EXHIBIT 10.16
FORM OF
GUARANTY AND INDEMNIFICATION AGREEMENT
This Guaranty and Indemnification Agreement (this "AGREEMENT") is entered
this ______ day of September, 2000 (the "EFFECTIVE DATE") by Propel, Inc., a
corporation organized and existing under the laws of the State of Delaware
("PROPEL"), in favor of Motorola, Inc., a corporation organized and existing
under the laws of the State of Delaware ("MOTOROLA").
RECITALS
WHEREAS, as of the Effective Date, Motorola owns all of the issued and
outstanding shares of Propel's common stock;
WHEREAS, the Board of Directors of Motorola has determined that it would be
appropriate and desirable to separate the Propel Business (as defined herein)
from Motorola and has caused Propel to be incorporated to facilitate such
separation;
WHEREAS, Motorola and Propel have entered into a Master Separation
Agreement (the "SEPARATION AGREEMENT") effective as of the Effective Date in
order to facilitate the separation of the Propel Business from Motorola;
WHEREAS, pursuant to the Separation Agreement, Motorola is transferring to
Propel and Propel is assuming, substantially all of the assets (including all of
the shares of the capital stock of the Operating Companies (as defined herein))
and liabilities associated with the Propel Business;
WHEREAS, in order to enhance the creditworthiness of various loan and other
obligations of certain of the Operating Companies (the "OC OBLIGATIONS"),
Motorola has issued certain credit enhancements, including without limitation,
certain guarantees and letters of credit as described in SCHEDULE I attached
hereto (collectively, the "MOTOROLA COMMITMENTS");
WHEREAS, in accordance with and as a condition precedent to Motorola's
execution of the Separation Agreement, Propel has agreed to guarantee all of
Motorola's obligations under the Motorola Commitments, and indemnify Motorola
for all fees, costs, losses or damages incurred in connection therewith, on the
terms and conditions set forth herein;
NOW THEREFORE, in consideration of the mutual covenants and agreements
herein contained and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Motorola and Propel each agree as
follows:
1. DEFINITIONS AND INTERPRETIVE PROVISIONS.
1.1 DEFINED TERMS. Capitalized terms used throughout this Agreement
(including the attachments and exhibits, which are a part of this Agreement)
shall have the meanings set forth in this Section 1.1. Capitalized terms not
defined herein shall have the meanings assigned to them in the Separation
Agreement.
"ADR" shall have he meaning assigned in Section 13.9 herein.
"AFFILIATE" of any specified Person means any other Person directly or
indirectly Controlling, Controlled by, or under common Control with, such
specified Person; provided, however, that for purposes of this Agreement, (i)
Motorola and its Subsidiaries (other than Propel and its Subsidiaries) shall not
be considered Affiliates of Propel and (ii) Propel and its Subsidiaries shall
not be considered Affiliates of Motorola.
"AGREEMENT" shall have the meaning assigned in the introductory
paragraph hereof.
"BENEFICIARIES" means those Persons (and any of their successors,
assigns or designees) to whom the Motorola Commitments are issued or that
possess the legal, equitable or contractual ability to demand payment or
performance under or pursuant to the Motorola Commitments.
"CONTRACTUAL OBLIGATION" shall have the meaning assigned in Section
5.2 herein.
"CONTROL" means the possession, direct or indirect, of the power to
direct or cause the direction of the management of the policies of a Person,
whether through the ownership of voting securities, by contract or otherwise.
"Controlling" and "Controlled" have the corollary meanings ascribed thereto.
"DISPUTE" shall have the meaning assigned in Section 13.9 herein.
"EFFECTIVE DATE" shall have the meaning assigned in the introductory
paragraph hereof.
"GOVERNMENTAL AUTHORITY" means any nation or government, any state or
other political subdivision thereof, and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.
"GUARANTEED OBLIGATIONS" shall mean all obligations to third parties
now or hereafter existing, whether direct or indirect, absolute or contingent,
and whether for fees (including reasonable attorneys' fees and costs, expert
witness fees, collateral monitoring fees, and examination fees), costs, losses,
damages, causes of action, premiums, indemnities, expenses, Taxes, risk support
(existing as of the Effective Date), charges and any other obligations
chargeable or owing under the Motorola Commitments.
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"INDEMNIFIED PARTY" shall have the meaning assigned in Section 3.1
herein.
"MOTOROLA COMMITMENTS" shall have the meaning assigned in the Recitals
hereof.
"OC OBLIGATIONS" shall have the meaning assigned in the Recitals
hereof.
"OPERATING COMPANIES" means any of the following companies: Baja
Celular Mexicana S.A. de C.V.; Movitel Del Noroeste S.A. de C.V.; Telefonia
Celular Del Norte S.A. de C.V.; Celular de Telefonia S.A. de C.V.; Compania de
Radiocommunicaciones Moviles, S.A.; Entel Telefonia Personal, S.A.; Tricom S.A.;
Abiatar, S.A.; Global Telecom, S.A.; Grupo Portatel S.A. de C.V.; Pelephone
Communications Ltd.; The Egyptian Company for Mobile Services; UAB Omnitel;
Jordan Mobile Telephone Services Company Ltd.; Bakcell II; ▇▇▇▇▇▇▇▇▇ Telephone
Company Ltd.; and Pakistan Mobile Communications (Pvt) Ltd.
"PERSON" means an individual, a partnership, a corporation, a limited
liability company, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization and a governmental entity or any
department, agency, or political subdivision thereof.
"PRIME RATE" means the rate of interest charged by Citibank to its
best customers for short-term unsecured loans.
"PROPEL BUSINESS" means the portion of the business conducted
immediately prior to the Effective Date, by the Network Management Group of
Motorola (for purposes of this Agreement, references to Propel and the Propel
Business prior to the Effective Date shall be deemed to mean the business
conducted by the Network Management Group), including (i) all business
operations whose financial performance is reflected in the Propel Financial
Statements, but expressly excluding, for the avoidance of doubt, Motorola's
ownership of wireless operating companies in Japan and Honduras, any residual
business related to Iridium LLC and any of its Affiliates or related gateway
operating companies or Iridium LLC handset sales or support; and (ii) the PCS
business in Israel, which as of the Effective Date, shall be known as Wireless
Distribution Services.
"PROPEL FINANCIAL STATEMENTS" means the latest financial statements of
Propel set forth in the registration statement on Form S-1, Registration No.
333-40200 filed by Propel with the Securities and Exchange Commission in
connection with the initial public offering of the Propel common stock, together
with all amendments and supplements thereto, as amended at the date of this
Agreement.
"REQUIREMENT OF LAW" shall have the meaning assigned in Section 5.2
herein.
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"SEPARATION AGREEMENT" shall have the meaning set forth in the
Recitals hereof.
"STEERING COMMITTEE" shall have the meaning set forth in Section 13.8
herein.
"SUBSIDIARY" means with respect to any specified Person, any
corporation or other legal entity of which such Person or any of its
Subsidiaries Controls or owns, directly or indirectly, more than 50% of the
stock or other equity interest entitled to vote on the election of the members
to the board of directors or similar governing body; provided, however, that for
purposes of this Agreement, Propel and its Subsidiaries shall not be considered
Subsidiaries of Motorola.
"TAXES" means any and all taxes, withholdings, charges, fees, costs,
expenses, or duties imposed by any Government Authority, excluding Taxes based
on the overall net income or profits of any Person.
1.2 OTHER DEFINITIONAL PROVISIONS.
(a) The words "hereof," "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement, and Section or
Schedule references contained in this Agreement are references to Sections or
Schedules in or to this Agreement unless otherwise specified.
(b) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
2. CONTINUING AND UNCONDITIONAL GUARANTY.
2.1 UNCONDITIONAL GUARANTY. Propel hereby unconditionally, absolutely
and irrevocably guarantees the full and prompt payment of the Guaranteed
Obligations, regardless of any law, regulation or order now or hereafter in
effect in any jurisdiction affecting any of the terms of the OC Obligations, the
Motorola Commitments or this Agreement or the rights of Motorola with respect
thereto or hereto (provided that Propel is not obligated to violate any such
law, regulation or order), without deduction for any claim of set-off or
counterclaim (any such set-off or counterclaim to be made in a separate
proceeding), including accrued interest, from and including the date of payment
by Motorola of any Guaranteed Obligations through and excluding the date Propel
fully reimburses Motorola for such payment (provided such payment is received by
Motorola by no later than 1:00 p.m.). Interest shall accrue at the Prime Rate
per annum through and including the tenth (10th) day after payment by Motorola
of any Guaranteed Obligations and notice of such payment being made to Propel
and thereafter shall accrue at the Prime Rate PLUS two percent (2%) per annum.
2.2 PROPEL'S OBLIGATIONS CONTINUING AND ABSOLUTE. Propel's
obligations hereunder shall be continuing and not be subject to any reduction,
limitation, impairment or termination for any reason, including but not limited
to, any claim of
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waiver, release, surrender, alteration or compromise, and shall not be subject
to any defense or set-off, counterclaim, recoupment or termination whatsoever by
reason of any of the following:
(a) the invalidity or unenforceability of the Motorola
Commitments or any agreement relating thereto, including without limitation, any
agreement relating to the OC Obligations;
(b) any extension, modification or renewal of, or indulgence
with respect to, or substitutions for, the sums evidenced by the Motorola
Commitments or any part thereof or any agreement relating thereto, including
without limitation, any agreement relating to the OC Obligations, at any time;
(c) any failure or omission to enforce any right, power or
remedy with respect to this Agreement, the Motorola Commitments or any part
thereof or any agreement relating thereto, including without limitation, any
agreement relating to the OC Obligations;
(d) any waiver of any right, power or remedy or of any default
with respect to this Agreement, the Motorola Commitments or any part thereof or
any agreement relating thereto, including without limitation, any agreement
relating to the OC Obligations;
(e) any compromise, settlement, waiver or other modification, or
any release or surrender, with or without consideration, or any part thereof or
any other obligation of any Person or entity with respect to the Motorola
Commitments or any part thereof or any agreement relating thereto, including
without limitation, any agreement relating to the OC Obligations;
(f) any defense, set-off, or counterclaim, to the payment of,
any right of recoupment, in connection with, or any termination of, the
Guaranteed Obligations or the OC Obligations;
(g) any change in the time, manner or place of payment of, or in
any other term of, all or any of the Guaranteed Obligations or the OC
Obligations, or any other obligations of any of the Operating Companies under or
in respect of any agreement relating to the Motorola Commitments or the OC
Obligations, or any other written amendment or waiver of or any consent to
departure from such agreements (including, without limitation, any increase in
the Guaranteed Obligations or OC Obligations resulting from the extension of
additional credit to any of the Operating Companies or any of their Affiliates
or otherwise, in each case without the prior written consent of, but with
commercially reasonable notice to, Propel);
(h) any taking, exchange, release, nonperfection or
nonperformance of any collateral, or any taking, release or amendment or waiver
of, or
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consent to departure from, any other guaranty, for all or any of the Guaranteed
Obligations or the OC Obligations;
(i) any manner of application of collateral, or proceeds
thereof, to all or any of the Guaranteed Obligations or the OC Obligations, or
any manner of sale or other disposition of any collateral for any of the
Guaranteed Obligations or the OC Obligations or any other obligations of any
Operating Companies or any other sale of assets of any Operating Companies or
any of their Affiliates;
(j) the existence or non-existence of any of the Operating
Companies as legal entities, or any change, restructuring or termination of the
corporate structure or existence of any of the Operating Companies or any of
their Affiliates;
(k) any failure of Motorola to disclose to Propel or any of the
Operating Companies any information relating to the business, condition
(financial or otherwise), operations, performance, properties or prospects of
any of the Operating Companies or compliance with any Motorola Commitments by
any of the Operating Companies now or hereafter known to Motorola (Propel
waiving any duty on the part of Motorola to disclose such information);
(l) the insolvency of the Operating Companies or the payment in
full of all of the Guaranteed Obligations at any time or from time to time;
(m) the power or authority or lack thereof of the Operating
Companies to incur the OC Obligations being guaranteed or enhanced by Motorola
pursuant to the Motorola Commitments;
(n) the power or authority or lack thereof of Motorola to incur
the Guaranteed Obligations; or
(o) any statute of limitations affecting the liability of Propel
under this Agreement or the liability of Motorola under the Motorola Commitments
or the ability of Motorola to enforce this Agreement or any provision of the
Motorola Commitments.
2.3 GUARANTY OF PAYMENT. Until each of the Beneficiaries has provided
written notice that the Guaranteed Obligations have been fully and properly
released or terminated, Propel agrees that this Agreement shall be an absolute,
present, continuing, unlimited, unconditional and irrevocable guaranty of
payment (and not of collection). Suit may be brought and maintained against
Propel by Motorola to enforce any liability, obligation or duty guaranteed
hereunder without joinder of any other person or entity. The liability of Propel
shall not be deemed to be waived, released, discharged, impaired or affected by:
any foreclosures, indulgence, or variation of terms of the Motorola Commitments
or the OC Obligations whether or not it might vary the risk of guaranty under
this Agreement, including, without limitation, any alteration, amendment,
acceleration, extension, modification, waiver or change concerning the amount of
time or
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manner of payment or performance of any of the Guaranteed Obligations or the OC
Obligations; any discharge or release of any of the obligations securing the
payment or performance thereof, whether or not in accordance with the respective
provisions thereof; or any bankruptcy, insolvency, reorganization, liquidation
or similar proceeding concerning the Operating Companies; the addition or
omission or delay in the enforcement of any right or remedy with respect to any
of the OC Obligations or with respect to this Agreement; or the receipt,
exchange, surrender or acquiescence in, any default with respect to any of the
Guaranteed Obligations or the OC Obligations.
3. INDEMNIFICATION.
3.1 GENERALLY. Without limitation of any other obligations of Propel
or remedies of Motorola under this Agreement, Propel shall, to the fullest
extent permitted by law, indemnify, defend, save and hold harmless Motorola and
each of its Affiliates and their respective officers, directors, employees,
agents and advisors (each, an "INDEMNIFIED PARTY") from and against, and shall
pay on demand, any and all claims, damages, losses, liabilities and expenses
(including, without limitation, reasonable fees and expenses of counsel) that
may be incurred by or asserted or awarded against any Indemnified Party in
connection with or as a result of any action or inaction by any Indemnified
Party in connection with the Motorola Commitments; PROVIDED that Propel shall
not be required to indemnify an Indemnified Party for any claims, damages,
losses, liabilities, and expenses to the extent (but only to the extent)
resulting from such Indemnified Party's gross negligence or willful misconduct,
as determined by a court of competent jurisdiction or an arbitrator or mediator
pursuant to Sections 13.7, 13.8 and 13.9 herein.
3.2 NO PUNITIVE DAMAGES. The Parties hereby also agrees that none of
the Indemnified Parties shall have any liability (whether direct or indirect, in
contract, tort or otherwise) to either Party or any of its Affiliates or any of
their respective officers, directors, employees, agents and advisors, and both
Parties hereby agree not to assert any claim against any Indemnified Party on
any theory of liability, for special, indirect, consequential or punitive
damages arising out of or otherwise relating to the Motorola Commitments or any
of the transactions contemplated by the Motorola Commitments.
3.3 SURVIVAL. Without prejudice to the survival of any of the other
agreements under this Agreement or any of the other agreements under the
Motorola Commitments, the agreements and obligations of Propel contained in
Section 2.1 (solely with respect to enforcement expenses) and this Section 3,
and the obligations of Motorola contained in Section 7 shall survive the payment
in full of the Guaranteed Obligations and all of the other amounts payable under
this Agreement.
4. PAYMENTS FREE AND CLEAR OF TAXES, ETC. Any payment, indemnification or
reimbursement made by Propel hereunder shall be free and clear of all Taxes,
charges, fees, costs, expenses, or duties imposed by any Governmental Authority
and if any such Governmental Authority requires the payment and/or withholding
of any of the foregoing, Propel shall be liable for all of such Taxes, charges,
costs, expenses or duties.
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Propel shall pay each Guaranteed Obligation payable pursuant to this Agreement
in the currency in which such Guaranteed Obligation is denominated.
5. REPRESENTATIONS AND WARRANTIES. The Parties represent and warrants to
each other that each of the following statements is accurate and complete in all
material respects on and as of the Effective Date:
5.1 this Agreement has been duly executed and delivered by each Party
and constitutes a legal, valid and binding obligation of each Party, enforceable
against each Party in accordance with its terms, except as limited by
bankruptcy, insolvency or other laws of general application relating to or
affecting the enforcement of creditors' rights generally;
5.2 the execution, delivery and performance of this Agreement do not
(i) violate any provisions of law or any order of any court or other agency of
government (each, a "REQUIREMENT OF LAW"), (ii) contravene any provision of any
material contract or agreement to which either Party is a party or by which
either Party or its assets are bound (each, a "CONTRACTUAL OBLIGATION"), or
(iii) result in the creation or imposition of any lien, charge or encumbrance of
any nature upon any property, asset or revenue of either Party;
5.3 all consents, approvals, orders and authorizations of, and
registrations, declarations and filings with, any governmental agency or
authority or other person or entity (including, without limitation, the
shareholders or partners of any entity), if any, which are required to be
obtained in connection with the execution and delivery of this Agreement or the
performance of either Party's obligations hereunder have been obtained, and each
is in full force and effect; and
5.4 Neither Party is in violation of any Requirement of Law or
Contractual Obligation other than any violation the consequences of which would
reasonably be expected to have a material adverse effect on the other Party's
ability to perform its obligations hereunder.
6. PAYMENT AND REINSTATEMENT OF THE GUARANTEED OBLIGATIONS. Motorola
shall use commercially reasonable efforts to promptly apply amounts received by
Motorola from any source on account of a Guaranteed Obligation from a particular
Operating Company toward the payment of such Guaranteed Obligation of such
Operating Company. Motorola shall apply the foregoing amounts among principal,
interest, fees or costs in its sole discretion, and notwithstanding any payments
made by or for the account of Propel pursuant to this Agreement. Propel agrees
that, if at any time all or any part of any payment theretofore applied by
Motorola to any of the Guaranteed Obligations is or must be rescinded or
returned by Motorola for any reason whatsoever (including, without limitation,
the insolvency, bankruptcy or reorganization of the Operating Companies), such
Guaranteed Obligations shall, for the purposes of this Agreement and to the
extent that such payment is or must be rescinded or returned, be deemed to have
continued in existence notwithstanding such application by Motorola,
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and this Agreement shall continue to be effective or be reinstated, as the case
may be, as to such Guaranteed Obligations, all as though such application by
Motorola had not been made.
7. PERMITTED ACTIONS OF MOTOROLA.
7.1 Notwithstanding anything to the contrary contained in this
Agreement, Motorola agrees that prior to taking any of the following actions, it
shall use commercially reasonable efforts to provide notice to Propel of
Motorola's intent to take such actions:
(a) make any payment or perform any obligation under any of the
Motorola Commitments;
(b) exercise any right or remedy (or take other action) against
any Operating Company or any customer or other third party contracting with any
Operating Company in connection with any OC Obligation;
(c) make any agreement with any Person to amend, modify or
otherwise adjust the terms and conditions of any Motorola Commitment, any OC
Obligation or any agreement relating to any Motorola Commitment or any OC
Obligation;
(d) amend, modify, or supplement in any manner the Motorola
Commitments or any agreement relating thereto, including without limitation, any
agreement relating to the OC Obligations, or compromise, settle or waive any
obligations or agreements of any Person in respect of any OC Obligation;
(e) obtain a security interest in any assets of the Operating
Companies or any third party (other than Propel) to secure any of the
obligations of the Operating Companies under the Motorola Commitments or Propel
hereunder;
(f) obtain the primary or secondary obligation of any obligor or
obligors, in addition to Propel or its Operating Companies, with respect to any
of the Guaranteed Obligations; or
(g) release, waive, compromise, alter or exchange, its security
interest in, or surrender, release or permit any substitution or exchange for,
all or any part of any collateral now or hereafter securing any of the
Guaranteed Obligations;
7.2 Without limiting the generality of any other provision of this
Agreement, Motorola may at any time, for time to time, in its sole discretion
and without notice to Propel:
(a) release, waive or compromise any obligation of Propel
hereunder;
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(b) waive, ignore or forbear from taking action or otherwise
exercising any of its default rights or remedies with respect to any default by
any of the Operating Companies under or in connection with the Motorola
Commitments or any agreement relating thereto, including without limitation, any
agreement relating to the OC Obligations;
(c) upon demand for payment or performance having been made upon
Motorola, demand payment or performance of such Guaranteed Obligation from
Propel at any time or from time to time, whether or not Motorola shall have
exercised any of its rights or remedies with respect to any property securing
such Guaranteed Obligation or any obligation hereunder or proceeded against any
other obligor primarily or secondarily liable for payment or performance of any
of the Guaranteed Obligations; and
(d) release, waive or compromise, extend or renew (for one or
more periods whether or not longer than the original period) any obligation of
any nature of any of the Operating Companies with respect to any of the
Guaranteed Obligations or the OC Obligations.
8. SPECIFIC WAIVERS. Without limiting the generality of any other
provision of this Agreement, Propel hereby expressly waives, to the extent
permitted by law:
8.1 notice of the acceptance by Motorola of this Agreement;
8.2 notice of the existence, creation, payment, nonpayment,
performance or nonperformance of all or any of the Guaranteed Obligations;
8.3 presentment, demand, notice of dishonor, protest, notice of
protest and all other notices whatsoever with respect to the payment or
performance of the Guaranteed Obligations or the amount thereof or any payment
or performance by Propel hereunder;
8.4 all diligence in collection or protection of or realization upon
the Guaranteed Obligations or any part thereof, or any obligation hereunder or
any security for or guaranty of any of the foregoing;
8.5 any right to direct or affect the manner or timing of Motorola's
enforcement of its rights or remedies under the Motorola Commitments or
hereunder;
8.6 any and all defenses which would otherwise arise upon the
occurrence of any event or contingency described in Section 6 hereof or upon the
taking of any action by Motorola permitted hereunder;
8.7 any defense, right of set-off, claim or counterclaim whatsoever
and any and all other rights, benefits, protections and other defenses available
to Propel now or at any time hereafter;
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8.8 all other principles or provisions of law, if any, that conflict
with the terms of this Agreement, including, without limitation, the effect of
any circumstances that may or might constitute a legal or equitable discharge of
Propel; and
8.9 all rights to revoke this Agreement at any time, and all rights
to revoke any agreement executed by Propel at any time to secure the payment and
performance of Propel's obligations under this Agreement.
9. SUBORDINATION.
9.1 GENERALLY. Propel hereby subordinates any and all indebtedness of
the Operating Companies to Propel to the full and prompt payment and performance
of all of the Guaranteed Obligations. Propel agrees that Motorola shall be
entitled to receive payment of all Guaranteed Obligations prior to Propel's
receipt of payment of any amount of any indebtedness resulting from subrogation
rights exercised by Propel against the Operating Companies with respect to
payments made by Propel hereunder. Any payments on such indebtedness to Propel,
if Motorola so requests, shall be collected, enforced and received by Propel, in
trust, as trustee for Motorola and shall be paid over to Motorola on account of
the Guaranteed Obligations, but without reducing or affecting in any manner the
liability of Propel under the other provisions of this Agreement. Motorola is
authorized and empowered, but not obligated, in its discretion, to require
Propel (i) to collect and enforce, and to submit claims in respect of, any
indebtedness of the Operating Companies to Propel, and (ii) to pay any amounts
received on such indebtedness to Motorola for application to the Guaranteed
Obligations.
9.2 UPON DEFAULT BY PROPEL. Without limiting the generality of
Section 9.1 above, upon the occurrence and during the continuance of any default
by Propel hereunder not cured to Motorola's reasonable satisfaction within five
(5) days of the delivery by Motorola to Propel of written notice of such
default, Propel agrees that Motorola shall be entitled to receive payment from
Propel, Inc. of all Guaranteed Obligations then due and payable prior to
Propel's receipt of payment of any amount of any indebtedness of the Operating
Companies to Propel, including without limitation, any dividends, distributions
or repayments of shareholder loans. Any payments on such indebtedness to Propel,
if Motorola so requests, shall be collected, enforced and received by Propel, in
trust, as trustee for Motorola and shall be paid over to Motorola on account of
the Guaranteed Obligations, but without reducing or affecting in any manner the
liability of Propel under the other provisions of this Agreement. Motorola is
authorized and empowered, but not obligated, in its discretion, to require
Propel (i) to collect and enforce, and to submit claims in respect of, any
indebtedness of each of the Operating Companies to Propel, and (ii) to pay any
amounts received on such indebtedness to Motorola for application to the
Guaranteed Obligations of the Operating Company from which Propel received
payment. Upon the occurrence and during the continuance of any default by Propel
hereunder not cured to Motorola's reasonable satisfaction within five (5) days
of the delivery by Motorola to Propel of written notice of such default,
Motorola is authorized and empowered, but not obligated, in its discretion in
the name of Propel, to
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collect and enforce, and to submit claims in respect of, any indebtedness of
each of the Operating Companies to Propel and to apply any amounts received
thereon to the Guaranteed Obligations of the Operating Company from which Propel
received payment.
10. SUBROGATION. Absent the written consent of Motorola, which shall not
be unreasonably withheld, Propel shall not exercise any rights which it may
acquire by way of subrogation under this Agreement with respect to a particular
Operating Company, by any payment hereunder or otherwise, until all of the
Guaranteed Obligations with respect to such Operating Company have been
irrevocably paid in full, in cash, and Motorola shall have no further
obligations to such Operating Company under the applicable Motorola Commitments.
If any amount shall be paid to Propel on account of such subrogation rights at
any other time, such amount shall be held in trust for the benefit of Motorola
and shall be forthwith paid to Motorola to be credited and applied to the
Guaranteed Obligations of the particular Operating Company making such payment,
whether matured or unmatured, in such manner as Motorola shall determine in its
sole discretion on a reasonable basis.
11. ASSIGNMENT OF MOTOROLA'S RIGHTS. Motorola may, from time to time, with
notice to Propel, assign or transfer any or all of the Guaranteed Obligations or
any interest therein and, notwithstanding any such assignment or transfer of the
Guaranteed Obligations or any subsequent assignment or transfer thereof, the
Guaranteed Obligations shall be and remain the Guaranteed Obligations for the
purpose of this Agreement. Each and every immediate and successive assignee or
transferee of any of the Guaranteed Obligations or of any interest therein
shall, to the extent of such party's interest in the Guaranteed Obligations, be
entitled to the benefits of this Agreement to the same extent as if such
assignee or transferee were Motorola; provided, however, that unless Motorola
shall otherwise consent in writing, Motorola shall have an unimpaired right,
prior and superior to that of any such assignee or transferee, to enforce this
Agreement for its own benefit as to those of the Guaranteed Obligations which
Motorola has not assigned or transferred.
12. FINANCIAL CONDITION OF THE OPERATING COMPANIES.
12.1 NO RELIANCE ON MOTOROLA. Propel represents and warrants that it
is fully aware of the financial condition of the Operating Companies, and Propel
delivers this Agreement based solely upon Propel's own independent investigation
of the Operating Companies' financial condition and in no part upon any
representation or statement of Motorola with respect thereto. Propel further
represents and warrants that it is in a position to and hereby does assume full
responsibility for obtaining such additional information concerning the
Operating Companies' financial condition as Propel may deem material to its
obligations hereunder, and Propel is not relying upon, nor expecting Motorola to
furnish it any information in Motorola's possession concerning the Operating
Companies' financial condition or concerning any circumstances bearing on the
existence or creation, or the risk of nonpayment or nonperformance of the
Guaranteed Obligations.
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12.2 WAIVER. Propel hereby waives any duty on the part of Motorola to
disclose to Propel any facts it may now or hereafter know about the Operating
Companies, regardless of whether Motorola has reason to believe that any such
facts materially increase the risk beyond that which Propel intends to assume or
has reason to believe that such facts are unknown to Propel.
12.3 ACKNOWLEDGEMENT. Propel hereby knowingly accepts the risk
encompassed within this Agreement which includes, without limitation, the
possibility that the Operating Companies will contract for additional
indebtedness for which Propel may be liable hereunder after the Operating
Companies' financial condition or ability to pay its lawful debts when they fall
due has deteriorated.
13. MISCELLANEOUS.
13.1. ENTIRE AGREEMENT. This Agreement and all other Exhibits and
Schedules attached hereto and thereto constitute the entire agreement between
the parties with respect to the subject matter hereof and thereof and supersede
all prior written and oral and all contemporaneous oral agreements and
understandings with respect to the subject matter hereof and thereof. This
Agreement contains the complete understanding of the parties hereto with respect
to the subject matter herein.
13.2. GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of Illinois regardless of the laws that
might otherwise govern under principles of conflicts of laws applicable thereto.
13.3. NOTICES. All notices and other communications hereunder shall be
in writing and shall be deemed to have been duly given when delivered in person,
by telecopy with answer back, by express or overnight mail delivered by a
nationally recognized air courier (delivery charges prepaid), or by registered
or certified mail (postage prepaid, return receipt requested) to the respective
parties as follows:
if to Motorola:
Motorola, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Motorola, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer and Chief Accounting Officer
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
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if to Propel or its Subsidiaries:
Propel, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Propel, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address as the party to whom notice is given may have
previously furnished to the others in writing in the manner set forth above. Any
notice or communication delivered in person shall be deemed effective on
delivery. Any notice or communication sent by telecopy shall be deemed effective
on the day at the place such notice or communication is received if confirmed by
return facsimile. Any notice or communication sent by air courier shall be
deemed effective on the day at the place at which such notice or communication
is received if delivery is confirmed by the air courier. Any notice or
communication sent by registered or certified mail shall be deemed effective on
the fifth Business Day at the place from which such notice or communication was
mailed following the day on which such notice or communication was mailed.
13.4. PARTIES IN INTEREST. This Agreement shall be binding upon and
inure solely to the benefit of each party hereto and their legal representatives
and successors, and each Affiliate of the parties hereto, and nothing in this
Agreement, express or implied, is intended to confer upon any other Person any
rights or remedies of any nature whatsoever under or by reason of this
Agreement. In addition and notwithstanding anything to the contrary contained in
this Agreement or in any other document, instrument or agreement between or
among any of Motorola, the Operating Companies, Propel or any third party, the
obligations of Propel with respect to the Guaranteed Obligations shall be joint
and several with any other person or entity that now or hereafter executes a
guaranty of any of the Guaranteed Obligations separate from this Agreement.
13.5. COUNTERPARTS. This Agreement may be executed in counterparts,
each of which shall be deemed to be an original but all of which shall
constitute one and the same agreement.
13.6. Reserved.
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13.7. JURISDICTION. In the event a Dispute under this Agreement is to
be submitted to judicial proceedings, each of Motorola and Propel consents to
the exclusive jurisdiction of the federal or state courts of Illinois for any
such legal action, suit or proceeding and agrees that any such action, suit, or
proceeding may be brought only in such courts. Each of Motorola and Propel
further waives any objection to the laying of venue for any suit, action or
proceeding in such courts. Each party agrees to accept and acknowledge service
of any and all process that may be served in any suit, action or proceeding.
Each party agrees that any service of process upon it mailed by registered or
certified mail, return receipt requested to such party at the address provided
in Section 16.3 above will be deemed in every respect effective service of
process upon such party in any such suit, action or proceeding. EACH PARTY
AGREES TO WAIVE ANY RIGHT IT MIGHT HAVE TO A TRIAL BY JURY IN ANY SUCH SUIT,
ACTION OR PROCEEDING.
13.8. AMICABLE RESOLUTION. (a) Motorola and Propel mutually desire
that friendly collaboration will develop between them. Accordingly, they will
try to resolve in an amicable manner all disagreements and misunderstandings
connected with their respective rights and obligations under this Agreement,
including any amendments hereto. In furtherance thereof, in the event of any
dispute or disagreement between Motorola and Propel as to the interpretation of
any provision of this Agreement executed in connection herewith (or the
performance of obligations hereunder or thereunder), the matter, upon written
request of either party, will be referred for resolution to a steering committee
established pursuant to Section 5.7 of the Master Separation Agreement (the
"STEERING COMMITTEE"). The Steering Committee will have two members, one of
which will be appointed by Motorola and one of which will be appointed by
Propel. The initial members of the Steering Committee will be the individuals
named on Schedule 5.7 of the Master Separation Agreement. Each of Motorola and
Propel will use its good faith reasonable efforts to avoid replacing the initial
members of the Steering Committee with another of their representatives for the
first year after the Effective Date. Thereafter, Motorola and Propel will, to
the extent practicable, honor the other's reasonable objections to any
replacements of Steering Committee members. While any person is serving as a
member of the Steering Committee, such person may not designate any substitute
or proxy for purposes of attending or voting at a Steering Committee meeting.
The Steering Committee will make every good faith effort to promptly resolve all
disputes or disagreements referred to it. Upon a unanimous vote, Steering
Committee decisions will be binding on Motorola and on Propel. If the Steering
Committee does not agree to a resolution of the dispute or disagreement within
90 days after the reference of the matter to it, each of Motorola and Propel
will be free to exercise the remedies available to it under applicable law,
subject to Section 13.9. Notwithstanding anything to the contrary in this
Section 13.8, no amendment to the terms of this Agreement will be effected
except in writing signed by an authorized officer of both parties. The Steering
Committee will be self-regulating.
(b) Between the Effective Date and the first anniversary of the Effective
Date the Steering Committee will hold meetings every six weeks on dates
established at the
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organizational meeting of the Steering Committee, which will be held as promptly
as practicable after the Effective Date. Such meeting dates may be rescheduled
by the Steering Committee if it becomes reasonably impracticable to hold such a
meeting. After the first anniversary of the Effective Date, the Steering
Committee will hold regularly scheduled meetings as determined by the Steering
Committee.
13.9 MEDIATION AND ALTERNATE DISPUTE RESOLUTION. (a) To the extent that any
misunderstanding or dispute with respect to one or more of the terms of this
Agreement ("DISPUTE") cannot be resolved in a friendly manner as set forth in
Section 13.8, the parties intend that such Dispute be resolved by an alternative
dispute resolution process ("ADR"), which shall require the escalation of any
Dispute, first, to the level of one senior executive of each of Motorola and
Propel (the "Senior Officers") and then to the head of Motorola's Communications
Enterprise (or its successor) and the CEO of Propel in an attempt to resolve any
such Dispute by negotiation. If the Senior Officers and/or the head of Motorola'
s Communications Enterprise and the Propel CEO are unable to resolve the Dispute
within ten days after the matter is referred to them, either Motorola or Propel
may demand mediation of the Dispute by written notice to the other. The two
parties shall select a mediator within ten days after the demand and neither of
the parties may unreasonably withhold consent to the selection of the mediator
and both parties shall share the cost of mediation equally. The parties may
agree to replace mediation with some other form of non-binding ADR such as
neutral fact finding or mini-trial. Nothing in this paragraph shall prevent
either Motorola or Propel from commencing formal litigation proceedings if (i)
good faith efforts to resolve the Dispute under these procedures have been
unsuccessful, or (ii) any delay resulting from efforts to mediate such dispute
could result in serious and irreparable injury to either Motorola or Propel. The
use of any ADR procedures will not be construed under the doctrines of laches,
waiver or estoppel to affect adversely the rights of either party.
(b) Each of Motorola and Propel will bear its costs of mediation or ADR,
but both parties shall share the costs of the mediation or ADR equally.
13.10. SEVERABILITY. If any term or other provision of this Agreement
is invalid, illegal or incapable of being enforced by any rule of law or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any manner materially
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an acceptable manner to the end
that transactions contemplated hereby are fulfilled to the fullest extent
possible.
13.11. FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE. No
failure or delay on the part of any party hereto in the exercise of any right
hereunder shall impair such right or be construed to be a waiver of, or
acquiescence in, any breach of any representation, warranty or agreement herein,
nor shall any single or partial exercise of any such right preclude other or
further exercise thereof or of any other right. All rights
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and remedies existing under this Agreement are cumulative to, and not exclusive
of, any rights or remedies otherwise available.
13.12. AMENDMENT. No change, amendment or waiver will be made to this
Agreement except by an instrument in writing signed on behalf of each of the
parties to such agreement.
13.13. INTERPRETATION. All references herein to Operating Companies
shall be deemed to include their successors and assigns, and all references
herein to Propel shall be deemed to include Propel and Propel's successors and
assigns. The headings contained in this Agreement, in any Exhibit or Schedule
hereto and in the table or contents to this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement. Any capitalized term used in any Schedule or Exhibit but not
otherwise defined therein, shall have the meaning assigned to such term in this
Agreement. When a reference is made in this Agreement to an Article or a
Section, Exhibit or Schedule, such reference shall be to an Article or Section
of, or an Exhibit or Schedule to, this Agreement unless otherwise indicated. The
Schedules and Exhibits attached hereto or referred to herein are an integral
part of this Agreement and are hereby incorporated into this Agreement and made
a part hereof as if set forth in full herein. After the Effective Date, the
Propel Business shall be deemed to be the business of Propel and its
Subsidiaries.
13.14 NO CROSS-COLLATERALIZATION. Notwithstanding anything set forth
in this Agreement to the contrary, nothing contained herein shall result in any
Operating Company being liable, directly or indirectly, for the obligations or
liabilities of any other Operating Company or of Propel.
13.15. ADVICE OF COUNSEL. Propel acknowledges that Propel has either
obtained the advice of counsel or has had the opportunity to obtain such advice
in connection with the terms and provisions of this Agreement.
13.16. PROPEL'S RIGHT TO ASSERT A CLAIM FOR BREACH OF THIS AGREEMENT.
Notwithstanding anything contained herein to the contrary, Propel shall have the
right to assert claims in good faith based upon material breaches by Motorola of
this Agreement in a court of competent jurisdiction pursuant to Section 13.7
herein or before an arbitrator pursuant to Section 13.8. Notwithstanding the
foregoing right of Propel, any alleged or actual breach by Motorola hereunder
shall in no manner and under no circumstances create any claim, defense, right
of set-off or any other right (except for counterclaims resulting from any
separate proceeding brought by Propel pursuant to this Section 13.16) for Propel
with respect to its payment and performance obligations under this Agreement,
and such obligations of Propel shall be unconditional, absolute and continuing
as set forth in Sections 2.1 and 2.2 herein.
13.17. TERM. Without limiting the generality of any other provision of
this Agreement, including Section 3.3 hereof, this Agreement shall be effective
upon the
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Effective Date and the obligations of Propel shall continue until the
Beneficiaries each acknowledge in writing that the Guaranteed Obligations have
been fully and properly paid, released or terminated.
[signature pages follow]
18
IN WITNESS WHEREOF, Propel has caused this Guaranty and Indemnification
Agreement to be duly executed and delivered by the proper and duly authorized
officer as of the day and year first above written.
PROPEL, INC.
By:
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Printed Name:
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Title:
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Accepted By:
MOTOROLA, INC.
By:
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Printed Name:
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Title:
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SCHEDULE I
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