Document:

EXHIBIT 4.3

 

Registration Rights Agreement

 

Dated as of April 24, 2015

 

among

 

Communications Sales & Leasing, Inc.,

 

CSL Capital, LLC,

 

the Guarantors identified herein,

 

and

 

Merrill Lynch, Pierce, Fenner & Smith Incorporated and J.P. Morgan Securities LLC

 

 

REGISTRATION RIGHTS AGREEMENT

 

This Registration Rights Agreement (the “Agreement”) is made and entered into this 24th day of April 2015, among Communications Sales & Leasing, Inc. (the “Issuer”), CSL Capital, LLC (the “Co-Issuer” and, together with the Issuer, the “Issuers”), the Guarantors identified on the signature pages hereto (the “Guarantors”) and Merrill Lynch, Pierce, Fenner & Smith Incorporated and J.P. Morgan Securities LLC, as representatives of the several initial purchasers listed in Schedule A to the Purchase Agreement (collectively, the “Initial Purchasers”).

 

This Agreement is made pursuant to the Purchase Agreement, dated April 16, 2015, among the Issuers, the Guarantors, the Selling Securityholders (as defined in the Purchase Agreement) and the Initial Purchasers (the “Purchase Agreement”), which provides for the sale by the Selling Securityholders to the Initial Purchasers of an aggregate of $400.0 million principal amount of the Issuers’ 6.00% Senior Secured Notes due 2023 (the “Secured Notes”) and $1,110.0 million principal amount of the Issuers’ 8.25% Senior Notes due 2023 (the “Initial Securities”). In order to induce the Initial Purchasers to enter into the Purchase Agreement, the Issuers and the Guarantors have agreed to provide to the Initial Purchasers and their direct and indirect transferees the registration rights set forth in this Agreement. The execution of this Agreement is a condition to the closing under the Purchase Agreement.

 

In consideration of the foregoing, the parties hereto agree as follows:

 

1.                                      Definitions.

 

As used in this Agreement, the following capitalized defined terms shall have the following meanings:

 

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

 

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

 

“Closing Date” shall mean April 24, 2015.

 

“Depositary” shall mean The Depository Trust Company, or any other depositary appointed by the Issuers, which depositary must be a clearing agency registered under the 1934 Act.

 

“Exchange Offer” shall mean the exchange offer by the Issuers of Exchange Securities for Registrable Securities pursuant to Section 2.1 hereof.

 

“Exchange Offer Registration” shall mean a registration under the 1933 Act effected pursuant to Section 2.1 hereof.

 

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“Exchange Offer Registration Statement” shall mean an exchange offer registration statement on Form S-4 (or, if applicable, on another appropriate form), and all amendments and supplements to such registration statement, including the Prospectus contained therein, all exhibits thereto and all documents incorporated by reference therein.

 

“Exchange Period” shall have the meaning set forth in Section 2.1 hereof. “Exchange Securities” shall mean 8.25% Senior Notes due 2023 issued by the Issuers and guaranteed by the Guarantors under the Indenture containing terms identical in all material respects to the Initial Securities (except that the Exchange Securities will not be subject to restrictions on transfer or to any increase in annual interest rate for failure to comply with this Agreement) and to be offered to Holders of Initial Securities in exchange for Registrable Securities pursuant to the Exchange Offer.

 

“Guarantors” shall have the meaning set forth in the preamble and shall also include the Guarantors’ respective successors.

 

“Holder” shall mean each Initial Purchaser, for so long as it owns any Registrable Securities, and each of its successors, assigns and direct and indirect transferees who become registered owners of Registrable Securities under the Indenture and each Participating Broker-Dealer that holds Exchange Securities for so long as such Participating Broker-Dealer is required to deliver a prospectus meeting the requirements of the 1933 Act in connection with any resale of such Exchange Securities.

 

“Indenture” shall mean the Indenture relating to the Initial Securities, dated as of April 24, 2015, among the Issuers, the Guarantors and Wells Fargo Bank, National Association, as trustee, as the same may be amended, supplemented, waived or otherwise modified from time to time in accordance with the terms thereof.

 

“Initial Purchaser” or “Initial Purchasers” shall have the meaning set forth in the preamble.

 

“Initial Securities” shall have the meaning set forth in the preamble.

 

“Issuers” shall have the meaning set forth in the preamble and shall also include each of the Issuers’ successors.

 

“Majority Holders” shall mean the Holders of a majority of the aggregate principal amount of Outstanding (as defined in the Indenture) Registrable Securities; provided that whenever the consent or approval of Holders of a specified percentage of Registrable Securities is required hereunder, Registrable Securities held by the Issuers and other obligors on the Initial Securities or any Affiliate (as defined in the Indenture) of the Issuers shall be disregarded in determining whether such consent or approval was given by the Holders of such required percentage amount.

 

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“Participating Broker-Dealer” shall mean Merrill Lynch, Pierce, Fenner & Smith Incorporated, J.P. Morgan Securities LLC and any other broker-dealer which makes a market in the Initial Securities and exchanges Registrable Securities in the Exchange Offer for Exchange Securities.

 

“Person” shall mean an individual, partnership (general or limited), corporation, limited liability company, trust or unincorporated organization, or a government or agency or political subdivision thereof.

 

“Private Exchange” shall have the meaning set forth in Section 2.1 hereof.

 

“Private Exchange Securities” shall have the meaning set forth in Section 2.1 hereof.

 

“Prospectus” shall mean the prospectus included in a Registration Statement, including any preliminary prospectus, and any such prospectus as amended or supplemented by any prospectus supplement, including any such prospectus supplement with respect to the terms of the offering of any portion of the Registrable Securities covered by a Shelf Registration Statement, and by all other amendments and supplements to a prospectus, including post-effective amendments, and in each case including all material incorporated by reference therein.

 

“Purchase Agreement” shall have the meaning set forth in the preamble.

 

“Registrable Securities” shall mean (i) the Initial Securities and, if issued, the Private Exchange Securities; provided, however, that Initial Securities and, if issued, the Private Exchange Securities, shall cease to be Registrable Securities when (1) a Registration Statement with respect to such Initial Securities shall have been declared effective under the 1933 Act and such Initial Securities shall have been disposed of pursuant to such Registration Statement, (2) such Initial Securities have been sold to the public pursuant to Rule 144 (or any similar provision then in force, but not Rule 144A) under the 1933 Act, (3) such Initial Securities shall have ceased to be outstanding or (4) the Exchange Offer is consummated (except in the case of Initial Securities purchased from the Issuers and continued to be held by an Initial Purchaser) and (ii) any Exchange Securities issued to a Participating Broker-Dealer until resold under the Exchange Offer Registration Statement.

 

“Registration Expenses” shall mean any and all expenses incident to performance of or compliance by the Issuers with this Agreement, including without limitation: (i) all SEC, stock exchange or Financial Industry Regulatory Authority, Inc. (“FINRA”) registration and filing fees, including, if applicable, the fees and expenses of any “qualified independent underwriter” (and its counsel) that is required to be retained by any holder of Registrable Securities in accordance with the rules and regulations of FINRA, (ii) all fees and expenses incurred in connection with compliance with state securities or blue sky laws and compliance with the rules of FINRA (including reasonable fees and disbursements of counsel for any underwriters or Holders in connection with blue sky qualification of any of the Exchange Securities or Registrable Securities and any filings with FINRA), (iii) all expenses of any Persons in preparing or assisting in preparing, word processing, printing and distributing any Registration Statement,

 

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any Prospectus, any amendments or supplements thereto, any underwriting agreements, securities sales agreements and other documents relating to the performance of and compliance with this Agreement, (iv) all fees and expenses incurred in connection with the listing, if any, of any of the Registrable Securities on any securities exchange or exchanges, (v) all rating agency fees, (vi) the fees and disbursements of counsel for the Issuers or the Guarantors and of the independent public accountants of the Issuers or the Guarantors, including the expenses of any special audits or “cold comfort” letters required by or incident to such performance and compliance, (vii) the fees and expenses of the Trustee, and any escrow agent or custodian, (viii) the reasonable fees and disbursements of Davis Polk & Wardwell LLP, special counsel representing the Holders of Registrable Securities in connection with a Shelf Registration hereunder and (ix) any fees and disbursements of the underwriters customarily required to be paid by issuers or sellers of securities and the fees and expenses of any special experts retained by the Issuers or the Guarantors in connection with any Registration Statement, but excluding underwriting discounts and commissions and transfer taxes, if any, relating to the sale or disposition of Registrable Securities by a Holder.

 

“Registration Statement” shall mean any registration statement of the Issuers which covers any of the Exchange Securities or Registrable Securities pursuant to the provisions of this Agreement, and all amendments and supplements to any such Registration Statement, including post-effective amendments, in each case including the Prospectus contained therein, all exhibits thereto and all material incorporated by reference therein.

 

“SEC” shall mean the United States Securities and Exchange Commission or any successor agency or government body performing the functions currently performed by the United States Securities and Exchange Commission.

 

“Shelf Registration” shall mean a registration effected pursuant to Section 2.2 hereof.

 

“Shelf Registration Statement” shall mean a “shelf” registration statement of the Issuers pursuant to the provisions of Section 2.2 of this Agreement which covers Registrable Securities or Private Exchange Securities on an appropriate form under Rule 415 under the 1933 Act, or any similar rule that may be adopted by the SEC, and all amendments and supplements to such registration statement, including post-effective amendments, in each case including the Prospectus contained therein, all exhibits thereto and all material incorporated by reference therein.

 

“Trustee” shall mean the trustee with respect to the Securities under the Indenture.

 

2.                                      Registration Under the 1933 Act.

 

2.1                               Exchange Offer. Unless the Exchange Offer would violate applicable law or any applicable interpretation of the staff of the SEC, the Issuers and the Guarantors shall, for the benefit of the Holders, at their cost, (A) prepare and file with the SEC an Exchange Offer Registration Statement on an appropriate form under the 1933 Act with respect to a proposed Exchange Offer and the issuance and delivery to the Holders, in exchange for the Registrable

 

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Securities (other than Private Exchange Securities) of a like principal amount of Exchange Securities, (B) use their commercially reasonable efforts to cause the Exchange Offer Registration Statement to be declared effective under the 1933 Act and (C) use their commercially reasonable efforts to cause the Exchange Offer to be consummated not later than 365 days following the Closing Date. The Exchange Securities will be issued under the Indenture. Upon the effectiveness of the Exchange Offer Registration Statement, the Issuers and the Guarantors shall promptly commence the Exchange Offer, it being the objective of such Exchange Offer to enable each Holder eligible and electing to exchange Registrable Securities for Exchange Securities (assuming that such Holder (a) is not an affiliate of the Issuers within the meaning of Rule 405 under the 1933 Act, (b) is not a broker-dealer tendering Registrable Securities acquired directly from the Issuers for its own account, (c) acquired the Exchange Securities in the ordinary course of such Holder’s business and (d) has no arrangements or understandings with any Person to participate in the Exchange Offer for the purpose of distributing the Exchange Securities, and has made representations to the Issuers to that effect) to transfer such Exchange Securities from and after their receipt without any limitations or restrictions under the 1933 Act and under state securities or blue sky laws.

 

In connection with the Exchange Offer, the Issuers and the Guarantors shall:

 

(a)                                 mail as promptly as practicable after the Exchange Offer Registration Statement has been declared effective under the 1933 Act to each Holder a copy of the Prospectus forming part of the Exchange Offer Registration Statement, together with any letter of transmittal and any related documents;

 

(b)                                 keep the Exchange Offer open for acceptance for a period of not less than 20 business days after the date notice thereof is mailed to the Holders (or longer if required by applicable law) (such period referred to herein as the “Exchange Period”);

 

(c)                                  utilize the services of the Depositary for the Exchange Offer;

 

(d)                                 permit Holders to withdraw tendered Registrable Securities at any time prior to 5:00 p.m. (Eastern Time), on the last business day of the Exchange Period, by sending to the institution specified in the notice, a telegram, telex, facsimile transmission or letter setting forth the name of such Holder, the principal amount of Registrable Securities delivered for exchange, and a statement that such Holder is withdrawing such Holder’s election to have such Registrable Securities exchanged;

 

(e)                                  notify each Holder that any Registrable Security not tendered will remain outstanding and continue to accrue interest, but will not retain any rights under this Agreement (except in the case of the Initial Purchasers and Participating Broker-Dealers as provided herein); and

 

(f)                                   otherwise comply in all respects with all applicable laws relating to the Exchange Offer.

 

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If, prior to consummation of the Exchange Offer, an Initial Purchaser holds any Initial Securities acquired by them and having the status of an unsold allotment in the initial distribution, the Issuers and the Guarantors upon the request of any such Initial Purchaser or, if a Shelf Registration Statement is required, at the request of any Holder whose Registrable Securities are being registered thereon, shall, simultaneously with the delivery of the Exchange Securities in the Exchange Offer, issue and deliver to such Initial Purchaser in exchange for the Initial Securities held by such Initial Purchaser, or, if no Exchange Offer is consummated, upon effectiveness of the Shelf Registration Statement (together, the “Private Exchange”), a like principal amount of debt securities of the Issuers on a senior basis that are identical (except that such securities shall bear appropriate transfer restrictions) to the Exchange Securities and issued under the Indenture (the “Private Exchange Securities”). For the avoidance of doubt, such Exchange Securities shall be likewise guaranteed by the Guarantors.

 

Notwithstanding the foregoing, during any 365-day period, the Issuers may suspend the effectiveness of the Shelf Registration Statement (i) solely for the purpose of filing of a post-effective amendment to such Shelf Registration Statement for such time as is reasonably necessary to incorporate annual audited financial information, quarterly financial information or other information required by the SEC with respect to the Issuer (a “Shelf Suspension Period”) where such post-effective amendment is not yet effective and needs to be declared effective to permit Holders to use the related prospectus and the Issuer is using its commercially reasonable best efforts to have such post-effective amendment declared effective or (ii) for up to two periods (each such period pursuant to this clause (ii) a “Suspension Period”) of up to 60 consecutive days (except for the consecutive 60-day period immediately prior to maturity of the Registerable Securities), but no more than an aggregate of 90 days during any 365-day period, if there is a possible acquisition or business combination or other transaction, business development or event involving the Issuers that may require disclosure in the Shelf Registration Statement and the Issuer determines in the exercise of its reasonable judgment that such disclosure is not in the best interests of the Issuer and its stockholders or obtaining any financial statements relating to an acquisition or business combination required to be included in the Shelf Registration Statement would be impracticable. In such a case, the Issuers shall promptly notify any Holder of the suspension of the effectiveness of r the Shelf Registration Statement, as the case may be, provided that such notice shall not require the Issuers to disclose the possible acquisition or business combination or other transaction, business development or event if the Issuer determines in good faith that such acquisition or business combination or other transaction, business development or event should remain confidential. Upon the abandonment, consummation or termination of the possible acquisition or business combination or other transaction, business development or event or the availability of the required financial statements with respect to a possible acquisition or business combination, the suspension of the use of the Shelf Registration Statement, as the case may be, pursuant to this paragraph shall cease and the Issuers shall promptly notify the Holders that the use of the prospectus contained in the Shelf Registration Statement, as the case may be, as amended or supplemented, as applicable, may resume. The Issuers shall provide sufficient copies of the latest version of such prospectus to the Holders promptly upon written request, and in no event later than one Business Day after such request, at any time during such period.

 

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The Exchange Securities and the Private Exchange Securities shall be issued under the Indenture, which has been qualified under the Trust Indenture Act of 1939, as amended (the “TIA”) and shall provide that the Exchange Securities shall not be subject to the transfer restrictions set forth in the Indenture but that the Private Exchange Securities shall be subject to such transfer restrictions. The Indenture shall provide that the Exchange Securities and the Private Exchange Securities shall vote and consent together on all matters as one class and that neither of the Exchange Securities or the Private Exchange Securities will have the right to vote or consent as a separate class on any matter. The Issuers shall use all commercially reasonable efforts to have the Private Exchange Securities bear the same CUSIP number as the Exchange Securities, to the extent permitted by the CUSIP Service Bureau. None of the Issuers or any of the Guarantors shall have any liability under this Agreement solely as a result of such Private Exchange Securities not bearing the same CUSIP number as the Exchange Securities.

 

As soon as practicable after the close of the Exchange Offer and/or the Private Exchange, as the case may be, the Issuers and the Guarantors shall:

 

(i)                                     accept for exchange all Registrable Securities duly tendered and not validly withdrawn pursuant to the Exchange Offer in accordance with the terms of the Exchange Offer Registration Statement and the letter of transmittal which shall be an exhibit thereto;

 

(ii)                                  accept for exchange all Initial Securities properly tendered pursuant to the Private Exchange;

 

(iii)                               deliver to the Trustee for cancellation all Registrable Securities so accepted for exchange; and

 

(iv)                              cause the Trustee promptly to authenticate and deliver Exchange Securities or Private Exchange Securities, as the case may be, to each Holder of Registrable Securities so accepted for exchange in a principal amount equal to the principal amount of the Registrable Securities of such Holder so accepted for exchange.

 

Interest on each Exchange Security and Private Exchange Security will accrue from the last date on which interest was paid on the Registrable Securities surrendered in exchange therefor (or if the Exchange Security or Private Exchange Security is authenticated between a record date and an interest payment date with respect to the Registrable Securities surrendered in exchange therefor, from such interest payment date) or, if no interest has been paid on such Registrable Securities, from the Closing Date. The Exchange Offer and the Private Exchange shall not be subject to any conditions, other than (i) that the Exchange Offer or the Private Exchange, or the making of any exchange by a Holder, does not violate applicable law or any applicable interpretation of the staff of the SEC, (ii) the due tendering of Registrable Securities in accordance with the Exchange Offer and the Private Exchange, as applicable, (iii) that each Holder of Registrable Securities exchanged in the Exchange Offer shall have represented that all Exchange Securities to be received by it shall be acquired in the ordinary course of its business and that at the time of the consummation of the Exchange Offer it shall have no arrangement or understanding with any person to participate in the distribution (within the meaning of the 1933

 

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Act) of the Exchange Securities and shall have made such other representations as may be reasonably necessary under applicable SEC rules, regulations or interpretations to render the use of Form S-4 or other appropriate form under the 1933 Act available, (iv) all governmental approvals which the Issuers reasonably deem necessary for the consummation of the Exchange Offer and the Private Exchange shall have been obtained and (v) that no action or proceeding shall have been instituted or threatened in any court or by or before any governmental agency with respect to the Exchange Offer or the Private Exchange which, in the Issuers’ judgment, would reasonably be expected to impair the ability of the Issuers or any of the Guarantors to proceed with the Exchange Offer or the Private Exchange. The Issuers shall inform the Initial Purchasers of the names and addresses of the Holders to whom the Exchange Offer is made, and the Initial Purchasers shall have the right to contact such Holders and otherwise facilitate the tender of Registrable Securities in the Exchange Offer.

 

2.2                               Shelf Registration. (i) If, because of any changes in law, SEC rules or regulations or applicable interpretations thereof by the staff of the SEC, the Issuers are not permitted to effect the Exchange Offer as contemplated by Section 2.1 hereof, (ii) if for any other reason the Exchange Offer is not consummated within 365 days after the Closing Date, (iii) upon the request of any of the Initial Purchasers with respect to Registrable Securities not eligible to be exchanged for Exchange Securities in the Exchange Offer or (iv) if a Holder is not permitted to participate in the Exchange Offer or does not receive fully tradable Exchange Securities pursuant to the Exchange Offer, then in case of each of clauses (i) through (iv) the Issuers and the Guarantors shall, at their cost:

 

(a)                                 file with the SEC and use their commercially reasonable efforts to cause to be declared effective no later than 180 days after the date of such event contemplated by clauses (i) through (iv) above, a Shelf Registration Statement relating to the offer and sale of the Registrable Securities by the Holders from time to time in accordance with the methods of distribution elected by the Majority Holders participating in the Shelf Registration and set forth in such Shelf Registration Statement.

 

(b)                                 Subject to any Suspension Period provided for in Section 2.1, use their commercially reasonable efforts to keep the Shelf Registration Statement continuously effective in order to permit the Prospectus forming part thereof to be usable by Holders for a period of one year from the date the Shelf Registration Statement is declared effective by the SEC, or for such shorter period that will terminate when all Registrable Securities covered by the Shelf Registration Statement have been sold pursuant to the Shelf Registration Statement, cease to be outstanding or otherwise cease to be Registrable Securities (the “Effectiveness Period”); provided, however, that the Effectiveness Period in respect of the Shelf Registration Statement shall be extended to the extent required to permit dealers to comply with the applicable prospectus delivery requirements of Rule 174 under the 1933 Act and as otherwise provided herein.

 

(c)                                  Notwithstanding any other provisions hereof, use their commercially reasonable efforts to ensure that (i) any Shelf Registration Statement and any amendment thereto and any Prospectus forming part thereof and any supplement thereto complies in all material respects

 

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with the 1933 Act and the rules and regulations thereunder, (ii) any Shelf Registration Statement and any amendment thereto does not, when it becomes effective, contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading and (iii) any Prospectus forming part of any Shelf Registration Statement, and any supplement to such Prospectus (as amended or supplemented from time to time), does not include an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements, in light of the circumstances under which they were made, not misleading.

 

The Issuers and the Guarantors further agree, if necessary, to supplement or amend the Shelf Registration Statement, as required by Section 3(b) below, and to furnish to the Holders of Registrable Securities copies of any such supplement or amendment promptly after its being used or filed with the SEC.

 

2.3                               Expenses. The Issuers shall pay all Registration Expenses in connection with the registration pursuant to Section 2.1 or 2.2. Each Holder shall pay all underwriting discounts and commissions and transfer taxes, if any, relating to the sale or disposition of such Holder’s Registrable Securities pursuant to the Shelf Registration Statement.

 

2.4.                            Effectiveness. (a) The Issuers and the Guarantors will be deemed not to have used their commercially reasonable efforts to cause the Exchange Offer Registration Statement or the Shelf Registration Statement, as the case may be, to become, or to remain, effective during the requisite period if the Issuers or any of the Guarantors voluntarily take any action that would, or omit to take any action which omission would, result in any such Registration Statement not being declared effective or in the Holders of Registrable Securities covered thereby not being able to exchange or offer and sell such Registrable Securities during that period as and to the extent contemplated hereby, unless such action is required by applicable law.

 

(b)                                 An Exchange Offer Registration Statement pursuant to Section 2.1 hereof or a Shelf Registration Statement pursuant to Section 2.2 hereof will not be deemed to have become effective unless it has been declared effective by the SEC; provided, however, that if, after it has been declared effective, the offering of Registrable Securities pursuant to an Exchange Offer Registration Statement or a Shelf Registration Statement is interfered with by any stop order, injunction or other order or requirement of the SEC or any other governmental agency or court, such Registration Statement will be deemed not to have become effective during the period of such interference, until the offering of Registrable Securities pursuant to such Registration Statement may legally resume.

 

2.5                               Interest. In the event that either (a) the Exchange Offer is not consummated on or prior to the 365th day after the Closing Date or (b) a Shelf Registration Statement is not declared effective, in either case, on or prior to the 180th calendar day following the date on which the obligation to file such Shelf Registration Statement arises (each of clauses (i) through (iv) of Section 2.2) (each such event referred to in clauses (a) and (b) of this Section 2.5, a “Registration Default”), the interest rate borne by the Initial Securities shall be increased (such additional interest being referred to as “Additional Interest”) by 0.25% per annum upon the occurrence of

 

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each Registration Default, which rate will be further increased by 0.25% each 90- day period that such Additional Interest continues to accrue under any such circumstance, provided that the maximum aggregate increase in the interest rate of Initial Securities will in no event exceed 1% per annum (including any rate increase paid or to be paid pursuant to the immediately succeeding paragraph). Following the cure of all Registration Defaults, the accrual of Additional Interest will cease and the interest rate will revert to the original rate.

 

If the Shelf Registration Statement has been filed and declared effective but is unusable by the Holders for any reason, and the aggregate number of days in any consecutive twelve-month period for which the Shelf Registration Statement shall not be usable exceeds 30 days in the aggregate (provided that such 30-day period shall toll during any Suspension Period or Shelf Suspension Period), then the interest rate borne by the Initial Securities shall be increased by 0.25% per annum of the principal amount of the Initial Securities for the first 90- day period (or portion thereof) beginning on the 31st such date that such Shelf Registration Statement ceases to be usable, which rate shall be increased by an additional 0.25% per annum of the principal amount of the Initial Securities at the beginning of each subsequent 90-day period, provided that the maximum aggregate increase in the interest rate of Initial Securities will in no event exceed 1% per annum (including any rate increase paid or to be paid pursuant to the immediately preceding paragraph). Any amounts payable under this paragraph shall also be deemed “Additional Interest” for purposes of this Agreement. Upon the Shelf Registration Statement once again becoming usable, the interest rate borne by the Initial Securities will be reduced to the original interest rate if the Issuers and the Guarantors are otherwise in compliance with this Agreement at such time. Additional Interest shall be computed based on the actual number of days elapsed in each 90-day period in which the Shelf Registration Statement is unusable. The Issuers shall notify the Trustee within five business days after each and every date on which an event occurs in respect of which Additional Interest is required to be paid (an “Event Date”). Additional Interest shall be paid by depositing with the Trustee, in trust, for the benefit of the Holders of Registrable Securities, on or before the applicable semiannual interest payment date, immediately available funds in sums sufficient to pay the Additional Interest then due. The Additional Interest due shall be payable on each interest payment date to the record Holder of Initial Securities entitled to receive the interest payment to be paid on such date as set forth in the Indenture. Each obligation to pay Additional Interest shall be deemed to accrue from and including the day following the applicable Event Date.

 

3.                                      Registration Procedures.

 

In connection with the obligations of the Issuers and the Guarantors with respect to Registration Statements pursuant to Sections 2.1 and 2.2 hereof, the Issuers and the Guarantors shall:

 

(a)                                 prepare and file with the SEC a Registration Statement, within the relevant time period specified in Section 2, on the appropriate form under the 1933 Act, which form (i) shall be selected by the Issuers, (ii) shall, in the case of a Shelf Registration, be available for the sale of the Registrable Securities by the selling Holders thereof, (iii) shall comply as to form in all material respects with the requirements of the applicable form and include or incorporate by

 

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reference all financial statements required by the SEC to be filed therewith or incorporated by reference therein, and (iv) shall comply in all respects with the requirements of Regulation S-T under the 1933 Act, and use their commercially reasonable efforts to cause such Registration Statement to become effective and remain effective in accordance with Section 2 hereof;

 

(b)                                 prepare and file with the SEC such amendments and post-effective amendments to each Registration Statement as may be necessary under applicable law to keep such Registration Statement effective for the applicable period; and cause each Prospectus to be supplemented by any required prospectus supplement, and as so supplemented to be filed pursuant to Rule 424 (or any similar provision then in force) under the 1933 Act and comply with the provisions of the 1933 Act, the 1934 Act and the rules and regulations thereunder applicable to them with respect to the disposition of all securities covered by each Registration Statement during the applicable period in accordance with the intended method or methods of distribution by the selling Holders thereof (including sales by any Participating Broker-Dealer);

 

(c)                                  in the case of a Shelf Registration, (i) notify each Holder of Registrable Securities, at least five business days prior to filing, that a Shelf Registration Statement with respect to the Registrable Securities is being filed and advising such Holders that the distribution of Registrable Securities will be made in accordance with the method selected by the Majority Holders participating in the Shelf Registration; (ii) furnish to each Holder of Registrable Securities and to each underwriter of an underwritten offering of Registrable Securities, if any, without charge, as many copies of each Prospectus, including each preliminary Prospectus, and any amendment or supplement thereto and such other documents as such Holder or underwriter may reasonably request, including financial statements and schedules and, if the Holder so requests, all exhibits in order to facilitate the public sale or other disposition of the Registrable Securities; and (iii) hereby consent to the use of the Prospectus or any amendment or supplement thereto by each of the selling Holders of Registrable Securities in connection with the offering and sale of the Registrable Securities covered by the Prospectus or any amendment or supplement thereto;

 

(d)                                 in the case of a Shelf Registration, use their commercially reasonable efforts to register or qualify the Registrable Securities under all applicable state securities or “blue sky” laws of such jurisdictions as any Holder of Registrable Securities covered by a Registration Statement and each underwriter of an underwritten offering of Registrable Securities shall reasonably request by the time the applicable Registration Statement is declared effective by the SEC, and do any and all other acts and things which may be reasonably necessary or advisable to enable each such Holder and underwriter to consummate the disposition in each such jurisdiction of such Registrable Securities owned by such Holder; provided, however, that the Issuers and the Guarantors shall not be required to (i) qualify as a foreign corporation or as a dealer in securities in any jurisdiction where it would not otherwise be required to qualify but for this Section 3(d), or (ii) take any action which would subject it to general service of process or taxation in any such jurisdiction where it is not then so subject;

 

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(e)                                  notify promptly each Holder of Registrable Securities under a Shelf Registration or any Participating Broker-Dealer who has notified the Issuers that it is utilizing the Exchange  Offer Registration Statement as provided in paragraph (f) below and, if requested by such Holder or Participating Broker-Dealer, confirm such advice in writing promptly (i) when a Registration Statement has become effective and when any post-effective amendments and supplements thereto become effective, (ii) of any request by the SEC or any state securities authority for post-effective amendments and supplements to a Registration Statement and Prospectus or for additional information after the Registration Statement has become effective, (iii) of the issuance by the SEC or any state securities authority of any stop order suspending the effectiveness of a Registration Statement or the initiation of any proceedings for that purpose, (iv) in the case of a Shelf Registration, if, between the effective date of a Registration Statement and the closing of any sale of Registrable Securities covered thereby, the representations and warranties of the Issuers and the Guarantors contained in any underwriting agreement, securities sales agreement or other similar agreement, if any, relating to the offering cease to be true and correct in all material respects, (v) of the happening of any event or the discovery of any facts during the period a Shelf Registration Statement is effective which makes any statement made in such Registration Statement or the related Prospectus untrue in any material respect or which requires the making of any changes in such Registration Statement or Prospectus in order to make the statements therein not misleading, (vi) of the receipt by the Issuers or any of the Guarantors of any notification with respect to the suspension of the qualification of the Registrable Securities or the Exchange Securities, as the case may be, for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose and (vii) of any determination by the Issuers that a post-effective amendment to such Registration Statement would be appropriate; (f)                              in the case of the Exchange Offer Registration Statement (i) include in the Exchange Offer Registration Statement a section entitled “Plan of Distribution” which section shall be reasonably acceptable to Merrill Lynch, Pierce, Fenner & Smith Incorporated and J.P. Morgan Securities LLC, on behalf of the Participating Broker-Dealers, and which shall contain a summary statement of the positions taken or policies made public by the staff of the SEC with respect to the potential “underwriter” status of any broker-dealer that holds Registrable Securities acquired for its own account as a result of market-making activities or other trading activities and that will be the beneficial owner (as defined in Rule 13d-3 under the Exchange Act) of Exchange Securities to be received by such broker-dealer in the Exchange Offer, including a statement that any such broker-dealer who receives Exchange Securities for Registrable Securities pursuant to the Exchange Offer may be deemed a statutory underwriter and must deliver a prospectus meeting the requirements of the 1933 Act in connection with any resale of such Exchange Securities, (ii) furnish to each Participating Broker-Dealer who has delivered to the Issuers the notice referred to in Section 3(e), without charge, as many copies of each Prospectus included in the Exchange Offer Registration Statement, including any preliminary prospectus, and any amendment or supplement thereto, as such Participating Broker-Dealer may reasonably request, (iii) hereby consent to the use of the Prospectus forming part of the Exchange Offer Registration Statement or any amendment or supplement thereto, by any Person subject to the prospectus delivery requirements of the SEC, including all Participating Broker-Dealers, in connection with the sale or transfer of the Exchange Securities covered by the Prospectus or any amendment or supplement thereto, and (iv) include in the transmittal letter or similar documentation to be executed by an exchange offeree in order to participate in the Exchange Offer (x) the following provision:

 

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“If the exchange offeree is a broker-dealer holding Registrable Securities acquired for its own account as a result of market-making activities or other trading activities, it will deliver a prospectus meeting the requirements of the 1933 Act in connection with any resale of Exchange Securities received in respect of such Registrable Securities pursuant to the Exchange Offer”; and

 

(y) a statement to the effect that by a broker-dealer making the acknowledgment described in clause (x) and by delivering a Prospectus in connection with the exchange of Registrable Securities, the broker-dealer will not be deemed to admit that it is an underwriter within the meaning of the 1933 Act.

 

(g)                                  (i) in the case of an Exchange Offer, furnish counsel for the Initial Purchasers and (ii) in the case of a Shelf Registration, furnish counsel for the Holders of Registrable Securities copies of any comment letters received from the SEC or any other request by the SEC or any state securities authority for amendments or supplements to a Registration Statement and Prospectus or for additional information;

 

(h)                                 use their commercially reasonable efforts to obtain the withdrawal of any order suspending the effectiveness of a Registration Statement at the earliest possible moment;

 

(i) in the case of a Shelf Registration, furnish to each Holder of Registrable Securities, and each underwriter, if any, without charge, at least one conformed copy of each Registration Statement and any post-effective amendment thereto, including financial statements and schedules (without documents incorporated therein by reference and all exhibits thereto, unless requested);

 

(j)                                    in the case of a Shelf Registration, cooperate with the selling Holders of Registrable Securities to facilitate the timely preparation and delivery of certificates representing Registrable Securities to be sold and not bearing any restrictive legends; and enable such Registrable Securities to be in such denominations (consistent with the provisions of the Indenture) and registered in such names as the selling Holders or the underwriters, if any, may reasonably request at least three business days prior to the closing of any sale of Registrable Securities;

 

(k)                                 in the case of a Shelf Registration, upon the occurrence of any event or the discovery of any facts, each as contemplated by Sections 3(e)(v) and 3(e)(vi) hereof, as promptly as practicable after the occurrence of such an event, use their commercially reasonable efforts to prepare a supplement or post-effective amendment to the Registration Statement or the related Prospectus or any document incorporated therein by reference or file any other required document so that, as thereafter delivered to the purchasers of the Registrable Securities or Participating Broker-Dealers, such Prospectus will not contain at the time of such delivery any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading or will remain so qualified. At such time as such public disclosure is otherwise made or the Issuers determine that such disclosure is not necessary, in each case to correct any misstatement of a material fact or to include any omitted material fact, the Issuers agree promptly to notify each

 

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Holder of such determination and to furnish each Holder such number of copies of the Prospectus as amended or supplemented, as such Holder may reasonably request;

 

(l)                                     in the case of a Shelf Registration, a reasonable time prior to the filing of any Registration Statement, any Prospectus, any amendment to a Registration Statement or amendment or supplement to a Prospectus or any document which is to be incorporated by reference into a Registration Statement or a Prospectus after initial filing of a Registration Statement or any free writing prospectus, provide copies of such document to the Initial Purchasers on behalf of such Holders; and make representatives of the Issuers and the Guarantors as shall be reasonably requested by the Holders of Registrable Securities, or the Initial Purchasers on behalf of such Holders, available for discussion of such document;

 

(m)                             provide the Trustee with printed certificates for the Exchange Securities, Private Exchange Securities or the Registrable Securities, as the case may be, in a form eligible for deposit with the Depositary;

 

(n)                                 Reserved;

 

(o)                                 in the case of a Shelf Registration, enter into agreements (including underwriting agreements) and take all other customary and appropriate actions in order to expedite or facilitate the disposition of such Registrable Securities and in such connection whether or not an underwriting agreement is entered into and whether or not the registration is an underwritten registration:

 

(i) make such representations and warranties to the Holders of such Registrable Securities and the underwriters, if any, in form, substance and scope as are customarily made by issuers to underwriters in similar underwritten offerings as may be reasonably requested by them;

 

(ii) furnish to each Initial Purchaser, each Holder and each underwriter, if any, in such substance and scope as they may request and as are customarily made by issuers to underwriters in primary underwritten offerings, upon the effectiveness of the Shelf Registration Statement, a certificate, dated the date of effectiveness of the Shelf Registration Statement or the date of the closing under any underwriting or similar agreement, as applicable, signed by (x) the president, vice president or the general counsel of the Issuer and (y) the chief financial or chief accounting officer of the Issuer, confirming, as of the date thereof, the matters set forth in paragraphs (i), (ii) and (iii) of Section 5(c) of the Purchase Agreement and such other matters as such parties may reasonably request;

 

(iii) if an underwriting agreement is entered into, cause the same to set forth indemnification provisions and procedures substantially equivalent to the indemnification provisions and procedures set forth in Section 4 hereof with respect to the underwriters and all other parties to be indemnified pursuant to said Section or, at the request of any

 

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underwriters, in the form customarily provided to such underwriters in similar types of transactions; and

 

(iv) deliver such documents and certificates as may be reasonably requested and as are customarily delivered in similar offerings to the Holders of a majority in principal amount of the Registrable Securities being sold and the managing underwriters, if any.

 

The above shall be done at (i) the effectiveness of such Registration Statement (and each post- effective amendment thereto) and (ii) each closing under any underwriting or similar agreement as and to the extent required thereunder;

 

(p)                                 in the case of a Shelf Registration or if a Prospectus is required to be delivered by any Participating Broker-Dealer in the case of an Exchange Offer, make available for inspection during regular business hours by representatives of the Holders of the Registrable Securities, any underwriters participating in any disposition pursuant to a Shelf Registration Statement, any Participating Broker-Dealer and any counsel or accountant retained by any of the foregoing (collectively, the “Inspectors”), all financial and other records, pertinent corporate documents and properties of the Issuers or any Guarantor (“Records”) reasonably requested by any such persons, and cause the respective officers, directors, employees, and any other agents of the Issuers or any Guarantor to supply all information reasonably requested by any such representative, underwriter, special counsel or accountant in connection with a Registration Statement, and make such representatives of the Issuers or any Guarantor available for discussion of such documents as shall be reasonably requested by the Initial Purchasers. Records which the Issuers determine, in good faith, to be confidential and any Records which they notify the Inspectors are confidential shall be maintained in confidence and shall not be disclosed by the Inspectors to any other Person until such time as (1) disclosure of such Records is required to be set forth in the Shelf Registration Statement or a Prospectus in order that such Shelf Registration Statement or Prospectus, as the case may be, does not contain an untrue statement of material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances then existing (in which case the subject information may only be disclosed to another Person following such time as the Shelf Registration Statement in which such information is included is publicly filed by the Issuers with the SEC), (2) disclosure is required to be made in connection with a court, administrative or regulatory proceeding or required by law (but only after prior written notice of such requirement shall have been given to the Issuers, to the extent legally permitted), or (3) the information in such Records has been made generally available to the public. Each such Inspector will be required to agree to keep information obtained by it as a result of its inspections pursuant to this Agreement confidential (except as otherwise permitted to be disclosed hereunder) and not to use such information as the basis for any market transactions in the securities of the Issuers unless and until such is made generally available to the public. Each Inspector will be required to further agree that it will, upon learning that disclosure of such Records is sought under clause (1) above, give notice to the Issuers and allow the Issuers and their subsidiaries at their expense to undertake appropriate action to prevent disclosure of the Records deemed confidential;

 

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(q)                                 (i) in the case of an Exchange Offer Registration Statement, a reasonable time prior to the filing of any Exchange Offer Registration Statement, any Prospectus forming a part thereof, any amendment to an Exchange Offer Registration Statement or amendment or supplement to such Prospectus or any free writing prospectus, provide copies of such document to the Initial Purchasers and to counsel to the Holders of Registrable Securities and make such changes in any such document prior to the filing thereof as the Initial Purchasers or counsel to the Holders of Registrable Securities may reasonably request and, except as otherwise required by applicable law, not file any such document in a form to which the Initial Purchasers on behalf of the Holders of Registrable Securities and counsel to the Holders of Registrable Securities shall not have previously been advised and furnished a copy of or to which the Initial Purchasers on behalf of the Holders of Registrable Securities or counsel to the Holders of Registrable Securities shall reasonably object, and make the representatives of the Issuers or any Guarantor available for discussion of such documents as shall be reasonably requested by the Initial Purchasers; and

 

(ii)                                  in the case of a Shelf Registration, a reasonable time prior to filing any Shelf Registration Statement, any Prospectus forming a part thereof, any amendment to such Shelf Registration Statement or amendment or supplement to such Prospectus or any free writing prospectus, provide copies of such document to the Holders of Registrable Securities, to the Initial Purchasers, to counsel for the Holders and to the underwriter or underwriters of an underwritten offering of Registrable Securities, if any, make such changes in any such document prior to the filing thereof as the Initial Purchasers, the counsel to the Holders or the underwriter or underwriters reasonably request and not file any such document in a form to which the Majority Holders, the Initial Purchasers on behalf of the Holders of Registrable Securities, counsel for the Holders of Registrable Securities or any underwriter shall not have previously been advised and furnished a copy of or to which the Majority Holders, the Initial Purchasers on behalf of the Holders of Registrable Securities, counsel to the Holders of Registrable Securities or any underwriter shall reasonably object, and make the representatives of the Issuers or any Guarantor available for discussion of such document as shall be reasonably requested by the Holders of Registrable Securities, the Initial Purchasers on behalf of such Holders, counsel for the Holders of Registrable Securities or any underwriter.

 

(r)                                    in the case of a Shelf Registration, use their commercially reasonable efforts to cause all Registrable Securities to be listed on any securities exchange on which similar debt securities issued by the Issuers are then listed if reasonably requested by the Majority Holders, or if requested by the underwriter or underwriters of an underwritten offering of Registrable Securities, if any;

 

(s)                                   in the case of a Shelf Registration, use their commercially reasonable efforts to cause the Registrable Securities to be rated by the appropriate rating agencies, if so requested by the Majority Holders, or if requested by the underwriter or underwriters of an underwritten offering of Registrable Securities, if any;

 

(t)                                    otherwise comply with all applicable rules and regulations of the SEC and make available to its security holders, as soon as reasonably practicable, an earnings statement

 

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covering at least 12 months which shall satisfy the provisions of Section 11(a) of the 1933 Act and Rule 158 thereunder;

 

(u)                                 cooperate and assist in any filings required to be made with FINRA and, in the case of a Shelf Registration, in the performance of any due diligence investigation by any underwriter and its counsel (including any “qualified independent underwriter” that is required to be retained in accordance with the rules and regulations of FINRA); and

 

(v)                                 upon consummation of an Exchange Offer or a Private Exchange, obtain a customary opinion of counsel to the Issuers and the Guarantors as may be required by the Trustee.

 

In the case of a Shelf Registration Statement, the Issuers may (as a condition to such Holder’s participation in the Shelf Registration) require each Holder of Registrable Securities to furnish to the Issuers such information regarding the Holder and the proposed distribution by such Holder of such Registrable Securities as the Issuers may from time to time reasonably request in writing. The Issuers may exclude from such Shelf Registration Statement the Registrable Securities of any Holder who fails to furnish such information within a reasonable time (not to exceed 15 business days) after receiving such request and shall be under no obligation to compensate any such Holder for any lost income, interest or other opportunity forgone, or any liability incurred, as a result of the Issuers’ decision to exclude such Holder in accordance with this paragraph.

 

In the case of a Shelf Registration Statement, each Holder agrees that, upon receipt of any notice from the Issuers of the happening of any event or the discovery of any facts, each of the kind described in Section 3(e)(v) hereof, such Holder will forthwith discontinue disposition of Registrable Securities pursuant to a Registration Statement until such Holder’s receipt of the copies of the supplemented or amended Prospectus contemplated by Section 3(k) hereof, and, if so directed by the Issuers, such Holder will deliver to the Issuers (at its expense) all copies in such Holder’s possession, other than permanent file copies then in such Holder’s possession, of the Prospectus covering such Registrable Securities current at the time of receipt of such notice.

 

If any of the Registrable Securities covered by any Shelf Registration Statement are to be sold in an underwritten offering, the underwriter or underwriters and manager or managers that will manage such offering will be selected by the Majority Holders of such Registrable Securities included in such offering and shall be acceptable to the Issuers. No Holder of Registrable Securities may participate in any underwritten registration hereunder unless such Holder (a) agrees to sell such Holder’s Registrable Securities on the basis provided in any underwriting arrangements approved by the persons entitled hereunder to approve such arrangements and (b) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements and other documents required under the terms of such underwriting arrangements.

 

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Notwithstanding anything herein to the contrary, the Issuers and the Guarantors shall be under no obligation to participate in any underwritten offering with respect to the Registrable  Securities in connection with the Shelf Registration and no such underwritten offering shall be effected pursuant to this Agreement without the prior consent of the Issuers.

 

4.                                      Indemnification; Contribution.

 

(a)                                 Each of the Issuers and the Guarantors jointly and severally agree to indemnify and hold harmless each Initial Purchaser, each Holder, each Participating Broker-Dealer, each Person who participates as an underwriter (any such Person being an “Underwriter”) and each Person, if any, who controls any Holder or Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act as follows:

 

(i) against any and all loss, liability, claim, damage and expense whatsoever, as incurred, arising out of any untrue statement or alleged untrue statement of a material fact contained in any Registration Statement (or any amendment or supplement thereto) pursuant to which Exchange Securities or Registrable Securities were registered under the 1933 Act, including all documents incorporated therein by reference, or the omission or alleged omission therefrom of a material fact required to be stated therein or necessary to make the statements therein not misleading, or arising out of any untrue statement or alleged untrue statement of a material fact contained in any Prospectus (or any amendment or supplement thereto) or “issuer free writing prospectus” as defined in Rule 433 under the 1933 Act (“Issuer Free Writing Prospectus”) or the omission or alleged omission therefrom of a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading;

 

(ii) against any and all loss, liability, claim, damage and expense whatsoever, as incurred, to the extent of the aggregate amount paid in settlement of any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or of any claim whatsoever based upon any such untrue statement or omission, or any such alleged untrue statement or omission; provided that (subject to Section 4(d) below) any such settlement is effected with the written consent of the Issuers; and

 

(iii) against any and all expense whatsoever, as incurred (including the fees and disbursements of counsel chosen by any indemnified party), reasonably incurred in investigating, preparing or defending against any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or any claim whatsoever based upon any such untrue statement or omission, or any such alleged untrue statement or omission, to the extent that any such expense is not paid under subparagraph (i) or (ii) above;

 

provided, however, that this indemnity agreement shall not apply to any loss, liability, claim, damage or expense to the extent arising out of any untrue statement or omission or alleged untrue statement or omission made in reliance upon and in conformity with written information furnished to the Issuers by an Initial Purchaser, Holder or Underwriter expressly for use in a

 

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Registration Statement (or any amendment thereto) or any Prospectus (or any amendment or supplement thereto).

 

(b)                                 Each Holder severally, but not jointly, agrees to indemnify and hold harmless the Issuers, the Guarantors, each Initial Purchaser, each Underwriter and the other selling Holders, and each of their respective directors, officers, employees, representatives and agents, and each Person, if any, who controls the Issuers, the Guarantors, the Initial Purchasers, any Underwriter or any other selling Holder within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act, against any and all loss, liability, claim, damage and expense described in the indemnity contained in Section 4(a) hereof, as incurred, but only with respect to untrue statements or omissions, or alleged untrue statements or omissions, made in the Shelf Registration Statement (or any amendment thereto) or any Prospectus included therein (or any amendment or supplement thereto) or any Issuer Free Writing Prospectus in reliance upon and in conformity with written information with respect to such Holder furnished to the Issuers by such Holder expressly for use in the Shelf Registration Statement (or any amendment thereto) or such Prospectus (or any amendment or supplement thereto) or any Issuer Free Writing Prospectus; provided, however, that no such Holder shall be liable for any claims hereunder in excess of the amount of net proceeds received by such Holder from the sale of Registrable Securities pursuant to such Shelf Registration Statement.

 

(c)                                  Each indemnified party shall give notice as promptly as reasonably practicable to each indemnifying party of any action or proceeding commenced against it in respect of which indemnity may be sought hereunder, but failure so to notify an indemnifying party shall not relieve such indemnifying party from any liability hereunder to the extent it is not materially prejudiced as a result thereof and in any event shall not relieve it from any liability which it may have otherwise than on account of this indemnity agreement. An indemnifying party may participate at its own expense in the defense of such action; provided, however, that counsel to the indemnifying party shall not (except with the consent of the indemnified party) also be counsel to the indemnified party. In no event shall the indemnifying party or parties be liable for the fees and expenses of more than one counsel (in addition to any local counsel) separate from their own counsel for all indemnified parties in connection with any one action or separate but similar or related actions in the same jurisdiction arising out of the same general allegations or circumstances. No indemnifying party shall, without the prior written consent of the indemnified parties, settle or compromise or consent to the entry of any judgment with respect to any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or any claim whatsoever in respect of which indemnification or contribution could be sought under this Section 4 (whether or not the indemnified parties are actual or potential parties thereto), unless such settlement, compromise or consent (i) includes an unconditional release of each indemnified party from all liability arising out of such litigation, investigation, proceeding or claim and (ii) does not include a statement as to or an admission of fault, culpability or a failure to act by or on behalf of any indemnified party.

 

(d)                                 If at any time an indemnified party shall have requested an indemnifying party to reimburse the indemnified party for fees and expenses of counsel, such indemnifying party agrees that it shall be liable for any settlement of the nature contemplated by Section 4(a)(ii)

 

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effected without its written consent if (i) such settlement is entered into more than 45 days after receipt by such indemnifying party of the aforesaid request, (ii) such indemnifying party shall have received notice of the terms of such settlement at least 30 days prior to such settlement being entered into and (iii) such indemnifying party shall not have reimbursed such indemnified party in accordance with such request prior to the date of such settlement.

 

(e)                                  If the indemnification provided for in this Section 4 is for any reason unavailable to or insufficient to hold harmless an indemnified party in respect of any losses, liabilities, claims, damages or expenses referred to therein, then each indemnifying party shall contribute to the aggregate amount of such losses, liabilities, claims, damages and expenses incurred by such indemnified party, as incurred, in such proportion as is appropriate to reflect the relative fault of the Issuers and the Guarantors on the one hand and the Holders on the other hand in connection with the statements or omissions which resulted in such losses, liabilities, claims, damages or expenses, as well as any other relevant equitable considerations. The relative fault of the Issuers and the Guarantors on the one hand and the Holders on the other hand shall be determined by reference to, among other things, whether any such untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact relates to information supplied by the Issuers, the Guarantors or the Holders and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission.

 

The Issuers, the Guarantors and the Holders agree that it would not be just and equitable if contribution pursuant to this Section 4 were determined by pro rata allocation (even if the Holders were treated as one entity for such purpose) or by any other method of allocation which does not take account of the equitable considerations referred to above in this Section 4. The aggregate amount of losses, liabilities, claims, damages and expenses incurred by an indemnified party and referred to above in this Section 4 shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in investigating, preparing or defending against any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or any claim whatsoever based upon any such untrue or alleged untrue statement or omission or alleged omission.

 

Notwithstanding the provisions of this Section 4, no Holder shall be required to contribute any amount in excess of the amount by which the total price at which the Initial Securities sold by it were offered exceeds the amount of any damages which such Holder has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission.

 

No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation.

 

For purposes of this Section 4, each Person, if any, who controls a Holder within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act shall have the same rights to contribution as such Holder, and each director of the Issuers, and each Person, if any, who

 

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controls the Issuers within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act shall have the same rights to contribution as the Issuers.

 

5.                                      Miscellaneous.

 

5.1                               Rule 144A. Each of the Issuers and the Guarantors hereby agrees with each Holder, for so long as any Registrable Securities remain outstanding, to file the reports required to be filed by the Issuer (if so required) under the 1933 Act and the Exchange Act in a timely manner and, if at any time the Issuer is not required to file such reports, to make available to any Holder or beneficial owner of Registrable Securities in connection with any sale thereof and any prospective purchaser of such Registrable Securities from such Holder or beneficial owner, the information required by Rule 144A(d)(4) under the 1933 Act in order to permit resales of such Registrable Securities pursuant to Rule 144A under the 1933 Act.

 

5.2                               No Inconsistent Agreements. The Issuers and the Guarantors have not entered into and the Issuers and the Guarantors will not after the date of this Agreement enter into any agreement which is inconsistent with the rights granted to the Holders of Registrable Securities in this Agreement or otherwise conflicts with the provisions hereof. The rights granted to the Holders hereunder do not and will not for the term of this Agreement in any way conflict with the rights granted to the holders of the Issuers’ and the Guarantors’ other issued and outstanding securities under any such agreements.

 

5.3                               Amendments and Waivers. The provisions of this Agreement, including the provisions of this sentence, may not be amended, modified or supplemented, and waivers or consents to departures from the provisions hereof may not be given unless the Issuers and the Guarantors have obtained the written consent of Holders of at least a majority in aggregate principal amount of the outstanding Registrable Securities affected by such amendment, modification, supplement, waiver or departure.

 

5.4                               Notices. All notices and other communications provided for or permitted hereunder shall be made in writing by hand delivery, registered first-class mail, telex, telecopier, or any courier guaranteeing overnight delivery (a) if to a Holder, at the most current address given by such Holder to the Issuers by means of a notice given in accordance with the provisions of this Section 5.4, which address initially is the address set forth in the Purchase Agreement with respect to the Initial Purchasers; and (b) if to the Issuers or the Guarantors, initially at the Issuers’ address set forth in the Purchase Agreement, and thereafter at such other address of which notice is given in accordance with the provisions of this Section 5.4.

 

All such notices and communications shall be deemed to have been duly given: at the time delivered by hand, if personally delivered; two business days after being deposited in the mail, postage prepaid, if mailed; when answered back, if telexed; when receipt is acknowledged, if telecopied; and on the next business day if timely delivered to an air courier guaranteeing overnight delivery.

 

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Copies of all such notices, demands, or other communications shall be concurrently delivered by the person giving the same to the Trustee under the Indenture, at the address specified in such Indenture.

 

5.5                               Successor and Assigns. This Agreement shall inure to the benefit of and be binding upon the successors, assigns and transferees of each of the parties, including, without limitation and without the need for an express assignment, subsequent Holders; provided that nothing herein shall be deemed to permit any assignment, transfer or other disposition of Registrable Securities in violation of the terms of the Purchase Agreement or the Indenture. If any transferee of any Holder shall acquire Registrable Securities, in any manner, whether by operation of law or otherwise, such Registrable Securities shall be held subject to all of the terms of this Agreement, and by taking and holding such Registrable Securities such person shall be conclusively deemed to have agreed to be bound by and to perform all of the terms and provisions of this Agreement, including the restrictions on resale set forth in this

 

Agreement and, if applicable, the Purchase Agreement, and such person shall be entitled to receive the benefits hereof.

 

5.6                               Third Party Beneficiaries. Each Initial Purchaser (even if such Initial Purchaser is not a Holder of Registrable Securities) shall be a third party beneficiary to the agreements made hereunder between the Issuers and the Guarantors, on the one hand, and the Holders, on the other hand, and shall have the right to enforce such agreements directly to the extent it deems such enforcement necessary or advisable to protect its rights or the rights of Holders hereunder. Each Holder of Registrable Securities shall be a third party beneficiary to the agreements made hereunder between the Issuers and the Guarantors, on the one hand, and the Initial Purchasers, on the other hand, and shall have the right to enforce such agreements directly to the extent it deems such enforcement necessary or advisable to protect its rights hereunder.

 

5.7.                            Specific Enforcement. Without limiting the remedies available to the Initial Purchasers and the Holders, the Issuers and the Guarantors acknowledge that any failure by the Issuers or any Guarantor to comply with its obligations under Sections 2.1 through 2.4 hereof may result in material irreparable injury to the Initial Purchasers or the Holders for which there is no adequate remedy at law, that it would not be possible to measure damages for such injuries precisely and that, in the event of any such failure, the Initial Purchasers or any Holder may obtain such relief as may be required to specifically enforce the Issuers’ and the Guarantors’ obligations under Sections 2.1 through 2.4 hereof.

 

5.8.                            Restriction on Resales. Until the expiration of one year after the Closing Date, the Issuers and the Guarantors will not, and will cause their “affiliates” (as such term is defined in Rule 144(a)(1) under the 1933 Act) not to, resell any Initial Securities which are “restricted securities” (as such term is defined under Rule 144(a)(3) under the 1933 Act) that have been reacquired by any of them and shall immediately upon any purchase of any such Initial Securities submit such Initial Securities to the Trustee for cancellation.

 

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5.9                               Counterparts. This Agreement may be executed in any number of counterparts and by the parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement.

 

5.10                        Headings. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof.

 

5.11                        GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK WITHOUT REGARD TO THE PRINCIPLES OF CONFLICT OF LAWS THEREOF.

 

5.12                        Severability. In the event that any one or more of the provisions contained herein, or the application thereof in any circumstance, is held invalid, illegal or unenforceable, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions contained herein shall not be affected or impaired thereby.

 

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IN WITNESS WHEREOF, the parties have executed this Agreement as of April 24, 2015.

 

	
 
    	
COMMUNICATIONS SALES & LEASING, INC.
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Kenneth A. Gunderman
    
	
 
    	
Name:
    	
Kenneth A. Gunderman
    
	
 
    	
Title:
    	
President & CEO
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
CSL CAPITAL, LLC
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Kenneth A. Gunderman
    
	
 
    	
Name:
    	
Kenneth A. Gunderman
    
	
 
    	
Title:
    	
President & CEO
    

 

[Signature Page to Registration Rights Agreement]

 

 

	
 
    	
GUARANTORS:
    
	
 
    	
 
    
	
 
    	
CSL NATIONAL GP, LLC
    
	
 
    	
CSL ALABAMA SYSTEM, LLC CSL ARKANSAS SYSTEM, LLC
    
	
 
    	
CSL FLORIDA SYSTEM, LLC
    
	
 
    	
CSL IOWA SYSTEM, LLC
    
	
 
    	
CSL MISSISSIPPI SYSTEM, LLC
    
	
 
    	
CSL MISSOURI SYSTEM, LLC
    
	
 
    	
CSL NEW MEXICO SYSTEM, LLC
    
	
 
    	
CSL OHIO SYSTEM, LLC
    
	
 
    	
CSL OKLAHOMA SYSTEM, LLC
    
	
 
    	
CSL REALTY, LLC CSL TEXAS SYSTEM, LLC
    
	
 
    	
CSL NORTH CAROLINA REALTY GP, LLC
    
	
 
    	
CSL TENNESSEE REALTY PARTNER, LLC
    
	
 
    	
CSL TENNESSEE REALTY, LLC
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Kenneth A. Gunderman
    
	
 
    	
Name:
    	
Kenneth A. Gunderman
    
	
 
    	
Title:
    	
President & CEO
    

 

[Signature Page to Registration Rights Agreement]

 

 

	
 
    	
CSL NATIONAL, LP, as a Guarantor
    
	
 
    	
 
    
	
 
    	
By: CSL NATIONAL GP, LLC, as its general partner
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Kenneth A. Gunderman
    
	
 
    	
Name:
    	
Kenneth A. Gunderman
    
	
 
    	
Title:
    	
President & CEO
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
CSL NORTH CAROLINA REALTY, LP, as a Guarantor
    
	
 
    	
 
    
	
 
    	
By: CSL NORTH CAROLINA REALTY GP, LLC, as its general partner
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Kenneth A. Gunderman
    
	
 
    	
Name:
    	
Kenneth A. Gunderman
    
	
 
    	
Title:
    	
President & CEO
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
CSL NORTH CAROLINA SYSTEM, LP, as a Guarantor By: CSL NORTH CAROLINA   REALTY GP, LLC, as its general partner
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Kenneth A. Gunderman
    
	
 
    	
Name:
    	
Kenneth A. Gunderman
    
	
 
    	
Title:
    	
President & CEO
    

 

[Signature Page to Registration Rights Agreement]

 

 

	
CONFIRMED AND ACCEPTED,
    	
 
    
	
as of the date first above   written:
    	
 
    
	
 
    	
 
    
	
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED J.P.   MORGAN SECURITIES LLC
    	
 
    
	
 
    	
 
    
	
By: MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
    	
 
    
	
 
    	
 
    
	
By:
    	
/s/ Vikas X. Singh
    	
 
    
	
Authorized Signatory
    	
 
    
	
 
    	
 
    
	
By: J.P. MORGAN SECURITIES LLC
    	
 
    
	
 
    	
 
    
	
By:
    	
 
    	
 
    
	
Authorized Signatory
    	
 
    
	
 
    	
 
    
	
For themselves and as Representatives of the other Initial   Purchasers.
    	
 
    

 

[Signature Page to Registration Rights Agreement]

 

 

	
CONFIRMED AND ACCEPTED,
    	
 
    
	
as of the date first above   written:
    	
 
    
	
 
    	
 
    
	
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED J.P.   MORGAN SECURITIES LLC
    	
 
    
	
 
    	
 
    
	
By: MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
    	
 
    
	
 
    	
 
    
	
By:
    	
 
    	
 
    
	
Authorized Signatory
    	
 
    
	
 
    	
 
    
	
By: J.P. MORGAN SECURITIES LLC
    	
 
    
	
 
    	
 
    
	
By:
    	
/s/ Noah Roth, Vice President
    	
 
    
	
Authorized Signatory
    	
 
    
	
 
    	
 
    
	
For themselves and as Representatives of the other Initial   Purchasers.
    	
 
    

 

[Signature Page to Registration Rights Agreement]EXHIBIT 10.16

 

SEVERANCE AGREEMENT

 

This Severance Agreement (the “Agreement”), dated as of June 1, 2015 (the “Effective Date”), is made by and between Communications Sales & Leasing, Inc., a Maryland corporation (the “Corporation”), and Daniel L. Heard (“Executive”).

 

WHEREAS, the Board of Directors of the Corporation (the “Board”) has determined that it is in the best interests of the Corporation to retain the services of Executive by the Corporation;

 

WHEREAS, Executive desires to be employed by the Corporation; and

 

WHEREAS, the Corporation and Executive desire to enter into this Agreement to set forth their understanding as to their respective rights and obligations in the event of a termination of Executive’s employment.

 

NOW THEREFORE, in consideration of the premises and the mutual covenants herein contained, the Corporation and Executive hereby agree as follows:

 

1.                                      Defined Terms.  For purposes of this Agreement, the following terms have the meanings indicated below:

 

(A)                               “Affiliate” means any business entity that is a Subsidiary of the Corporation and any limited liability company, partnership, corporation, joint venture, or any other entity in which the Corporation or any such Subsidiary owns an equity interest.

 

(B)                               “Annual Incentive Plan” means the Communications Sales & Leasing, Inc. Performance Incentive Compensation Plan (or any successor plan).

 

(C)                               “Annual Incentive Target” means, with respect to any measuring period, the amount of cash compensation that would be payable to Executive under the Annual Incentive Plan for such measuring period, computed assuming that the level of performance with respect to a performance goal identified in accordance with the terms of the Annual Incentive Plan as the “target” level of performance has been achieved.  Where no level of performance has been specifically identified as the “target” level, the “target” level shall be (i) the only level if one level is identified and (ii) the midpoint between the lowest level and the highest level if two or more levels are identified.  Where the amount of compensation depends on the achievement of multiple performance goals, the achievement of each target level of performance with respect to each goal shall be assumed.

 

(D)                               “Cause” means the occurrence of any of the following: (i) Executive’s failure to make a good faith effort to substantially perform his or her duties (other than any such failure due to Executive’s Disability) or Executive’s insubordination with respect to a specific directive of any officer (if Executive reports directly to an officer) or the Board (if Executive reports directly to the Board) to which Executive reports directly or indirectly; (ii) Executive’s dishonesty, gross negligence in the performance of his or her duties hereunder or engaging in willful misconduct, which in the case of any such gross negligence, has caused or is reasonably expected to result in direct or indirect material injury to the Corporation or any Affiliate; (iii) breach by Executive of any material provision of any written agreement, including, without

 

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limitation, this Agreement, with the Corporation or any Affiliate or material violation of any Corporation policy applicable to Executive; or (iv) Executive’s commission of a crime that constitutes a felony or other crime of moral turpitude or fraud. If, subsequent to Executive’s termination of employment hereunder for other than Cause, the Corporation in good faith determines that Executive’s employment could have been terminated for Cause hereunder, Executive’s employment shall, at the election of the Corporation, be deemed to have been terminated for Cause retroactively to the date the events giving rise to Cause occurred.

 

(E)                                A “Change in Control” means, at any time subsequent to the date of this Agreement, the occurrence of any of the following events:

 

(i)                                     any sale, lease, exchange or other transfer (in one transaction or a series of related transactions) of all or substantially all of the assets of the Corporation to any Person or group of related Persons for purposes of Section 13(d) of the Exchange Act (a “Group”), together with any affiliates thereof;

 

(ii)                                  the commencement of the liquidation or dissolution of the Corporation that occurs following the approval by the holders of capital stock of the Corporation of any plan or proposal for such liquidation or dissolution of the Corporation;

 

(iii)                               any Person or Group becomes the beneficial owner (within the meaning of Section 13(d) of the Exchange Act), directly or indirectly, of shares representing more than 50% of the aggregate voting power of the issued and outstanding stock entitled to vote in the election of directors, managers or trustees of the Corporation and such Person or Group actually has the power to vote such shares in any such election;

 

(iv)                              the replacement of a majority of the Board over a two-year period from the directors who constituted the Board at the beginning of such period, and such replacement shall not have been approved by a vote of at least a majority of the Board then still in office who either were members of such Board at the beginning of such period; or

 

(v)                                 a merger or consolidation of the Corporation with another entity in which holders of the Corporation’s common stock immediately prior to the consummation of the transaction hold, directly or indirectly, immediately following the consummation of the transaction, 50% or less of the common equity interest in the surviving corporation in such transaction.

 

Notwithstanding anything herein to the contrary, an event described above shall be considered a Change in Control hereunder only if it also constitutes a “change in control event” under Section 409A of the Code, to the extent necessary to avoid the adverse tax consequences thereunder with respect to any award subject to Section 409A of the Code.

 

(F)                                 “Code” means the Internal Revenue Code of 1986 and the rules and regulations promulgated thereunder, as such law, rules and regulations may be amended, supplemented or replaced from time to time.

 

(G)                               “Date of Termination” has the meaning stated in paragraph (B) of Section 8 hereof.

 

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(H)                              “Disability” means that Executive is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than 12 months.  The determination of whether an individual has a Disability shall be determined under procedures established by the Board.  The Board may rely on any determination that Executive is disabled for purposes of benefits under any long-term disability plan maintained by the Corporation or any Affiliate in which Executive participates, provided that the definition of disability applied under such disability plan meets the requirements of a Disability in the first sentence hereof.

 

(I)                                   “Exchange Act” means the Securities Exchange Act of 1934 and the rules and regulations promulgated thereunder, as such law, rules and regulations may be amended, supplemented or replaced from time to time.

 

(J)                                   “Good Reason” means any one of the following: (i) a material diminution in Executive’s base compensation (from the amount in effect on the date of the Change in Control); (ii) a material diminution in authority, duties, or responsibilities of Executive; (iii) a material diminution in the budget over which executive retains authority; (iv) a material change in the geographic location (i.e., to a location more than 50 miles from Executive’s primary work location prior to such change) at which Executive is required to perform services; and (v) any other action or inaction that constitutes a material breach of Executive’s employment agreement, if any, with the Corporation or any Affiliate; provided, however, that for Executive to be able to resign for “Good Reason,” Executive must give the Corporation and the applicable Affiliate, if any, notice of the above conditions within 90 days after the condition first exists, the Corporation and/or Affiliate must not have remedied the condition within 30 days after receiving written notice, and Executive must resign within 60 days after Executive’s and/or Affiliate’s failure to remedy.

 

(K)                               “Non-Interference / Assistance Period” means the period commencing with the Date of Termination and ending on the first anniversary of the Date of Termination; provided that if a court of competent jurisdiction determines that such period is unenforceable, then such time period shall end on the date that is 6 months after the Date of Termination.

 

(L)                                “Notice of Termination” has the meaning stated in Paragraph (A) of Section 8 hereof.

 

(M)                            “Payment Trigger” means (i) the termination of Executive’s employment with the Corporation or an Affiliate in a manner that constitutes a “separation from service”, as defined in Section 409A, for any reason other than (a) by Executive without Good Reason, (b) by the Corporation as a result of the Disability of Executive or with Cause or, (c) as a result of the death of Executive (ii) coincident with or within two years following a Change in Control..

 

(N)                               “Person” means an individual, partnership, corporation, limited liability company, unincorporated organization, trust or joint venture, or a governmental agency or political subdivision thereof.

 

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(O)                               “Section 409A” means Section 409A of the Code and any proposed, temporary or final regulations, or any other guidance, promulgated with respect to such Section 409A by the U.S. Department of Treasury or the Internal Revenue Service.

 

(P)                                 “Subsidiary” means a “subsidiary corporation,” as that term is defined in Section 424(f) of the Code, or any successor provision.

 

2.                                      Term of Agreement.  This Agreement shall become effective on the Effective Date and shall continue in effect until the earliest of (A) a Date of Termination determined in accordance with Section 8 shall have occurred prior to a Change in Control, (B) if a Payment Trigger shall have occurred during the term of this Agreement, the performance by the Corporation of all its obligations under this Agreement, (C) June 1, 2018, if, as of such date, a Change in Control shall not have occurred and be continuing or (D) if, as of June 1, 2018, a Change in Control shall have occurred and be continuing, either the expiration of such period thereafter within which a Payment Trigger may occur or the ensuing occurrence of a Payment Trigger and the performance by the Corporation of all of its obligations under this Agreement.

 

3.                                      General Provisions.

 

(A)                               The Corporation hereby represents and warrants to Executive as follows:  (i) the execution and delivery of this Agreement and the performance by the Corporation of the actions contemplated hereby have been duly authorized by all necessary corporate action on the part of the Corporation; (ii)this Agreement is a legal, valid and legally binding obligation of the Corporation, enforceable in accordance with its terms; (iii) either the execution or delivery of this Agreement nor the consummation by the Corporation of the actions contemplated hereby (a) will violate any provision of the certificate of incorporation or bylaws (or other charter documents) of the Corporation; or (b) will violate or be in conflict with any applicable law or any judgment, decree, injunction or order of any court or governmental agency or authority. Executive hereby represents and warrants to the Corporation that (x) Executive’s execution, delivery and performance of this Agreement does not and shall not conflict with, breach, violate or cause a default under any contract, agreement, instrument, order, judgment or decree to which Executive is a party or by which he is bound, (y) Executive is not a party to or bound by any employment agreement, non-compete agreement or confidentiality agreement with any other person or entity, and (z) upon the execution and delivery of this Agreement by the Corporation, this Agreement shall be the valid and binding obligation of Executive, enforceable in accordance with its terms.  Executive hereby acknowledges and represents that s/he fully understands the terms and conditions contained herein.

 

(B)                               In no event shall payments be made under this Agreement in respect of more than one termination of Executive’s employment with the Corporation and its Affiliates.

 

(C)                               This Agreement does not create, and shall not be construed as creating, an express or implied contract of employment and, except as otherwise agreed in writing between Executive and the Corporation, Executive does not and shall not have any right to be retained in the employ of the Corporation or any Affiliate.  Notwithstanding the immediately preceding sentence or any other provision of this Agreement, a termination of Executive’s employment with the Corporation or any Affiliate must be effected in accordance with a Notice of

 

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Termination satisfying paragraph (A) of Section 8 in order to constitute a termination for purposes of this Agreement.

 

4.                                      Severance Payments.

 

(A)                               Not in Connection with a Change in Control.  In the event that the Executive’s employment with the Corporation and its Affiliates terminates during the term of this Agreement and such termination does not occur coincident with or within two years following a Change in Control, the terms of this Paragraph (A)of Section 4 shall apply.

 

(i)                                     Death or Disability.  If Executive’s employment terminates as a result of Executive’s death or Disability, then the Corporation shall pay to Executive Executive’s base salary and any accrued vacation pay through the Date of Termination to the extent not theretofore paid, and such amount shall be paid in a lump sum within 30 days following the Date of Termination.

 

(ii)                                  By the Corporation for Cause or by Executive (with or without Good Reason).  If the Corporation terminates Executive’s employment for Cause or Executive terminates his or her employment with the Corporation (whether with or without Good Reason), then the Corporation shall pay to Executive Executive’s base salary and any accrued vacation pay through the Date of Termination to the extent not theretofore paid, and such amount shall be paid in a lump sum within 30 days following the Date of Termination.

 

(iii)                               By the Corporation not for Cause.  If the Corporation terminates Executive’s employment not for Cause, then the Corporation shall pay to Executive:

 

(a)                                 Executive’s base salary and any accrued vacation pay through the Date of Termination to the extent not theretofore paid, and such amount shall be paid in a lump sum within 30 days following the Date of Termination; and

 

(b)                                 subject to Sections 7 and 10 of this Agreement, an amount no less than equal to Executive’s annual base salary in effect on the Date of Termination.  This amount will be paid to Executive in equal installments over a period of 1 year.  Such installment payments will be made to Executive in accordance with the Corporation’s customary payroll practices.

 

In the event that Executive’s employment with the Corporation is terminated in a manner described in Paragraph (A)(iii) of Section 4, Executive will not be entitled to, and will not receive, any other post-termination compensation, including any benefits under any other severance or change in control severance plan, program, agreement or other form of arrangement maintained or entered into by the Corporation or any Affiliate.

 

(B)                               Coincident with or within two years following a Change in Control.  In the event that Executive’s employment with the Corporation and its Affiliates terminates during the term of this Agreement and such termination occurs coincident with or within two years following a Change in Control, the terms of this Paragraph (B) of Section 4 shall apply.

 

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(i)                                     Death or Disability.  If Executive’s employment terminates as a result of Executive’s death or Disability, then the Corporation shall pay to Executive Executive’s base salary and any accrued vacation pay through the Date of Termination to the extent not theretofore paid, and such amount shall be paid in a lump sum within 30 days following the Date of Termination.

 

(ii)                                  By the Corporation for Cause or by Executive without Good Reason.  If the Corporation terminates Executive’s employment for Cause or Executive terminates his or her employment without Good Reason, then the Corporation shall pay to Executive Executive’s base salary and any accrued vacation pay through the Date of Termination to the extent not theretofore paid, and such amount shall be paid in a lump sum within 30 days following the Date of Termination.

 

(iii)                               Upon the occurrence of a Payment Trigger.  If a Payment Trigger occurs during the term of this Agreement, then the Corporation shall provide to Executive:

 

(a)                                 within 30 days following the Date of Termination,  Executive’s base salary and accrued vacation pay through the Date of Termination to the extent not theretofore paid;

 

(b)                                 within (I) 30 days following the Date of Termination or (II) any earlier date as required by the Annual Incentive Plan, and subject to Sections 7 and 10 of this Agreement, the amount of any incentive compensation that has been allocated or awarded to Executive for a completed fiscal year or other completed measuring period preceding the occurrence of the Date of Termination under any incentive compensation plan that has not yet been paid to Executive;

 

(c)                                  within (I) the 30-day period commencing on the 60th day following the Date of Termination, or (II) such later period as required by Section 6, and subject to Sections 7 and 10 of this Agreement, a lump sum payment equal to the product of (x) the Annual Incentive Target in effect immediately prior to the Payment Trigger and (y) a fraction, the numerator of which is the number of calendar days in the current fiscal year through the Date of Termination, and the denominator of which is 365, reduced by the amount, if any, paid or payable to Executive under the Annual Incentive Plan’s terms with respect to the fiscal year during which the Date of Termination occurs;

 

(d)                                 Commencing on the 60th day following the Date of Termination and continuing for a period of 1 year, or within such other period as required by Section 6, and subject to Sections 7 and 10 of this Agreement, the Corporation shall pay to Executive, in equal installments over the course of the applicable payment period, an amount equal to the product of: (I) two multiplied by, (II) the sum of: (x) the higher of (1) Executive’s annual base salary in effect immediately prior to the occurrence of the Change in Control and (2) Executive’s annual base salary in effect immediately prior to the Payment Trigger and (y) the higher of Executive’s Annual Incentive Target in effect immediately prior to the occurrence of the Change in Control and Executive’s Annual Incentive Target in effect immediately prior to the Payment Trigger.  The installment payments will be made to Executive in accordance with the Corporation’s customary payroll practices;

 

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(e)                                  Commencing on the 60th day following the Date of Termination and continuing for a period of 1 year, and subject to Sections 7 and 10 of this Agreement the Corporation shall pay to Executive, in equal installments over the course of the applicable payment period, an amount equal to the product of (I) Executive’s monthly premium for health and dental insurance continuation coverage for Executive and Executive’s family under the Consolidated Omnibus Budget Reconciliation Act of 1985, based on the monthly premium rate for such coverage in effect on the Date of Termination, multiplied by (II) 24 months.  The installment payments will be made to Executive in accordance with the Corporation’s customary payroll practices;

 

(f)                                   subject to Sections 7 and 10 of this Agreement, up to $25,000 for executive transition/outplacement services received by Executive (I) prior to the expiration of the Non-Interference / Assistance Period (II) through a third party professional provider of such services identified and retained by Executive.  Such payment will be paid directly to such third party provider by the Corporation promptly following its receipt of an invoice from such provider confirming the provision of such services to Executive.

 

Notwithstanding the foregoing, if Executive receives any payments or benefits pursuant to Paragraph (B)(iii) of this Section 4, Executive shall not be entitled to any severance pay or benefits under any other severance or change in control severance plan, program or policy maintained by the Corporation and/or one or more Affiliates, unless otherwise specifically provided therein in a specific reference to this Agreement.

 

5.                                      Certain Reductions in Change in Control Payments.

 

(A)                               In the event that the Accounting Firm determines that any Change in Control Payment to Executive would be subject to the Excise Tax, the Accounting Firm shall determine, in accordance with the following restrictions, whether to reduce the aggregate amount of the Change in Control Payments payable to Executive to the Reduced Amount.  For clarity, the Change in Control Payments shall be reduced to the Reduced Amount only if the Accounting Firm determines that Executive would receive a greater Net After-Tax Benefit if Executive’s Change in Control Payments were reduced to the Reduced Amount.

 

(B)                               If the Accounting Firm determines that the aggregate Change in Control Payments otherwise payable to Executive should be reduced to the Reduced Amount in accordance with Section 5(A), the Corporation shall promptly notify Executive to that effect and provide Executive a copy of the detailed calculation thereof.  All determinations made by the Accounting Firm under this Section 5 shall be binding upon the Corporation and Executive and shall be made within 30 business days after termination of Executive’s employment.  The reduction of Executive’s Change in Control Payments to the Reduced Amount, if applicable, shall be made by reducing the Change in Control Payments under the following Paragraphs of Section 4 (and no other Change in Control Payments) in the following order:  (i) Paragraph (B)(iii)(d), (ii) Paragraph (B)(iii)(c), (iii) Paragraph (B)(iii)(e), and (iv) Paragraph (B)(iii)(f).  All fees and expenses of the Accounting Firm pursuant to this Section 5 shall be borne solely by the Corporation.

 

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(C)                               The following terms have the following meanings for purposes of this Section 5.

 

(i)                                     “Accounting Firm” means an independent, nationally recognized accounting firm designated by the Corporation in good faith prior to a Change in Control; provided that if the Accounting Firm is not willing or able to value the restrictive covenants in Section 9, then the restrictive covenants shall be valued by an independent third-party valuation specialist selected by the Corporation in good faith.

 

(ii)                                  “Change in Control Payment” means any payment or distribution by the Corporation in the nature of compensation (within the meaning of Section 280G(b)(2) of the Code) to or for the benefit of Executive that is contingent on a Change in Control, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise.

 

(iii)                               “Excise Tax” means the excise tax imposed by Section 4999 of the Code, together with any interest or penalties imposed with respect to such excise tax.

 

(iv)                              “Net After-Tax Benefit” means the aggregate Value of all Change in Control Payments to Executive, net of all taxes imposed on Executive with respect thereto under Sections 1 and 4999 of the Code and under applicable state and local laws, as determined by the Accounting Firm after taking into account any value attributable to the restrictive covenants in Section 9 that is treated as reasonable compensation described in Section 280G(b)(4) of the Code.

 

(v)                                 “Reduced Amount” means the greatest amount of Change in Control Payments that can be paid to Executive that would not result in the imposition of the Excise Tax upon Executive if the Accounting Firm determines to reduce Change in Control Payments to Executive pursuant to this Section 5, determined after taking into account any value attributable to the restrictive covenants in Section 9 that is treated as reasonable compensation described in Section 280G(b)(4) of the Code.

 

(vi)                              “Value” of a Change in Control Payment means the economic present value of a Change in Control Payment as of the date of the Change in Control (or such other date as required pursuant to Section 280G), as determined by the Accounting Firm pursuant to Section 280G of the Code using the discount rate required by Section 280G(d)(4) of the Code.

 

6.                                      Compliance with Section 409A.

 

(A)                               Notwithstanding anything contained in this Agreement to the contrary, if Executive is a “specified employee,” as determined under the Corporation’s policy for determining specified employees on the Date of Termination, all payments, benefits or reimbursements paid or provided under this Agreement that constitute a “deferral of compensation” within the meaning of Section 409A of the Code, that are provided as a result of a “separation from service” within the meaning of Section 409A and that would otherwise be paid or provided during the first six months following such Date of Termination shall be accumulated through and paid or provided (together with interest at the applicable Federal short-term rate,

 

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compounded semi-annually, in effect under Section 1274(d) of the Code as of the Date of Termination) within 30 calendar days after the first business day following the six month anniversary of such Date of Termination (or, if Executive dies during such six-month period, within 10 calendar days after Executive’s death).

 

(B)                               It is intended that the payments and benefits provided under this Agreement either shall be exempt from the application of or shall comply with the requirements of Section 409A.  For purposes of Section 409A, each payment hereunder shall be considered a separate payment.  This Agreement shall be construed, administered, and governed in a manner that effects such intent, and the Corporation shall not take any action that would be inconsistent with such intent. Without limiting the foregoing, the payments and benefits provided under this Agreement may not be deferred, accelerated, extended, paid out or modified in a manner that would result in the imposition of an additional tax under Section 409A upon Executive. Although the Corporation shall use its best efforts to avoid the imposition of taxation, interest and penalties under Section 409A, the tax treatment of the benefits provided under this Agreement is not warranted or guaranteed. Neither the Corporation, its Affiliates nor any of their respective directors, officers, employees or advisors shall be held liable for any taxes, interest, penalties or other monetary amounts owed by Executive or any other taxpayer as a result of the Agreement.

 

7.                                      Release.  Notwithstanding anything contained herein to the contrary, the Corporation shall only be obligated to pay or provide, or continue to pay or provide, any benefit under Paragraphs (A)(iii), (B)(iii)(c), (B)(iii)(d), (B)(iii)(e) and (B)(iii)(f) of Section 4 to the extent that: (A) within the 45-day period after the Date of Termination, Executive executes a waiver and release substantially in the form attached hereto as Exhibit A; (B) Executive does not revoke such waiver and release; (C) the waiver and release becomes effective and irrevocable in accordance with its terms; (D) Executive remains in compliance with the terms and conditions of Section 9; and (E) Executive is not then-currently subject to any claims for recoupment or clawback of any of his or her compensation from the Corporation under any clawback and/or recoupment policy of the Corporation applicable to Executive.

 

8.                                      Termination Procedures.

 

(A)                               Except in the event that Executive’s employment terminates as a result of Executive’s death (in which case no Notice of Termination is required), any purported termination of Executive’s employment shall be communicated by written Notice of Termination from one party hereto to the other party hereto in accordance with Section 13 hereof.  For purposes of this Agreement, a “Notice of Termination” means a written notice that indicates the specific termination provision in this Agreement relied upon, and, if applicable, sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of Executive’s employment under the provision so indicated.  Further, a Notice of Termination for Cause shall include a copy of a resolution duly adopted by the affirmative vote of not less than a majority of the entire membership of the Board (excluding for these purposes Executive himself or herself) at a meeting of the Board that was called and held for the purpose of considering the termination (after reasonable notice to Executive and an opportunity for Executive, together with his or her counsel, to be heard by the members of the Board) finding that, in the informed, reasonable, good faith judgment of the Board, Executive was guilty of conduct set forth in the definition of Cause in Section 1(D), and specifying the particulars thereof in detail.

 

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(B)                               “Date of Termination” means the effective date of the termination of Executive’s employment with the Corporation resulting from Executive’s death or an event that constitutes a “separation from service” within the meaning of Section 409A of the Code.  Except as provided in the next sentence, the Date of Termination shall be determined as follows: (i) if Executive’s employment is terminated for Disability, 20 business days after Notice of Termination is given (provided that Executive shall not have returned to the full-time performance of Executive’s duties during that 20 business day period); (ii) if Executive’s employment is terminated as a result of Executive’s death, the date of Executive’s death; and (iii) if Executive’s employment is terminated for any other reason, the date specified in the Notice of Termination, which, in the case of a termination by the Corporation, shall not be less than 10 business days except in the case of a termination for Cause (in which case the date of termination may be earlier), and, in the case of a termination by Executive, shall not be less than 10 business days nor more than 20 business days, respectively, after the date such Notice of Termination is given.  The Corporation and Executive shall take all steps necessary (including with regard to any post-termination services by Executive) to ensure that any termination described in this Paragraph (B) of Section 8 constitutes a “separation from service” (or is otherwise a permissible distribution event) within the meaning of Section 409A of the Code and that the date on which such separation from service (or permissible distribution event) takes place is the “Date of Termination”.

 

9.                                      Non-Disclosure; Non-Competition; and Non-Interference

 

(A)                               Executive acknowledges that in the course of his or her employment with the Corporation and its Affiliates s/he has had and will have access to confidential information and trade secrets proprietary to the Corporation and its Affiliates, including, without limitation, information relating to the Corporation’s and its Affiliates’ products, suppliers, and customers, the sources, nature, processes, costs and prices of the Corporation’s and its Affiliates’ products, the names, addresses, contact persons, purchasing and sales histories, and preferences of the Corporation’s and its Affiliates’ suppliers and customers, the Corporation’s and its Affiliates’ business plans and strategies, and the names and addresses of, amounts of compensation paid to, and the trading and sales performance of the Corporation’s and its Affiliates’ employees and agents (hereinafter referred to as the “Confidential Information”).  Executive further acknowledges that the Confidential Information is proprietary to the Corporation and its Affiliates, that the unauthorized disclosure of any of the Confidential Information to any person or entity will result in immediate and irreparable competitive injury to the Corporation and its Affiliates, and that such injury cannot adequately be remedied by an award of monetary damages.  Accordingly, Executive shall not at any time disclose any Confidential Information to any person or entity who is not properly authorized by the Corporation or its Affiliates to receive the information without the prior written consent of the Chairman of the Board (which consent may be withheld for any reason or no reason) unless and except to the extent that such disclosure is required by any subpoena or other legal process (in which event Executive shall give the Chairman of the Board prompt written notice of such subpoena or other legal process in order to permit the Corporation and its Affiliates to seek appropriate protective orders), and that s/he shall not use any Confidential Information for his or her own account without the prior written consent of the Chairman of the Board (which consent may be withheld for any reason or no reason).

 

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(B)                               Executive shall not during his or her employment with the Corporation or its Affiliates and thereafter until the expiration of the Non-Interference/Assistance Period, in any manner, directly or indirectly, through any person, firm or corporation, alone or as a member of a partnership or as an officer, director, shareholder, investor or employee of or in any other corporation or enterprise or otherwise, (i) engage in or be engaged in, or collaborate or partner with, or assist or provide perform any executive, managerial, supervisory, sales, marketing, research, consulting, or customer-related services to any other person, firm, corporation or enterprise in engaging or being engaged in, any Competitive Business within any state in which the Corporation or any Affiliate conducts business as of Executive’s Date of Termination, or (ii) directly or indirectly solicit, divert, take away, service, or accept the business of any active customer of the Corporation or any Affiliate, or any person or entity who is or was at any time during the previous one-year period a customer of the Corporation or any Affiliate.  Nothing in this Section 9 prohibit Executive from being:  (a) owning shares of a mutual fund or a diversified investment company or (b) passively owning not more than 5% of any class of outstanding equity securities of any corporation or other entity that is publicly traded, so long as Executive does not actively participate in the business of such corporation or other entity.  For purposes of this Section 9, “Competitive Business” means the business then actively being conducted by the Corporation or any Affiliate as of the Date of Termination, and any area of business in which the Corporation or any Affiliate has engaged during the one year period immediately preceding the Date of Termination, including, but not limited to, the business of owning, acquiring, developing, building and/or leasing communication distribution systems, the business of owning, acquiring, developing, building and/or leasing other real property assets within or outside of the communications infrastructure industry for lease to third parties and the business of operating, managing and/or administering real estate investment trusts.

 

(C)                               Executive shall not during his or her employment with the Corporation or its Affiliates and thereafter until the expiration of the Non-Interference/Assistance Period, employ, partner or collaborate on a business enterprise with or assist any person or entity in employing, any employee of the Corporation or an Affiliate.  Executive shall not during his or her employment with the Corporation or its Affiliates and thereafter until the expiration of the Non-Interference/Assistance Period solicit, or assist any person or entity to solicit, any employee of the Corporation or any Affiliate to leave the employment of the Corporation or such Affiliate or to become employed by, or partner or collaborate on a business enterprise with, any other entity.

 

(D)                               If a court of competent jurisdictions holds that the restrictions stated herein are unreasonable under circumstances then existing, the parties agree to substitute the maximum period, scope or geographical area reasonable under such circumstances for the stated period, scope or area and that the court shall be allowed to revise and/or modify the restrictions contained herein to cover the maximum period, scope and area permitted by applicable law.

 

(E)                                Executive acknowledges that the covenants contained in this Section 9 are a principal inducement for the willingness of the Corporation to enter into this Agreement and make the payments and provide to Executive the benefits described in this Agreement and that

 

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the Corporation and Executive intend the covenants (i) to be binding upon and enforceable against Executive in accordance with their terms, notwithstanding any common or statutory law to the contrary; and (ii) to survive and continue in full force in accordance with their terms notwithstanding the termination of this Agreement.  Executive agrees that the obligations of the Corporation under this Agreement (specifically including, but not limited to, the obligation to make any payment or provide any benefit under any of Paragraphs (A)(iii), (B)(iii)(c), (B)(iii)(d), (B)(iii)(e) and (B)(iii)(f) of Section 4) constitute sufficient consideration for the covenants contained in this Section 9.  The Corporation and Executive further agree that the restrictions contained in this Section 9 are reasonable in period, scope and geographical area and are necessary to protect the legitimate business interests and Confidential Information of the Corporation and its Affiliates.  Executive agrees that s/he will notify the Corporation in writing if s/he has any questions regarding the applicability of this Section 9.  Because Executive’s services are unique and because Executive has access to Confidential Information, the parties agree that the Corporation and its Affiliates would be damaged irreparably in the event any of the provisions of this Section 9 were not performed in accordance with their specific terms or were otherwise breached and that money damages would be an inadequate remedy for any such non-performance or breach.  In the event that Executive breaches or threatens to breach any such provision of this Section 9, the parties agree that the Corporation and its Affiliates shall be entitled to seek any and all equitable and legal relief provided by law, specifically including immediate and permanent injunctive relief to prevent any breach or threatened breach of any of such provisions and to enforce such provisions specifically (without posting a bond or other security).  Executive hereby waives any claim that the Corporation and its Affiliates have an adequate remedy at law.  The parties agree that the foregoing relief shall not be construed to limit or otherwise restrict the ability of the Corporation and its Affiliates to pursue any other remedy provided by law, including the recovery of any actual, compensatory or punitive damages.

 

10.                               Cessation of Payments; Recoupment.  The Corporation and Executive acknowledge and agree that the Corporation may cease making any and all payments payable under Paragraphs (A)(iii), (B)(iii)(c), (B)(iii)(d), (B)(iii)(e) and (B)(iii)(f) of Section 4 if the Corporation reasonably believes that Executive has breached, or is in breach of, any of his/her obligations under Section 9.  Without prejudice to any other remedies available to the Corporation under this Agreement or applicable law, the Corporation may also seek to recoup, and Executive agrees to return upon Corporation’s written request, any payments (other than Executive’s annual base salary and any accrued vacation pay through the Date of Termination) made to Executive under Paragraphs (A)(iii), (B)(iii)(c), (B)(iii)(d), (B)(iii)(e) and (B)(iii)(f) of Section 4 if Executive has breached, or is in breach of, any of Executive’s obligations under this Agreement.

 

11.                               Disputes.

 

(A)                               Except as set forth in Section 11(B) below, any dispute or controversy arising out of or in connection with this Agreement shall, upon a written notice from Executive to the Corporation either before suit thereupon is filed or within 20 business days thereafter, be settled exclusively by binding arbitration in accordance with the Commercial Arbitration Rules of the American Arbitration Association.  The arbitration proceeding shall be conducted before a panel of three arbitrators sitting in the municipality in which Executive’s principal place of employment with the Corporation (or, if applicable, an Affiliate) is (or was, in the event that

 

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Executive’s employment is terminated prior to the initiation of arbitration proceedings) located.  Judgment may be entered on the arbitrator’s award in any court having jurisdiction.

 

(B)                               Notwithstanding anything to the contrary in Section 11(A), the Corporation shall not be required to seek or participate in arbitration regarding any breach or threatened breach by Executive of his or her obligations under Section 9, and may instead pursue its remedies for such breach in a court of competent jurisdiction in accordance with Section 15.

 

(C)                               Corporation undertakes and agrees that if Corporation breaches or threatens to breach any material provision of this Agreement, Corporation shall be liable for any attorneys’ fees and costs reasonably incurred by Executive in enforcing, in accordance with the terms of this Agreement, Executive’s rights under this Agreement.  Executive undertakes and agrees that if Executive breaches or threatens to breach any provision of this Agreement, Executive shall be liable for any attorneys’ fees and costs reasonably incurred by the Corporation in enforcing, in accordance with the terms of this Agreement, its rights under this Agreement.

 

12.                               Successors; Binding Agreement.

 

(A)                               Except as otherwise provided herein, all covenants and agreements contained in this Agreement shall bind and inure to the benefit of and be enforceable by and upon the Corporation and its successors and assigns.

 

(B)                               This Agreement shall inure to the benefit of and be enforceable by Executive’s personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees, and legatees.  Any and all amounts payable to Executive hereunder that, as a result of Executive’s death, would not be paid until after Executive’s death (other than amounts which, by their terms, terminate upon the death of Executive) shall be paid in accordance with the terms of this Agreement to the executors, personal representatives, or administrators of Executive’s estate.

 

13.                               Notices.  For purposes of this Agreement, all notices and other communications provided pursuant to the Agreement shall be in writing and shall be deemed to have been duly given when delivered or mailed by United States registered mail, return receipt requested, postage prepaid, addressed to the respective addresses set forth below, or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notice of change of address shall be effective only upon actual receipt:

 

To the Corporation:

 

Communications Sales & Leasing, Inc.
 10802 Executive Center Drive
 Benton Building, Suite 300
 Little Rock, Arkansas 72211
 Attention: Chief Executive Officer

 

To Executive:
 Daniel L. Heard

 

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79 Valley Club Circle
 Little Rock, Arkansas 72212

 

14.                               Miscellaneous.  Except as otherwise provided in Section 6, no provision of this Agreement may be modified, waived, or discharged unless such waiver, modification, or discharge is agreed to in writing and signed by Executive and an officer of the Corporation specifically designated by the Board.  No waiver by either party hereto at any time of any breach by the other party hereto of, or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time.  No agreements or representations, oral or otherwise, express or implied, with respect to the subject matter hereof have been made by either party which are not expressly set forth in this Agreement.  Any payments provided for hereunder shall be paid net of any applicable withholding required under federal, state, or local law and any additional withholding to which Executive has agreed.

 

15.                               Governing Law.  The validity, interpretation, construction, and performance of this Agreement shall be governed by the laws of the State of Maryland, without giving effect to any choice of law or conflict of law provision or rule (whether of the State or Maryland or any other jurisdiction.  Any legal action, other than an arbitration described in Paragraph (A) of Section 11, relating to or arising out of this Agreement shall be filed and litigated exclusively in a state court of competent jurisdiction located in Little Rock, Arkansas.

 

16.                               Validity.  The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, each of which shall remain in full force and effect.

 

17.                               Counterparts.  This Agreement may be executed in several counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument.

 

[Signature page follows]

 

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IN WITNESS WHEREOF, the parties have signed this Agreement as of the date set forth above.

 

	
 
    	
COMMUNICATIONS SALES &   LEASING, INC.
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Kenneth A. Gunderman
    
	
 
    	
 
    	
Name: Kenneth A. Gunderman
    
	
 
    	
 
    	
Title: President and Chief Executive Officer
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
EXECUTIVE
    
	
 
    	
 
    
	
 
    	
/s/ Daniel L. Heard
    
	
 
    	
Daniel L. Heard
    

 

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EXHIBIT A

******

WAIVER AND RELEASE AGREEMENT

 

THIS WAIVER AND RELEASE AGREEMENT (this “Waiver and Release”) is entered into by and between             (“Executive”) and Communications Sales & Leasing, Inc. (the “Company”) (collectively, the “Parties”).

 

WHEREAS, the Parties have entered into a Severance Agreement dated as of     , 20   (the “Agreement”);

 

WHEREAS, Executive’s employment has been or will be terminated in accordance with the Agreement as of [DATE] (the “Date of Termination”); and

 

WHEREAS, the Parties seek to fully and finally settle all existing claims, whether or not now known, arising out of Executive’s employment and termination of employment on the terms set forth herein.

 

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

 

1.                                      In consideration of the payments to be made and the benefits to be received by Executive pursuant to Paragraphs (A)(iii), (B)(iii)(c), (B)(iii)(d), (B)(iii)(e) and (B)(iii)(f) of Section 4 of the Agreement (the “Severance Benefits”) which Executive acknowledges are in addition to payments and benefits to which Executive would otherwise be entitled upon termination of employment without providing a release of claims under the normal operation of the Company’s benefit plans, policies, and/or practices Executive hereby agrees to provide the waiver and release set forth in Section 2 below.

 

2.                                      For valuable consideration from the Company, receipt of which is hereby acknowledged, Executive waives, releases, and forever discharges the Company and its current and former parents, subsidiaries, affiliates, divisions, shareholders, owners, members, officers, directors, attorneys, agents, employees, successors, and assigns, and the Company’s parents’, subsidiaries’, and affiliates’ divisions, shareholders, owners, members, officers, directors, attorneys, agents, employees, successors, and assigns (collectively referred to as the “Company Releasees”) from any and all rights, causes of action, claims or demands, whether express or implied, known or unknown, that arise on or before the date that Executive executes this Waiver and Release, which Executive has or may have against the Company and/or the Company Releasees, including, but not limited to, any rights, causes of action, claims, or demands relating to or arising out of the following:

 

a.                                      anti-discrimination, anti-harassment, and anti-retaliation laws, such as the Age Discrimination in Employment Act, the Older Workers Benefit Protection Act, and Executive Order 11141, which prohibit employment discrimination based on age; Title VII of the Civil Rights Act of 1964, the Civil Rights Act of 1866 (42 U.S.C. § 1981), the Equal Pay Act, and Executive Order 11246, which prohibit

 

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discrimination based on race, color, national origin, religion, or sex; the Genetic Information Nondiscrimination Act, which prohibits discrimination on the basis of genetic information; the Americans With Disabilities Act and Sections 503 and 504 of the Rehabilitation Act of 1973, which prohibit discrimination based on disability; and any other federal, state, or local laws prohibiting employment or wage discrimination; and

 

b.                                      other employment laws, such as the Worker Adjustment and Retraining Notification Act, which requires that advance notice be given of certain workforce reductions; the Employee Retirement Income Security Act of 1974, which, among other things, protects employee benefits; the Family and Medical Leave Act, which requires employers to provide leaves of absence under certain circumstances; state laws which regulate wage and hour matters, including all forms of compensation, vacation pay, sick pay, compensatory time, overtime, commissions, bonuses, and meal and break periods; state family, medical, and military leave laws, which require employers to provide leaves of absence under certain circumstances; the Sarbanes Oxley Act; and any other federal, state, or local laws relating to employment which—to the extent Employee performed work for the Company in West Virginia—would include, without limitation, the West Virginia Human Rights Act, and—to the extent Employee performed work for the Company in New Jersey—would include, without limitation, the New Jersey Conscientious Employee Protection Act; and

 

c.                                       tort, contract, and quasi-contract claims, such as claims for wrongful discharge, physical or personal injury, intentional or negligent infliction of emotional distress, fraud, fraud in the inducement, negligent misrepresentation, defamation, invasion of privacy, interference with contract or with prospective economic advantage, breach of express or implied contract, unjust enrichment, promissory estoppel, breach of covenants of good faith and fair dealing, negligent hiring, negligent supervision, negligent retention, and similar or related claims; and

 

d.                                      all remedies of any type, including, but not limited to, damages and injunctive relief, in any action that may be brought on Executive’s behalf against the Company and/or the Company Releasees by any government agency or other entity or person.

 

Executive understands that Executive is releasing claims about which Executive may not know anything at the time Executive executes this Waiver and Release.  Executive acknowledges that it is Executive’s intent to release such unknown claims, even though Executive recognizes that someday Executive might learn new facts relating to Executive’s employment or learn that some or all of the facts Executive currently believes to be true are untrue, and even though Executive might then regret having signed this Waiver and Release.  Nevertheless, Executive acknowledges Executive’s awareness of that risk and agrees that this Waiver and Release shall remain effective in all respects in any such case.  Executive expressly waives all rights Executive might have under any laws, including, without limitation, the laws set forth in Schedule I to this Waiver and Release, intended to protect Executive from waiving unknown claims.

 

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3.                                      Notwithstanding anything to the contrary in this Waiver and Release, the waiver and release contained herein shall exclude any rights or claims (a) that may arise after the date on which Executive executes this Waiver and Release; (b) that cannot be released under applicable law (such as worker’s compensation and unemployment insurance claims); or (c) for indemnification or directors and officers liability insurance coverage, if any, to which s/he was entitled immediately prior to his or her Date of Termination with regard to his or her service as an officer or director of the Company or any company(ies) controlled by, controlling or under common control with the Company, and any predecessors, successors or assigns to the foregoing (the “CS&L Group”).  In addition, the Parties agree that this Waiver and Release shall not adversely affect, alter, or extinguish (i) any vested right that Executive may have with respect to any pension or other retirement benefits to which Executive is or will be entitled by virtue of Executive’s employment with the CS&L Group; (ii) Executive’s rights under the Consolidated Omnibus Budget Reconciliation Act of 1985; or (iii) Executive’s rights under Sections 4 and 5 of the Agreement which are intended to survive termination of employment, and nothing in this Waiver and Release shall prohibit Executive from enforcing such rights.  Moreover, nothing in this Waiver and Release shall prevent or preclude Executive from challenging in good faith the validity of this Waiver and Release, nor does it impose any conditions precedent, penalties, or costs for doing so, unless specifically authorized by applicable law.

 

4.                                      Except to the extent previously disclosed by Executive in writing to the Company, Executive represents and warrants that Executive has (a) filed no claims, lawsuits, charges, grievances, or causes of action of any kind against the Company and/or the Company Releasees and, to the best of Executive’s knowledge, Executive possesses no claims (including Fair Labor Standards Act (“FLSA”) and worker’s compensation claims); (b) received any and all compensation (including overtime compensation), meal periods, and rest periods to which Executive may have been entitled, and Executive is not currently aware of any facts or circumstances constituting a violation by the Company and/or the Company Releasees of the FLSA or other applicable wage, hour, meal period, and/or rest period laws; and (c) not suffered any work-related injury or illness within the twelve (12) months preceding Executive’s execution of this Waiver and Release, and Executive is not currently aware of any facts or circumstances that would give rise to a worker’s compensation claim against the Company and/or the Company Releasees.

 

5.                                      Executive agrees that Executive will remain reasonably available to the Company as needed to assist in the smooth transition of Executive’s duties to one or more other employees of the Company and without additional compensation to Executive and to assist in the defense of the Company’s interests in pending or threatened litigation and any other administrative and regulatory proceedings which currently exist or which may arise in the future and involve the conduct of the Company’s business activities during the period of Executive’s employment with the Company.  Executive’s obligations with respect to transition duties under this Section 5 shall terminate eight (8) weeks following the Date of Termination; however, Executive’s obligations under this Section 5 with respect to the defense of the Company’s interests shall survive the Date of Termination and the termination of this Waiver and Release.

 

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6.                                      Executive specifically agrees and understands that the existence and terms of this Waiver and Release are strictly CONFIDENTIAL and that such confidentiality is a material term of this Waiver and Release.  Accordingly, except as required by applicable law or unless authorized to do so by the Company in writing, Executive agrees that s/he shall not communicate, display or otherwise reveal any of the contents of this Waiver and Release to anyone other than his or her spouse, attorney or financial advisor, provided, however, that they are first advised of the confidential nature of this Waiver and Release and Executive obtains their agreement to be bound by the same. The Company agrees that Executive may respond to legitimate inquiries regarding his or her employment with the Company by stating that the Parties terminated their relationship on an amicable basis and that the Parties have entered into a confidential Waiver and Release that prohibits him or her from further discussing the specifics of his or her separation.  Nothing contained herein shall be construed to prevent Executive from discussing or otherwise advising subsequent employers of the existence of any obligations as set forth in the Agreement or this Waiver and Release.  Further, nothing contained herein shall be construed to limit or otherwise restrict the CS&L Group’s ability to disclose the terms and conditions of this Waiver and Release as may be required by applicable law or business necessity.

 

7.                                      In the event that Executive breaches or threatens to breach any provision of this Waiver and Release, s/he agrees that the CS&L Group shall be entitled to seek any and all equitable and legal relief provided by law, specifically including immediate and permanent injunctive relief.  Executive hereby waives any claim that the CS&L Group has an adequate remedy at law.  In addition, and to the extent not prohibited by law, Executive agrees that the CS&L Group shall be entitled to an award of all costs and attorneys’ fees incurred by the CS&L Group in any successful effort to enforce the terms of this Waiver and Release.  Executive agrees that the foregoing relief shall not be construed to limit or otherwise restrict the CS&L Group’s ability to pursue any other remedy provided by law, including the recovery of any actual, compensatory or punitive damages.  Moreover, if Executive pursues any claims against any Company Releasee subject to the foregoing Waiver and Release, Executive agrees to immediately reimburse the Company for the value of all Severance Benefits received to the fullest extent permitted by law.

 

8.                                      The Parties acknowledge that this Waiver and Release is entered into solely for the purpose of ending their employment relationship on an amicable basis and shall not be construed as, or used as evidence of, an admission of liability or wrongdoing by either Party and that both the CS&L Group and Executive have expressly denied any such liability or wrongdoing.  Executive agrees that s/he is eligible for re-employment by CS&L Group only by mutual agreement and consent of the Parties.

 

9.                                      Each of the promises and obligations contained in this Waiver and Release shall be binding upon and shall inure to the benefit of the heirs, executors, administrators, assigns and successors in interest of each of the Parties.

 

10.                               The Parties agree that each and every paragraph, sentence, clause, term and provision of this Waiver and Release is severable and that if any portion of this Waiver and Release

 

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should be deemed not enforceable for any reason, such portion shall be stricken and the remaining portion(s) thereof should continue to be enforced to the fullest extent permitted by applicable law.

 

11.                               This Waiver and Release shall be interpreted, enforced and governed under the laws of the State of Maryland, without regard to any applicable state’s choice of law provisions.

 

12.                               Executive represents and acknowledges that in signing this Waiver and Release s/he does not rely, and has not relied, upon any representation or statement made by the CS&L Group or by any of the CS&L Group’s employees, officers, agents, stockholders, directors or attorneys with regard to the subject matter, basis or effect of this Waiver and Release other than those specifically contained herein.

 

13.                               Executive acknowledges that Executive has been given at least forty-five (45) days to consider this Waiver and Release from the date that it was first given to Executive.  Executive agrees that changes in the terms of this Waiver and Release, whether material or immaterial, do not restart the running of the forty-five (45)-day consideration period.  Executive may accept this Waiver and Release by executing this Waiver and Release within the designated time period, but no sooner than the first day after the Date of Termination.  Executive shall have seven (7) days from the date that Executive executes this Waiver and Release to revoke Executive’s acceptance of this Waiver and Release by delivering written notice of revocation within the seven (7)-day period to the following Company contact:

 

Communications Sales & Leasing, Inc.
 10802 Executive Center Drive
 Benton Building, Suite 300
 Little Rock, Arkansas  72212
 Attn: Human Resources Department

 

If Executive does not revoke acceptance, this Waiver and Release will become effective and irrevocable by Executive on the eighth day after Executive has executed it.

 

14.                               This Waiver and Release represents the entire agreement between the Parties concerning the subject matter hereof, shall supersede any and all prior agreements which may otherwise exist between them concerning the subject matter hereof (specifically excluding, however, the post-termination obligations contained in the Agreement), and shall not be altered, amended, modified or otherwise changed except by a writing executed by both Parties.

 

BY SIGNING BELOW, EXECUTIVE ACKNOWLEDGES THAT S/HE HAS READ THIS WAIVER AND RELEASE AND THAT IT INCLUDES A COMPLETE RELEASE OF ALL KNOWN AND UNKNOWN CLAIMS; THAT THE COMPANY HAS ADVISED EXECUTIVE TO CONSULT WITH AN ATTORNEY PRIOR TO SIGNING THIS WAIVER AND RELEASE; THAT S/HE HAS BEEN GIVEN SUFFICIENT TIME TO CONSULT WITH AN ATTORNEY AND CONSIDER THE TERMS OF THIS WAIVER AND RELEASE; THAT S/HE

 

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UNDERSTANDS EACH OF ITS TERMS; AND THAT S/HE HAS SIGNED THIS WAIVER AND RELEASE KNOWINGLY AND VOLUNTARILY.

 

IN WITNESS WHEREOF, the Parties have themselves signed, or caused a duly authorized agent thereof to sign, this Waiver and Release on their behalf and thereby acknowledge their intent to be bound by its terms and conditions.

 

	
EXECUTIVE
    	
 
    	
COMMUNICATIONS SALES AND LEASING, INC.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Signed: 
    	
 
    	
 
    	
Signed: 
    	
 
    
	
Print Name: Daniel L. Heard
   Date: 
    	
 
    	
Title: President & CEO
   Date: 
    
					

 

6

 

[Schedule I to Waiver and Release

 

As emphasized in the Waiver and Release, Executive understands that Executive is releasing claims that Executive may not know about and that Executive expressly waives and relinquishes all rights and benefits which Executive may have under any state or federal statute or common law principle that would otherwise limit the effect of this release to claims known or suspected prior to the date Executive signs this Waiver and Release, including, but not limited to, the effect of protections afforded by the following laws:

 

1.                                      California Employees

 

Section 1542 of the Civil Code of the State of California states as follows:

 

“A general release does not extend to claims which the creditor does not know or suspect to exist in his or her favor at the time of executing the release, which if known by him or her must have materially affected his or her settlement with the debtor.”

 

2.                                      Montana Employees

 

Section 28-1-1602 of the Montana Code Annotated states as follows:

 

“A general release does not extend to claims which the creditor does not know or suspect to exist in the creditor’s favor at the time of executing the release, which, if known by the creditor, must have materially affected the creditor’s settlement with the debtor.”

 

3.                                      North Dakota Employees

 

Section 9-13-02 of the North Dakota Century Code states as follows:

 

“A general release does not extend to claims which the creditor does not know or suspect to exist in the creditor’s favor at the time of executing the release, which if known by the creditor, must have materially affected the creditor’s settlement with the debtor.”

 

4.                                      South Dakota Employees

 

Section 20-7-11 of the South Dakota Codified Laws states as follows:

 

“A general release does not extend to claims which the creditor does not know or suspect to exist in his [or her] favor at the time of executing the release, which if known by him [or her] must have materially affected his [or her] settlement with the debtor.”

 

Thus, notwithstanding the provisions of Section 1542 of the Civil Code of the State of California, Section 28-1-1602 of the Montana Code Annotated, Section 9-13-02 of the North Dakota Century Code, and Section 20-7-11 of the South Dakota Codified Laws, and for the purpose of implementing a full and complete release and discharge of the Company and the Company Releasees, Employee expressly acknowledges that this release is intended to include in its effect, without limitation, all claims which Employee does not know or suspect to exist in  Employee’s favor at the time Employee executes this Agreement, and that this Agreement contemplates the extinguishment of any such claims.]

 

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