authority (such increase, the “Value Increase”) for the year covered by such tax protest or appeal (such year. the “Protest Year”) then Lessee must pay Landlord, in addition to all Tax Protest Costs, an amount (the “Additional Taxes”) equal to the sum of the following: (i) the product of the Value Increase multiplied by the tax rate in effect for the Protest Year plus (ii) the amount of additional taxes payable during the five (5) year period following the Protest Year, such amount to be calculated based upon the Value Increase multiplied by the tax rate estimated to be in effect for each year during such five (5) year period. Lessee must pay all Additional Taxes - even those in excess of Lessee’s proportionate share and which may relate to years beyond the term of this Sublease. The Additional Taxes will be conclusively determined by a tax consultant selected by Landlord, without regard to whether and to what extent Landlord may be able in years following the Protest Year to reduce or otherwise eliminate any Value Increase. All Tax Protest Costs and Additional Taxes must be paid by Lessee within five (5) days following written demand by Landlord.

 

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3.05 Security Deposit: Upon execution of this Sublease, in addition to the installment of rent due under Article 3 and in addition to any other amounts that are due from Lessee upon the execution of this Sublease, Lessee shall deliver to Landlord a Security Deposit in the amount stated in Lease Information. Landlord may apply all or part of the Security Deposit to any unpaid rent, and damages and charges for which Lessee is legally liable under this Sublease, and damages and charges that result from a breach of this Sublease, including but not limited to any other provision that requires Lessee to leave the Leased Premises in a certain condition upon the expiration or termination of this Sublease. If Landlord uses any part of the Security Deposit, Lessee shall restore the Security Deposit to its full amount within ten (10) days after Landlord’s written demand. Lessee’s failure to restore the full amount of the Security Deposit within the time specified will be a default under this Sublease. No interest will be paid on the Security Deposit. Landlord will not be required to keep the Security Deposit separate from its other accounts, and no trust relationship is created with respect to the Security Deposit. After the expiration of this Sublease, Landlord shall refund the unused portion of the Security Deposit, if any, to Lessee within ten (10) days after the date Lessee surrenders possession of the Leased Premises and provides a written notice to Landlord of Lessee’s forwarding address for the purpose of refunding the Security Deposit. If Landlord transfers its interest in the Leased Premises, then Landlord may assign the Security Deposit to the transferee and Landlord thereafter shall have no further liability for the return of the Security Deposit. The provisions of this Article will survive the expiration or termination of this Sublease.

 

Article 4.
USE OF LEASED PREMISES

 

4.01 Permitted Uses: Lessee shall be permitted to use the Leased Premises for the purpose of conducting for-profit commercial services or activities consisting of any or all of the following operations and no others:

 

(a) Location of corporate headquarters, operation of warehouse, freight distribution and storage services for commercial and non-commercial activities;
     
(b) Manufacture, assembly, development and testing of Lessee’s satellite parts and subsystems systems required to build and deploy Lessee’s satellite products for commercial and government applications. Lessee will have the option to build clean room facilities within the Leased Premises to accommodate its manufacturing and payload testing requirements;

 

 

 

 

  (c) Sales of Lessee’s products;
     
(d) Storage of such inventory, equipment and apparatus as may be incidental and/or necessary to Lessee’s operations, including, but not limited to motor and electric vehicles and aircraft operated and/or owned by Lessee;
     
(e) Build-out and construction required to locate Lessee’s ground satellite antennas and related operational equipment on the Leased Premises. This will include concrete slabs at each location, electricity and fiber connectivity and a temporary structure to house Lessee’s ground test satellite antenna system and the antenna farm location for Lessee’s satellite communication systems.
     
(f) Such other uses described in Exhibit C or as may be permitted in writing by MDC.

 

4.02 Prohibited Uses: Lessee agrees at all times to comply with the following:

 

(a) Lessee shall at no time use, or permit the use of, the Leased Premises in a manner that is contrary to applicable federal, state, or local laws, ordinances, rules, or regulations, which shall include, but not be limited to, applicable Federal Aviation Administration (“FAA”) rules and regulations and applicable regulations for the use of the Airport as may from time to time be promulgated by MDC or City;
     
(b) Lessee shall not permit any permanent, unshielded light or illumination source to cause glare as viewed from any street, adjacent properties or operating aircraft;
     
(c) Lessee shall not cause or permit the burial or storage above ground on the Leased Premises of any hazardous waste or materials, as defined by federal or state law, except in accordance with applicable federal, state, or local laws, ordinances, regulations and rules, as may be adopted or amended from time to time;
     
(d) Lessee shall not cause or permit any use or activity on the Leased Premises that may create a hazardous condition for aircraft operating at the Airport;
     
(e) Lessee shall not allow the Leased Premises to be used for parking of motor vehicles, motorcycles, or motor driven equipment by anyone other than customers, employees, or contractors of Lessee except as may be authorized by the Director of Airports, with all such parking being limited to areas designated by the Department of Airports for such parking. Lessee shall not be in default for the improper parking of vehicles over which neither Lessee nor any of its sublessees, customers, employees, or contractors have any control; and
     
(f) Lessee shall not operate, nor permit the operation of, a car rental business from the Leased Premises, unless the Lessee or the operator of said car rental business has executed a car rental concession or permit agreement with MDC or City; and

 

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(g) Lessee shall not allow airline passenger operations to be conducted on the Leased Premises. The Leased Premises shall not be used for any use that is disreputable or creates extraordinary fire hazards or results in an increased rate of insurance on the Leased Premises or its contents or the storage of any hazardous materials or substances. If, because of an act on the party of Lessee, the rate of insurance on the Leased Premises, its facilities or its contents increases, Lessee shall pay to Landlord the amount of such increase on demand, and acceptance of such payment shall not constitute a waiver of any of Landlord’s other rights. Lessee shall conduct its business and control each other Lessee party or agent, so as not to create any nuisance or interfere with other Lessees or Landlord in its management of the Leased Premises, its facilities or contents. Subject to Landlord’s reasonable security measures and the Rules and Regulations described in Article 17.06, Lessee and its agents and employees will have access to the Leased Premises 24 hours per day, 7 days per week.

 

4.03 Compliance with Minimum Standards: All activities conducted upon the Leased Premises, whether by Lessee or its sublessees, shall be in substantial conformance with the City’s Minimum Standards for Aeronautical Activities, as such standards exist or may be duly amended from time to time by the City Council to the extent that such Minimum Standards may apply to Lessee’s operations. MDC agrees to provide Lessee with written notice not later than 30 days prior to adoption of substantive changes to the Minimum Standards for Aeronautical Activities that would apply to Lessee’s operations.

 

4.04 Non-exclusive Uses: Lessee understands and acknowledged that, as to that part of the Airport not included within the Leased Premises, the allowable uses permitted herein are on a non-exclusive basis with respect to other potential providers of aeronautical services at the Airport.

 

Article 5.
OBLIGATIONS OF LESSEE
WITH REGARD TO CONSTRUCTION OF IMPROVEMENTS

 

5.01 Approval of Plans Not Assurance of Design Quality: The approval by MDC and the Director of Airports of any plans and specifications applies only to the conformity of such plans to the general architectural and operational plan for the Leased Premises and the Airport. The approval of MDC and the Director of Airports does not constitute approval of the quality of the architectural or engineering work performed. Neither MDC, City nor the Director of Airports assumes any liability or responsibility for the architectural or engineering design or for any defect in any building or improvement constructed from the plans or specifications. Construction of any contemplated improvements shall be in accordance with the plans presented to and approved by MDC and the Director of Airports. All construction work shall be subject to inspection by a representative employed by MDC and City or an inspector from the Code Enforcement Division of the City of Midland, or both, to determine that such work conforms to the plans and specifications approved by MDC and City, which inspections shall be conducted and adjudicated on a time-is-of-the-essence basis.

 

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5.02 Contractor’s Insurance; Bonds: At any time construction activities are undertaken on the Leased Premises, Lessee shall require that its contractor or contractors keep in force insurance issued by a responsible insurance company or companies authorized to conduct business in the State of Texas insuring the improvements during construction under Completed Builder’s All Risk Insurance, including fire, extended coverage, vandalism and malicious mischief, in an amount equal to the full insurable value of such construction as the same progresses in order to insure continuity of construction and ultimate completion despite damage or destruction suffered during the course thereof. ALL INSURANCE SHALL NAME MDC AND CITY AS ADDITIONAL INSUREDS AND CO-PAYEES AND PROVIDE FOR A WAIVER OF SUBROGATION IN FAVOR OF MDC AND CITY. Lessee shall require all contractors performing construction work on the Leased Premises to provide payment and performance bonds issued by a responsible bonding company or companies authorized to conduct business in the State of Texas for the full amount of the cost of the construction to be performed on forms which are in compliance with Tex. Gov’t Code Chapter 2253, as amended. The foregoing shall be made a part of any contract between Lessee and its contractor or contractor. In the event Lessee does not complete the construction work itself; it shall comply with the all risk insurance provisions hereof.
   
5.03 Compliance with Building Codes and Federal Standards: All improvements made to the Leased Premises by Lessee shall comply with all applicable City Building Codes and federal standards for construction of airport improvements in effect at the time construction commences as well as all other applicable Federal Aviation Administration regulations, if any.
   
5.04 Encumbrance of Leasehold Estate: Lessee shall at no time encumber or attempt to encumber its leasehold interest in the Leased Premises by deed of trust, mortgage, security agreement or other security interest.
   
5.05 Ownership of Buildings, Improvements and Fixtures: Any and all buildings, improvements (including, but not limited to all aprons, taxiways and roadways), additions, alterations, and permanent fixtures existing on the commencement date of this Sublease or constructed or placed on any part of the Leased Premises during the Sublease Term by City, MDC or Lessee shall be considered part of the real property of the Leased Premises, shall remain on the Leased Premises, and shall not be removed by Lessee or any sublessee without the written consent of the MDC. All improvements, additions, alterations, and fixtures on the Leased Premises shall become the sole property of MDC or City upon termination of this Sublease without compensation to Lessee, it being understood and agreed by Lessee that the improvements located on the Leased Premises at the end of the Sublease Term are additional consideration for this Sublease. Notwithstanding the above, Lessee shall have the right at any time during Lessee’s occupancy of the Leased Premises, or within a reasonable time thereafter, to remove any and all furniture, machinery, tools, inventory, computers, equipment, but not permanent fixtures owned or placed by Lessee, in, under, or on the Leased Premises; provided, however, prior to the termination of the Sublease Term, Lessee shall repair any damage to any buildings or improvements on the Leased Premises resulting from their removal. Any such personal property items which are not removed within sixty (60) days after the termination date of this Sublease shall become the property of MDC or City as of that date.

 

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Article 6.
REPAIRS, MAINTENANCE AND RESTORATION

 

6.01 Maintenance by Lessee: Lessee shall, at Lessee’s sole expense, keep the Leased Premises and all improvements of any kind, which may be existing at the commencement of the Lease Term in good repair, condition and appearance. Lessee specifically acknowledges its obligations, at its sole expense, to keep in good repair, condition and appearance the foundation, roof, exterior walls and structural portions of the interior walls of the hangars located on the Leased Premises. Lessee shall keep mowed and in a sightly condition all landscaping and grass areas within the Lease Premises. MDC shall be the sole judge of the quality of Lessee’s maintenance; provided, however, MDC shall not unreasonably withhold acceptance of said repairs or maintenance. Upon written notice by MDC to Lessee, Lessee shall be required to perform such reasonable maintenance under this Article 6.01, as MDC considers necessary. If Lessee does not undertake such maintenance within ten (10) business days after receipt of written notice. MDC shall have the right to enter on the Leased Premises and perform the necessary maintenance, the cost of which shall be borne by Lessee. Other items of maintenance for which Lessee shall be solely responsible shall include, but not be limited to, the following:

 

(a) Janitorial services, providing janitorial supplies, window washing, rubbish and trash removal;
     
(b) Supply and replacement of light bulbs in and on all buildings (except lighting removed for causing obstructions or glare);
     
(c) Replacement of cracked or broken glass in all buildings;
     
(d) Cleaning of interior stoppages in interior plumbing fixtures and drain lines up to the first manhole or clean out outside of the exterior of the building where the stoppage occurred;
     
(e) Replacement of floor covering;
     
(f) Maintenance of all doors and door operating systems, including weather stripping and glass replacement;
     
(g) Painting, repairing and replacement of interior walls not resulting from structural failure;
     
(h) Landscaping and grass cutting services within the Leased Premises, including, but not limited to, repair or replacement of exterior building flood lights and planter lights;
     
(i) Repair or replacement of heating, air conditioning, ventilation, electrical, plumbing, or mechanical systems, or their respective components (Lessee shall provide for such repairs by procuring annual maintenance contracts requiring quarterly status reporting from MDC-approved third-party vendors, with said contracts and any maintenance reports to be promptly provided to MDC within thirty (30) days of completion); and
     
(j) Maintenance of all aprons, ramps, and roadways that are constructed by Lessee.

 

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Subject to the provisions of Article 5.05, on the last day of the term hereof, or on any earlier termination, Lessee shall surrender the Leased Premises to MDC in the same condition, except for fire and casualty, ordinary wear and tear, clean and free of debris.

 

All material repairs and material maintenance described in this Article shall be performed only by contractors and subcontractors approved in writing by Landlord (which approval will not be unreasonably withheld or delayed). Lessee shall cause all contractors and subcontractors to procure and maintain insurance coverage against such risks, in such amounts, and with such companies as Landlord may reasonably require, and to procure payment and performance bonds reasonably satisfactory to Landlord covering the cost of the repairs and maintenance. All such repairs and maintenance shall be performed in accordance with all laws and in a good and workmanlike manner so as not to damage the buildings (including the Premises, the roof, the structural elements, and the plumbing, electrical lines, or other utility transmission facility). All such repairs and maintenance that may affect the buildings’ HVAC, electrical, plumbing, other mechanical systems, the roof, or structural elements must be approved by MDC, at Lessee’s expense.

 

Lessee shall not permit any mechanic’s liens to be filed against any portion of the Premises for any work performed, materials furnished, or obligation incurred by or at the request of Lessee. Lessee’s failure to comply with this requirement shall constitute a default of this Sublease.

 

6.02 Trash and Waste Removal: Lessee agrees to cause to be removed from the Leased Premises, at its own expense, all waste, garbage and rubbish, and agrees not to deposit same on the Leased Premises except temporarily in waste or garbage containers provided by Lessee at Lessee’s expense. Lessee further agrees that Lessee will store all parts, supplies, and other materials on the interior of buildings located on the Leased Premises, provided, however, that any parts or supplies which must be kept outside because of volatility of the supply item or the size of the part will be kept out of view of the public traveling on public rights of way or other surrounding Lessees by installation of fencing or other means of screening approved by MDC and the Director of Airports.

 

Article 7.
ACCESS TO AND USE OF AIRPORT

 

7.01 Access to Airport: City shall maintain all roads on the Airport giving access to the Leased Premises in good and adequate condition for use by cars and trucks and shall always maintain free and uninterrupted access to the Leased Premises over said roads at all times; provided, however, MDC shall not be in default of this Sublease if access is interrupted.
   
7.02 Right to Use Airport: Lessee and Lessee’s employees, sublessees, and guests shall have the right to use that part of the Airport and its facilities not included within the Leased Premises in common with others authorized to do so. Such use shall be subject to any and all applicable federal, state or local laws, ordinances, statutes, rules, regulations, or orders of any governmental authority, lawfully exercising jurisdiction over the Airport or the activities and business operations of Lessee, including any limitations, restrictions or prohibitions affecting the aviation activities or operations of Lessee.

 

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7.03 Vehicular Operations on the Airfield: No vehicles of Lessee, its employees, customers or invitees will be allowed to operate on, or cross, the runways and taxiways and their respective safety areas of the Airport. When necessary, Airport Operations Control Center personnel will provide Lessee escorted access to and from the airfield area.
   
7.04 Airport Security Rules and Regulations: Lessee, its directors, officers, employees, and contractors shall comply with all federal and local Airport Security Regulations adopted by the City or the Department of Airports as such rules and regulations exist or may hereafter be amended.
   
7.05 14 C.F.R. Part 77 Requirements: Lessee agrees to comply with the notification and review requirements set forth in Part 77 of the Federal Aviation Regulations [14 CFR Part 77] in the event any future structure, antenna or building is planned for the Leased Premises, or in the event of any planned modification of any present or future building, antenna or structure located on the Leased Premises.
   
7.06 Control of Structures: Lessee shall not erect nor permit the erection of any structure or object, nor permit the growth of any tree on the Leased Premises which highest point is above a mean sea level elevation established by the FAA and City as a height limitation on such structures or objects. MDC and City reserves the right to enter upon the Leased Premises and to remove the offending structure or object and cut the offending tree at Lessee’s expense.
   
7.07 Aerial Approaches: MDC and City reserve the right to take any action they considers necessary to protect the aerial approaches of the Airport against obstruction together with the right to prevent Lessee from erecting or permitting to be erected any building or other structure on or adjacent to the Airport which, in the opinion of City, would limit the usefulness of the Airport or constitute a hazard to aircraft.
   
7.08 Right of Over-flight: There is hereby reserved to City, for the use and benefit of the public, a right of flight for the passage of aircraft above the surface of the Leased Premises, together with the right to cause in said airspace such noise as may be inherent in the operation of aircraft, now known or hereafter used for navigation of or flight in the air, using said airspace for landing at, taking off from or operating on the Airport.

 

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Article 8.
INSURANCE AND INDEMNITY

 

8.01 Lessee’s Minimum Insurance Amounts: Lessee shall obtain and maintain continuously in effect at all times during the Sublease Term, at Lessee’s sole expense, at least the following minimum insurance with a carrier or carriers licensed to do business in the State of Texas and satisfactory to MDC:
(a) Property and Casualty Insurance insuring against loss or damage to Lessee’s improvements and any and all property being maintained or repaired by Lessee due to fire, lightning and all other perils included in standard extended coverage policies, and vandalism and malicious mischief, all in amounts of not less than one-hundred percent (100%) of replacement value;
(b) Commercial General Liability Insurance against claims for bodily injury, death, or property damage occurring on, in or about the Leased Premises, or any other portion of the Airport, in at least the amount of $10,000,000.00 per individual, $10,000,000.00 per occurrence and $10.000,000.00 with respect to property, and the statutory limits with respect to worker’s compensation.

All insurance policies referenced herein or procured by Lessee for the purposes contemplated herein shall name MDC and City as additional insureds and provide for waivers of subrogation in favor of MDC and City. MDC and City shall not be liable to the Lessee or those claiming by, through, or under for any injury to or death of any person or the damage to or theft, destruction, loss, or loss of use of any property or inconvenience (a “Loss”) caused by casualty, theft, fire, third parties, or any other matter (including Losses arising through repair or alteration of any part of the Premises or failure to make repairs, or from any other cause), regardless of whether the negligence of any party caused such Loss in whole or in part. Lessee waives any claim it might have against MDC and City for any damage to or theft destruction, loss, or loss of use of any property, to the extent the same is insured against under any insurance policy maintained by it that covers the Leased Premises, the Leased Premises, MDC’s and City’s or Lessee’s fixtures, personal property, leasehold improvements, or business, or is required to be insured against by it under the terms hereof, regardless of whether the negligence or fault of the other party caused such loss. Each party shall cause its insurance carrier to endorse all applicable policies waiving the carrier’s rights of recovery under subrogation or otherwise against the other party.

 

8.02 Lessee’s Coverage Primary: All insurance herein required shall apply as primary and not in excess of or contributing with other insurance which the Lessee may carry. Insurance provided pursuant to Article 8.01 shall name MDC and City as additional insureds or loss payees as the case may be and provide for a waiver of subrogation in favor of MDC arid City. The comprehensive general liability policy as provided in Article 8.01(b) shall provide contractual liability coverage sufficiently broad so as to include the liability assumed by Lessee under this Sublease.
   
8.03 Contents of General Liability Policy: Lessee’s Comprehensive General Liability policy shall protect MDC, City and Lessee against any and all liability to any person or persons whose property damage or personal injury arises out of or is in connection with the occupation, use, or condition of the Leased Premises or resulting from any injury or damage occurring on or about the roads, driveways or other public areas of the Leased Premises used by Lessees, its trustees, officers, employees, students, invitees, and contractors at the Airport, whether or not such damage or injury is the result of negligence of Lessee or its officers, employees, representatives, invitees, licensees, contractors, agents, guests, or students.

 

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8.04 Cancellation and Certificates of Insurance: Lessee’s insurance as required by this Sublease shall not be subject to cancellation or material alteration until at least thirty (30) days’ written notice has been provided to MDC. Lessee shall furnish to MDC, annually, certificates of insurance showing MDC and City as additional insureds and evidencing that all of the herein-stated requirements have been met.
   
8.05 MDC’s Right to Purchase Insurance: In the event such insurance as required by Article 8.01 shall lapse, such event shall constitute a default by Lessee and MDC reserves the right to obtain such insurance at Lessee’s expense. Upon demand from MDC, Lessee shall reimburse MDC for the full amount of the premium paid on Lessee’s behalf.
   
8.06 Indemnity: LESSEE WILL INDEMNIFY AND HOLD HARMLESS AND DEFEND MDC AND CITY AND ALL OF MDC’S AND CITY’S OFFICERS, AGENTS AND EMPLOYEES FROM ALL SUITS, ACTIONS, CLAIMS, DAMAGES, PERSONAL INJURIES, LOSSES, PROPERTY DAMAGE AND EXPENSES OF ANY CHARACTER WHATSOEVER, INCLUDING REASONABLE ATTORNEY’S FEES, BROUGHT FOR OR ON ACCOUNT OF ANY INJURIES OR DAMAGES RECEIVED OR SUSTAINED BY ANY PERSON OR PERSONS OR PROPERTY ON ACCOUNT OF ANY NEGLIGENT ACT OF LESSEE, ITS AGENTS OR EMPLOYEES, OR ANY SUBCONTRACTOR, ARISING OUT OF, OR RESULTING FROM, LESSEE’S USE OF, OR ACTIVITIES ON THE LEASED PREMISES, OR LESSEE’S ACTIVITIES AND OPERATIONS GROWING OUT OF OR IN ANY WAY CONNECTED WITH THIS SUBLEASE, AND LESSEE WILL BE REQUIRED TO PAY ANY JUDGMENT WITH COSTS THAT MAY BE OBTAINED AGAINST MDC OR CITY OR ANY OF MDC’S OR CITY’S OFFICERS, AGENTS OR EMPLOYEES, INCLUDING REASONABLE ATTORNEY’S FEES.

 

LESSEE AGREES THAT IT WILL INDEMNIFY AND HOLD HARMLESS AND DEFEND MDC AND CITY AND ALL OF MDC’S AND CITY’S OFFICERS, AGENTS AND EMPLOYEES FROM ALL SUITS, ACTIONS, CLAIMS, DAMAGES, PERSONAL INJURIES, LOSSES, PROPERTY DAMAGE AND EXPENSES OF ANY CHARACTER WHATSOEVER, INCLUDING REASONABLE ATTORNEY’S FEES, BROUGHT FOR OR ON ACCOUNT OF ANY INJURIES OR DAMAGES RECEIVED OR SUSTAINED BY ANY PERSON OR PERSONS OR PROPERTY ON ACCOUNT OF ANY NEGLIGENT ACT OF MDC OR CITY, MDC’S OR CITY’S RESPECTIVE OFFICERS, AGENTS AND EMPLOYEES, WHETHER SUCH NEGLIGENT ACT WAS THE SOLE PROXIMATE CAUSE OF THE INJURY OR DAMAGE, OR A PROXIMATE CAUSE JOINTLY AND CONCURRENTLY WITH LESSEE OR LESSEE’S EMPLOYEES, AGENTS, OR SUBCONTRACTORS NEGLIGENCE, IN THE EXECUTION, SUPERVISION, AND OPERATIONS GROWING OUT OF OR IN ANY WAY CONNECTED WITH THE PERFORMANCE OF THIS SUBLEASE AND LESSEE WILL BE REQUIRED TO PAY ANY JUDGEMENT WITH COSTS THAT MAY BE OBTAINED AGAINST MDC OR CITY, OR ANY OF MDC’S OR CITY’S RESPECTIVE OFFICERS, AGENTS, OR EMPLOYEES, INCLUDING REASONABLE ATTORNEY’S FEES.

 

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Article 9.
UTILITIES

 

Lessee shall be solely responsible for the payment of all electric, telephone, water, sewer, refuse, natural gas and other public utility services used on the Leased Premises.

 

Article 10.
SIGNS

 

10.01 Consent Required: Except with the prior written consent of the Director of Airports, which shall not be unreasonably withheld. Lessee shall not erect, maintain or display any signs or any advertising at, or on, the exterior part of structures on the Leased Premises, or inside any buildings located on the Leased Premises so as to be visible through the window or exterior doors thereof.
   
10.02 Monument Signage: MDC shall install, or cause to be installed, a sign containing Lessee’s name and/or logo on the monument sign serving the Leased Premises. The design, size, specifications, graphics, materials, manner of affixing, exact location, colors, and lighting (if applicable) of Lessee’s sign shall be in a form substantially similar to the architectural drawings contained in the Project Manual for the Midland Development Corporation Landscape Improvements to the Spaceport Business Park Project and the associated Midland Development Corporation Landscape Improvements Construction Plans. Said Project Manual and Construction Plans are incorporated herein by reference and shall be kept on file in the offices of MDC. The parties agree that all right, title, and interest in Lessee’s sign and the monument sign shall remain with MDC.
   
10.03 Removal on Termination: Upon the termination of this Sublease, Lessee shall remove, obliterate or paint out, as MDC may direct, any and all signs and advertising on the Leased Premises or elsewhere at the Airport, and in connection therewith shall restore the Leased Premises to the same condition as prior to the placement of any such signs or advertising. In the event that there is a failure by Lessee to so remove, obliterate or paint out each and every sign or advertising and so to restore the Leased Premises within seven business days after termination, MDC may, at its option, perform the necessary work at the expense of Lessee, and the charge therefor shall be paid by Lessee to MDC on demand. In certain circumstances, MDC may elect to allow specific signs to remain as existing at the termination of this Sublease. Such signs shall be identified and agreed upon mutually, in writing, by Lessee and MDC.

 

Article 11.
SUBLEASING

 

At no time shall Lessee sublease any portion of the Leased Premises or otherwise assign its interests or obligations in this Sublease without the written consent of MDC. Any such assignment or attempted assignment shall be void.

 

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Article 12.
TAX LIENS

 

Lessee shall be solely responsible for the collection and payment of all applicable federal, state, and local taxes, including, but not limited to, sales, use, amusement, or excise tax required to be collected and paid over by Lessee to the appropriate taxing authority. Furthermore, Lessee shall be responsible for the payment of any applicable ad valorem taxes and any taxes on Lessee’s personal property located on the Leased Premises. Lessee shall at no time permit the foreclosure of any tax liens to Lessee’s leasehold interest in the Leased Premises or the buildings, fixtures, or other improvements located on the Leased Premises. MDC shall have the right to pay such taxes due after Lessee’s refusal to pay such taxes, and upon demand Lessee shall reimburse the MDC for the amount of taxes paid plus any penalties, interests, and attorney’s fees incurred, subject to Lessee’s right to challenge the validity of such taxes in whole or in part, in which case the reimbursement shall be deferred until resolution of the challenge. In the event that Lessee is successful in any challenge regarding the payment of any tax, MDC shall be subrogated to any recovery obtained by Lessee to the extent of the amount of taxes, interests, penalties, and attorney fees previously paid by MDC and not already reimbursed by Lessee.

 

Article 13.
DEFAULT AND REMEDIES

 

13.01 Default by Lessee: The following shall be deemed to be events of default by Lessee under this Sublease:
(a) Lessee shall fail to pay when due any installment of rent or any other payment required pursuant to this Sublease;
     
(b) Lessee shall abandon any substantial portion of the Leased Premises;
     
(c) Lessee or any guarantor of Lessee’s obligations hereunder shall file a petition or be adjudged bankrupt or insolvent under any applicable federal or state bankruptcy or insolvency law or admit that it cannot meet its financial obligations as they become due, or a receiver or trustee shall be appointed for all or substantially all of the assets of Lessee of any guarantor of Lessee’s obligations hereunder;
     
(d) Lessee or any guarantor of Lessee’s obligations hereunder shall make a transfer in fraud of creditors or shall make an assignment for the benefit of creditors;
     
(e) Lessee shall do or permit to be done any act which results in a lien being filed against the Leased Premises;
     
(f) The liquidation, termination, dissolution of Lessee or any guarantor of Lessee’s obligations hereunder; or
     
(g) Lessee shall be in noncompliance with any other term, provision or covenant of this Sublease or the Development Agreement, other than those specified in subparts (a) through (f) above.

 

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13.02 Abandonment of Business by Lessee: Lessee further agrees that the abandonment for a period of thirty (30) consecutive days by Lessee of the conduct of its business activities at the Airport shall terminate Lessee’s rights under this Sublease. By so terminating this Sublease, MDC does not waive any other claim or rights against Lessee. For the purposes of this paragraph, the term “abandonment” shall mean the failure of Lessee to be open for business on the Leased Premises except in the case of war, strike, catastrophe or causes beyond Lessee’s control.
   
13.03 No Remedy Exclusive: No remedy herein conferred upon or reserved to MDC or Lessee is intended to be exclusive of any other available remedy or remedies, but each and every such remedy shall be cumulative and shall be in addition to every other remedy given under this Sublease or hereafter existing under law or in equity. No delay or omission to exercise any right or power accruing upon any default shall impair any such right or power or shall be construed to be a waiver thereof, but any such right and power may be exercised from time to time and as often as may be deemed expedient. In order to entitle MDC and Lessee to exercise any remedy reserved to it in this section, it shall not be necessary to give any notice, other than such notice as may be herein expressly required.
   
13.04 Landlord’s Lien: If Lessee defaults in paying rent or any other sum due from Lessee to Landlord under this Sublease, Landlord has a lien on all fixtures, chattels, or other property of any description belonging to Lessee that are placed in, or become a part of, the Leased Premises as security for rent due and to become due for the remainder of the Sublease Term and any other sum Lessee owes Landlord, subject, and subordinate to, any purchase money security interests that Lessee has on its machinery, tools, inventory, and equipment. This lien is not in lieu of, nor in any way affects, the statutory landlord’s lien but is in addition to that lien, and Lessee grants Landlord a security interest in all of Lessee’s property placed in or on the Leased Premises, which is more particularly described in Exhibit D, for purposes of this contractual lien. This does not prevent Lessee’s selling any merchandise in the ordinary course of business free of such Landlord’s lien. If Landlord exercises the option to terminate the leasehold, reenter, and relet the Leased Premises as provided in the preceding paragraph and gives Lessee reasonable notice of the intent to take possession and an opportunity for a hearing on the matter, Landlord may take possession of all of Lessee’s property on the Leased Premises and sell it at public or private sale after giving Lessee reasonable notice of the time and place of any public sale or of the time after which any private sale is to be made, for cash or on credit, for the prices and terms that Landlord considers best, with or without having the property present at the sale. The proceeds of the sale will be applied first to the necessary and proper expense of removing, storing, and selling the property, then to the payment of any rent due or to become due under this Sublease; any balance will paid to Lessee.

 

For the purpose of further securing the Lessee’s rent obligations herein, the parties agree that Lessee shall not sell in whole or in part or otherwise encumber the intellectual property of the Lessee during the Sublease Term. Intellectual property shall mean, but not be limited to, a work or invention that is the result of creativity, such as a manuscript or a design, to which one has rights and for which one may apply for a patent, copyright, or trademark to which the Lessee could reasonably bring legal action against the unauthorized use of the intellectual property.

 

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13.05 No Waiver of Breach: MDC’s failure or delay in declaring the existence of an event of default by Lessee shall not be construed as a waiver thereof, nor shall it be construed so as to waive or to lessen the right of MDC to insist upon the performance by Lessee of any term, covenant or condition hereof, or to exercise any rights given it on account of any such event of default. A waiver of any particular event of default shall not be deemed to be a waiver of the same, similar of any other subsequent event of default.
   
13.06 Expeditious Action: Notwithstanding any provision as to notice in this Sublease, if in MDC’s reasonable judgment the continuance of any event of default by Lessee for the full period of the notice to cure the event of default will jeopardize the operation of the Airport or the rights of MDC or the other Airport Lessees, MDC may, without notice, elect to perform those acts in respect to which Lessee is in default. Lessee shall reimburse MDC for any reasonable and necessary costs incurred by MDC pursuant to this Article 13.06.
   
13.07 Reletting: Lessee acknowledges that MDC has entered into this Sublease in reliance upon, among other matters, Lessee’s agreement and continuing obligation to pay all rent due throughout the Sublease Term. As a result, Lessee hereby knowingly and voluntarily waives, after advice of competent counsel, any of MDC (and any affirmative defense based upon such duty) following any Event of Default to relet the Leased Premises or otherwise mitigate MDC’s damages arising from such Event of Default. If such waiver is not effective under then applicable law or MDC otherwise elects, at MDC’s sole option, to attempt to relet all or any part of the Leased Premises, Lessee agrees that MDC has no obligation to: (i) relet the Leased Premises prior to leasing any other space within the buildings; (ii) relet the Leased Premises (A) at a rental rate or otherwise on terms below market, as then determined by MDC in its sole discretion; (B) to any entity not satisfying MDC’s then standard financial credit risk criteria; (C) for a use (1) not consistent with Lessee’s use prior to the Event of Default; (2) which would violate then applicable law or regulation, or violate any restrictive covenant or other lease affecting the buildings; (3) which would impose a greater burden upon the buildings’ parking, HVAC or other facilities; and/or (4) which would involve any use of Hazardous Materials; (iii) divide the Leased Premises, install new demising walls or otherwise reconfigure the Leased Premises to make same more marketable; (iv) pay any leasing or other commissions arising from such reletting. Unless Lessee unconditionally delivers MDC, in good and sufficient funds, the full amount thereof in advance; (v) pay, and/or grant any allowance for, lessee finish or other costs associated with any new lease, even though same may be amortized over the applicable Sublease Term, unless Lessee unconditionally delivers MDC, in good and sufficient funds, the full amount thereof in advance; and/or (vi) relet the Leased Premises, if to do so, MDC would be required to alter other portions of the buildings, make ADA-type modifications or otherwise install or replace any sprinkler, security, safety, HVAC or other building operating systems.
   
13.08 Security Agreement: Lessee shall execute a security agreement, the form of which is attached hereto as Exhibit E and incorporated herein for all purposes, and MDC shall have the right to file a UCC-1 Financing Statement in the state of Lessee’s incorporation in order to perfect a lien on the assets described in said security agreement. The liened assets described in said security agreement shall be limited to Lessee’s unencumbered personal property physically located and installed on and in the Leased Premises. These liened assets shall not include Lessee’s intellectual property, patents/patent applications, trademarks/trademark applications, domain names, logos, copyrights/copyright applications, and/or Lessee’s proprietary technology and software. Lessee agrees that MDC may, in an event of default by Company under this Sublease or the Development Agreement, execute against Company’s property pursuant to the terms of said security agreement.

 

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13.09 Cure Period: In lieu of exercising any of the right and remedies referenced herein, after MDC gives Lessee written notice of its default as set forth in this Sublease, MDC may, in its sole and absolute discretion, elect to allow Lessee a period not less than thirty (30) days, but not to exceed sixty (60) days to cure any such default. Any such election by MDC to allow Lessee to cure such a default shall in no way be construed as, or shall operate as, a waiver of any of MDC’s rights contained in the Development Agreement or this Sublease.

 

Article 14.
TERMINATION

 

14.01 Discretionary Termination. MDC shall have the right to terminate this Sublease upon Lessee’s violation or default of any provision contained in the Sublease or the Development Agreement and failure to cure said violation or default within thirty (30) days after receipt of written notice from MDC reasonably specifying such violation or default, or such longer period as may be reasonably necessary so long as Lessee has commenced the cure within the thirty (30) day period, and thereafter is diligently pursing such care. Except for the payment by Lessee to MDC of rents or other amounts past due accrued to the termination date, but not yet due, either party shall have the right to terminate this Sublease in its entirety, without monetary penalty, and all rights and obligations ensuing therefrom immediately upon the occurrence of the following:
(a) The issuance of any order, rule or regulation of the FAA, or its successor federal agency, or other competent government authority, federal or state, or the issuance and execution of any judicial process by any court of competent jurisdiction, materially restricting for a period of at least thirty (30) days, the use of the Airport for aeronautical purposes; provided that none of the foregoing is due to any material fault of Lessee; or
(b) The material restriction of City’s operation of the Airport by action of the federal government, or any department or agency thereof, under its wartime or emergency powers, and the continuance thereof for a period of not less than thirty (30) days; provided, however, that without prejudice to the rights of Lessee to terminate as above provided, the MDC and Lessee may mutually agree to adjust fees and charges; or
(c) Material restriction of the operation of the Airport arising from City’s failure to maintain and keep in repair the landing area of the Airport.

 

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14.02 Automatic Termination. Except for the payment by Lessee to MDC of rents or other amounts past due accrued to the termination date, but not yet due, this Sublease shall automatically terminate in its entirety, without monetary penalty, within thirty (30) days following the FAA’s determination that Lessee’s use or occupation of the Property does not comply with the requirements of 49 U.S.C. 47107(a)(1), the FAA’s Airport Improvement Program, or any other applicable statute, rule, or regulation. MDC, in its sole and absolute discretion, may elect to toll said thirty (30) day period so as to prevent the automatic termination of this Sublease for any or no reason at all. If this Sublease is terminated for any of the reasons set forth in Article 14.01 or Article 14.02, MDC shall promptly repay Lessee any rent previously paid by Lessee attributable to the period following the date of such termination.
14.03 Termination; Accelerated Rent. Notwithstanding any other provision contained in this Sublease, if Lessee creates any condition that does not conform to the purpose of establishing Lessee’s headquarters, network operations center, manufacturing operations, and satellite antenna farm on the Property, as contemplated by this Sublease or the Development Agreement, and said condition causes the FAA to determine that Lessee’s use or occupation of the Leased Premises does not comply with the requirements of 49 U.S.C. 47107(a)(1), the FAA’s Airport Improvement Program, or any other applicable statute, rule, or regulation, and Lessee has exercised all reasonable administrative efforts to appeal said determination by the FAA, then this Sublease shall terminate and all rent payments contemplated by this Sublease shall, at MDC’s option, thereupon immediately become due and payable to MDC. Lessee shall be obligated for such accelerated rent regardless of which, if any, remedies otherwise provided in this Sublease, the Development Agreement, or by law MDC elects to pursue.
14.04 Economic Development Agreement; Concurrent Termination. A termination of this Sublease shall terminate the Development Agreement. A termination of the Development Agreement shall terminate this Sublease. A termination of this Sublease without liability to either party shall terminate the Development Agreement without liability to either party. A termination of the Development Agreement without liability to either party shall terminate this Sublease without liability to either party. Uncured defaults under either the Development Agreement or the Sublease shall be deemed uncured defaults of the other agreement, and contractual and legal termination procedures shall apply to both this Sublease and the Development Agreement.

Article 15.
RENT ABATEMENT, BASE RENT, DISCOUNTED BASE RENT
AND DEVELOPMENT AGREEMENT

 

15.01 Economic Development Agreement Commitments: Simultaneously with the execution of this Sublease, Lessee will execute the Development Agreement with MDC. The Development Agreement requires Lessee to maintain certain levels of Annual Payroll, make certain leasehold Capital Improvements, make certain investments in Personal Property and maintain certain levels of Inventory (collectively defined in the Development Agreement as the “Improvements”). All Improvements will be located at the Leased Premises. In addition, all employees used when accounting for Annual Payroll calculations will have their principal work place as the Leased Premises.

 

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In order to ensure Lessee’s compliance with its commitments and obligations due under this Sublease and the Development Agreement, Lessee shall, subject to confidentiality and privacy obligations, make all documents available to MDC for inspection, audit and copying, regardless of whether a dispute is then pending between the parties. Access shall be provided to MDC and/or the accounting firm designated by MDC, in its sole and absolute discretion, to perform such review during normal business hours in an adequate work space. Upon receipt of a written request made by MDC, Lessee shall reimburse all costs incurred by MDC relating to the inspection, audit and copying of said documents.

 

15.02 Base Rent and Discounted Base Rent: Landlord agrees to discount the initial monthly Base Rent for Office Space from $15.00 per square foot to $12.00 per square foot herein referred to as (“Adjusted Base Rent”). The difference between Base Rent and Adjusted Base Rent ($3.00 per square foot), being referred to herein as (“Discounted Rent”). Therefore, the initial monthly Base Rent will be charged to the Lessee at an annual rate of $15.00 per square foot for the Office Space, $9.00 per square foot for Hangar A space and $7.00 per square foot for Hangar B space plus a ground lease of $0.45 per square foot for Lot M and Lot L.
15.03 Lessee Rent Abatement: Landlord agrees to provide the Lessee the Leased Premises for the first five (5) years of the Sublease Term rent-free (the “Rent Abatement Period”). During the Rent Abatement Period the Lessee will pay monthly, the monthly Base Rent and the CAM charges due each month. Within fifteen (15) days after the end of each quarter year during the Rent Abatement Period, the Landlord shall rebate such Base Rent paid to the Landlord. After the Rent Abatement Period, the then-current monthly rental rate shall be the Adjusted Base Rent for the Office Space, the Base Rent for Hangar A, Hangar B and the ground lease plus the CAM charges for the Leased Premises.
15.04 Lessee’s Earned Rental Abatement: In accordance with Section IV.E of the Development Agreement, if by December 31, 2023, Lessee certifies, as provided for therein, that Lessee has invested at least (i) Twenty-Eight Million Five Hundred Thousand and No/100 Dollars ($28,500,000) in Improvements and (ii) created and maintained One Hundred Sixty (160) Full-Time Jobs with an Annual Payroll of Twelve Million Eight Hundred Thousand and No/100 Dollars ($12,800,000), then Lessee shall be entitled to an additional five (5) years’ worth of rent abatement, as provided for in Article 15.03 herein.
15.05 Grace Period and Post Grace Period Rent Obligations: If the Lessee is unable to meet the Development Agreement commitments with respect to Full-Time Jobs and Annual Payroll amounts, upon written request by Lessee, Landlord shall extend the completion dare of such unfulfilled requirement(s) by six (6) months (the “Grace Period”). During said Grace Period, Lessee shall pay 0.5 times the Base Rent (the “Grace Period Rent”) plus CAM charges for the Leased Premises without rebate by Landlord. If Lessee is unable to bring itself back into compliance during the Grace Period, Lessee will be required to begin paying the Adjusted Base Rent for the Office Space and the Base Rent for Hanger A, Hanger B and the Land Lease (the “Post Grace Period Rent”) plus CAM charges for the Leased Premises in the first month following the end of the Grace Period. The Grace Period Rent and Post Grace Period Rent will continue until all shortfalls are brought into compliance with the Development Agreement. When Lessee is able to bring itself back into compliance with the Development Agreement during the Rent Abatement Period, Landlord shall reinstate the rent abatement as described in Article 15.02 during the remainder of the Rent Abatement Period. Lessee shall NOT be entitled to recapture the Grace Period Rent or Post Grace Period Rent paid during the Grace Period Rent or Post Grace Period Rent payment period(s).

 

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Article 16.
HOLD OVER

 

If Lessee fails to vacate the Leased Premises at the end of the Sublease Term, then Lessee shall be a Lessee at-will and, in addition to all other damages and remedies to which Landlord may be entitled for such holding over, Lessee shall pay, in addition to the other rent, a daily Basic Rental equal to 150% of the daily Basic Rental payable during the last month of the Sublease Term.

 

Article 17.
MISCELLANEOUS PROVISIONS

 

17.01 Quiet Enjoyment: Upon the performance of the covenants and agreements on the part of the Lessee to be performed hereunder, as determined to be satisfied in MDC’s sole and absolute discretion, Lessee shall peaceable have and enjoy the Leased Premises, appurtenances, facilities, licenses and privileges granted in this Sublease.
17.02 Force Majeure: Neither the MDC nor Lessee shall be deemed in violation of this Sublease if it is prevented from performing any of its obligations hereunder except the obligation to pay rent by reason of strikes, boycotts, labor disputes, embargoes, shortages of materials, act of God, act of superior governmental authority, weather conditions, floods, riots, rebellions, acts of sabotage or any other circumstances for which it is not responsible or which are not in its control.
17.03 Independent Contractor: It is expressly understood and agreed that Lessee shall perform all work and services described herein as an independent contractor and not as an officer, agent, servant or employee of MDC; that Lessee shall have exclusive control of and the exclusive right to control the details of the services and work performed hereunder, and all persons performing the same; and shall be solely responsible for the acts and omissions of its officers, agents, employees, contractors and subcontractors; that the doctrine of respondeat superior shall not apply as between MDC and Lessee, its officers, agents, employees, contractors and subcontractors; and that nothing herein shall be construed as creating a partnership or joint enterprise between MDC and Lessee. No person performing any of the work and services described hereunder shall be considered an officer, agent, servant or employee of MDC. Further, it is specifically understood and agreed that nothing in this Sublease is intended or shall be construed as creating a “Community of Pecuniary Interest” or “An Equal Right of Control” that would give rise to vicarious liability. Lessee shall be an independent contractor under this Sublease and shall assume all the rights, obligations and liabilities, applicable to it as such independent contractor hereunder and any provisions in this Sublease that may appear to give MDC the right to direct Lessee as to details of doing the work herein covered or to exercise a measure of control over the work shall be deemed to mean that Lessee shall follow the desires of MDC in the results of the work only. MDC does not have the power to direct the order in which the work is done. MDC shall not have the right to control the means, methods or details of the Lessee’s work.

 

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17.04 Inspection by MDC: MDC may enter upon the Leased Premises at any reasonable time for any purpose necessary, incidental to or connected with the performance of MDC’s obligations hereunder, or in the exercise of its governmental functions, for fire protection or security purposes, or for inspecting or maintaining the Leased Premises, or doing any and all things MDC is obligated to do, or which may be deemed by MDC necessary or desirable for the proper conduct and operation of the Airport or the protection of MDC’s interests. Such inspections shall be (i) accompanied by a representative of Lessee; (ii) conducted during normal business hours; and (iii) shall not be disruptive or intrusive to Lessee’s business operations.
17.05 On-Site Representatives: Lessee shall select and appoint a representative or representatives for its operations at the Airport. The representatives shall be qualified and experienced and vested with the full power and authority to act in the name of the Lessee with respect to the method, manner and conduct of the operation of Lessee to be performed under this Sublease.
17.06 Conformance with Rules and Regulations: The use of the Airport by Lessee shall be subject to any and all rules, regulations and ordinances which are now in force or which may be hereafter adopted by MDC and City with respect to the operation and use of the Airport, but no such rules, regulations, or ordinances shall increase the rents payable by Lessee under this Sublease or otherwise materially and adversely affect Lessee’s tenure of the Leased Premises under this Sublease. Furthermore, this Sublease and Lessee’s use of the Airport shall be subject to all applicable laws, ordinances, resolutions, statutes, rules, regulations or orders of any federal, state or local governmental authority lawfully exercising jurisdiction over the Airport or the activities and business operations of Lessee, including any limitations, restrictions or prohibitions affecting the aviation activities or operations of Lessee.
17.07 Licenses and Permits: Lessee hereby agrees that it shall, at its own expense and cost, procure and obtain all lawfully required licenses and permits, certificates and other authorizations (all, “Permits”) required by any governmental authority, in connection with or covering the operations or activities permitted to be performed by it under the provisions of this Sublease. Landlord shall assist Lessee, diligently and free of charge in applying for and obtaining the Permits, as needed.

 

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17.08 Notices: Notices provided for in this Sublease shall be either hand delivered, sent/received by recognized courier, or sent by certified mail, return receipt requested, postage prepaid, and properly addressed as follows:
  If to MDC: Executive Director

Midland Development Corporation

109 N. Main St.

Midland, Texas 79701

 

  With Copy To: City Manager

P.O. Box 1152

300 North Loraine

Midland, Texas 79702

 

  If to Lessee: AST & SCIENCE, LLC

ATTN: Abel Avellan

Chairman and CEO

1111 Brickell Avenue, Suite 1000

Miami Florida 33131

 

The parties may change the representative or address for delivery of notices from time to time by sending written notices to the other party. All notices shall be in writing and effective only upon actual receipt.

 

17.09 Governing Law and Venue: This Sublease shall be governed by and construed in accordance with the laws and court decisions of the State of Texas. All performance and payment made pursuant to this Sublease shall be deemed to have occurred in Midland County, Texas. The sole, exclusive, and mandatory venue for any claims, suits, disputes or any other action arising from, relating to or concerning in any way this Sublease or the performance of this Sublease shall be in Midland County, Texas. The obligations and undertakings of each of the parties to this Sublease shall be deemed to have occurred in Midland County, Texas. This Sublease shall be governed by, interpreted, enforced and construed under the laws of the State of Texas. The laws of the State of Texas shall govern, construe and enforce all the rights and duties of the parties, including but not limited to tort claims and any and all contractual claims or disputes, arising from or relating in any way to the subject matter of this Sublease, without regard to conflict of laws and rules that would direct application of the laws of another jurisdiction. All payments under this Sublease are deemed to have taken place in Midland County, Texas.
17.10 Severability: If any provision of this Sublease is invalid or unenforceable, this Sublease shall be considered severable as to such provision, and the remainder of this Sublease shall remain valid and binding as though such invalid or unenforceable provisions were not included herein.
17.11 Captions: Section headings are inserted herein only as a matter of convenience and for reference, and in no way defines, limits or describes the scope or intent to any provision herein.

 

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17.12 Use of Language: Words of any gender used in this Sublease shall be held and construed to include any other gender, and words in the singular shall be held to include the plural, unless the context otherwise requires.

 

17.13 Counterparts: This Sublease may be executed in multiple counterparts, each of which shall be deemed as original, and all of which constitute but one and the same instrument.
17.14 Development of the Airport: The parties understand and agree future development, changes, alterations, modifications or improvement to the Airport are in the sole discretion of City. subject only to such notification to Lessee that the FAA may dictate.
17.15 Subordination to Other Agreements: This Sublease shall be subordinate to the provisions and requirements of any existing or future agreement between MDC and City relative to the Leased Premises, including the lease agreement between MDC and City regarding the Leased Premises, which is attached hereto as Exhibit A, and City and the United States, relative to the development, operation or maintenance of the Airport.
17.16 No Exclusivity on Aeronautical Services: Nothing herein contained shall be construed to grant or authorize the granting of the exclusive right to provide aeronautical services to the public as prohibited by Section 308(a) of the Federal Aviation Act of 1958, as amended.
17.17 Discrimination Prohibited: The Lessee, for itself, its trustees, officers, legal representatives, successors-in-interest and assigns, as a part of the consideration hereof, agrees (1) that no person on the grounds of race, color, sex, national origin, veteran status or disability shall be excluded from participation in, denied the benefits of or be otherwise subjected to discrimination in the use of the Leased Premises; (2) that in the construction of any improvements on, over or under the Leased Premises and the furnishing of services thereon, no person on the grounds of race, sex, color, national origin, or disability shall be excluded from participation in, denied the benefits of or otherwise be subjected to discrimination; (3) that the Lessee shall use the Leased Premises and the Airport in compliance with all other requirements imposed by, or pursuant to, Title 49, Code of Federal Regulations, Department of Transportation, Subtitle A, office of the Secretary, Part 21, Nondiscrimination in Federally-Assisted Programs of the Department of Transportation-Effectuation of Title VI of the Civil Rights Act of 1964, and as said regulations may be amended. In the event of breach of any of the above nondiscrimination covenants, the MDC shall have the right to terminate this Sublease and to re-enter and repossess the Leased Premises and the improvements thereon and hold the same as if said Sublease were terminated by its own term pursuant to Article 2.01 above.
17.18 Affirmative Action Program: Lessee assures that it will undertake an affirmative action program as required by 14 CFR Part 152, Subpart E, to ensure that no person shall on the grounds of race, creed, color, national origin, sex or disability be excluded from participating in any employment activities covered in 14 CFR Part 152, Subpart E. Lessee assures that no person shall be excluded on these grounds from participating in or receiving the services or benefits of any program or activity covered by this Sublease.

 

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17.19 Entire Agreement: This Sublease, in conjunction with the Development Agreement, embodies the entire agreement between MDC and Lessee. and supersedes all prior agreements and understandings, whether written or oral, and all contemporaneous oral agreements and understandings relating to the subject matter hereof. This Sublease shall not be changed, modified, discharged or extended, except by written instrument duly executed by MDC and Lessee. The parties agree that no representations or warranties shall be binding upon either party unless expressed in writing.
17.20 Governmental Immunity: By executing this Sublease, MDC is not waiving its right of governmental immunity. MDC is retaining its immunity from suit. MDC is not granting consent to be sued by legislative resolution or action. THERE IS NO WAIVER OF GOVERNMENTAL IMMUNITY.
17.21 Third-Party Beneficiary: MDC’s approval of this Sublease does not create a third-party beneficiary. There is no third-party beneficiary to this Sublease. No person or entity who is not a party to this Sublease shall have any third-party beneficiary or other rights hereunder.
17.22 Notice of Alleged Breach: As a condition precedent to filing suit for alleged damages incurred by an alleged breach of an express or implied provision of this Sublease, Lessee or its legal representative, shall give the Chairman of the MDC, or any other reasonable official of MDC, notice in writing of such damages, duly verified, within one hundred and twenty (120) days after the same has been sustained. The discovery rule does not apply to the giving of this notice. The notice shall include when, where and how the damages occurred, the apparent extent thereof, the amount of damages sustained, the amount for which Lessee will settle, the physical and mailing addresses of Lessee at the time and date the claim was presented and the physical and mailing addresses of Lessee for the six months immediately preceding the occurrence of such damages, and the names and addresses of the witnesses upon whom the Lessee relies to establish its claim; and a failure to so notify MDC within the time and manner provided herein shall exonerate, excuse and except MDC from any liability whatsoever. MDC is under no obligation to provide notice to Lessee that Lessee’s notice is insufficient MDC reserves the right to request reasonable additional information regarding the claim. Said additional information shall be supplied within thirty (30) days after receipt of notice.

The statutory prerequisites outlined herein constitute jurisdictional requirements pursuant to Section 271.154 of the Texas Local Government Code and Section 311.034 of the Texas Government Code. Notwithstanding any other provision, Lessee’s failure to comply with the requirements herein shall perpetually bar Lessee’s claim for damages under Chapter 271 of the Texas Local Government Code, and Section 311.034 of the Texas Government Code, regardless if MDC has actual or constructive notice or knowledge of said claim or alleged damages. Lessee agrees that the requirements of this entire agreement are reasonable.

 

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17.23 RELEASE: LESSEE HEREBY RELEASES, RELINQUISHES, ACQUITS AND FOREVER DISCHARGES MDC, MDC’S EMPLOYEES AND OFFICERS, FROM ANY AND ALL DEMANDS, CLAIMS, DAMAGES OR CAUSES OF ACTION OF ANY KIND WHATSOEVER, WHICH LESSEE HAS OR MIGHT HAVE IN THE FUTURE, INCLUDING BUT NOT LIMITED TO BREACH OF CONTRACT, QUANTUM MERUIT, DUE PROCESS AND TAKINGS CLAUSES UNDER THE TEXAS AND UNITED STATES CONSTITUTION, TORT CLAIMS OR MDC’S NEGLIGENCE.
17.24 WAIVER OF ATTORNEY FEES: BY EXECUTING THIS SUBLEASE, LESSEE AGREES TO WAIVE AND DOES HEREBY WAIVE ANY CLAIM IT HAS OR MAY HAVE AGAINST THE MDC, REGARDING THE AWARD OF ATTORNEY’S FEES, WHICH ARE IN ANY WAY RELATED TO THIS SUBLEASE, OR THE CONSTRUCTION, INTERPRETATION OR BREACH OF THE SUBLEASE. LESSEE SPECIFICALLY AGREES THAT IF LESSEE BRINGS OR COMMENCES ANY LEGAL ACTION OR PROCEEDING RELATED TO THIS SUBLEASE, THE CONSTRUCTION, INTERPRETATION, VALIDITY OR BREACH OF THIS SUBLEASE, INCLUDING BUT NOT LIMITED TO ANY ACTION PURSUANT TO THE PROVISIONS OF THE TEXAS UNIFORM DECLARATORY JUDGMENTS ACT (TEXAS CIVIL PRACTICE AND REMEDIES CODE SECTION 37.001, ET SEQ., AS AMENDED), LESSEE AGREES TO (i) WAIVE AND RELINQUISH ANY AND ALL RIGHTS TO THE RECOVERY OF ATTORNEY’S FEES TO WHICH LESSEE MIGHT OTHERWISE BE ENTITLED AND (ii) ASSUME COMPLETE RESPONSIBILITY FOR AND PAY ANY AND ALL ATTORNEY FEES AND ASSOCIATED COSTS INCURRED IN GOOD FAITH BY MDC IN ITS CONTESTING OF THE LEGAL ACTION OR PROCEEDING BROUGHT BY LESSEE.

LESSEE ACKNOWLEDGES THAT THIS IS THE INTENTIONAL RELINQUISHMENT OF A PRESENTLY EXISTING KNOWN RIGHT AND THE ASSUMPTION OF A FUTURE OBLIGATION IN THE EVENT THAT LESSEE BRINGS OR COMMENCES ANY LEGAL ACTION OR PROCEEDING AGAINST MDC RELATED TO THIS SUBLEASE, THE CONSTRUCTION, INTERPRETATION, VALIDITY OR BREACH OF THIS SUBLEASE, INCLUDING BUT NOT LIMITED TO ANY ACTION PURSUANT TO THE PROVISIONS OF THE TEXAS UNIFORM DECLARATORY JUDGMENTS ACT (TEXAS CIVIL PRACTICE AND REMEDIES CODE SECTION 37.001, ET SEQ., AS AMENDED). LESSEE ACKNOWLEDGES THAT IT UNDERSTANDS ALL TERMS AND CONDITIONS OF THE THIS SUBLEASE.

 

BY EXECUTION OF THIS SUBLEASE, LESSEE HEREBY REPRESENTS AND WARRANTS THAT LESSEE HAS READ AND UNDERSTOOD THE SUBLEASE.

 

17.25 Waiver of Rights under the Deceptive Trade Practices; Consumer Protection Act: Landlord and Lessee waive their rights under the Deceptive Trade Practices-Consumer Protection Act, Section 17.41 et seq., Business & Commerce Code, a law that gives consumers special rights and protections. Each, after consultation with an attorney of its selection, voluntarily consents to this waiver.

 

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17.26 Patriot Act Representation: MDC and Lessee each represent to the other that: (i) its property interests are not blocked by Executive Order No. 13224, 66 Fed. Reg. 49079; (ii) it is not a person listed on the Specially Designated Nationals and Blocked Persons list of the Office of Foreign Assets Control of the United States Department of the Treasury; and (iii) it is not acting for or on behalf of any person on that list.
17.27 Landlord Improvements; Security Fencing: MDC agrees to provide a security fence with keypad entrance to the perimeter of Lot H and Lot M of the Leased Premises; provided, however, that MDC shall only be responsible for the costs of said security fence in an amount not to exceed $100,000.00.
17.28 Landscaping: MDC agrees to provide for professional landscaping work and services for the Leased Premises, which are more particularly described in the Project Manual for the Midland Development Corporation Landscape Improvements to the Spaceport Business Park Project and the associated Midland Development Corporation Landscape Improvements Construction Plans.
17.29 Governmental Function: MDC AND LESSEE HEREBY ACKNOWLEDGE AND AGREE THAT THE ENTIRETY OF MDC’S PERFORMANCE AND OBLIGATIONS UNDER THIS SUBLEASE ARE GOVERNMENTAL FUNCTIONS. BY ENTERING INTO THIS SUBLEASE, LESSEE RELEASES MDC FROM ANY PRESENT OR FUTURE CLAIMS ASSERTING MDC’S PERFORMANCE AND OBLIGATIONS UNDER THIS SUBLEASE ARE NOT GOVERNMENTAL FUNCTIONS. MDC AND LESSEE ACKNOWLEDGE AND AGREE THAT THIS SUBLEASE IS IN THE PUBLIC INTEREST AND SERVES A PUBLIC PURPOSE OF THE STATE OF TEXAS AND CITY OF MIDLAND IN PROMOTING THE WELFARE OF THE GENERAL PUBLIC ECONOMICALLY BY SECUREING AND RETAINING BUSINESS ENTERPRISES AND AS A RESULT OF MAINTAINING A HIGHER LEVEL OF EMPLOYMENT, ECONOMIC ACTIVITY, AND STABILITY.

THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES. TIME IS OF THE ESSENCE WITH REGARDS TO ALL DEADLINES IN THIS SUBLEASE.

 

REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK
SIGNATURE PAGE TO FOLLOW

 

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IN WITNESS WHEREOF, the parties hereto have caused this Sublease to be legally executed in duplicate this 13th day of November, 2018.

 

  MIDLAND DEVELOPMENT CORPORATION
   
  /s/ Brent D. Hilliard
  Brent D. Hilliard, Chairman

 

ATTEST:  
   
/s/ Wesley Bownds  
Wesley Bownds, Secretary  

 

[Signature Page Follows]

 

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  AST & SCIENCE, LLC
   
 

/s/ Tho

mas E. Severson

  Thomas E. Severson JR
  Chief Financial Officer & COO

 

THE STATE OF NORTH CAROLINA §
  §
COUNTY OF SWAIN §

 

BEFORE ME, Lisa L. Bryan, a notary public, on this day personally appeared Abel Avellan, Chairman and CEO of AST & Science, LLC, known to me to be the person whose name is subscribed to the foregoing instrument, and acknowledged to me that he executed the same as the act and deed of said Company for the purposes and consideration therein expressed and in the capacity therein stated.

 

GIVEN UNDER MY HAND AND SEAL OF OFFICE THIS 13th day of November, A.D., 2018.

 

  /s/ Lisa L. Bryan
  Notary Public, in and for
  the State of North Carolina

  

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Exhibit 21.1

 

SUBSIDIARIES OF AST SPACEMOBILE, INC.

 

Entity Name

 

Jurisdiction of Formation

AST & Science, LLC   Delaware
AST&Science Texas LLC   Texas
AST Space Mobile USA LLC (f/k/a AST& Defense, LLC)   Delaware
AST&Science Israel Ltd.   Israel
AST & Science Iberia, Sociedad Limitada Unipersonal   Spain
AST Spacemobile UK Limited   United Kingdom
NanoAvionics US LLC   Delaware
NanoAvionika UAB, private limited liability company   Lithuania
NANOAVIONICS UK LTD   United Kingdom

 

 

 

 

 

Exhibit 99.1

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 

 

To the Members of

AST & Science, LLC

Midland, TX

 

Opinion on the Consolidated Financial Statements

 

We have audited the accompanying consolidated balance sheets of AST & Science, LLC and Subsidiaries (the “Company”) as of December 31, 2020 and 2019, the related consolidated statements of operations, comprehensive loss, redeemable convertible preferred stock and members’ equity and cash flows for the years then ended, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the years then ended, in conformity with accounting principles generally accepted in the United States of America.

 

Basis for Opinion

 

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

 

We conducted our audits in accordance with the standards of the PCAOB and in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

 

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

 

/s/ BDO USA LLP

 

We have served as the Company’s auditor since 2017.

 

Fort Lauderdale, FL

February 26, 2021

 

1
 

 

AST & SCIENCE LLC AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(dollars in thousands, except per share data)

 

    As of December 31,  
    2020     2019  
ASSETS                
Current assets:                
Cash and cash equivalents   $ 42,777     $ 26,498  
Accounts receivable, net     2,081       328  
Inventory     2,591       182  
Prepaid expenses     1,249       445  
Other current assets     2,234       286  
Total current assets     50,932       27,739  
                 
Property and equipment:                
BlueWalker 3 Satellite – construction in progress     27,013       2,097  
Property and equipment, net     10,057       1,685  
Total property and equipment, net     37,070       3,782  
                 
Other long-term assets:                
Operating lease right-of-use assets     7,045        
Intangible assets, net     526       672  
Goodwill     3,912       3,593  
Other assets and deposits     160       162  
Total other long-term assets, net     11,643       4,427  
TOTAL ASSETS   $ 99,645     $ 35,948  
                 
LIABILITIES AND MEMBERS’ EQUITY                
Current liabilities:                
Accounts payable   $ 4,990     $ 1,552  
Accrued expenses and other current liabilities     4,222       1,948  
Deferred revenue     3,401       949  
Note payable to Founder           1,750  
Current operating lease liabilities     504        
Total current liabilities     13,117       6,199  
                 
Non-current operating lease liabilities     6,541        
Total liabilities     19,658       6,199  
                 
Commitments and Contingencies (Note 6)                
                 
Members’ equity:                
Series A convertible preferred stock, $0.01 par value, authorized 684,932 shares, 684,932 shares issued and outstanding as of December 31, 2020 and 2019 (liquidation preference of $20,000 at December 31, 2020 and 2019)     9,394       9,394  
Series B convertible preferred stock, $0.01 par value per share - 2,765,027 and 1,995,810 shares authorized as of December 31, 2020 and 2019, respectively; 2,765,027 and 773,376 shares issued and outstanding as of December 31, 2020 and 2019, respectively (liquidation preference of $119,636 and $31,520 at December 31, 2020 and 2019, respectively)     102,717       28,847  
Members’ common equity, 10,000,000 shares authorized as of December 31, 2020 and 2019; 5,500,840 and 5,500,000 issued and outstanding as of December 31, 2020 and 2019, respectively     5,462       5,171  
Promissory note from common shareholder           (100 )
Accumulated other comprehensive income (loss)     (168 )     (329 )
Accumulated Deficit     (39,908 )     (15,847 )
Noncontrolling interest     2,490       2,613  
Total members’ equity     79,987       29,749  
TOTAL LIABILITIES AND MEMBERS’ EQUITY   $ 99,645     $ 35,948  

 

See accompanying notes to the consolidated financial statements

 

2
 

 

AST & SCIENCE LLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 2020 and 2019
(dollars in thousands, except per share data)

 

    2020     2019  
Revenues   $ 5,967     $ 1,414  
Cost of sales     (3,025 )     (954 )
Gross profit     2,942       460  
                 
Operating expenses:                
Engineering services     13,081       4,668  
General and administrative costs     12,320       5,404  
Research and development costs     1,011       1,062  
Depreciation and amortization     887       388  
Total operating expenses     27,299       11,522  
                 
Other income and expense:                
Interest income     71       2  
Interest expense     (10 )     (22 )
Other income and (expense), net     22       (15 )
Total other income (expense)     83       (35 )
Net loss before income taxes     (24,274 )     (11,097 )
Income taxes     (131 )     (44 )
Net loss     (24,405 )     (11,141 )
Add: Net loss attributable to noncontrolling interests     344       256  
Net loss attributable to AST&Science   $ (24,061 )   $ (10,885 )
Cumulative convertible preferred stock dividends   $ (8,290 )   $ (523 )
Income available to common shareholders   $ (32,351 )   $ (11,408 )
Basic and diluted net loss per share   $ (5.88 )   $ (2.07 )
Basic and diluted shares used in computing net loss per share     5,500,404       5,500,000  

 

See accompanying notes to the consolidated financial statements

 

3
 

 

AST & SCIENCE LLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
FOR THE YEARS ENDED DECEMBER 31, 2020 and 2019
(dollars in thousands, except per share data)

 

    2020     2019  
Net loss   $ (24,405 )   $ (11,141 )
Foreign currency translation adjustments     382       (145 )
Comprehensive loss     (24,023 )     (11,286 )
Comprehensive loss attributable to noncontrolling interest:                
Add: Net loss attributable to noncontrolling interests     344       256  
Foreign currency translation adjustments     (221 )     65  
Comprehensive loss attributable to AST&Science   $ (23,900 )   $ (10,965 )

 

See accompanying notes to the consolidated financial statements

 

4
 

  

AST & SCIENCE LLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF REDEEMABLE CONVERTIBLE PREFERRED STOCK AND MEMBERS’ EQUITY
(dollars in thousands)

 

    Series B
Redeemable
Preferred Stock
    Series A
Preferred Stock
    Series B
Preferred Stock
    Common Equity     Promissory
Note from
Common
    Accumulated
Other
Comprehensive
    Accumulated     Noncontrolling     Total  
    Shares     Values     Shares     Values     Shares     Values     Shares     Values     Shareholder     Loss     Deficit     Interest     Equity  
Balance, December 31,
2018
        $       684,932     $ 9,394           $       5,500,000     $ 5,039     $ (100 )   $ (249 )   $ (4,962 )   $ 2,934     $ 12,056  
Issuance of Series B Convertible Preferred Stock, net of issuance costs of $2,153                             773,376       28,847                                           28,847  
Stock-based compensation                                               132                               132  
Unrealized foreign currency translation adjustments                                                           (80 )           (65 )     (145 )
Net income (loss)                                                                 (10,885 )     (256 )     (11,141 )
Balance, December 31, 2019         $       684,932     $ 9,394       773,376     $ 28,847       5,500,000     $ 5,171     $ (100 )   $ (329 )   $ (15,847 )   $ 2,613     $ 29,749  
Stock options exercised                                         840       1                               1  
Issuance of Series B Redeemable Convertible Preferred Stock, net of issuance costs of $5,889     1,966,704       72,944                                                                    
Issuance of Series B Convertible Preferred Stock, net of issuance costs of $69                             24,947       926                                           926  
Modification upon amendment of Series B Convertible Preferred Stock     (1,966,704 )     (72,944 )                 1,966,704       72,944                                           72,944  
Payment of Promissory Note by Common Shareholder                                                     100                         100  
Stock-based compensation                                               290                               290  
Unrealized foreign currency translation adjustments                                                           161             221       382  
Net income (loss)                                                                 (24,061 )     (344 )     (24,405 )
Balance, December 31, 2020         $       684,932     $ 9,394       2,765,027     $ 102,717       5,500,840     $ 5,462     $     $ (168 )   $ (39,908 )   $ 2,490     $ 79,987  

 

See accompanying notes to the consolidated financial statements

 

5
 

 

AST & SCIENCE LLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2020 and 2019
(dollars in thousands)

 

    2020     2019  
Cash flows from operating activities:                
Net loss   $ (24,405 )   $ (11,141 )
Adjustments to reconcile net loss to cash used in operating activities:                
Depreciation     670       174  
Amortization of intangible assets     217       214  
Non-cash operating lease expense     219        
Stock-based compensation     290       132  
Changes in operating assets and liabilities:                
Accounts receivable     (1,568 )     118  
Prepaid expenses and other current assets     (1,485 )     (159 )
Inventory     (2,236 )     (148 )
Accounts payable and accrued expenses     3,476       881  
Operating lease liabilities     (219 )      
Deferred revenue     2,235       595  
Other current assets and current liabilities     6       34  
Net cash used in operating activities     (22,800 )     (9,300 )
                 
Cash flows from investing activities:                
Purchase of property and equipment     (8,123 )     (1,557 )
Purchase of intangible asset     (23 )      
BlueWalker 3 Satellite – construction in process     (22,265 )     (2,097 )
Net cash used in investing activities     (30,411 )     (3,654 )
                 
Cash flows from financing activities:                
Proceeds from Founder bridge loan           1,750  
Repayment for Founder bridge loan     (1,750 )      
Proceeds from issuance of Series B Redeemable Preferred Stock     78,833        
Issuance costs from issuance of Series B Redeemable Preferred Stock     (5,889 )      
Proceeds from issuance of Series B Preferred Stock     1,000       31,000  
Issuance costs from issuance of Series B Preferred Stock     (1,856 )     (371 )
Proceeds from promissory note with common shareholder     100        
Direct and incremental costs incurred for the merger with NPA     (775 )      
Net cash provided by financing activities     69,663       32,379  
                 
Effect of exchange rate changes on cash     (173 )     (46 )
                 
Net increase in cash and cash equivalents     16,279       19,379  
Cash and cash equivalents, beginning of period     26,498       7,119  
Cash and cash equivalents, end of period   $ 42,777     $ 26,498  
                 
Supplemental disclosure of cash flow information:                
Non-cash investing activities:                
Purchase of accrued construction in process     2,615        
Purchase of accrued property and equipment     794        
Right-of-use assets obtained in exchange for operating lease liabilities as of January 1, 2020 upon adoption of ASC 842     6,472        
Right-of-use assets obtained in exchange for operating lease liabilities     734        
Non-cash financing activities:                
Accrued direct and incremental costs incurred for the merger with NPA     376        
Transaction costs accrued in connection with issuance of Series B Preferred Stock           1,782  
Cash paid during the fiscal year for:                
Interest     25       7  
Income taxes     134       6  

 

See accompanying notes to the consolidated financial statements

 

6
 

 

AST & Science LLC and Subsidiaries

Notes to Consolidated Financial Statements

As of and for the Years Ended 2020 and 2019

 

1. Nature of Business and Basis of Presentation

 

Nature of Business

 

AST & Science LLC and its subsidiaries (“AST” or the “Company”) is an innovative satellite designer and manufacturer. AST is currently in the process of testing, developing and building its BlueWalker 3 test satellite in advance of manufacturing and launching the first space based global cellular network distributed through a constellation of Low Earth Orbit Satellites (the “AST Satellite Constellation”). Once deployed and operational, the AST Satellite Constellation will provide connectivity directly to standard/unmodified cellular phones or any 2G/3G/4G LTE/5G and IoT-enabled device (the “SpaceMobile Service”). The SpaceMobile Service will be made available to cellular subscribers and others through wholesale commercial roaming agreements with cellular service providers on a global basis.

 

The Company operates from six locations that include its corporate headquarters and 85,000 square foot satellite assembly, integrating and testing facility in Midland, Texas, as well as operations in Maryland, Spain, the United Kingdom, and Israel. In addition, its 51% owned and controlled subsidiary, NanoAvionika, is located in Lithuania. The accounts of all entities wholly owned by AST are fully consolidated and all intercompany balances are eliminated. NanoAvionika, AST’s only non-wholly owned subsidiary, is also fully consolidated, with all intercompany balances eliminated. NanoAvionika’s non-controlling equity interest and related losses are presented separately in the accompanying financial statements.

 

There continues to be uncertainties regarding the pandemic of the novel coronavirus (“COVID-19”), and the Company is closely monitoring the impact of COVID-19 on all aspects of its business, including how it will impact its customers, employees, suppliers, vendors, and business partners. Any estimates made herein may change as new events occur and additional information is obtained, and actual results could differ materially from any estimates made herein under different assumptions or conditions. The Company has evaluated the impact of the COVID-19 pandemic for the year ended December 31, 2020 and has not realized a material impact to the Company’s technology development efforts or operations. The Company is unable to predict the impact that COVID-19 may have on its financial position and operations moving forward due to the numerous uncertainties. The Company will continue to assess the evolving impact of COVID-19.

 

CARES Act

 

On March 27, 2020, former President Trump signed into law the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”). The CARES act was enacted as a response to the COVID-19 outbreak discussed above and is meant to provide companies with economic relief. The CARES Act, among other things, includes provisions relating to refundable payroll tax credits, deferment of employer side social security payments, net operating loss carryback periods, alternative minimum tax credit refunds, modifications to the net interest deduction limitations, increased limitations on qualified charitable contributions, and technical corrections to tax depreciation methods for qualified improvement property.

 

The impact of the CARES Act on the Company’s financial position and statement of operations was immaterial as of December 31, 2020. The Company has not incurred any indebtedness with respect to loans available under the CARES Act, and given the Company is not taxable, the tax implications of the CARES Act do not apply. The Company will continue to assess the evolving impact of the CARES Act.

 

Basis of Presentation

 

The accompanying financial statements are prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and intercompany transactions are eliminated during consolidation.

 

The Company has incurred recurring losses since its inception, including net losses of $24.4 million and $11.1 million for the years ended December 31, 2020 and 2019, respectively.

 

7
 

 

1. Nature of Business and Basis of Presentation (cont.)

 

As of December 31, 2020, the Company held cash and cash equivalents of $42.8 million. Management believes that its cash and cash equivalents on hand as of December 31, 2020 will be sufficient to continue funding the Company’s increased operations through at least one year from the date these financial statements are available to be issued. The Company’s success is dependent upon its ability to continue to raise capital in order to fund ongoing research and development, successfully commercialize its products, generate revenue, meet its obligations, and ultimately obtain profitable operations. The Company will seek additional financing to continue to fund its research and development efforts and the capital required to fund the AST Satellite Constellation. The ability of the Company to secure this additional capital cannot be assured.

 

2. Summary of Significant Accounting Policies

 

Goodwill

 

The Company evaluates goodwill for impairment annually, or more frequently if events or changes in circumstances indicate that the goodwill may be impaired. Goodwill is tested at the reporting unit level, which is considered an operating segment or one level below an operating segment. The Company has two reporting units: AST and Nano. However, given no goodwill has been allocated to the AST reporting unit, the Company identifies Nano as the sole reporting unit for purposes of goodwill impairment testing.

 

Our annual goodwill impairment test is based on either a qualitative or quantitative assessment. We have the option to perform a qualitative assessment to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If management determines this is the case, we are required to perform a quantitative assessment. A quantitative assessment is an analysis of the fair value of the reporting unit compared to its carrying value. A goodwill impairment charge is recorded for the amount by which the carrying amount exceeds the reporting unit’s fair value. The Company performs the annual goodwill impairment test during the fourth quarter each year. There were no impairment charges for goodwill recognized for the years ended December 31, 2020 and 2019.

 

Long-Lived Assets

 

Long-lived assets, except for goodwill, consist of property and equipment and finite-lived acquired intangible assets, such as developed technology and tradenames. Long-lived assets, except for goodwill, are tested for recoverability whenever events or changes in business circumstances indicate that the carrying amount of the asset may not be fully recoverable. The Company continually evaluates whether events or circumstances have occurred that indicate that the estimated remaining useful life of long-lived assets and finite-lived intangible assets may warrant revision or if events or circumstances indicate that the carrying value of these assets may be impaired. To compute whether assets have been impaired, the estimated undiscounted future cash flows for the estimated remaining useful life of the assets are compared to the carrying value. To the extent that the future cash flows are less than the carrying value, the assets are written down to the estimated fair value of the asset. There were no impairment charges for long-lived assets recognized for the years ended December 31, 2020 and 2019.

 

Use of Estimates

 

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses, and the disclosure of contingent assets and liabilities as of and during the reporting period. The Company bases its estimates and assumptions on historical experience when available and on other market-specific or other relevant assumptions that it believes to be reasonable under the circumstances. Significant estimates and assumptions reflected in these financial statements include, but are not limited to, useful lives assigned to property and equipment, the fair values of common stock and preferred stock, valuation and impairment of goodwill and intangible assets, and equity-based compensation expense. The Company assesses estimates on an ongoing basis; however, actual results could materially differ from those estimates.

 

8
 

 

Cash and Cash Equivalents

 

The Company’s cash and cash equivalents consist of cash maintained within standard checking accounts for its operating subsidiaries and an interest bearing Money Market Demand and Deposit account with JPMorgan Chase Bank, N.A. (the “Chase Bank”) (“Chase Bank Investment Account”). The Company considers all highly liquid investments with a maturity date of 90 days or less at the date of purchase to be cash equivalents.

 

Concentration of Credit Risk

 

Financial instruments that potentially subject the Company to significant concentration of credit risk consist primarily of cash and cash equivalents, and trade receivables. The Company maintains its cash in accounts at financial institutions that, at times, may exceed federally insured limits. The cash balances in these financial institutions are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000. The Company may deposit cash at institutions that are not insured by the FDIC, which is limited to its foreign subsidiaries. The Company manages credit risk by reviewing the counterparties’ credit at least quarterly.

 

Our subsidiary, NanoAvionika, typically derives its revenue from a small number of customers. Two customers accounted for approximately 76% of the Company’s trade receivables as of December 31, 2020, and two customers accounted for approximately 24% of the Company’s trade receivables as of December 31, 2019. Three customers accounted for approximately 50% of the Company’s revenue as of December 31, 2020, and two customers accounted for approximately 28% of the Company’s revenue as of December 31, 2019. Credit risk on accounts receivable is minimized given the research and development stage of the Company, and the fact that its primary business focus is to manufacture and launch its test satellites as opposed to entering into revenue transactions with customers in the short term.

 

Inventory

 

Inventories are carried at the lower of cost or net realizable value. Cost is determined by the first-in first-out (FIFO) method. The cost of construction in progress comprises raw materials, satellite componentry, direct labor, and other direct engineering costs. No reserve for excess and/or obsolete inventory was recognized in the periods presented.

 

Inventories consisted of the following at December 31, 2020 and 2019 (in thousands):

 

    December 31,
2020
    December 31,
2019
 
Raw material   $ 2,285     $ 182  
Work-in-process     306        
Total   $ 2,591     $ 182  

 

Property and Equipment

 

The Company records property and equipment at cost. Repairs and maintenance costs that do not extend the useful life or enhance the productive capacity of an asset are expensed as incurred and recorded as part of general and administrative operating expenses on the Consolidated Statement of Operations. Upon retirement or disposal of property and equipment, the Company derecognizes the cost and accumulated depreciation balance associated with the asset, with a resulting gain or loss from disposal included in the determination of net income or loss. Maintenance and repairs are charged to expense as incurred and any additions or improvements which extend the useful life of an asset or increase its productive capacity are capitalized. Depreciation expense is computed using the straight-line method over the estimated useful lives which the Company has assigned to its underlying asset classes, which are as follows:

 

    Estimated Useful Life
Computers, software, and equipment   2 to 5 years
Leasehold improvements   Shorter of estimated useful life or lease term
Satellite antenna   5 years
Test and lab equipment   5 years
Phased array test facility   5 years
Assembly and integration equipment   5 years
Furniture and fixtures   7 years
Vehicles   5 years

 

9
 

  

Foreign Currency Translation

 

The financial statements of the Company’s foreign subsidiaries are translated from local currency into reporting currency, which is U.S. dollars, using the current exchange rate at the balance sheet date for assets and liabilities, and the weighted average exchange rate prevailing during the period for revenues and expenses. The functional currency for AST’s foreign subsidiaries is considered to be the local currency for each entity and, accordingly, translation adjustments for these subsidiaries are included in accumulated other comprehensive loss within members’ capital.

 

Realized and unrealized gains and losses resulting from foreign currency transactions denominated in currencies other than the functional currency are reflected as other income (expense), net in the consolidated statements of operations. Foreign currency translation gains and losses are recorded to other comprehensive income on the Company’s Consolidated Balance Sheets.

 

Fair Value Measurements

 

Certain assets and liabilities are carried at fair value under GAAP. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. A framework is used for measuring fair value utilizing a three-tier hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. Financial assets and liabilities carried at fair value are to be classified and disclosed in one of the following three levels of the fair value hierarchy, of which the first two are considered observable and the last is considered unobservable:

 

  Level 1 — defined as observable inputs, such as quoted prices unadjusted in active markets for identical securities;
     
  Level 2 — defined as inputs other than quoted prices included in Level 1 that are either directly or indirectly observable; and
     
  Level 3 — defined as significant unobservable inputs in which little or no market data exists, therefore, requiring an entity to develop its own assumptions

 

The Company’s financial assets have been classified as Level 1. The carrying amounts of the Company’s financial assets (which include cash, cash equivalents, and accounts receivable) and liabilities (which include accounts payable) approximate fair value because of the short maturity of these instruments. No financial assets have been classified as Level 2 or Level 3.

 

Engineering Costs

 

Engineering costs are charged to expense as incurred. Engineering costs consist primarily of the expenses associated with our ongoing engineering efforts to establish technical feasibility of our products, as well as the cost of internal staff (such as engineers and consultants) to support these efforts. Currently, major engineering activities include procuring and manufacturing the satellite components required for the BW3 satellite. AST intends to assemble and test the BW3 satellite at its Midland, Texas facility during the first half of 2021. The BW3 is scheduled to be launched during the second half of 2021. Additionally, AST has established alternative uses (separate economic value) for BW3 and therefore, the hard costs (i.e., test equipment, antennas, sensors, cables, launch vehicles) and other nonrecurring costs solely associated with AST’s BW3 developments are capitalized to its construction in progress (“CIP”) account, and presented on its Consolidated Balance Sheets.

 

10
 

 

Research and Development Costs

 

Research and development costs are charged to expense as incurred. Research and development costs consist principally of non-recurring engineering developments in which the Company typically engages third party vendors, including materials and supplies, license costs, contract services, and other outside expenses. Costs for certain research and development activities are recognized in line with the completion of specific tasks using information from the Company’s vendors on their actual costs incurred. Payments for these activities are based on the terms of the individual arrangements, which may differ from the pattern of costs incurred, and reflected in the financial statements as prepaid or accrued research and development.

 

Government and Space Agency Grants

 

The Company’s subsidiary, NanoAvionika, receives grant funding in exchange for satellite technology development efforts made by the Company to the European Space Agency and other governmental bodies. If the Company fails to maintain required commitments, the funds received may have to be repaid or other adverse consequences may arise, which could affect our cash flows and profitability.

 

When the Company has been awarded grant funding, cost reimbursements are recognized when it is probable that the Company will comply with the conditions attached to the grant arrangement and the grant proceeds will be received. Grants are recognized in the Company’s results of operations on a systematic basis over the periods in which the Company recognizes the related costs for which the grant is intended to compensate. Specifically, when grants are related to reimbursements, the grants are recognized as a reduction of the related expense in the Company’s results of operations. For grants related to reimbursements of capital expenditures, the grants are recognized as a reduction of the basis of the asset and recognized in the Company’s results of operations over the estimated useful life of the depreciable asset as reduced depreciation expense. The Company recognized a reduction to cost of sales related to grants for a total of $0.3 million and $1.6 million for the years ended December 31, 2020 and 2019, respectively.

 

Income Taxes

 

AST & Science LLC and subsidiaries elected to be taxed as Limited Liability Companies which are treated as partnerships for federal and state income tax purposes. Accordingly, for federal and state income tax purposes, all income, losses, and other tax attributes pass through to the members’ income tax returns, and no provision for income taxes has been recorded for these entities in the consolidated financial statements. Notwithstanding its disregarded status, the Company does have controlling ownership interest in a Lithuanian subsidiary that is subject to foreign income taxes. None of the Company’s other subsidiaries were subject to material income tax consequences during the periods presented.

 

Convertible Preferred Stock

 

As of December 31, 2020 and 2019, the Company’s outstanding Series A and B Convertible Preferred Stock does not meet any of the criteria requiring presentation in mezzanine equity, and as such, the Preferred Stock will be presented in permanent equity. In February 2020, the Company issued Series B Preferred Stock to Rakuten Mobile Singapore Pte. Ltd. (“Rakuten”), which the Company classified within mezzanine equity as the redemption of the shares was outside of the control of the Company. In December 2020, the Rakuten Series B Preferred Stock was amended to remove the redemption feature, which triggered a reclassification from mezzanine equity to permanent equity. The amendment to the Rakuten Series B Preferred Stock is discussed further in Note 5.

 

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Stock-Based Compensation

 

The Company estimates the grant date fair value of share-based awards to employees and to members of the Board of Directors using the Black-Scholes option-pricing model. Use of the Black-Scholes model requires the Company to make assumptions with respect to the expected term of stock options, the expected volatility of the common stock consistent with the expected life of the option, the expected volatility of the common stock consistent with the expected life of the option, risk-free interest rates and expected dividend yields of the common stock. For awards that vest based solely on achievement of a service condition, the Company recognizes expense on a straight-line basis over the period during which the award holder provides such services. For awards that vest based on both service and performance conditions, the Company recognizes expense using a graded method for such awards only to the extent it believes achievement of the performance conditions are probable. The Company recognizes forfeitures as they occur and reverses any previously recognized compensation cost associated with forfeited awards. The Company accounts for stock-based compensation for awards granted to nonemployees in a similar fashion to the way it accounts for stock-based compensation awards to employees.

 

Collaboration Arrangements

 

The Company considers the nature and contractual terms of an arrangement and assess whether the arrangement involves a joint operating activity pursuant to which it is an active participant and exposed to significant risks and rewards with respect to the arrangement. If the Company is an active participant and exposed to the significant risks and rewards with respect to the arrangement, it accounts for these arrangements pursuant to Accounting Standards Codification (“ASC”) Topic 808, Collaborative Arrangements, as amended by ASU 2018-18 (“ASC 808”), and applies a systematic and rational approach to recognize revenue (unless parts of the arrangement are within the scope of other authoritative accounting literature or can be appropriately analogized to other authoritative accounting literature).

 

Revenue Recognition

 

The Company recognizes revenue in accordance with Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Topic 606) and its related amendments (collectively known as “ASC 606”). In accordance with ASC 606, revenue is recognized when a customer obtains control of promised goods or services. The amount of revenue reflects the consideration to which the Company expects to be entitled to receive in exchange for these goods or services. To achieve this core principle, the Company applies the following five steps: (1) identify the contract with the customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to performance obligations in the contract, and (5) recognize revenue when or as the Company satisfies a performance obligation.

 

Costs to obtain the Company’s contracts are capitalized and amortized over the expected customer benefit period, and typically include commissions paid to external parties or distributors. Sales commissions are considered incremental costs in obtaining a new contract and thus are appropriately capitalized. Costs to fulfill the Company’s contracts, such as our overhead costs and third-party costs to manufacturers, do not meet the specified capitalization criteria (i.e., do not generate or enhance resources of the Company) and as such are expensed as incurred. Costs to obtain and fulfill the Company’s contracts were immaterial as of December 31, 2020 and 2019.

 

Segments

 

Operating segments are defined as components of an entity for which separate financial information is available and that is regularly reviewed by the Chief Operating Decision Maker (“CODM”) in deciding how to allocate resources to an individual segment and in assessing performance. The Company’s CODM is its Chief Executive Officer. The Company has determined that it operates in one operating segment, as the CODM reviews financial information presented on a combined basis for purposes of making operating decisions, allocating resources, and evaluating financial performance.

 

Recent Accounting Pronouncements

 

Adopted accounting standards

 

In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-02, Leases (Topic 842). This ASU requires a lessee to record, for all leases with a lease term of more than 12 months, an asset representing its right to use the underlying asset for the lease term and a liability to make lease payments. For leases with a lease term of 12 months or less, a practical expedient is available whereby a lessee may elect, by class of underlying asset, not to recognize a right-of-use asset or lease liability. A lessee making this accounting policy election would recognize lease expense over the term of the lease, generally in a straight-line pattern. This guidance is effective for financial statements issued for fiscal years beginning after December 15, 2020. Early adoption is permitted. In transition, a lessee and a lessor will recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. The modified retrospective approach includes a number of optional practical expedients. These practical expedients relate to identifying and classifying leases that commenced before the effective date, initial direct costs for leases that commenced before the effective date, and the ability to use hindsight in evaluating lessee options to extend or terminate a lease or to purchase the underlying asset. ASU 2018-11 was issued in June 2018 that also permits entities to choose to initially apply ASU 2016-02 at the adoption date and recognize a cumulative-effect adjustment to the opening balance of net assets in the period of adoption.

 

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The Company early adopted ASC 842 as of January 1, 2020 using the modified retrospective method which did not require it to restate prior periods and did not have an impact on retained earnings. The Company has elected the “package of 3” practical expedients permitted under the transition guidance which eliminates the requirements to reassess prior conclusions about lease identification, lease classification, and initial direct costs. The Company also adopted an accounting policy which provides that leases with an initial term of 12 months or less and no purchase option that the Company is reasonably certain of exercising will not be included within the lease right-of-use assets and lease liabilities on its Consolidated Balance Sheets. The Company elected an accounting policy to combine the non-lease components (which include common area maintenance, taxes and insurance) with the related lease component. The Company elected to apply this practical expedient to all asset classes upon the adoption of ASC 842.

 

At the inception of an arrangement, the Company determines whether the arrangement is or contains a lease based on the circumstances present. Leases with a term greater than one year are recognized on the Consolidated Balance Sheets as right-of-use assets, lease liabilities, and, if applicable, long-term lease liabilities. The Company includes renewal options to extend the lease in the lease term where it is reasonably certain that it will exercise these options. Lease liabilities and the corresponding right-of-use assets are recorded based on the present values of lease payments over the lease terms. The interest rate implicit in lease contracts is typically not readily determinable. As such, the Company utilizes the appropriate incremental borrowing rates, which are the rates that would be incurred to borrow on a collateralized basis, over similar terms, amounts equal to the lease payments in a similar economic environment. Variable payments that do not depend on a rate or index are not included in the lease liability and are recognized as incurred. Lease contracts do not include residual value guarantees nor do they include restrictions or other covenants. Certain adjustments to the right-of-use assets may be required for items such as initial direct costs paid, incentives received, or lease prepayments. If significant events, changes in circumstances, or other events indicate that the lease term or other inputs have changed, the Company would reassess lease classification, remeasure the lease liability by using revised inputs as of the reassessment date, and adjust the right-of-use asset.

 

See the Commitments and Contingencies footnote (Note 6) for the effects of the adoption of this ASU on the Company’s financial statements.

 

In June 2016, the FASB issued ASU 2016-13, Financial Instruments — Credit Losses (Topic 326). The ASU changes the impairment model for most financial assets that are measured at amortized cost and certain other instruments from an incurred loss model to an expected loss model. Entities will be required to estimate credit losses over the entire contractual term of an instrument. The ASU includes financial assets recorded at amortized cost basis such as loan receivables, trade and certain other receivables as well as certain off-balance sheet credit exposures such as loan commitments and financial guarantees. The ASU does not apply to financial assets measured at fair value, and loans and receivables between entities under common control. The ASU is effective for fiscal years beginning after December 15, 2022. Early adoption may be selected for fiscal years beginning after December 15, 2018. An entity must apply the amendments in the ASU through a cumulative-effect adjustment to net assets as of the beginning of the first reporting period in which the guidance is effective except for certain exclusions.

 

The Company early adopted ASU 2016-13 as of January 1, 2020. The adoption primarily impacts the Company’s trade receivables and grant receivables in relation to sales made by our subsidiary, NanoAvionika. The Company monitors its credit exposure through active review of customer balances. The Company’s expected loss methodology for accounts receivable is developed using historical collection experience, current and future economic and market conditions and a review of the current status of customers’ account balances. Historical credit losses have not been significant due to the financial stability and creditworthiness of our limited number of customers. The Company considers credit losses immaterial to our business and, therefore, have not provided all of the disclosures otherwise required by the standard.

 

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Accounting standards to be adopted in future periods

 

In August 2020, the FASB issued ASU 2020-06, Debt — Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging — Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, to reduce complexity in applying GAAP to certain financial instruments with characteristics of liabilities and equity. The guidance in ASU 2020-06 simplifies the accounting for convertible debt and convertible preferred stock by removing the requirements to separately present certain conversion features in equity. The amendments in ASU 2020-06 are effective for public entities that meet the definition of an SEC filer, excluding smaller reporting companies as defined by the SEC, for fiscal years beginning after December 15, 2021. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2023. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020. Entities should adopt the guidance as of the beginning of the fiscal year of adoption and cannot adopt the guidance in an interim reporting period. The new standard will be effective in the first quarter of 2021. The Company is currently evaluating the impact the standard will have on the consolidated financial statements.

 

3. Property and Equipment

 

Property and equipment, net consisted of the following at December 31, 2020 and 2019 (in thousands):

 

    2020       2019  
Computers, software, and equipment   $ 1,707     $ 699  
Leasehold improvements     3,536       340  
Satellite antenna     1,338       293  
Test and lab equipment     2,666        
Phased array test facility     704       234  
Assembly and integration equipment     616        
Furniture and fixtures     338       268  
Vehicles     67       67  
Property and equipment     10,972       1,901  
Accumulated depreciation     (915 )     (216 )
Property and equipment, net     10,057       1,685  
                 
BlueWalker 3 Satellite – construction in progress     27,013       2,097  
Total property and equipment, net   $ 37,070     $ 3,782  

 

Depreciation expense for the years ended December 31, 2020 and 2019 was $0.7 million and $0.2 million, respectively. In addition, the Company is currently manufacturing, testing and integrating its Blue Walker 3 Test Satellite. As of December 31, 2020, the Company incurred $27 million relating to this effort.

 

4. Common Stock

 

Pursuant to the Fourth Amended and Restated Limited Liability Company Operating Agreement dated February 4, 2020, the Company is authorized to issue a total of 10,000,000 common shares, of which 5,500,840 common shares were issued and outstanding at December 31, 2020 and 4,499,160 common shares were available for future issuance at December 31, 2020.

 

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The holders of common shares are entitled to one vote for each common share held at all meetings of Shareholders. Holders of common shares may receive distributions at the sole discretion of the Board of Directors.

 

The Company reserved the following shares of common stock for future issuance as of December 31, 2020 and 2019:

 

    December 31, 2020     December 31, 2019  
Convertible preferred stock     3,449,959       1,458,308  
Options outstanding     815,233       635,730  
Options available for future grants     67,488       242,832  
Total common shares reserved for future issuance     4,332,680       2,336,870  

 

5. Convertible Preferred Stock

 

On June 26, 2018, the Company entered into a Series A Preferred Stock Purchase Agreement. Under the Agreement, the Company issued an aggregate of 684,932 shares of Series A Preferred Stock (“Series A”) at a purchase price of $14.60 per share for aggregate proceeds of $10 million. The Company incurred issuance costs of approximately $0.6 million in connection with the issuance of the Series A Preferred Shares.

 

On October 16, 2019, the Company entered into a Series B Preferred Stock Purchase Agreement. Under the Agreement, the Company issued an aggregate of 773,376 shares (the “Initial Series B Issuance”) of Series B Preferred Stock (“Series B”) at a purchase price of $40.08 per share for aggregate proceeds of $31 million. The proceeds are presented net of incurred issuance costs of approximately $2.1 million in connection with the issuance of the Series B Preferred Shares.

 

In connection with the Initial Series B Issuance, the Company entered into a commercial agreement on October 26, 2019 with Vodafone Ventures Limited (“Vodafone”), whereby Vodafone is provided exclusivity to operate the AST commercial service in agreed upon markets as defined in the agreement. As part of this agreement, Vodafone will promote the service as an element of its normal business and the Company is provided a 50/50 revenue share for all services enabled by the Company’s SpaceMobile satellite segment. The term of the agreement is five (5) years starting with the initial launch of commercial service based on the Phase 3 constellation anticipated in 2023. The Vodafone Agreement is considered a collaborative arrangement under ASC 808 as both parties are active participants and share in the significant risks and rewards of the activities. The Company will not assign any value to the Vodafone Agreement at inception and will recognize their share of expenses as they are performed up to the time the activities are revenue generating. For the years ended December 31, 2020 and 2019, the Company has not recognized any revenue under the Vodafone collaborative arrangement.

 

On February 14, 2020, the Company entered into a Series B Preferred Stock Purchase Agreement. Under the Agreement, the Company issued an aggregate of 1,966,704 shares (the “Second Series B Issuance”) of Series B Preferred Stock at a purchase price of $40.08 per share for aggregate proceeds of $78.8 million (the “Rakuten Shares”) to Rakuten. In conjunction with the Second Series B Issuance, the Company also entered into a commercial agreement with Rakuten (the “Rakuten Commercial Agreement”) (see Note 13). The Rakuten Commercial Agreement requires that the Company adhere to certain key performance indicators (“KPIs”) beginning on September 30, 2023 (the “First Measurement Date”) and December 31, 2024 (the “Second Measurement Date”). If the Company is unable to meet or exceed these KPIs on the First Measurement Date or the Second Measurement Date, or voluntarily or involuntary becomes subject to bankruptcy proceedings, Rakuten will have the option to require the Company to redeem the Rakuten Shares at the redemption price of $30 per share (the “Rakuten Redemption Clause”). Rakuten’s redemption rights will be extended for a period of no later than 6 months if the Company’s failure to meet the KPIs as required arises from any failure or delays in obtaining any governmental or third party approvals required in connection with the launch of the SpaceMobile Service (see Note 13) or in connection with the delivery of the KPIs. The Rakuten shares carry the same terms as the previously issued shares of Series B Preferred Stock, other than the Rakuten Redemption Clause noted herein. Upon issuance, the Rakuten Shares were classified outside of members’ equity, within mezzanine equity, because the Rakuten Redemption Clause was not solely within the control of the Company.

 

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On December 15, 2020 (the “Amendment Date”), the Company executed the Amended and Restated Commercial Agreement (the “A&R Commercial Agreement”) with Rakuten, which amended the Rakuten Commercial Agreement. The A&R Commercial Agreement removes the Rakuten Redemption Clause from the Rakuten Shares and replaces it with a one-time cash payment penalty (the “Penalty Payment”) of $10 million. The Penalty Payment is payable upon the Company’s failure to meet the KPIs at the measurement dates originally established in the Rakuten Commercial Agreement.

 

The amendment to Rakuten Commercial Agreement to replace the Rakuten Redemption Clause with the Penalty Payment was accounted for as a modification of the Rakuten Shares for accounting purposes. In making this determination, the Company considered the significance of the revisions to existing contractual terms. These revisions were not considered qualitatively or quantitatively significant as the redemption clause was not deemed probable to be triggered when the shares were originally issued or as of the amendment date. The Company determined that any incremental difference in the fair value of the shares as a result of the modification was de minimis, and accordingly, the carrying value remained unchanged. Additionally, as the Rakuten Redemption Clause was removed as part of the A&R Commercial Agreement, the Rakuten Shares are no longer redeemable outside of the control of the Company and have been reclassified from temporary to permanent equity. The Penalty Payment, which replaced the Rakuten Redemption Clause, is considered a revenue component of the A&R Commercial Agreement accounted for under ASC 606. The Company considers this a form of variable consideration which is fully constrained as of execution of the A&R Commercial Agreement as well as of December 31, 2020.

 

On March 1, 2020, the Company entered into another Series B Preferred Stock Purchase Agreement with Samsung Next Fund LLC. Under the Agreement, the Company issued an aggregate of 24,947 shares (the “Third Series B Issuance”) of Series B Preferred Stock for a purchase price of $40.08 per share for aggregate proceeds of $1 million. The Samsung shares carry the same terms as the previously issued shares of Series B Preferred Stock.

 

As of December 31, 2020, the Company has $8.8 million in aggregate preferred cumulative dividends equal to $3.19 per share.

 

As of December 31, 2020, the Series A and Series B Preferred Stock have the following rights, preferences and privileges:

 

Conversion Rights

 

Each share of Series A and Series B Preferred Stock is convertible at the option of the holder at any time after the date of issuance. The number of shares of common stock to be issued in the event of a conversion is determined by dividing the original issue price of $14.60 for the Series A preferred stock and $40.08 for the Series B preferred stock by the conversion price of then in effect for Series A preferred stock and Series B preferred stock. The conversion price for Series A preferred stock was initially $14.60 and Series B preferred stock was initially $40.08, subject to adjustment under certain circumstances, including but not limited to certain additional issuances of common shares.

 

The Series A Preferred Stock and Series B Preferred Stock automatically converts at the either (a) the closing of a Qualified IPO, all outstanding Series A Preferred Shares and Series B Preferred Shares shall automatically be converted into Common Shares, at the then effective Series A Conversion Price and Series B Conversion Price or (b) at the election of the Required Series A Holders and Required Series B Holders, all or any portion of the outstanding Series A Preferred Shares and Series B Preferred Shares shall automatically be converted into Common Shares, at the then effective Series A Conversion Price and Series B Conversion Price.

 

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Liquidation Preference

 

Upon liquidation, dissolution, or winding-up of the Company, or a merger, consolidation, lease or transfer of the Company (a “Deemed Liquidation Event”), shareholders of Series A Preferred stock and Series B Preferred Stock are entitled to receive a liquidation preference, first, to each holder of Series B Preferred Shares on a pari passu basis in proportion to amounts distributable, until each holder of Series B Preferred Shares has received, in the aggregate, the greater of (i) cumulative distributions equal to one (1) times the Series B Original Issue Price paid by such holder in respect of each of such holder’s Series B Preferred Shares, plus any accrued but unpaid dividends or (ii) distributions that would have been made to such holder had its Series B Preferred Shares been converted into Common Shares prior the distribution; and second, to each holder of Series A Preferred Shares on a pari passu basis in proportion to amounts distributable, until each holder of Series A Preferred Shares has received, in the aggregate, the greater of (i) cumulative distributions equal to two (2) times the Series A Original Issue Price paid by such holder in respect of each of such holder’s Series A Preferred Shares; or (ii) distributions that would have been made to such holder had its Series A Preferred Shares been converted into Common Shares prior the distribution; and thereafter, to all holders of Common Shares, pro rata, in proportion to their percentage interests.

 

Dividends

 

Subject to the terms of the Dissolution or Deemed Liquidation Event, the Board of Directors may, in its sole discretion with the consent of the Required Series A Holders, cause the Company to distribute cash or property from time to time to the Shareholders in such amounts as the Board of Directors deems appropriate. Any such distributions shall be made to the Shareholders, pro rata, in proportion to their percentage interests. As of December 31, 2020 and 2019, no dividends have been paid or declared.

 

The Company shall not declare, pay or set aside any dividends on any class or series of Shares unless the holders of the Series B Preferred Shares then outstanding shall first receive, on a pro rata basis, a dividend on each outstanding share of the Series B Preferred Shares equaling the greater of (i) eight percent (8%) of the Series B Original Issue Price and (ii) the corresponding dividend the holder of the Series B Preferred Shares would receive on an as-converted to Common Share basis. The foregoing dividend shall be cumulative (non-compounding) and will accrue daily and be payable when declared or upon a Deemed Liquidation Event.

 

Voting Rights

 

Except as provided by law or by other provisions of the Preferred Stock Agreements, Preferred Stock and common stockholders’ vote together as one class on an “as-converted basis”. On any matter presented to the stockholders of the Corporation for their action or consideration at any meeting of stockholders of the Corporation, each holder of Series A Preferred Stock and Series B Preferred Stock is entitled to cast the number of votes equal to the number of whole shares of Common Stock into which the shares of Series A Preferred Stock and Series B Preferred Stock held by such holder are convertible as of the record date for determining stockholders entitled to vote on such matter. The holders of the shares of Series A Preferred Stock, exclusively and as a separate class, are entitled to elect 1 director of the Corporation. The holders of the shares of Series B Preferred Stock, exclusively and as a separate class, are entitled to elect 1 director of the Corporation. The holders of the shares of Common Stock, exclusively and as a separate class, are entitled to elect 2 directors of the Corporation.

 

6. Commitments and Contingencies

 

On November 13, 2018, the Company entered into both an Economic Development Agreement (the “EDA”) and a sublease agreement with Midland Development Corporation. The premise of the EDA was to create jobs in the Midland Texas area, as well as, to have AST improve the land, office and hangar spaces at the Midland International Air & Space Port in Midland, Texas.

 

The rentable spaces included office space (44,988 SF), hangar A (28,480 SF), hangar B (11,900 SF), and land (approximately 238,000 SF). The term of the lease commenced on November 21, 2018 and extends through November 20, 2033. Pursuant to the agreement, the base rental payments for the first five years will be abated, provided that the Company prepays the rent in each period and achieves an increasing level of financial commitments, measured annually on March 31st of each of the first five years of the lease. The Company can qualify for an additional five years (years six through ten of the term) of abatements which are contingent upon the Company achieving its commitments through the first five years of the lease and maintaining or exceeding those year five commitment levels in years six through year ten of the term. These commitments include 1) the total number of full-time jobs and the related annual payroll costs and 2) cumulative capital investments in personal property and improvements to the existing land/structures. The Company recognizes the lease reimbursements as an offset to the lease asset, liability and rent expense for the related reimbursable month when the contingency is probable of being resolved.

 

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The Company’s other outstanding operating leasehold obligations include additional office space in Maryland, Illinois, Spain, Israel, United Kingdom and Lithuania. The Company’s leases have established fixed payment terms which are subject to annual rent increases throughout the term of each lease agreement. The Company’s lease agreements have varying non-cancellable rental periods which include options for the Company to extend portions of its lease terms. Management considered that it was not reasonably certain to exercise any extension options present in its lease arrangements that are outstanding as of the adoption date, with the exception of the Texas sublease. In addition, the Company’s leases have similar terms in which they may terminate the lease prior to the end date but must provide advanced notice. The Company is not reasonably certain to exercise the right to terminate their agreements.

 

Based on an evaluation of the impact of the adoption of ASC 842, the Company determined that it will apply the modified retrospective approach, in which the Company will not adjust comparative periods. There was no cumulative-effect adjustment to the opening balance of retained earnings. As of the adoption date on January 1, 2020, the Company recognized a right-of-use asset and lease liability of $6.4 million. The Company identified and assessed significant assumptions in recognizing the right-of-use asset and lease liability on January 1, 2020 as follows:

 

Incremental Borrowing Rate

 

The Company derives its incremental borrowing rate from information available at the lease commencement date in determining the present value of lease payments. The incremental borrowing rate represents a collateralized rate of interest the Company would have to pay to borrow over a similar term an amount equal to the lease payments in a similar economic environment. The Company’s lease agreements do not provide implicit rates. As the Company did not have any external borrowings at the transition date with comparable terms to its lease agreements, the Company estimated its incremental borrowing rate based on the lowest grade of debt available in the marketplace for the same term as the associated lease(s). The Company elected to use an 11.9% discount rate for its main, shorter-term operating leases (generally two (2) to five (5) year leases). For the Texas sublease, which is greater than 10 years, the Company elected to use a 15% discount rate. The weighted average discount rate at December 31, 2020 is 14%.

 

Operating Leases

 

The components of lease expense were as follows (in thousands):

 

    Year Ended
December 31,
2020
 
Short-term operating lease expense   $ 41  
Operating lease expense     301  
Total lease expense   $ 342  

 

Additional lease information is summarized in the following table (in thousands, except lease term and discount rate):

 

    Year Ended
December 31,
2020
 
Cash paid for amounts included in the measurement of operating lease liabilities   $ 349  
Operating right-of-use assets obtained in exchange for lease obligations   $ 759  
Weighted-average remaining lease term – operating leases (years)     11.3  
Weighted-average discount rate – operating leases     14 %

 

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Maturities of lease liabilities as of December 31, 2020 are as follows (in thousands):

 

Year ending December 31,   Amount  
2021   $ 1,432  
2022     1,294  
2023     1,310  
2024     1,257  
2025     1,156  
Thereafter     7,701  
Total lease payments     14,151  
Less effects of discounting     (7,106 )
Present value of lease liabilities   $ 7,045  

 

Under the prior lease standard (ASC 840), as of December 31, 2019 future minimum lease payments under operating leases were as follows:

 

Year ending December 31,   Amount  
2020   $ 1,174  
2021     1,174  
2022     1,045  
2023     1,047  
2024     983  
Thereafter     8,678  
Total minimum lease payments   $ 14,101  

 

Lease balances as of December 31, 2020 are as follows (in thousands):

 

Operating lease right-of-use assets   $ 7,045  
Short-term operating lease liabilities   $ 504  
Non-current operating lease liabilities     6,541  
Total operating lease liabilities   $ 7,045  

 

Net rent expense under operating lease arrangements at the Company was $0.3 million for the year ended December 31, 2020. Net rent expense reported under ASC 840 was $0.2 million for the year ended December 31, 2019.

 

Legal Proceedings

 

The Company is not a party to any material litigation and does not have contingency reserves established for any litigation liabilities as of December 31, 2020 and 2019.

 

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7. Goodwill and Intangible Assets

 

Goodwill

 

The change in the carrying amount of goodwill for the years ended December 31, 2020 and 2019 is summarized as follows (in thousands):

 

    2020     2019  
Balance at beginning of the year   $ 3,593     $ 3,666  
Acquisitions            
Translation adjustments     319       (73 )
Balance at the end of the year   $ 3,912     $ 3,593  

 

Intangible Assets

 

Identified intangible assets are comprised of the following as of December 31, 2020 and 2019 (in thousands):

 

    Useful Lives   2020   2019
Intangible assets subject to amortization:                    
Developed technology   5   $ 1,161     $ 1,067  
Trademarks and domain name   15     23        
Total gross intangible assets subject to amortization       $ 1,184     $ 1,067  
Accumulated amortization         (658 )     (395 )
Total net intangible assets subject to amortization       $ 526     $ 672  

 

The aggregate amortization expense for the years ended December 31, 2020 and 2019 was $0.2 million . Based on the carrying value of identified intangible assets recorded at December 31, 2020, and assuming no subsequent impairment of the underlying assets, the amortization expense is expected to be as follows (in thousands):

 

Fiscal Year   Amortization
Expense
 
2021   $ 234  
2022     234  
2023     40  
2024     2  
2025 and Thereafter     16  
    $ 526  

 

Impairments

 

In the fourth quarter of 2020, the Company performed its annual goodwill impairment test and completed a quantitative assessment for the Nano reporting unit. The fair value of the Nano reporting unit was based upon an equal weighting of the income and market approaches, utilizing estimated cash flows and a terminal value, discounted at a rate of return that reflects the relative risk of the cash flows, as well as valuation multiples derived from comparable publicly traded companies that are applied to operating performance of the reporting unit. There was no impairment as a result of the annual test performed in the fourth quarter of 2020.

 

In the fourth quarter of 2019, the Company performed the annual goodwill impairment test and completed a qualitative assessment for the Nano reporting unit. This qualitative assessment included reviewing factors such as macroeconomic conditions, industry and market considerations, cost factors, entity-specific financial performance and other events, such as changes in the Company’s management or strategy. There was no impairment as a result of the annual test performed in the fourth quarter of 2019.

 

20
 

 

The Company is required to evaluate long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable. The Company routinely assesses whether impairment indicators are present. As of December 31, 2020 or 2019, no impairment charges were recorded.

 

8. Accrued Expenses and Other Current Liabilities

 

As of December 31, 2020, accrued expenses includes accruals relating to the construction in process of $1.6 million and accrued payroll of $1.0 million. The remaining balance within the account relates to other general accruals.

 

As of December 31, 2019, accrued expenses includes transaction costs of $1.8 million, incurred in connection with the issuance of Series B Preferred Stock in the Initial Closing and subsequently paid in March 2020.

 

9. Revenue

 

Disaggregation of Revenue

 

The Company’s subsidiary, NanoAvionika, recognizes revenue related to sales of manufactured small satellites and their components as well as launch related services. In general, the Company recognizes revenue for services provided over time as the Company’s performance does not result in an asset with an alternative use and the Company is entitled to be compensated for performance completed to date. The Company recognizes revenue for services provided over time based on an output method, under which the total value of revenue is recognized based on each contract’s deliverable(s) as they are completed and when value is transferred to a customer. Certain of the Company’s performance obligations do not meet the criteria for over time recognition. In these scenarios, the Company recognizes revenue upon transfer of control of the performance obligation to the customer. Revenue recognized over time versus revenue recognized upon transfer for the periods ending December 31, 2020 and 2019 was as follows (in thousands):

 

    2020     2019  
Revenue from performance obligations recognized over time   $ 5,037     $ 1,236  
Revenue from performance obligations recognized at point-in-time transfer     930       178  
Total   $ 5,967     $ 1,414  

 

Contract Balances

 

Contract assets relate to our conditional right to consideration for our completed performance under the contract. Contract liabilities relates to payments received in advance of performance under the contract. Contract liabilities (i.e., deferred revenue) are recognized as revenue as (or when) the Company perform under the contract. During the years ended December 31, 2020 and 2019, the Company recognized approximately $0.6 million and $0.4 million, respectively, of revenue related to its deferred revenue balance at January 1, 2020 and 2019, respectively.

 

As of December 31, 2020 and 2019, the Company had deferred revenue of $3.4 million and $0.9 million, respectively, classified in current liabilities related to performance obligations that have not yet been satisfied. The Company expects to recognize the revenue associated with satisfying these performance obligations within the next 12 months.

 

Accounts Receivable

 

The Company receives payments from customers based on a billing schedule as established in our contracts. Accounts receivable includes amounts billed and currently due from customers. Accounts receivable are recorded when the right to consideration becomes unconditional. The Company did not reserve an allowance for doubtful accounts for the years ended December 31, 2020 and 2019 given historical experience and management’s evaluation of outstanding accounts receivable at the end of the fiscal year.

 

21
 

 

10. Share-Based Compensation

 

Share-Based Compensation Expense

 

Share-based compensation, measured at the grant date based on the fair value of the award, is typically recognized ratably over the requisite services period, using the straight-line method of expense attribution. The Company recorded share-based compensation expense in the following expense categories of its consolidated statements of operations and comprehensive loss (in thousands):

 

    2020     2019  
Engineering services   $ 211     $ 68  
General and administrative costs     72       64  
BlueWalker 3 Satellite – construction in progress     7        
Total   $ 290     $ 132  

 

Equity Incentive Plan

 

Under the 2019 Equity Incentive Plan (“Option Plan”), the Company is authorized to issue ordinary shares, as well as options exercisable for ordinary shares, as incentives to its employees, consultants, and members of its Board of Directors. The issuance of share options and ordinary shares is administered by the Board of Directors using standardized share option and share subscription agreements.

 

There are two types of options granted under the Option Plan: (1) service-based options and (2) performance-based options. Service-based options typically vest over a five year service period with 20% of the award vesting on the first anniversary of the employee’s commencement date, and the balance thereafter in 48 equal monthly installments. Certain service-based options also provide for accelerated vesting if there is a change in control or other performance condition as defined by the Option Plan. Performance-based options typically vest on the earliest date that any of the following occurs: (i) the Company effects an initial public offering and becomes a reporting company, (ii) the Company experiences a change of control, or (iii) other specified performance conditions. Both service-based and performance-based options typically expire no later than 10 years from the date of grant.

 

As of December 31, 2020, the Company was authorized to issue a total of 883,561 ordinary service-based and performance-based shares under a reserve set aside for equity awards. As of December 31, 2020, there were 67,488 ordinary shares available for future issuance and 815,233 options outstanding.

 

The following table summarizes the Company’s option activity for the year ended December 31, 2020:

 

    Options     Weighted-
Average
Exercise
Price
    Weighted-
Average
Remaining
Contractual
Term (years)
 
Outstanding at December 31, 2019     635,730     $ 0.93        
Granted     263,600       8.71        
Exercised     (840 )     0.93        
Cancelled or forfeited     (83,257 )     6.04        
Outstanding at December 31, 2020     815,233     $ 2.92       2.04  
Options exercisable as of December 31, 2020     365,174     $ 1.27       2.03  
Vested and expected to vest at December 31, 2020     815,233     $ 2.92       2.04  

 

On May 20, 2020, the Board approved the issuance of 248,600 non-statutory common share option grants under the 2019 Equity Incentive Plan. On November 14, 2020, the Board approved the issuance of 15,000 performance-based option grants, for which 100% of the shares fully vest on the date of the launch of the Company’s Blue Walker 3 test satellite. The weighted average grant date fair value of share options granted was $4.76 per share, with an aggregate fair value of $1.3 million for the year ended December 31, 2020. The Company recorded share-based compensation expense of $0.3 million for the year ended December 31, 2020, with a portion capitalized to BlueWalker 3 satellite construction-in-progress on the Consolidated Balance Sheets.

 

22
 

 

During the twelve months ended December 31, 2020, the Company granted 181,600 service-based options for the purchase of an aggregate of 42 service-based awards, and the Company granted 82,000 performance-based options for the purchase of an aggregate of 7 performance-based awards. Performance-based conditions vary by employee contract and may include triggers pertaining to successful completion of Company initiatives, transactions, or change-in-control clauses. The Company concluded that the performance conditions associated with 2 of these performance-based awards were probable as of the grant dates, and therefore began to recognize expense at the time of the grant of the award. The Company recorded expense of less than $0.1 million during the twelve months ended December 31, 2020 related to these 2 performance awards, which includes the acceleration of vesting expense. For the remaining 5 performance-based awards, the Company determined that the achievement of the performance targets was not probable as of the grant dates and as of the reporting date, and therefore has not recognized any expense related to these awards during the year ended December 31, 2020. The total unrecognized compensation expense for these performance awards was $0.4 million for the year ended December 31, 2020.

 

The following table summarizes the Company’s unvested option activity for the year ended December 31, 2020:

 

    Number of
Shares
    Weighted-
Average
Grant Date
Fair Value
 
Unvested at December 31, 2019     410,044     $ 0.59  
Granted     263,600       4.76  
Vested     (153,440 )     1.24  
Forfeited     (70,146 )     3.30  
Unvested at December 31, 2020     450,058     $ 2.37  

 

For the year ended December 31, 2020, total unrecognized compensation expense related to the unvested employee and director share-based awards was $1.0 million, which is expected to be recognized over a weighted average period of 1.82 years.

 

The Company estimates the fair value of the stock-based awards to employees and non-employees using the Black-Scholes option pricing model, which requires the input of subjective assumptions, including (i) the expected volatility of our stock, (ii) the expected term of the award, (iii) the risk-free interest rate, and (iv) any expected dividends. Due to the lack of company-specific historical and implied volatility data, the Company based the estimate of expected volatility on the estimated and expected volatilities of a representative group of publicly traded companies. For these analyses, the Company selects companies with comparable characteristics including enterprise value, risk profiles, position within the industry, and with historical share price information sufficient to meet the expected life of the stock-based awards. The Company computes the historical volatility data using the daily closing prices for the selected companies’ shares during the equivalent period of the calculated expected term of the stock-based awards. The Company will continue to apply this process until a sufficient amount of historical information regarding the volatility of the Company’s stock price becomes available. For awards that qualify as “plain-vanilla” options, the Company estimates the expected life of the employee stock options using the “simplified” method, whereby, the expected life equals the average of the vesting term and the original contractual term of the option. The expected term of stock options granted to non-employees is equal to the contractual term of the option award. The risk-free interest rate is determined by reference to the U.S. Treasury yield curve in effect at the time of grant of the award for time periods approximately equal to the expected term of the award. Expected dividend yield is based on the fact that the Company has never paid cash dividends and does not expect to pay any cash dividends in the foreseeable future. The Company elects to account for forfeitures as they occur rather than apply an estimated forfeiture rate to share based payment expense.

 

23
 

 

The following table presents, on a weighted average basis, the assumptions used in the Black-Scholes option pricing model to determine the fair value of share options granted to employees and directors:

 

    2020     2019  
Exercise price   $ 8.71     $ 0.93  
Fair market value   $ 4.83     $ 0.58 – $0.59  
Expected dividend yield     0.0 %     0.0 %
Expected term (in years)     6.32       5.60 – 6.20  
Expected volatility     60.00 %     70.00 %
Weighted-average risk-free rate     0.43 %     2.21% – 2.45 %

 

11. Net Loss Per Share

 

The Company presents basic net loss per share using the two-class method. The two-class method is an earnings allocation formula that treats a participating security as having rights to earnings that otherwise would have been available to common stockholders and that determines basic net loss per share for each class of common stock and participating security according to dividends declared (or accumulated) and participation rights in undistributed earnings that would have been available to common stockholders. A participating security is defined as a security that may participate in undistributed earnings with common stock. The Company’s capital structure includes securities that participate with common stock on a one-for-one basis for distribution of dividends. These are the Series B Preferred Stock and the Series A Preferred Stock. The Company determines the diluted net income per share by using the more dilutive of the two-class method or the treasury stock method and by including the basic weighted average of the outstanding preferred shares in the calculation of diluted net income per share under the two-class method and including all potential common shares assumed issued in the calculation of diluted net income per share under the treasury stock method.

 

The following table sets forth the computation of basic and diluted net loss per share:

 

    Fiscal Year Ended
December 31,
 
    2020     2019  
    (dollars in thousands,
except per share amounts)
 
Numerator – basic and diluted:                
Net loss attributable to AST & Science   $ (24,061 )   $ (10,885 )
Cumulative convertible preferred stock dividends     (8,290 )     (523 )
Income available to common shareholders     (32,351 )     (11,408 )
Denominator – basic and diluted:                
Shares used in computing net loss per share attributable to common stockholders     5,500,404       5,500,000  
Basic and diluted net loss per share attributable to common stockholders   $ (5.88 )   $ (2.07 )

 

For the year ended December 31, 2020, 3,449,959 shares of preferred stock convertible into common stock and 815,233 shares of underlying stock options were excluded from the calculation of diluted earnings per share as their effect on the calculation would have been anti-dilutive.

 

24
 

 

12. Related Parties

 

On December 15, 2017, the Company exchanged 110,000 common shares for a $0.1 million promissory note receivable due from an executive officer of the Company. The note receivable accrues interest monthly at a rate of two percent and is payable on December 15, 2027 or upon a Deemed Liquidation event. As the executive officer paid fair value for the shares, the Company determined that the transaction would be presented as a reduction to Members’ Equity. The executive officer repaid all amounts outstanding relating to the promissory note receivable in December 2020.

 

On July 11, 2019, the Company entered into a promissory note agreement with the Founder and Chief Executive Officer of AST (the “Founder Note”). Under the terms of the original and amended agreement dated September 10, 2019, the principal amount borrowed by the Company was $1.75 million bearing interest at 2.37% per annum. The balance outstanding under the Founder Note was $1.75 million and interest expense related to the Founder Note was less than $0.1 million for the year ended December 31, 2020. The Company repaid all amounts outstanding relating to the Founder Note on March 3, 2020.

 

On March 1, 2018, NanoAvionika entered into the Option Agreement with InMotion Holdings, LLC, a Delaware limited liability company wholly-owned by AST’s Chief Executive Officer and Chairman of the Board, Abel Avellan, whereby Nano granted InMotion 2,919 option shares in connection with a Service Agreement between Nano and InMotion dated March 1, 2018 (the “Services Agreement”) pursuant to which InMotion is to provide consulting services to Nano. The option shares vest over a three-year period and for so long as the Service Agreement is in effect. In addition, the options shares are only exercisable upon a change of control. For this reason, the Company has not recognized any expense related to the grant of these shares. For such consulting services, InMotion is also entitled to receive, but has never billed to or collected from Nano a management fee totaling $15,000 per month.

 

On January 20, 2020, the Company entered into the Support Services Agreement with Finser Corporation (“Finser”), which is part of the Cisneros Group of Companies, of which a member of the Board of Directors is the Chief Executive Officer, whereby Finser will provide the Company consulting and administrative support services. The Company incurred $0.2 million in consulting services for the year ended December 31, 2020, which were included within the general and administrative expenses on the Consolidated Statement of Operations.

 

13. Significant Agreements

 

Launch Services Agreement with GK Launch Services

 

On July 17, 2020, the Company entered into an agreement with GK Launch Services (“the Contractor”) as part of the testing and development of the BlueWalker 3 Satellite (the “Launch Services Agreement”). Under the Launch Services Agreement, the Contractor will provide payload and launch services for the BlueWalker 3 Satellite. The Company has agreed to pay the Contractor up to $7.8 million in exchange for its services on a milestone-based schedule, commencing at the inception of the contract and continuing until the Company’s final acceptance of the results of the launch services. In July 2020, the Company paid the Contractor an upfront, nonrefundable amount of $1.6 million. In September 2020, the Company paid the Contractor an additional nonrefundable installment of $1.2 million. Total additional payments of $5.0 million are due to the Contractor beginning in 2021 based on the completion of certain contingent milestones and the completion of services.

 

The Company may terminate the Launch Services Agreement at any time, without obligation to pay future milestone payments, unless the Contractor has commenced services in relation to that milestone, in which case the Company must pay a portion of that future milestone payment proportionate to the services provided to-date. In the event of termination, the Contractor is entitled to retain all payments made by the Company for any milestones achieved to-date. As of December 31, 2020, the Company classified $3.6 million of costs incurred made to-date within BlueWalker 3 Satellite – Construction in progress on the Consolidated Balance Sheets.

 

Rakuten Commercial Agreement and Amended and Restated Commercial Agreement

 

In connection with the Second Series B Issuance, the Company entered into a commercial agreement on February 14, 2020 (the “Rakuten Commercial Agreement”) with Rakuten, whereby Rakuten will receive unlimited exclusive rights and usage of the AST Satellite Constellation capacity in Japan and AST will receive a fixed $0.5 million annual maintenance fee payable to the Company upon the launch of such coverage. The Company does not expect to launch the AST Satellite Constellation capacity in Japan until 2023.

 

25
 

 

The terms of the Rakuten Commercial Agreement will continue for so long as Rakuten owns a majority of the Series B Preferred Stock or the equity interest into which those shares convert (see Note 5). The Rakuten Agreement also provides that Rakuten will receive preferential commercial terms in certain Rakuten partner markets where the SpaceMobile Service will be made to cellular subscribers.

 

The Company has determined that its sole performance obligation in the Rakuten Commercial Agreement is to provide the unlimited exclusive rights and usage of the AST Satellite Constellation capacity in Japan over the contract term, which includes the maintenance of Rakuten’s earth stations in Japan, commencing on the date of coverage launch (the “Coverage Term”). The Company will therefore recognize the annual payments associated with the exclusive rights and maintenance over the Coverage Term using a time-based measure toward complete satisfaction of the performance obligation. During the year ended December 31, 2020, the Company did not receive any payments or recognize any revenue pursuant to the Rakuten Commercial Agreement.

 

On December 15, 2020, the Company executed the Amended and Restated Commercial Agreement (the “A&R Commercial Agreement”). The A&R Commercial Agreement did not substantively impact the terms of the Rakuten Commercial Agreement except the Rakuten Redemption Clause as described in Note 5.

 

Dialog Design and Manufacturing Agreement

 

On September 29, 2020, the Company entered into a Design and Manufacturing Agreement with Dialog Semiconductor Operations Services Ltd (“Dialog”). Dialog will provide the delivery of design and supply chain services for four radio-frequency integrated circuits (“RFICs”), in addition to materials, facilities, and equipment required for the design and validation of these RFICs.

 

The Company has agreed to pay Dialog up to $7.0 million for its services on a milestone-based schedule, commencing with $0.5 million due to Dialog at project start, with an additional $3.6 million due in the first two stages of the SOW (design and qualification). Additionally, the Company has agreed to pay $2.9 million under an optional third stage (production), including the purchase of production units from Dialog, under the condition that the Company completes an additional financing. The Company incurred $0.8 million in costs related to this during the year ended December 31, 2020, which have been recorded to Research and development costs in the Consolidated Statement of Operations.

 

Equity Purchase Agreement

 

On December 15, 2020, the Company entered into an equity purchase agreement (the “Equity Purchase Agreement”) with New Providence Acquisition Corp. (“NPA”), a blank check company formed as a Delaware corporation, whereby AST and NPA will enter into a business combination transaction (the “Business Combination”), subject to approval of NPA’s current shareholders to affect the merger.

 

14. Subsequent Events

 

The Company has evaluated subsequent events for financial statement purposes occurring through February 26, 2021, the date these financial statements were issued, and determined that no additional subsequent events had occurred that would require recognition in these financial statements and that all subsequent events that require disclosure have been disclosed.

 

26

 

Exhibit 99.2

 

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

 

Defined terms included below have the same meaning as terms defined and included elsewhere in this Form 8-K.

 

Introduction

 

Pursuant to the Equity Purchase Agreement, a series of transactions, occurred including the following: NPA (i) entered into the A&R Certificate of Incorporation to, among other things, (a) change the name of NPA to AST SpaceMobile, Inc., (b) convert all then-outstanding Sponsor Stock, into Class A Common Stock and (c) authorize the issuance of Class B Common Stock and Class C Common Stock, (ii) replace the Existing Bylaws with the SpaceMobile Bylaws, and (iii) enter into the TRA with AST and the Existing Equityholders as part of the transaction. Following the Closing Date, NPA is organized in an “Up-C” structure in which substantially all of the operating assets of AST’s business are held by AST, and NPA’s only assets are its equity interests in AST.

 

The following unaudited pro forma condensed combined financial information has been prepared in accordance with Article 11 of Regulation S-X. The following unaudited pro forma condensed combined financial statements of the Company presents the combination of the financial information of NPA and AST, adjusted to give effect to the Business Combination including:

 

  the reverse recapitalization between AST and NPA, whereby no goodwill or other intangible assets are recorded;
     
  the consummation of the PIPE Investment pursuant to the Subscription agreements; and
     
  the effectiveness of the Tax Receivable Agreement.

 

NPA was a blank check company incorporated on May 28, 2019 as a Delaware corporation and formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses. On September 13, 2019, the closing date of the IPO, NPA consummated its IPO of 20,000,000 units at $10.00 per unit, generating gross proceeds of $200,000,000. Simultaneously with the closing of the IPO, NPA consummated the sale of 5,500,000 private placement warrants to the Sponsor at a price of $1.00 per warrant, generating gross proceeds of $5,500,000. The 20,000,000 public warrants issued in the IPO units and the 5,500,000 private placement warrants are each exercisable for one share of NPA Class A Common Stock at an exercise price of $11.50. On September 19, 2019, in connection with the underwriters’ full exercise of their over-allotment option, NPA consummated the sale of an additional 3,000,000 units and the sale of an additional 600,000 private placement warrants, generating total gross proceeds of $30,600,000. Following the IPO, the exercise of the over-allotment option and the sale of the private placement warrants, a total of $230,000,000 was placed in the Trust Account. At the close of the transaction, immediately prior to the effect of redemptions, there was approximately $232 million held in the Trust Account. NPA has until June 15, 2021 (21 months from the IPO Closing Date) to complete an initial business combination.

 

AST was organized as a limited liability company under the laws of the State of Delaware on May 31, 2017. AST’s SpaceMobile Service is expected to provide cost-effective, high-speed mobile broadband services with global coverage to all end-users, regardless of where they live or work, without the need to purchase special equipment. The SpaceMobile Service would be the first global space-based cellular broadband network using LEO satellites to provide connectivity to any standard, unmodified, off-the-shelf mobile phone or 2G/3G/4G LTE/5G and IoT-enabled device. AST’s innovative satellite designs and components will reduce the communication delay effects which existing geostationary satellite systems experience. The SpaceMobile Service will provide global coverage for users traveling in and out of areas without terrestrial mobile services on land, at sea or in flight.

 

The following unaudited pro forma condensed combined balance sheet as of December 31, 2020 assumes that the Business Combination occurred on December 31, 2020. The unaudited pro forma condensed combined statement of operations for the year ended December 31, 2020 present the pro forma effect to the Business Combination as if they had been completed on January 1, 2020.

 

 
 

 

The unaudited pro forma condensed combined financial statements have been presented for illustrative purposes only and do not necessarily reflect what the Company’s financial condition or results of operations would have been had the Business Combination occurred on the dates indicated. Further, the pro forma condensed combined financial information also may not be useful in predicting the future financial condition and results of operations of the Company. The actual financial position and results of operations may differ significantly from the pro forma amounts reflected herein due to a variety of factors.

 

The historical financial information of NPA was derived from the audited financial statements of NPA as of and for the year ended December 31, 2020, incorporated by reference into this Form 8-K. The historical financial information of AST was derived from the audited consolidated financial statements of AST as of and for the year ended December 31, 2020, incorporated by reference into this Form 8-K. This information should be read together with NPA’s and AST’s audited financial statements and related notes, the sections titled “ Management’s Discussion and Analysis of Financial Condition and Results of Operations of NPA,” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations of AST” and other financial information incorporated by reference into this Form 8-K.

 

The Business Combination will be accounted for as a reverse recapitalization, with no goodwill or other intangible assets recorded, in accordance with United States generally accepted accounting principles (“GAAP”). The AST shareholders continue to control AST before and after the Business Combination. As there is no change in control, AST was determined to be the accounting acquirer based on evaluation of the following facts and circumstances:

 

  AST shareholders will have a majority of the voting power of the Company;
     
  AST will have the ability to nominate and represent a majority of the Company’s Board; and
     
  AST’s former management will comprise the vast majority of the management and executive positions of the Company.

 

Under this method of accounting, NPA was treated as the “acquired” company for financial reporting purposes. Accordingly, for accounting purposes, the Business Combination was treated as the equivalent of AST issuing stock for the net assets of NPA, accompanied by a recapitalization. The net assets of NPA were stated at historical cost, with no goodwill or other intangible assets recorded. Operations prior to the Business Combination are those of AST.

 

Description of the Business Combination

 

On December 15, 2020, NPA entered into the Equity Purchase Agreement. The consideration to be paid in connection with the Business Combination consists of the Contribution Amount. Following the consummation of the Equity Purchase Agreement,, a series of transactions occurred including the following: NPA (i) entered into the A&R Certificate of Incorporation to, among other things, (a) changed the name of NPA to AST SpaceMobile, Inc., (b) converted all then-outstanding Sponsor Stock into Class A Common Stock and (c) authorized the issuance of Class B Common Stock and Class C Common Stock, (ii) replaced the Existing Bylaws with the SpaceMobile Bylaws, and (iii) entered into the TRA with AST and the Existing Equityholders as part of the transaction.

 

Additionally, the Existing Equity holders, the Company and AST entered into the A&R Operating Agreement of AST, which, among other things, (i) restructured the capitalization of AST to (a) authorize the issuance of AST Common Units to NPA, (b) reclassified the Existing AST Units, other than any Existing AST Prior Incentive Equity Units, held by the Existing Equityholders into AST Common Units and (c) reclassified all of the Existing AST Prior Incentive Equity Units into AST Incentive Equity Units, concurrently with and subject to adjustments to the AST Options affecting the number of units and exercise price (as applicable) thereof, (ii) appointed NPA as the managing member of AST. Pursuant to the consummation of the Equity Purchase Agreement, each Existing AST Unit held by each Existing Equityholder were automatically reclassified into the number of AST Common Units set forth in Schedule I of the Equity Purchase Agreement. Following this reclassification, any certificates outstanding evidencing ownership of Existing AST Units are of no further force or effect.

 

 
 

 

Following the consummation of the Equity Purchase Agreement, the Company is organized in an “Up-C” structure whereby the existing shareholders of AST received a class of noneconomic common shares (Class B Common Stock) and Abel Avellan, the current controlling party of AST, received a class of super-voting, noneconomic common shares (Class C Common Stock) in the Company while retaining economic interests in AST that are exchangeable to Class A Common Stock or redeemable for cash. When a holder of Class B Common Stock exchanges AST Common Units for shares of Class A Common Stock, a number of shares of Class B Common Stock equal to the number of such AST Common Units will be immediately retired and will no longer be outstanding. However, when a holder of Class C Common Stock exchanges AST Common Units for Class A Common Stock, no shares of Class C Common Stock are retired until the shares of Class A Common Stock received in exchange are transferred to a person who is not a Key Holder. By contrast, if AST Common Units are redeemed for cash, whether by holders of Class B Common Stock or Class C Common Stock, a corresponding number of shares of Class B Common Stock or Class C Common Stock will be retired and will no longer be outstanding.

 

The following table shows the effect on the voting rights and economic interests on each class of stockholders based on the economic interest and voting rights at Closing Date if all of the holders of Class B Common Stock exchanged their AST Common Units for Class A Common Stock following the closing of the Business Combination.

 

    Economic and Voting Rights at Closing    

Class B Holders Exchange All Common Units

for Class A Common Stock Post-Closing

 
   

Class A

Shares

   

Class B

Shares

   

Class C

Shares

    Economic %    

Voting

Rights

   

Voting

%

   

Class A

Shares

   

Class B

Shares

   

Class C

Shares

   

Economic

%

   

Voting

Rights

   

Voting

%

 
Class A Holders     51,729,704                   29 %     51,729,704       6 %     51,729,704              —             29 %     51,729,704       6 %
Class B Holders           51,636,922             28 %     51,636,922       6 %     51,636,922                   28 %     51,636,922       6 %
Class C Holders                 78,163,078       43 %     781,630,780       88 %                 78,163,078       43 %     781,630,780       88 %
Totals     51,729,704       51,636,922       78,163,078       100 %     884,997,406       100 %     103,366,626             78,163,078       100 %     884,997,406       100 %

 

Because all of the shares of Class B Common Stock are retired immediately upon exchange, and effectively replaced with Class A Common Stock, the economic interest and voting rights of the various classes of stockholders do not change following such exchange.

 

The effect of the holders of Class C Common Stock collectively exchanging all of their AST Common Units for shares of Class A Common Stock, is reflected in the table below.

 

    Economic Interests and Voting Rights at Closing    

Class C Holders Exchange All Common Units

for Class A Common Stock Post-Closing

 
   

Class A

Shares

   

Class B

Shares

   

Class C

Shares

   

Economic

%

   

Voting

Rights

   

Voting

%

   

Class A

Shares

   

Class B

Shares

   

Class C

Shares

   

Economic

%

   

Voting

Rights

   

Voting

%

 
Class A Holders     51,729,704                   29 %     51,729,704       6 %     51,729,704                   20 %     51,729,704       6 %
Class B Holders           51,636,922             28 %     51,636,922       6 %           51,636,922             20 %     51,636,922       6 %
Class C Holders                 78,163,078       43 %     781,630,780       88 %     78,163,077             78,163,078       60 %     781,630,780       88 %
Totals     51,729,704       51,636,922       78,163,078       100 %     884,997,406       100 %     129,892,781       51,636,922       78,163,078       100 %     884,997,406       100 %

 

Although the shares of Class C Common Stock remain outstanding, they are non-economic, and so the economic percentages for each class of stockholder do not change by virtue of the exchange. Furthermore, the voting percentages do not change either, because the calculation of the Class C Share Voting Amount, reduces the number of shares that each share of Class C Common Stock bears by an amount proportional to the number of shares of other voting stock (other than Class C Common Stock) held by the Class C Common Stockholder. The practical effect of the formula used to calculate the Class C Share Voting Amount is that it will cap the aggregate voting power of the Class C Common Stock so that, in most scenarios, the voting power of the Class C Common Stock will not increase, or will increase more slowly than it would otherwise in the event the Class C holders acquire additional voting stock in the Company. In this example, because the Class C Stockholders received additional voting stock in the form of Class A Common Stock, the Class C Share Voting Amount is reduced from 10 votes per share (at Closing) to approximately 9 votes per share, so the overall voting power of the Class C shares remains constant.

 

 
 

 

As such, in these examples, a holder of Class B Common Stock exchanging AST Common Units for Class A Common Stock and forfeiting its voting shares of Class B Common Stock, such holder has the same voting and economic rights in the Company before and after such transaction. Upon a holder of Class C Common Stock exchanging AST Common Units for Class A Common Stock but not also forfeiting its voting shares of Class C Common Stock, such holder retains their same ownership rights in the Company before and after such exchange; however, because the holder retains shares of Class C Common Stock until the corresponding shares of Class A Common Stock are transferred to non-Key Holders, the holder’s voting rights remain the same as before the exchange. Although the holder of Class C Common Stock now has additional voting stock in the Company—the Class A Common Stock received in exchange of AST Common Units—the number of votes each share of Class C Common Stock bears is reduced (through the calculation of the Class C Share Voting Amount) so that the holder’s overall voting power does not increase.

 

However, there can be situations in the future where, unlike the above example, a holder of Class C Common Stock could exchange AST Common Units for shares of Class A Common Stock and increase their voting power, because the cap in the calculation of “Class C Share Voting Amount” does not come into play. Holders of Class C Common Stock could, in certain situations, increase their voting power by conducting an exchange of AST Common Units, even when their economic position does not change. The following table shows the effect an exchange of AST Common Units by holders of Class C Common Stock could have if undertaken at a time when the total share base of the Company is significantly expanded. The columns on the right reflect that, as the result of subsequent issuances, the number of Class A shares outstanding has increased four-fold, to 207,000,000 shares, with no changes in the holdings of the other classes of stockholder. The columns on the right show the effect on voting and economic interests caused by a Class C Holder exchanging 20% of their total AST Common Units when the Class A share base is so expanded.

 

   

Economic Interests and Voting Rights with

Four-Fold Increase in Public Float

   

Class C Holders Exchange 20% of Aggregate

Common Units for Class A Common Stock

 
   

Class A

Shares

   

Class B

Shares

   

Class C

Shares

    Economic %    

Voting

Rights

   

Voting

%

   

Class A

Shares

   

Class B

Shares

   

Class C

Shares

    Economic %    

Voting

Rights

   

Voting

%

 
Class A Holders     206,918,816                   62 %     206,918,816       20 %     206,918,816                   58 %     206,918,816       19.6 %
Class B Holders           51,636,922             15 %     51,636,922       5.0 %           51,636,922             15 %     51,636,922       4.9 %
Class C Holders                 78,163,078       23 %     781,630,780       75 %     15,632,616             78,163,078       27 %     797,263,395       75.5 %
Totals     206,918,816       51,636,922       78,163,078       100 %     1,040,186,518       100 %     222,551,432       51,636,922       78,163,078       100 %     1,055,819,134       100 %

 

In this case, although the Class C Holders have not increased their economic stake in the Company — only exchanged their AST Common Units for Class A Common Stock — because they can now vote that Class A Common Stock in addition to the Class C Common Stock that has not been retired, they have increased their number of total votes by approximately 15.6 million and their percentage of voting power by 0.5% relative to the holders of Class A and Class B Common Stock.

 

Following the consummation of the transactions contemplated by the Equity Purchase Agreement, Avellan holds all the outstanding shares of Class C Common Stock and as a percentage of the sum of Class A Common Stock, Class B Common Stock and Class C Common Stock outstanding that is approximately 43% of the total. In addition to voting together with Class A Common Stock and Class B Common Stock (with one vote per share) on all matters, as a holder of Class C Common Stock, Avellan is, prior to the Sunset Date, entitled to a number of votes on all matters on which stockholders are entitled to vote equal to the lesser of 10 votes per share and the Class C Share Voting Amount, the latter of which is a number of votes per share equal to (i) the Closing Class C Percentage (which is approximately 88%) of the total voting power of the outstanding voting stock of the Company, minus (ii) the total voting power of the outstanding stock of the Company owned or controlled by the Key Holders (other than of Class C Common Stock), divided by (iii) the number of shares of Class C Common Stock outstanding.

 

 
 

 

All the business of AST is held directly by AST and NPA’s only direct asset consists of the AST Common Units. The existing AST equity holders control own approximately 71% of AST Common Units, respectively; NPA is the sole manager of AST in accordance with the terms of the A&R Operating Agreement entered into in connection with the closing of the Business Combination. After the Closing Date, current NPA stockholders, together with the PIPE Investors, own approximately 29% of the combined AST Common Units. The public and private placement warrants remained outstanding following the Business Combination.

 

In connection with the Business Combination, NPA entered into the Subscription Agreements with the PIPE Investors, pursuant to which NPA issued approximately 23 million shares of NPA Class A Common Stock at $10.00 per share, for gross proceeds to NPA of approximately $230 million.

 

In addition, at the closing of the Business Combination, the Company, AST, the Existing Equity holders and the TRA Holder Representative entered into the Tax Receivable Agreement. Pursuant to the Tax Receivable Agreement, SpaceMobile is generally required to pay the TRA Holders 85% of the amount of savings, if any, in U.S. federal, state, local, and foreign taxes that are based on, or measured with respect to, net income or profits, and any interest related thereto that the Tax Group (i.e., the Company and applicable consolidated, unitary, or combined Subsidiaries thereof) realizes, or is deemed to realize, as a result of certain Tax Attributes, which include:

 

  existing tax basis in certain assets of AST and certain of its direct or indirect Subsidiaries, including assets that will eventually be subject to depreciation or amortization, once placed in service, attributable to AST Common Units acquired by the Company from a TRA Holder (including AST Common Units held by a Blocker Corporation acquired by the Company in a Reorganization Transaction (as defined in the Tax Receivable Agreement)), each as determined at the time of the relevant acquisition;
     
  tax basis adjustments resulting from taxable exchanges of AST Common Units (including any such adjustments resulting from certain payments made by the Company under the Tax Receivable Agreement) acquired by the Company from a TRA Holder pursuant to the terms of the A&R Operating Agreement;
     
  tax deductions in respect of portions of certain payments made under the Tax Receivable Agreement; and
     
  certain tax attributes of Blocker Corporations holding AST Common Units that are acquired directly or indirectly by the Company pursuant to a Reorganization Transaction.

 

The following summarizes the consideration for the Business Combination:

 

in thousands(a)      
Cash held in the Trust Account prior to redemptions   $ 232,033  
Less: Redemptions     (205 )
Proceeds of PIPE Investment     230,000  
Less: Deferred underwriting commissions     (4,830 )
Contribution Amount   $ 456,988  

 

 

  (a) The Contribution Amount that was contributed to AST is calculated based on the $232.0 million of NPA cash and $230.0 million raised from the PIPE Investment less $4.8 million for estimated deferred underwriting commissions payable to BTIG and $.02 million in redemptions. The Contribution Amount does not reflect a reduction of $0.6 million related to the repayment of a 2021 loan between AST and NPA upon closing of the Business Combination.

 

 
 

 

The following summarizes the pro forma shares of Common Stock economic ownership and voting rights associated with such shares:

 

Ownership and Voting

 

in actuals   Shares    

Ownership

%

   

Voting

Rights

   

Voting

%

 
Class A Common Stock(a)     51,729,704       29 %     51,729,704       6 %
Class B Common Stock(b)     51,636,922       28 %     51,636,922       6 %
Class C Common Stock(c)     78,163,078       43 %     781,630,780       88 %
Total Shares at Closing     181,529,704       100 %     884,997,406       100 %

 

(a) Excludes (i) 129,800,000 AST Common Units held by parties other than the Company outstanding immediately following the consummation of the Business Combination, (ii) 6,100,000 Private Placement Warrants outstanding and (iii) 11,500,000 NPA Public Warrants outstanding. AST Common Units are redeemable for, at the Company’s election (subject to certain exceptions), either cash (based on the market price for a share of Class A Common Stock at the time of the redemption) or an equal number of shares of Class A Common Stock.
(b) Class B Common Stock are non-economic and carry one vote per share whereas Class A Common Stock are economic shares and will have one vote per share.
(c) Class C Common Stock are non-economic and, until the Sunset Date, will entitle the holder thereof to cast a number of votes on all matters on which stockholders are entitled to vote equal to the lesser of (x) 10 votes and (y) the Class C Share Voting Amount, whereas Class A Common Stock are economic shares and will have one vote per share. From and after the Sunset Date, Class C Common Stock will entitle the holder thereof to case one vote per share.

 

The following unaudited pro forma condensed combined balance sheet as of December 31, 2020, the unaudited pro forma condensed combined statement of operations for the year ended December 31, 2020 are based on the historical financial statements of NPA and AST. The unaudited pro forma adjustments are based on information currently available, assumptions and estimates underlying the unaudited pro forma adjustments and are described in the accompanying notes. Actual results may differ materially from the assumptions used to present the accompanying unaudited pro forma condensed combined financial information.

 

 
 

 

UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET

AS OF DECEMBER 31, 2020

(in thousands)

 

   

NPA

(Historical)

(US GAAP)

   

AST

(Historical)

(US GAAP)

    Combined     Pro Forma Adjustments         Pro Forma Combined  
ASSETS                                            
Current Assets                                            
Cash and cash equivalents   $ 131     $ 42,777     $ 42,908       (110 )   (A)   $ 461,137  
                              232,033     (B)        
                              230,000     (C)        
                              (5,295 )   (C) (E)        
                              (8,050 )   (E)        
                              (29,482 )   (E)        
                              (350 )   (G)        
                              (312 )   (F)        
                              (205 )   (N)        
                                             
Accounts receivable, net     -       2,081       2,081       -           2,081  
Inventory     -       2,591       2,591       -           2,591  
Prepaid expenses     23       1,249       1,272       -           1,272  
Other current assets     55       2,234       2,289       (1,107 )   (E)     1,182  
                                             
Property and Equipment                                            
Blue walker 3 satellite - construction in progress     -       27,013       27,013       -           27,013  
Property and equipment, net     -       10,057       10,057       -           10,057  
                                             
Other Long-Term Assets                                            
Operating lease right-of-use assets     -     $ 7,045       7,045       -           7,045  
Intangible assets, net     -       526       526       -           526  
Goodwill, net     -       3,912       3,912       -           3,912  
Investment and cash held in trust account     232,196       -       232,196       (163 )   (A)     -  
                              (232,033 )   (B)        
Other assets and deposits     -       160       160       -           160  
Total Assets   $ 232,405     $ 99,645     $ 332,050       184,926         $ 516,976  
                                             
LIABILITIES AND STOCKHOLDERS’ EQUITY                                            
Current Liabilities                                            
Accounts payable   $ 634     $ 4,990     $ 5,624       (559 )   (D)   $ 4,631  
                            $ (359 )   (E)        
                              (75 )   (F)        
                                             
Accrued expenses     -       4,222       4,222       559     (D)     4,104  
                                             
                              (450 )   (E)        
                              (227 )   (F)        
Deferred revenue     -       3,401       3,401       -           3,401  
Current operating lease liability     -       504       504       -           504  
Long-Term Liabilities                                            
Deferred tax liabilities     10       -       10       (10 )   (F)     -  
                              -     (H)        
Deferred underwriting fees payable     8,050       -       8,050       (8,050 )   (E)     -  
Non-current operating lease liability     -       6,541       6,541       -           6,541  
Total Liabilities     8,694       19,658       28,352       (9,171 )         19,181  
Redeemable Equity                                         -  
Common stock subject to possible redemption     218,711       -       218,711       (218,711 )   (I)     -  
                                             
Equity                                            
                                             
Class A Common Stock     -       -       -       2     (C)     5  
                              2     (I)        
                              1     (K)        
                              -     (N)        
Class B Common Stock     1       -       1       (1 )   (K)     5  
                              5     (L)        
Class C Common Stock     -       -       -       8     (L)     8  
Series A convertible preferred units, net             9,394       9,394       (9,394 )   (L)     -  
Series B convertible preferred units, net             102,717       102,717       (102,717 )   (L)     -  
Founder’s common equity     -       5,462       5,462       (5,462 )   (L)     -  
Accumulated other comprehensive income (loss)     -       (168 )     (168 )     168     (J)     -  
Additional paid in capital     4,152       -       4,152       229,998     (C)     181,601  
                              (5,295 )   (C) (E)        
                              (29,780 )   (E)        
                              218,709     (I)        
                              (354,216 )   (M)        
                              (168 )   (J)        
                              847     (J)        
                              117,560     (L)        
                              (205 )   (N)        
Retained earnings/(accumulated deficit)     847       (39,908 )     (39,061 )     (273 )   (A)     (40,531 )
                              (350 )   (G)        
                              (847 )   (J)        
                                             
Total equity attributable to stockholders     5,000       77,497       82,497       58,592           141,089  
Noncontrolling interests     -       2,490       2,490       354,216     (M)     356,706  
Total equity     5,000       79,987       84,987       412,808           497,795  
Total liabilities and equity   $ 232,405     $ 99,645     $ 332,050     $ 184,926         $ 516,976  

 

 
 

 

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS

FOR THE YEAR ENDED DECEMBER 31, 2020

(in thousands, except share and per share data)

 

   

NPA

(Historical)

(US GAAP)

   

AST

(Historical)

(US GAAP)

    Combined     Pro Forma Adjustments (1)         Pro Forma Combined (1)  
                                   
Revenues   $ -     $ 5,967     $ 5,967     $ -         $ 5,967  
Cost of Sales     -       (3,025 )     (3,025 )     -           (3,025 )
Gross Profit     -       2,942       2,942       -           2,942  
                                             
                                             
Operating Expenses                                            
Engineering services     -       (13,081 )     (13,081 )     -           (13,081 )
General and administrative cost     -       (12,320 )     (12,320 )     (350 )   AA     (12,670 )
Research and development cost     -       (1,011 )     (1,011 )     -           (1,011 )
Formation and operating cost     (1,125 )     -       (1,125 )     (120 )   BB     (1,245 )
Depreciation and amortization     -       (887 )     (887 )     -           (887 )
Total Operating Expense     (1,125 )     (27,299 )     (28,424 )     (470 )         (28,894 )
                                             
Other Income and Expense                                            
Interest and dividend Income     1,480       71       1,551       (1,480 )   CC     71  
Interest expense     -       (10 )     (10 )     -           (10 )
Other income and (expense), net     2       22       24       -           24  
Total other income /(expense)     1,482       83       1,565       (1,480 )         85  
                                             
Earnings/(loss) before income taxes     357       (24,274 )     (23,917 )     (1,950 )         (25,867 )
                                             
Provision for income taxes     (166 )     (131 )     (297 )     -           (297 )
Net Earnings/(Loss)     191       (24,405 )     (24,214 )     (1,950 )         (26,164 )
                                             
Less: Net loss attribute to non-controlling interest     -       344       344       17,693     DD     18,037  
Net earnings/(loss) attributable to stockholders     191       (24,061 )     (23,870 )     15,743           (8,127 )
                                             
Net loss per common share   $ (0.12 )                               $ (0.16 )
Weighted average shares outstanding                                            
Basic and diluted     7,008,667                                   51,729,704  

 

 

(1) Net loss per common share is based on the weighted average shares of Class A Common Stock and does not include Class B Common Stock and Class C Common Stock as these shares are non-economic.

 

 
 

 

NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

 

1. Basis of Presentation

 

The Business Combination will be accounted for as a reverse recapitalization in accordance with GAAP as AST has been determined to be the accounting acquirer, primarily due to the fact that AST shareholders continue to control the Company. Under this method of accounting, while NPA is the legal acquirer, it is treated as the “acquired” company for financial reporting purposes. Accordingly, the Business Combination was treated as the equivalent of AST issuing stock for the net assets of NPA, accompanied by a recapitalization. The net assets of NPA are stated at historical cost, with no goodwill or other intangible assets recorded. Operations prior to the Business Combination are those of AST.

 

The unaudited pro forma condensed combined balance sheet as of December 31, 2020 assumes that the Business Combination occurred on December 31, 2020. The unaudited pro forma condensed combined statement of operations for the year ended December 31, 2020 present pro forma effect to the Business Combination as if they have been completed on January 1, 2020.

 

The unaudited pro forma condensed combined balance sheet as of December 31, 2020 has been prepared using, and should be read in conjunction with, the following:

 

  NPA’s audited balance sheet as of December 31, 2020 and the related notes, incorporated by reference into this Form 8-K; and
     
  AST’s audited consolidated balance sheet as of December 31, 2020 and the related notes, incorporated by reference into this Form 8-K .

 

The unaudited pro forma condensed combined statement of operations for the year ended December 31, 2020 has been prepared using, and should be read in conjunction with, the following:

 

  NPA’s audited statement of operations for the year ended December 31, 2020 and the related notes, incorporated by reference into this Form 8-K and
     
  AST’s audited consolidated statement of operation for the year ended December 31, 2020 and the related notes, incorporated by reference into this Form 8-K statement.

 

Management has made significant estimates and assumptions in its determination of the pro forma adjustments. As the unaudited pro forma condensed combined financial information has been prepared based on these preliminary estimates, the final amounts recorded may differ materially from the information presented.

 

The unaudited pro forma condensed combined financial information does not give effect to any anticipated synergies, operating efficiencies, tax savings, cost savings or anticipated costs of operating a public company that may be associated with the Business Combination.

 

The pro forma adjustments reflecting the consummation of the Business Combination are based on certain currently available information and certain assumptions and methodologies that NPA believes are reasonable under the circumstances. The unaudited condensed pro forma adjustments, which are described in the accompanying notes, may be revised as additional information becomes available and is evaluated. Therefore, it is likely that the actual adjustments will differ from the pro forma adjustments and it is possible the difference may be material. NPA believes that these assumptions and methodologies provide a reasonable basis for presenting all of the significant effects of the Business Combination based on information available to management at the time and that the pro forma adjustments give appropriate effect to those assumptions and are properly applied in the unaudited pro forma condensed combined financial information.

 

The unaudited pro forma condensed combined financial information is not necessarily indicative of what the actual results of operations and financial position would have been had the Business Combination taken place on the dates indicated, nor are they indicative of the future consolidated results of operations or financial position of the Company. They should be read in conjunction with the historical financial statements and notes thereto of NPA and AST.

 

 
 

 

2. Accounting Policies

 

Upon consummation of the Business Combination, the Company’s management will perform a comprehensive review of the two entities’ accounting policies. As a result of the review, management may identify differences between the accounting policies of the two entities which, when conformed, could have a material impact on the financial statements of the Company. Based on initial analysis, management did not identify any differences that would have a material impact on the unaudited pro forma condensed combined financial information. As a result, the unaudited pro forma condensed combined financial information does not assume any differences in accounting policies.

 

3. Adjustments to Unaudited Pro Forma Condensed Combined Financial Information

 

The unaudited pro forma condensed combined financial information has been prepared to illustrate the effect of the Business Combination and has been prepared for informational purposes only.

 

The following unaudited pro forma condensed combined financial information has been prepared in accordance with Article 11 of Regulation S-X as amended by the final rule, Release No. 33-10786 “Amendments to Financial Disclosures about Acquired and Disposed Businesses”. Release No. 33-10786 replaces the existing pro forma adjustment criteria with simplified requirements to depict the accounting for the transaction (“Transaction Accounting Adjustments”) and present the reasonably estimable synergies and other transaction effects that have occurred or reasonably expected to occur (“Management’s Adjustments”). NPA has elected not to present Management’s Adjustments and will only be presenting Transaction Accounting Adjustments in the following unaudited pro forma condensed combined financial information.

 

The unaudited pro forma condensed combined provision for income taxes does not necessarily reflect the amounts that would have resulted had the Company filed consolidated income tax returns during the periods presented.

 

The unaudited pro forma basic and diluted earnings per share amounts presented in the unaudited pro forma condensed combined statements of operations are based upon the amount of Class A Common Stock outstanding, assuming the Business Combination occurred on January 1, 2020.

 

Adjustments to Unaudited Pro Forma Condensed Combined Balance Sheet

 

The adjustments included in the unaudited pro forma condensed combined balance sheet as of December 31, 2020 are as follows:

 

  (A) Reflects the change in the cash and cash equivalents, and cash held in Trust balances held by NPA, prior to redemption payments, at the close of the Business Combination.

 

  (B) Reflects the reclassification of $232.0 million of investments and cash held in the Trust Account, prior to redemptions, that becomes available to fund the Business Combination.

 

  (C) Represents the gross proceeds of $230.0 million from the issuance of 23 million shares of Class A Common Stock at $0.0001 par value, in the PIPE Investment offset by the PIPE Investment fee of $5.3 million.

 

  (D) Reflects the reclassification of NPA’s historical accrued expenses to align with the balance sheet presentation of AST.

 

  (E)

Reflects the settlement of $43.7 million of estimated transaction costs in connection with the Business Combination, of which $0.8 million has been paid as of December 31, 2020. $5.3 million relates to the PIPE Investment fee as noted above and is reflected as a reduction of additional paid-in capital as those are directly related to the equity raise. $8.1 million is the settlement of NPA’s deferred underwriting compensation fees incurred during the IPO due upon completion of the Business Combination of which $4.8 million is payable to BTIG. $0.8 million relates to the settlement of the accrued transaction expenses within accrued expenses and accounts payable. $1.1 million of deferred transaction costs which is directly related to the equity raise is reflected within additional paid in capital. The remaining amount of $29.5 million relates to advisory, legal, and other fees to be incurred and is reflected within additional paid-in capital.

 

 
 

 

  (F) Reflects the settlement of NPA’s historical liabilities after payment of liabilities related to transaction costs in connection with the Business Combination that was settled upon the close of the Business Combination.
     
  (G) Reflects the reduction in cash for the one-time discretionary transaction bonus approved by the AST board of directors to Mr. Severson for efforts towards the completion of the Business Combination.
     
  (H) Pursuant to the Tax Receivable Agreement, the Company will generally be required to pay the TRA Holders 85% of the amount of savings, if any, in U.S. federal, state, local, and foreign taxes that are based on, or measured with respect to, net income or profits, and any interest related thereto that the Tax Group realizes, or is deemed to realize, as a result of certain Tax Attributes, which include existing tax basis in certain assets of AST and certain of its direct or indirect Subsidiaries, including assets that will eventually be subject to depreciation or amortization, once placed in service, attributable to AST Common Units acquired by the Company from a TRA Holder (including AST Common Units held by a Blocker Corporation acquired in a Reorganization Transaction (as defined in the Tax Receivable Agreement)), each as determined at the time of the relevant acquisitions; tax basis adjustments resulting from taxable exchanges of AST Common Units (including any such adjustments resulting from certain payments made by the Company under the Tax Receivable Agreement) acquired by the Company from a TRA Holder pursuant to the terms of the A&R Operating Agreement; tax deductions in respect of portions of certain payments made under the Tax Receivable Agreement; and certain tax attributes of Blocker Corporations holding AST Common Units that are acquired directly or indirectly by the Company pursuant to a Reorganization Transaction.

 

Upon the consummation of the Business Combination, the Tax Group did not acquire any AST Common Units in an Exchange or Reorganization Transaction, as defined in the Tax Receivable Agreement. As a result, no Tax Receivable Agreement liability has been recorded. As part of the Business Combination, the Company obtains an increased tax basis in its AST Common Units. The gross (pre-tax) deferred tax asset relating to SpaceMobile’s investment in AST is approximately $299 million. The Company has assessed the realizability of their deferred tax assets and in that analysis has considered the relevant positive and negative evidence available to determine whether it is more likely than not that some portion or all of the deferred tax assets will be realized. As a result, the Company has recorded a full valuation allowance against its deferred tax assets. A full valuation allowance on deferred tax assets will be maintained until there is sufficient evidence to support the reversal of all or some portion of these allowances.

 

  (I) Reflects the reclassification of the NPA Class A Common Stock subject to possible redemption to permanent equity at $0.0001 par value.
     
  (J) Reflects the reclassification of NPA’s historical retained earnings and AST’s accumulated other comprehensive loss to additional paid in capital as part of the recapitalization.
     
  (K) Reflects the conversion of Founder Shares to Class A Common Stock at the closing of the Business Combination. In connection with the closing of the Business Combination, all Founder Shares converted into shares of Class A Common Stock.
     
  (L) Reflects conversion of redeemable preferred units and AST Series A Preferred Units and AST Series B Preferred Units into AST Common Units, and the recapitalization of AST as the issuance of Class B Common Stock and Class C Common Stock as consideration for the reverse recapitalization.
     
  (M) Reflects the recognition of 71% noncontrolling interests as a result of the Up-C structure. The noncontrolling interest is determined based on the noncontrolling interest percentage of NPA’s pro forma equity less certain adjustments.

 

 
 

 

Our A&R Operating Agreement provides that the AST Common Units not held by NPA provide each member with the right to cause NPA to redeem its AST Common Units in whole or in part at any time and from time to time following the waiver or expiration of the lock-up period pursuant to the Stockholders’ Agreement. NPA, as the Managing Member of AST, shall have the option to elect to have the redeemed

 

AST Common Units redeemed for either shares of Class A Common Stock or cash as set forth in the A&R Operating Agreement (the “Cash Settlement”). NPA established a committee to exercise full control over all decisions on settlement for noncontrolling interest redemptions. The committee, named the Redemption Election Committee, has the fiduciary duties to act in the best interests of all of the Company’s stockholders, was delegated the full power of the Company’s Board in respect of redemption settlement decisions, and consists solely of directors that are neither nominated by, or affiliated with, any noncontrolling interest holders.

 

Further, the settlement decisions made by the Redemption Election Committee will be solely in the Company’s control and cannot be overridden or vetoed by other board members, including Mr. Avellan. Pursuant to the Stockholders’ Agreement, the Stockholder Parties will agree that, until such date as the Stockholder Parties collectively control less than 50% of the total voting power of the Company, (i) the Stockholder Parties will take all necessary action to cause the Company and the Company’s Board to maintain the Redemption Election Committee of the Company’s Board and its delegated powers and (ii) the provisions of the Stockholders’ Agreement relating to the Redemption Election Committee cannot be amended without the express approval of the Redemption Election Committee.

 

The noncontrolling interest was classified as permanent equity within the pro forma balance sheet as the Company, acting through the Special Redemption Committee, may only elect to settle a redemption request in cash if the cash delivered in the exchange is limited to the cash proceeds to be received from a new permanent equity offering through issuance of Class A Common Stock in accordance with Section 11.1.2 of the Operating Agreement.

 

  (N) Reflects the actual redemption of 20,296 shares of NPA Common Stock for aggregate redemption payments of $0.2 million at a redemption price of approximately $10.09 per share and allocated to Class A Common Stock and additional paid-in capital using par value $0.0001 per share as of the close of the transaction.

 

Adjustments to Unaudited Pro Forma Condensed Combined Statements of Operations

 

The pro forma adjustments included in the unaudited pro forma condensed combined statements of operations for the year ended December 31, 2020 are as follows:

 

  (AA) Reflects the one-time payment of a discretionary transaction bonus approved by the AST board of directors to Mr. Severson for efforts towards the completion of the Business Combination.
     
  (BB) Reflects the elimination of NPA’s administrative service fee paid to the Sponsor that ceased upon the close of the Business Combination.
     
  (CC) Reflects elimination of interest income and dividends earned on the Trust Account.
     
  (DD) Reflects the recognition of net income attributable to the 71% noncontrolling interests as a result of the Up-C structure.

 

 
 

 

4. Earnings per Share

 

Represents net earnings per share calculated using the historical weighted average shares outstanding, and the issuance of additional shares in connection with the Business Combination, assuming the shares were outstanding since January 1, 2020. As the Business Combination are being reflected as if they had occurred at the beginning of the periods presented, the calculation of weighted average shares outstanding for basic and diluted net loss per share assumes that the shares issuable relating to the Business Combination have been outstanding for the entire periods presented.

 

(in thousands, except share and per share data)      
Pro forma net loss attributable to stockholders   $ (8,127 )
Pro forma weighted average Class A Common Stock – basic and diluted     51,729,704  
Pro forma Class A net loss per ordinary share   $ (0.16 )
Pro forma weighted average Class A shares outstanding – basic and diluted        
Class A – Public Stockholders     22,979,704  
Class A – Sponsors     5,750,000  
Total New Providence     28,729,704  
Class A – Private Placement Investors (PIPE)     23,000,000  
Pro forma weighted average Class A shares outstanding – basic and diluted(1)     51,729,704  

 

  (1) The Class B Common Stock and Class C Common Stock issued for consideration are non-economic and as such are excluded from the earnings per share calculation. For the purposes of applying the treasury stock method for calculating diluted earnings per share, it was assumed that all outstanding warrants sold in the IPO and warrants sold in the private placement are exchanged for 17.6 million underlying NPA Class A Common Stock. However, this results in anti-dilution, the effect of such exchange was not included in calculation of diluted earnings per share.

 

 
 

 

Comparative Share Information

 

The following table sets forth selected historical comparative share information for NPA and AST and unaudited pro forma condensed combined per share information of the Company after giving effect to the Business Combination:

 

The pro forma book value information reflects the Business Combination as if it had occurred on December 31, 2020. The weighted average shares outstanding and net earnings per share information reflect the Business Combination as if it had occurred on January 1, 2020.

 

This information is only a summary and should be read together with the selected historical financial information incorporated by reference into this Form 8-K, and the historical financial statements of NPA and AST and related notes. The unaudited pro forma condensed combined per share information of NPA and AST is derived from, and should be read in conjunction with, the unaudited pro forma condensed combined financial statements and related notes incorporated by reference into this Form 8-K

 

The unaudited pro forma condensed combined earnings per share information below does not purport to represent the earnings per share which would have occurred had the companies been combined during the periods presented, nor earnings per share for any future date or period. The unaudited pro forma condensed combined book value per share information below does not purport to represent what the value of NPA and AST would have been had the companies been combined during the periods presented.

 

    NPA (Historical)     AST (Historical)     Combined Pro Forma(2)  
As of and for the year ended December 31, 2020                        
Book value per share(1)   $ 0.71     $ 14.09     $ 2.73  
Weighted average shares outstanding, basic and diluted:                        
Common Stock – basic and diluted     7,008,667               51,729,704  
Founder’s common equity-basic and diluted             5,500,404          
Net income (loss) per common share/unit:                        
Common Stock – basic and diluted   $ (0.12 )           $ (0.16 )
Founder’s common equity-basic and diluted           $ (5.88 )        

 

 

(1) Book value per share = Total equity attributable to stockholders/weighted average shares outstanding.
   
(2) There is no pro forma share equivalent calculation as the Class B Common Stock and Class C Common Stock are non-economic.

 

 

 

Exhibit 99.3

 

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

You should read the following discussion and analysis of our financial condition and results of operations together with the “Selected Historical Financial Information” section of this prospectus and our financial statements and the related notes. This discussion contains forward-looking statements that reflect our plans, estimates, and beliefs that involve risks and uncertainties. As a result of many factors, such as those set forth under the “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements” sections and elsewhere in this prospectus, our actual results may differ materially from those anticipated in these forward-looking statements.

 

Overview

 

We are an innovative satellite designer and manufacturer. We operate from six locations that include our corporate headquarters and 85,000 square foot satellite assembly, integrating and testing facility in Midland, Texas, as well as operations in Maryland, Spain, the United Kingdom, and Israel. In addition, our 51% owned and controlled subsidiary, Nano, is located in Lithuania.

 

We and our global partners are building the first and only space-based cellular broadband network to be accessible by standard smartphones. Our SpaceMobile Service is expected to provide cost-effective, high-speed mobile broadband services with global coverage to all end-users, regardless of where they live or work, without the need to purchase special equipment. We believe the SpaceMobile Service would be the first global direct mobile broadband network using low Earth orbit (“LEO”) satellites to provide connectivity to any standard, unmodified, off-the-shelf mobile phone or 2G/3G/4G LTE/5G and IoT-enabled device. We intend to partner with mobile network operators (“MNOs”) to offer the SpaceMobile Service to the MNOs’ end-user customers. Users will not need to subscribe to the SpaceMobile Service directly with us, nor will they need to purchase any new or additional equipment. Users will be able to access the SpaceMobile Service when prompted on their device that they are no longer within range of the land-based facilities of the MNO operator or will be able to purchase a plan directly with their existing mobile provider.

 

The SpaceMobile Service is planned to be provided through a network of 168 high-powered, large phased-array satellites in LEO. The worldwide mobile traffic will be directed by the SpaceMobile Service to a terrestrial gateway and then to the in-country MNO’s core cellular network connected to the internet. Users will connect to the SpaceMobile Service as if they were using a local cell tower, with less communication delay effects than existing geostationary satellite communication systems experience.

 

On April 1, 2019, we launched our first test satellite, the BlueWalker 1 (“BW1”), which was used to validate our satellite to cellular architecture and was capable of managing communications delays from LEO orbit and the effects of doppler in a satellite to ground cellular environment using the 4G-LTE protocol. We are currently manufacturing and procuring the satellite componentry required for our BlueWalker 3 (“BW3”) test satellite. As of December 31, 2020, we have incurred approximately $27.0 million on our BW3 efforts, and we intend to incur an additional $22 to $27 million to bring this project to completion. During the first half of 2021, we will be assembling and testing the BW3 satellite at our facility in Midland, Texas. BW3 is scheduled to launch in the second half of 2021. We are planning our first commercial satellite launches for the second half of 2022 or early 2023, which are expected to provide satellite coverage in certain Equatorial countries with 20 satellites. We plan to achieve full global mobile coverage with 110 satellites by the end of 2023 or early in 2024 and multiple input multiple output (“MIMO”) with a total of 168 satellites by the end of 2024.

 

Revenue is currently generated from Nano, which consists of satellite development and manufacturing, procuring and arranging launch services, as well as in-orbit operations. Additionally, on a smaller scale, Nano offers hosted payload services, sale of individual satellite parts and subsystems, and software licenses. We are exploring the possibility of reducing our ownership interest in Nano, such that we would no longer own a majority of the share capital of Nano.

 

For additional information regarding our relationships with industrial and wireless infrastructure providers, see the section entitled “Business — Key Industrial and Wireless Infrastructure Provider Relationships.”

 

 

 

 

Impact of COVID-19 Pandemic

 

With the on-going global spread of the COVID-19 pandemic, we have implemented business continuity plans designed to address and mitigate the impact of the COVID-19 pandemic on our business. The extent to which the COVID-19 pandemic impacts our business, research and development efforts and the value of our equity, will depend on future developments that are highly uncertain and cannot be predicted with confidence at this time, such as the ultimate duration of the pandemic, travel restrictions, quarantines, social distancing and business closure requirements, and the effectiveness of actions taken globally to contain and treat the disease. The global economic slowdown, the overall disruption of global healthcare systems and the other risks and uncertainties associated with the pandemic could have a material adverse effect on our business, financial condition, results of operations and growth prospects. In addition, to the extent the ongoing COVID-19 pandemic adversely affects our business and results of operations, it may also have the effect of heightening many of the other risks and uncertainties specific to the industry. To date, the pandemic has not had a material impact to our technology development efforts or results of our operations. However, given the daily evolution of the COVID-19 outbreak and the global responses to curb its spread, we are not able to estimate the future effects of the COVID-19 outbreak on our results of operations, financial condition, or liquidity.

 

Components of Results of Operations

 

Revenues

 

To date, we have not generated significant revenues and do not expect to begin generating revenues from the SpaceMobile Service until 2023. Our 51% owned subsidiary, Nano, generates revenue from ancillary sales and services in Europe and the United States, but is primarily engaged in the development and manufacture of satellite technology. Nano also sells individual satellite parts, subsystems, and software to be configured to customers’ satellites, and enters into “rideshare” type agreements whereby Nano provides hosted payload services using customers’ payloads integrated with Nano-owned Satellite Buses for scheduled launches. Given the above information, any revenue recognition presented herein primarily relates to Nano’s commercially available goods and services.

 

Cost of Sales

 

Cost of sales includes the purchase price of various products and services that are used in performing under Nano’s revenue arrangements. Cost of sales also includes operational costs to fulfill Nano customer orders, including costs for Nano employees and overhead.

 

Engineering Services

 

Engineering costs are charged to expense as incurred. Engineering costs consist primarily of the expenses associated with our ongoing engineering efforts to establish technical feasibility of our products, as well as the cost of internal staff (such as engineers and consultants) to support these efforts. Currently, major engineering activities include procuring and manufacturing the satellite components required for the BW3 satellite. We intend to assemble and test the BW3 satellite at our Midland, Texas facility during the first half of 2021. The BW3 is scheduled to be launched during the second half of 2021. Additionally, we have established alternative uses (separate economic value) for BW3 and therefore, the hard costs (i.e., test equipment, antennas, sensors, cables, launch vehicles) and other nonrecurring costs solely associated with our BW3 developments are capitalized to its construction in progress (“CIP”) account, and presented on our Consolidated Balance Sheets.

 

Research and Development Costs

 

Our research and development (“R&D”) costs consist principally of non-recurring engineering developments in which we typically engages third party vendors. Currently, major R&D activities include engaging with vendors to help develop the electronic componentry and software to be used in the first commercial satellite launch phase of the SpaceMobile Service, which is expected to provide satellite coverage in certain countries along the Equator with 20 satellites.

 

 

 

 

General and Administrative Costs

 

Our general and administrative expenses include the costs of insurance, personnel, and outside professional services, including accounting and legal fees. We expect to incur additional expenses in anticipation of becoming a public company, including expenses necessary to comply with the rules and regulations applicable to companies listed on a national securities exchange and related to compliance and reporting obligations pursuant to the rules and regulations of the SEC, as well as higher expenses for general and director and officer insurance, investor relations, and professional services.

 

Depreciation and Amortization

 

Depreciation and amortization expense includes amounts related to property and equipment as well as finite-lived intangible assets. Once BW3 is completed and successfully launched, we expect a significant portion of our depreciation expense to relate to the depreciation of this asset, given its assigned useful life is two years.

 

Interest Income

 

Our interest income consists primarily of interest earned on cash and cash equivalents held by us in interest bearing demand deposit accounts.

 

Interest Expense

 

Our interest expense consists of interest on the borrowings from our Chief Executive Officer, Abel Avellan. We repaid all amounts due under this borrowing as of March 3, 2020.

 

Other Income and (Expense), Net

 

Our other income or expense consists of miscellaneous non-operating items, such as foreign exchange gains or losses.

 

Income Taxes

 

Our income tax expense is driven by our foreign subsidiaries, primarily Israel and Nano.

 

 

 

 

Results of Operations

 

Year Ended December 31, 2020 Compared to the Year Ended December 31, 2019

 

The following table sets forth a summary of our consolidated results of operations for the year-end periods indicated below and the changes between the periods.

 

    Year Ended December 31,  
    2020     2019     $ Change  
    (dollars in thousands)  
Revenues   $ 5,967     $ 1,414     $ 4,553  
                         
Cost of sales     (3,025 )     (954 )     (2,071 )
                         
Gross profit     2,942       460       2,482  
                         
Operating expenses:                        
Engineering services     13,081       4,668       8,413  
General and administrative costs     12,320       5,404       6,916  
Research and development costs     1,011       1,062       (51 )
Depreciation and amortization     887       388       499  
Total operating expenses     27,299       11,522       15,777  
                         
Other income and expense:                        
Interest income     71       2       69  
Interest expense     (10 )     (22 )     12  
Other income and (expense), net     22       (15 )     37  
Total other income (expense)     83       (35 )     118  
                         
Net loss before income taxes     (24,274 )     (11,097 )     (13,177 )
Income taxes     (131 )     (44 )     (87 )
Net loss   $ (24,405 )   $ (11,141 )   $ (13,264 )

 

Revenues

 

Total revenues increased by $4.6 million to $6.0 million for the year ended December 31, 2020 as compared to the year ended December 31, 2019. The increase was primarily due to a $3.9 million increase in sales to new third-party customers, and a $0.7 million increase in revenue recognized on existing Nano customers.

 

Cost of Sales

 

Total cost of sales increased by $2.1 million to $3.0 million for the year ended December 31, 2020 as compared to the year ended December 31, 2019. The increase was primarily due to increased costs to deliver new and existing revenue contracts to Nano customers, specifically at the newly established Nano US entity during the fiscal year.

 

Engineering Services

 

Total engineering services increased by $8.4 million to $13.1 million for the year ended December 31, 2020 as compared to the year ended December 31, 2019. The increase was primarily due to a $5.2 million increase in internal engineer headcount and a $1.8 million increase in internal consultant headcount. The costs related to recurrent engineers and consultants that are not solely associated with the development of BW3 are expensed as engineering services. The remaining $1.4 million increase relates to other operating expenses, such as consumables, components and facility expenses, specifically relating to new operations in United Kingdom during the current fiscal year. We expect engineering expenses to continue to increase over the upcoming years as the SpaceMobile Service is developed.

 

General and Administrative Costs

 

Total general and administrative costs increased by $6.9 million to $12.3 million for the year ended December 31, 2020 as compared to the year ended December 31, 2019. The increase was primarily due to a $4.0 million increase in employee and consultant-related expenses such as salaries and recruiting fees due to the increase in headcount compared to the prior year period, a $1.8 million increase in professional costs due to the increase in legal and accounting services compared to the prior year period, and a $1.5 million increase in other miscellaneous expenses such as corporate office supplies, licenses, and insurance costs, offset by a $0.4 million decrease in travel expenses due to reduced travel as a result of the COVID-19 pandemic.

 

Research and Development Costs

 

Total research and development costs decreased by $0.1 million to $1.0 million for the year ended December 31, 2020 as compared to the year ended December 31, 2019. The decrease was primarily due a $1.1 million decrease in costs relating to the development of BW1 given this project was completed in 2019, offset by a $1.0 million increase in 2020 development efforts relating to the SpaceMobile constellation.

 

 

 

 

Depreciation and Amortization

 

Total depreciation and amortization increased by $0.5 million to $0.9 million for the year ended December 31, 2020 as compared to the year ended December 31, 2019. The increase was primarily due to the purchase of additional fixed assets and leasehold improvements during the fiscal year.

 

Total Other Income (Expense)

 

Total other income increased by $0.1 million to $0.1 million for the year ended December 31, 2020 as compared to the year ended December 31, 2019. The increase was primarily driven by a $0.1 million increase in interest earned during the current fiscal year.

 

Liquidity and Capital Resources

 

We require capital to fund our operating expenses and to make capital expenditures. We expect our capital requirements to increase as our operations expand. Historically, we have funded operations primarily from the proceeds from issuances of AST Series A Preferred Units and AST Series B Preferred Units (“AST Preferred Stock”). Through December 31, 2020, we had raised an aggregate of $120.8 million in gross proceeds from the issuance of AST Preferred Stock. As of December 31, 2020, cash and cash equivalents totaled $42.8 million and working capital totaled $37.8 million. We closely monitor our liquidity and capital resources for any potential impact that the COVID-19 pandemic may have on operations. In addition, we are exploring various sources of funding, including the Business Combination, aimed at further supporting our liquidity profile, as well as maintaining business and organizational continuity through the pandemic.

 

The design, development, manufacture, integration, testing, assembly and launch of satellites and related components is a capital-intensive venture. We estimate the gross costs associated with designing, building and launching the 20 Equatorial SpaceMobile satellites to be approximately $510 million, which includes $128 million of capital raised to date by us from preferred stock, common stock, and founder loan proceeds. To raise the necessary capital to fund this expenditure in the short term, we entered into an Equity Purchase Agreement with NPA on December 15, 2020 with respect to the Business Combination, which closed on April 5, 2021. As part of the Business Combination, NPA contributed approximately $457 million in gross proceeds to us in exchange for 28.5% of the outstanding AST Common Units and became the managing member of AST. We estimate the gross costs associated with designing, building and launching all global and MIMO SpaceMobile satellites and related infrastructure to be approximately $1.7 billion. We believe that, following the Closing, we have sufficient capital to fund planned operations and development for the next 12 to 24 months, which includes the launch of our first 20 Equatorial satellites. We will need to raise additional capital to continue developing and launching satellites to complete subsequent phases of the SpaceMobile Service. We expect to raise additional funds through the issuance of equity, equity related or debt securities, or through obtaining credit from government or financial institutions. This capital may be necessary to fund our ongoing operations, continue research, development and design efforts, improve infrastructure, and launch satellites. We cannot be certain that additional funds will be available to us on favorable terms if required, or at all. If we cannot raise additional funds when needed, our financial condition, results of operations, business and prospects could be materially adversely affected.

 

Cash Flows

 

Historical Cash Flows

 

The following table summarizes our sources and uses of cash for the years ended December 31, 2020 and 2019:

 

    Year Ended December 31,  
    2020     2019  
    (dollars in thousands)  
Cash and cash equivalents at end of period   $ 42,777     $ 26,498  
                 
Cash used in operating activities   $ (22,800 )   $ (9,300 )
Cash used in investing activities     (30,411 )     (3,654 )
Cash provided by financing activities     69,663       32,379  

 

 

 

 

Operating activities

 

Cash used in operating activities was $22.8 million for the year ended December 31, 2020, as compared to cash used in operating activities of $9.3 million for the same period in 2019. The $13.5 million increase in cash used in operating activities for the year ended December 31, 2020 was primarily attributable to the $24.4 million net loss as a result of the expansion of our operations and satellite technology development efforts, an increase in net loss of $13.3 million, as well as a $0.2 million increase driven by a $1.1 million change in operating assets and liabilities, offset by a $0.9 million change in adjustments to reconcile net loss to cash used in operating activities.

 

Investing activities

 

Cash used in investing activities was $30.4 million for the year ended December 31, 2020, as compared to cash used in investing activities of $3.7 million for the same period in 2019. The $26.8 million increase in cash used in investing activities for the year ended December 31, 2020 was primarily attributable to a $20.2 million increase in BW3 satellite construction costs that started at the end of year 2019 and are still in progress, as well as a $6.6 million increase in purchases of property and equipment including satellite antennas, test equipment, and leasehold improvements.

 

Financing activities

 

Cash provided by financing activities was $69.7 million for the year ended December 31, 2020, as compared to cash provided by financing activities of $32.4 million for the same period in 2019. The $37.3 million increase in cash provided by financing activities for the year ended December 31, 2020 was primarily attributable to $72.9 million of net proceeds from the issuance of AST Series B Rakuten Preferred Units during the fiscal year, offset by a $31.5 million decrease in net proceeds from AST Series B Preferred Units issued in the prior period.

 

Funding Requirements

 

We believe our existing cash and cash equivalents will be sufficient to meet anticipated cash requirements for at least 12 months from the date hereof. However, our forecast of the period of time through which our financial resources will be adequate to support operations is a forward-looking statement that involves risks and uncertainties, and actual results could vary materially. We have based this estimate on assumptions that may prove to be wrong, and we could expend capital resources sooner than we expect.

 

Future capital requirements will depend on many factors, including:

 

  Seeking and obtaining market access approvals;
     
  Establishing and maintaining supply and manufacturing relationships with third parties that can provide adequate, in both amount and quality, products and services to support our satellite development;
     
  Addressing any competing technological and market developments; and
     
  Attracting, hiring, and retaining qualified personnel.

 

Further details on the various risks to our operations are provided and discussed in the “Risk Factors” section of this document.

 

 

 

 

Until such time, if ever, as we can generate substantial revenues to support our cost structure, we expect to finance cash needs through a combination of equity offerings, debt financings, commercial and other similar arrangements. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interest of stockholders will be or could be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of common stockholders. Debt financing and equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. If we raise funds through commercial agreements, or other similar arrangements with third parties, we may have to relinquish valuable rights to our technologies and/or future revenue streams, or grant licenses on terms that may not be favorable to us and/or may reduce the value of our common stock. In addition, our ability to raise necessary financing could be impacted by the COVID-19 pandemic and its effects on the market conditions. If we are unable to raise additional funds through equity or debt financings when needed, we may be required to delay, limit, reduce or terminate our commercialization efforts or grant rights to develop and market other services even if we would otherwise prefer to develop and market these services ourelf or potentially discontinue operations. See the sections entitled “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements” included herein for additional information.

 

Contractual Obligations

 

The following table reflects our contractual obligations as of December 31, 2020:

 

    Payments Due by Period  
    Total     Less than 1 year     More than
1 year and less than 3
    More than
3 years and less than 5
    More than 5 years  
    (dollars in thousands)  
Operating lease obligations(1)   $ 14,151     $ 1,432     $ 2,604     $ 2,413     $ 7,701  
Purchase obligations(2)     8,337       8,337                    
Total   $ 22,488     $ 9,769     $ 2,604     $ 2,413     $ 7,701  

 

 

(1) We primarily lease office space under operating lease agreements, with the most material lease relating to our International Air & Space Port in Midland, Texas. Refer to Note 6 — Commitments and Contingencies in the Notes to Consolidated Financial Statements for additional information on our leases.
   
(2) The purchase obligations are associated with contracts with GK Launch Services and Dialog that are enforceable and legally binding, and specify all significant terms, including quantities to be purchased, price provisions, and the approximate timing of the transactions. Refer to Note 13 — Significant Agreements in the Notes to Consolidated Financial Statements for additional information.

 

Off-Balance Sheet Arrangements

 

We do not maintain any off-balance sheet arrangements.

 

Critical Accounting Policies and Estimates

 

Our management’s discussion and analysis of financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate our policies and estimates, including but not limited to, those related to our revenue from contracts with customers, goodwill, intangibles and long-lived assets. Our management bases our estimates on historical experience, data available at the time the estimates are made and various assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

 

We consider the following accounting policies to be those that require the most subjective judgment or that involve uncertainty that could have a material impact on our financial statements. If actual results differ significantly from management’s estimates and projections, there could be a material effect on the financial statements. This is not a comprehensive list of all of our accounting policies. In many cases, the accounting treatment of a particular transaction is specifically dictated by GAAP, with no need for management’s judgment in its application. For a discussion of our other accounting policies, see Note 2 — Summary of Significant Accounting Policies in the Notes to Consolidated Financial Statements.

 

 

 

 

Revenue from Contracts with Customers

 

We recognize revenue when or as control is transferred to a customer, which is in accordance with ASC 606, “Revenue from Contracts with Customers” (“ASC 606”). The determination of revenue is dependent upon the following five step process: 1) we account for a contract with a customer when there is written approval, the contract is committed, the rights of the parties are identified, the contract has commercial substance and consideration is probable of collection; 2) we determine performance obligations by assessing whether the products or services are distinct from the other elements of the contract. In order to be distinct, the product or service must perform either on its own or with readily available resources and must be separate within the context of the contract; 3) we consider the amount stated on the face of the purchase order to be the transaction price and does not have variable consideration which could impact the stated purchase price agreed to; 4) transaction price is allocated to each individual performance obligation based on the standalone selling price of that performance obligation and if standalone market transactions are not available, we will estimate the standalone selling price through market assessments; and 5) if the transaction meets the criteria for over time recognition, we recognize revenue as the good or service is delivered. For transactions that do not meet the criteria for over time recognition, we will recognize revenue at a point in time based on an assessment of the five criteria for transfer of control. We have concluded that revenue should be recognized when shipped or delivered based on contractual terms.

 

As it relates to government and space agency grants, Nano receives grant funding in exchange for satellite technology development efforts made by Nano to the European Space Agency and other governmental bodies. If Nano fails to maintain required commitments, the funds received may have to be repaid or other adverse consequences may arise, which could affect cash flows and profitability. When Nano has been awarded grant funding, cost reimbursements are recognized when it is probable that Nano will comply with the conditions attached to the grant arrangement and the grant proceeds will be received. Grants are recognized in Nano’s results of operations on a systematic basis over the periods in which it recognizes the related costs for which the grant is intended to compensate. Specifically, when grants are related to reimbursements, the grants are recognized as a reduction of the related expense in our results of operations. For grants related to reimbursements of capital expenditures, the grants are recognized as a reduction of the basis of the asset and recognized in Nano’s results of operations over the estimated useful life of the depreciable asset as reduced depreciation expense.

 

As it relates to collaborative arrangements, we consider the nature and contractual terms of an arrangement and assess whether the arrangement involves a joint operating activity pursuant to which we are an active participant and exposed to significant risks and rewards with respect to the arrangement. If we are an active participant and exposed to the significant risks and rewards with respect to the arrangement, we account for these arrangement pursuant to ASC Topic 808, Collaborative Arrangements, as amended by ASU 2018-18 (“ASC 808”), and applies a systematic and rational approach to recognize revenue (unless parts of the arrangement are within the scope of other authoritative accounting literature or can be appropriately analogized to other authoritative accounting literature). In connection with the Initial Series B Preferred Stock Issuance, we entered into a commercial agreement on October 26, 2019 with Vodafone, whereby Vodafone is provided exclusivity to operate the SpaceMobile Service in agreed upon markets as defined in the agreement. As part of this agreement, Vodafone will promote the service as an element of its normal business, and we are provided a 50/50 revenue share for all services enabled by our SpaceMobile satellite segment. The term of the agreement is five years starting with the initial launch of commercial service based on the Phase 3 constellation anticipated in 2023. The Vodafone commercial agreement is considered a collaborative arrangement under ASC 808 as both parties are active participants and share in the significant risks and rewards of the activities. We will not assign any value to the Vodafone commercial agreement at inception and will recognize their share of expenses as they are performed up to the time the activities are revenue generating.

 

Goodwill, Intangibles and Long-Lived Assets

 

We assess goodwill for impairment at least annually in the fourth quarter, on a reporting unit basis, or more frequently, when events and circumstances occur indicating that the recorded goodwill may be impaired. For the year ended December 31, 2020, our goodwill impairment process included applying a quantitative impairment analysis where the fair value of the reporting unit was compared to its carrying value (including goodwill). We engaged an independent third-party valuation specialist to assist in the determination of the fair value of the reporting unit based upon inputs and assumptions provided by management. The fair value of the reporting unit was based upon an equal weighting of the income and market approaches, utilizing estimated cash flows and a terminal value, discounted at a rate of return that reflects the relative risk of the cash flows, as well as valuation multiples derived from comparable publicly traded companies that are applied to operating performance of the reporting unit. Significant judgments inherent in these analyses include estimating the amount and timing of future cash flows and the selection of appropriate discount rates and long-term growth rate assumptions. Changes in these estimates and assumptions could materially affect the determination of fair value for the reporting unit and could result in an impairment charge, which could be material to our financial position and results of operations. Based on the results of the quantitative impairment analysis, it was determined that there has been no impairment of goodwill related to the reporting unit as of December 31, 2020.

 

We assesses the impairment of intangible and long-lived assets whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Factors we consider important in the determination of an impairment include significant underperformance relative to historical or projected future operating results, significant changes in the manner that we use the acquired asset and significant negative industry or economic trends.

 

Recent Accounting Pronouncements

 

See Note 2 — Summary of Significant Accounting Policies in the Notes to Consolidated Financial Statements for a full description of recent accounting pronouncements including the expected dates of adoption and effects on results of operations and financial condition.