-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, JUpWzlX9zfDLDb+FnyaILyLAW/X8T7V+Nt3w5fIGR/FsHSndrfrO7qN1FRa09C8M k/yDKL+BtWnk9lZJmOHoyA== 0000898822-00-000955.txt : 20001204 0000898822-00-000955.hdr.sgml : 20001204 ACCESSION NUMBER: 0000898822-00-000955 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 20001130 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 20001201 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AT&T CORP CENTRAL INDEX KEY: 0000005907 STANDARD INDUSTRIAL CLASSIFICATION: TELEPHONE COMMUNICATIONS (NO RADIO TELEPHONE) [4813] IRS NUMBER: 134924710 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-01105 FILM NUMBER: 782212 BUSINESS ADDRESS: STREET 1: 32 AVENUE OF AMERICAS CITY: NEW YORK STATE: NY ZIP: 10013-2412 BUSINESS PHONE: 9082214268 MAIL ADDRESS: STREET 1: 32 AVENUE OF AMERICAS CITY: NEW YORK STATE: NY ZIP: 10012-2412 FORMER COMPANY: FORMER CONFORMED NAME: AMERICAN TELEPHONE & TELEGRAPH CO DATE OF NAME CHANGE: 19920703 8-K 1 0001.txt FORM 8-K SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 Form 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported): December 1, 2000 (November 30, 2000) AT&T CORP. (Exact Name of Registrant as Specified in Charter) New York No. 1-1105 No. 13-4924710 (State or Other Jurisdiction (Commission (I.R.S. Employer of Incorporation) File Number) Identification No.) 32 Avenue of the Americas, New York, New York 10013-2412 (Address of Principal Executive Offices, including ZIP code) (212) 387-5400 (Registrant's telephone number, including area code) (Former Name or Former Address, if Changed Since Last Report) Item 5. Other Events. On November 30, 2000, AT&T Corp. and NTT DoCoMo, Inc. announced that NTT DoCoMo has agreed to invest approximately $9.8 billion for AT&T preferred stock, equivalent to 406 million shares of AT&T Wireless tracking stock (representing a 16% economic interest in the AT&T Wireless Group). NTT DoCoMo will also acquire five-year warrants to purchase the equivalent of an additional 41.7 million shares of AT&T Wireless tracking stock at $35 per share. In addition, the two companies also announced that AT&T Wireless and NTT DoCoMo will form a strategic alliance with respect to mobile multimedia services. Copies of the binding letter agreement, term sheet and material annexes to the term sheet and the press release are attached hereto as Exhibits 10.1, 10.2, 10.3, 10.4 and 99.1, respectively, and are incorporated herein by reference. This summary is qualified by reference to such exhibits. Item 7. Financial Statements and Exhibits. (c) Exhibits. Exhibit 10.1 Letter Agreement by and among AT&T Corp., AT&T Wireless Services, Inc. and NTT DoCoMo, Inc., dated November 30, 2000. (Schedules and certain other attachments to this Exhibit have not been filed; upon request, AT&T will furnish supplementally to the Securities and Exchange Commission a copy of any omitted schedule or attachment.) Exhibit 10.2 Exhibit 1 to the Letter Agreement by and among AT&T Corp., AT&T Wireless Services, Inc. and NTT DoCoMo, Inc., dated November 30, 2000 - Investment and Strategic Alliance Term Sheet. (Schedules and certain other attachments to this Exhibit have not been filed; upon request, AT&T will furnish supplementally to the Securities and Exchange Commission a copy of any omitted schedule or attachment.) Exhibit 10.3 Annex A to the Investment and Strategic Alliance Term Sheet - Warrant Term Sheet. Exhibit 10.4 Annex F to the Investment and Strategic Alliance Term Sheet - Non-Competition and Confidentiality. Exhibit 99.1 AT&T Corp. Press Release issued November 30, 2000 entitled "AT&T AND NTT DOCOMO ANNOUNCE STRATEGIC WIRELESS ALLIANCE." SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. AT&T CORP. /s/ Steven Garfinkel ----------------------------------- By: Steven Garfinkel Assistant Secretary December 1, 2000 Exhibit Index ------------- Exhibit No. Document ---------- -------- Exhibit 10.1 Letter Agreement by and among AT&T Corp., AT&T Wireless Services, Inc. and NTT DoCoMo, Inc., dated November 30, 2000. (Schedules and certain other attachments to this Exhibit have not been filed; upon request, AT&T will furnish supplementally to the Securities and Exchange Commission a copy of any omitted schedule or attachment.) Exhibit 10.2 Exhibit 1 to the Letter Agreement by and among AT&T Corp., AT&T Wireless Services, Inc. and NTT DoCoMo, Inc., dated November 30, 2000 - Investment and Strategic Alliance Term Sheet. (Schedules and certain other attachments to this Exhibit have not been filed; upon request, AT&T will furnish supplementally to the Securities and Exchange Commission a copy of any omitted schedule or attachment.) Exhibit 10.3 Annex A to the Investment and Strategic Alliance Term Sheet - Warrant Term Sheet. Exhibit 10.4 Annex F to the Investment and Strategic Alliance Term Sheet - Non-Competition and Confidentiality. Exhibit 99.1 AT&T Corp. Press Release issued November 30, 2000 entitled "AT&T AND NTT DOCOMO ANNOUNCE STRATEGIC WIRELESS ALLIANCE." EX-10.1 2 0002.txt EXHIBIT 10.1 - LETTER AGREEMENT Exhibit 10.1 AT&T CORP. AT&T WIRELESS SERVICES, INC. 295 North Maple Avenue 7277 164th Avenue, Northeast Basking Ridge, New Jersey 07920 Redmond, Washington 98501 November 30, 2000 NTT DoCoMo, Inc. Sanno Park Tower--41st Floor 11-1, Nagata-cho 2-chome Chiyoda-ku, Tokyo 100-6150 Attention: Dr. Tachikawa Ladies and Gentlemen: Reference is hereby made to the term sheet attached hereto as Exhibit 1 (together with the attachments thereto, the "Term Sheet") regarding certain agreements among AT&T Corp., a New York corporation ("AT&T"), AT&T Wireless Services, Inc., a Delaware corporation ("AT&T-W"), and NTT DoCoMo, Inc., a corporation organized under the laws of Japan ("DoCoMo"), and together with AT&T and AT&T-W, the "Parties"), including a proposed investment by DoCoMo in AT&T's Wireless Group and a proposed strategic alliance between DoCoMo and AT&T's Wireless Group. In the event the Spin-off (as defined in the Term Sheet) is to be effected by spinning off an entity other than AT&T-W, the corporation that is the subject of the Spin-off (and that is or is to be the issuer of publicly traded common stock representing the former AT&T Wireless Group) shall execute this Letter Agreement (which includes the Term Sheet) and, upon doing so, shall be substituted for AT&T-W and thereafter be deemed to be a Party hereto. 1. Defined Terms. (a) The term "AT&T-W" shall refer to AT&T-W or to the corporation (if not AT&T-W) that is the subject of the Spin-off (and that is or is to be the issuer of publicly traded common stock representing the former AT&T Wireless Group). (b) The term "Alliance" shall mean the mobile multimedia alliance contemplated by the Term Sheet. (c) The term "Investment" shall mean the purchase by DoCoMo (or one or more of its designated wholly owned subsidiaries) of New AT&T-W Tracking Stock and the Warrants as contemplated by the Term Sheet. (d) In this Letter Agreement, the Term Sheet and the attachments and annexes thereto and the documents delivered by the parties in connection herewith: (i) references to "ABBA" shall be understood to be references to AT&T, (ii) references to "ABBA-W" shall be understood to be references to AT&T-W, and (iii) references to "Dylan" shall be understood to be references to DoCoMo. (e) Capitalized terms used herein and not otherwise defined have the meanings ascribed to them in the Term Sheet. 2. Binding Nature; Definitive Agreements. (a) The Term Sheet sets forth the terms of the transactions contemplated hereby and thereby, including the Investment and the Alliance. The Parties intend that the Term Sheet will be superseded by definitive agreements, filings under state law and other legal instruments, which will contain provisions incorporating the terms set forth in the Term Sheet, together with provisions customary in the case of transactions of the type described herein and therein, and such other provisions as are reasonable and appropriate in the context of the transactions contemplated hereby and thereby and to give effect thereto. The foregoing notwithstanding, the Parties expressly acknowledge and agree that this Letter Agreement (including the Term Sheet) constitutes a binding agreement among them, subject to the terms and conditions set forth in this Letter Agreement (including the Term Sheet), until definitive documentation is executed and delivered (except that the effectiveness and enforceability of the provisions of the Term Sheet are subject to certain conditions set forth in paragraph 4 below). (b) The Parties intend to execute such definitive documentation by December 15, 2000. If definitive documentation is not executed and delivered with respect to any matter contained in the Term Sheet by December 22, 2000, then, at the request of any Party, the proposed definitive documentation embodying the parties' differing views will immediately be submitted to mediation before the first person listed under "Mediators" on Exhibit 2 attached hereto (or if he is unable or unwilling to serve in such capacity, then before the second person listed under "Mediators" on Exhibit 2) in an effort to resolve any remaining differences among the Parties with respect to such definitive documentation. Such mediation shall include at least two meetings between the mediator and the Parties spanning a time period of at least three weeks. (c) In the event such differences are not resolved through such mediation by January 12, 2001, DoCoMo and AT&T will each submit on such date its proposed forms of each disputed provision of the definitive documentation to a single arbitrator, who shall be the first person listed under "Arbitrators" on Exhibit 2 (or if he is unable or unwilling to serve in such capacity, then the second person listed under "Arbitrators" on Exhibit 2) for binding arbitration. Notwithstanding the foregoing, if any differences relating to the certificate of designations for the New AT&T-W Tracking Stock are not resolved through mediation by January 5, 2001, DoCoMo and AT&T will each submit on such date its proposed forms of each disputed provision of such certificate of designations to the arbitrator as set forth in the preceding sentence for binding arbi- -2- tration. Not later than January 19, 2001, in the case of the certificate of designations, or January 31, 2001, in the case of any other definitive documentation, the arbitrator, after hearing the Parties, will resolve each disputed provision by selecting one of the two versions of each such provision submitted. When each disputed provision is resolved in this manner, the provisions selected by the arbitrator shall be inserted into the applicable documents and such documents will become the definitive documentation with respect to the matters set forth in the Term Sheet. The arbitrator shall make his or her determination according to his or her best business judgment, and principles of fairness and consistency with the Term Sheet. The arbitrator's decision may be set forth in a declaratory award and judgment may be entered thereon in any court identified in paragraph 6(g). Other than as set forth in this paragraph, the arbitration shall be conducted in accordance with the Commercial Arbitration Rules of the American Arbitration Association or any successor thereof, and shall take place at an appointed time and place in New York, New York. 3. Efforts. Each Party hereto agrees to act in good faith and to use all reasonable efforts to consummate the transactions contemplated by this Letter Agreement (including the Term Sheet), and to complete in a timely manner the related definitive agreements, instruments and filings in a manner that best gives effect to the terms set forth in the Term Sheet. 4. Effectiveness; Conditions. (a) The closing of the Investment and initiation of the Alliance shall be conditioned upon (1) the expiration or termination of any applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act"), (2) the absence of any statute, rule, regulation, executive order, decree or injunction (each, an "Order") having been enacted, entered, promulgated or enforced by any governmental entity or judicial or regulatory authority (each, a "Governmental Authority") of the United States, Japan, Canada or Mexico that has the effect of making the Investment illegal or otherwise prohibiting the consummation of the Investment, or that prohibits AT&T-W or DoCoMo from entering into the Alliance materially as contemplated by the Term Sheet; (3) receipt or expiration of any other material approval or waiting period required by a Governmental Authority, if any, (4) receipt by DoCoMo of an opinion of counsel to AT&T (subject to customary qualifications) as to (i) the due authorization and validity of the New AT&T-W Tracking Stock, the Current AT&T-W Tracking Stock issuable upon conversion thereof, the AT&T-W Common Stock issuable in exchange therefor in the Spin-off, the Warrants and the New AT&T-W Tracking Stock or AT&T-W Common Stock issuable upon exercise thereof, and (ii) the absence of conflict of the transaction with the AT&T articles of incorporation , (5) the filing of a certificate of designations relating to the New AT&T-W Tracking Stock with the Secretary of State of the State of New York, (6) the truth and accuracy of AT&T and AT&T-W's representations and warranties (which condition may be waived by DoCoMo) and of DoCoMo's representations and warranties (which condition may be waived by AT&T and AT&T-W) contained in Annex D to the Term Sheet and in this Letter Agreement (in all material respects in the case of any such representation or warranty that is not qualified by materiality) as of the Closing Date (as defined below) as if made on and as of the Closing Date (except that representations and warranties that by their terms speak only as of some other date need be true and accurate as of such other date), (7) compliance in all material respects by AT&T and AT&T-W with their pre-closing obligations (which condition may be waived by DoCoMo) and compliance in all material respects by DoCoMo with its pre-closing obligations (which condition may be waived by AT&T and AT&T-W); and (8) delivery to DoCoMo (which condition may be waived by DoCoMo) and -3- to AT&T and AT&T-W (which condition may be waived by AT&T and AT&T-W) of officer's certificates of AT&T and AT&T-W or of DoCoMo, as the case may be, certifying as to the matters set forth in clauses (6) and (7) above on behalf of the applicable Party. (b) Unless otherwise agreed by the Parties, the purchase of New AT&T-W Tracking Stock constituting the Investment shall occur on the later to occur of (1) January 22, 2001 and (2) as promptly as practicable (but in no event more than four business days) following the first date on which all of the conditions have been satisfied (other than those conditions that by their nature are to be satisfied by actions taken at the closing, which must be satisfied or waived at the closing); provided that, in the event AT&T-W or its affiliates acquire spectrum in the spectrum auction scheduled to commence in December 2000 and AT&T-W or such affiliates are required to fund the purchase of such spectrum prior to January 22, 2001, the purchase by DoCoMo of up to $1 billion of New AT&T-W Tracking Stock shall occur no later than the day prior to the date such funding is required (but in any event no earlier than January 15, 2001), subject to the satisfaction of the conditions set forth in paragraph 4(a) and the provision of notice by AT&T-W to DoCoMo of the potential need for such funding at least five business days prior to such earlier closing. For the avoidance of doubt, such closing(s) shall occur as set forth above even if the definitive documentation has not been completed or the arbitration with respect thereto has not been resolved, provided that any arbitration with respect to the definitive documentation shall continue in order to arrive at the final definitive documentation as rapidly as possible thereafter. The date of consummation of the Investment is referred to as the "Closing Date." 5. Termination. (a) This Letter Agreement may be terminated at any time by mutual written agreement of all of the Parties hereto. (b) If any of the conditions set forth in clauses (4)(a)(1), (2) or (3) becomes permanently incapable of being satisfied by virtue of any order, decree or ruling or other action taken by any Governmental Authority that is final and nonappealable, then any Party hereto (other than any Party (treating AT&T and AT&T-W as a single party) whose failure to comply with its obligations hereunder shall have caused such failure to occur or who has failed to use its reasonable best efforts to cause any such order, decree or ruling to be lifted) may terminate this Letter Agreement by sending written notice to each of the other Parties. (c) If the Investment is not consummated on or before March 31, 2001 (the "Outside Date"), then any Party hereto (other than any Party (treating AT&T and AT&T-W as a single party) whose failure to comply with its obligations hereunder shall have caused such failure to occur or who has failed to use its reasonable best efforts to consummate the Investment) may terminate this Letter Agreement by sending written notice to each of the other Parties. The Outside Date shall be extended to August 15, 2001 in the event that the failure to consummate the investment is due to the failure of any condition set forth in Section 4(a)(1), (2) or (3) to be satisfied by March 31, 2001. (d) Upon any termination in accordance with this Section 5, this Letter Agreement (including the Term Sheet) shall be null and void and of no further force or effect, but such termination shall not relieve any Party from liability for any breach of this Letter Agreement. -4- 6. Miscellaneous. (a) Representations and Warranties. Each Party severally represents to each of the other Parties that (A) this Letter Agreement (including the Term Sheet) has been duly authorized, executed and delivered by such Party and constitutes the legal, valid and binding obligation of such Party and enforceable against such Party in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium and similar laws affecting the rights of creditors generally and by general principles of equity, and (B) such Party has the necessary corporate or other power and authority to enter into this Letter Agreement (including the Term Sheet) and, subject to the satisfaction of the conditions set forth in Section 4 hereof, to consummate the Investment and the Alliance and otherwise to carry out its obligations hereunder and thereunder. In addition, the representations and warranties of each Party contained in Annex D to the Term Sheet shall be effective as of the date hereof as if set forth in full herein. (b) Expenses. Except as otherwise provided herein or in the Term Sheet, all costs and expenses incurred in connection with this Letter Agreement and the transactions contemplated hereby shall be paid by the Party incurring such costs and expenses. (c) Entire Agreement; No Third-Party Beneficiaries. This Letter Agreement (including the Term Sheet), and the letter agreement of even date herewith, by and among AT&T, AT&T-W and DoCoMo, constitute the entire agreement and, except as expressly set forth herein, supersedes any and all other prior agreements and undertakings, both written and oral, among the Parties, or any of them, with respect to the subject matter hereof. This Letter Agreement (including the Term Sheet) shall be only for the benefit of the Parties and is not intended for the benefit of any other party (except to one or more wholly owned subsidiaries of DoCoMo to which DoCoMo may assign its right to purchase hereunder). (d) Assignment; Successors. Neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned by any of the Parties hereto, in whole or in part (whether by operation of law or otherwise), without the prior written consent of each of the other Parties, except that DoCoMo may assign its right to purchase hereunder to one or more wholly owned subsidiaries of DoCoMo (so long as they remain wholly owned subsidiaries of DoCoMo), provided that such subsidiary or subsidiaries shall be bound by all the provisions of this Letter Agreement (including the Term Sheet) and that DoCoMo shall not be released from its obligations hereunder by virtue of such assignment. Subject to the preceding sentence, this Letter Agreement will be binding upon, inure to the benefit of and be enforceable by the Parties and their respective successors and assigns. (e) Amendment; Waiver. (i) This Letter Agreement and/or the Term Sheet may be amended at any time pursuant to a writing executed by each Party hereto. (ii) Any Party hereto may (A) extend the time for the performance of any of the obligations or other acts of the others or (B) waive compliance with any of the agreements or conditions contained herein. Any agreement on the part of a Party to any such extension or waiver shall be valid only as against such Party and only if set forth in an instrument in writing signed by such Party. -5- (f) Governing Law. This Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State of New York applicable to contracts executed in and to be performed entirely within that State, without giving effect to the conflicts of laws principles thereof. (g) Submission to Jurisdiction; Waivers. Each of the Parties hereto irrevocably agrees that any legal action or proceeding with respect to this Letter Agreement (including the Term Sheet) or for recognition and enforcement of any judgment in respect hereof, other than with respect to any dispute subject to mediation and arbitration under paragraph 2 (but including for enforcement of the arbitration provisions contained in paragraph 2 or any award resulting therefrom), brought by any other Party hereto or its successors or assigns shall be brought and determined only in the United States District Court for the Southern District of New York, or in the event (but only in the event) that such court does not have subject matter jurisdiction over such action or proceeding, only in the courts of the State of New York. Each of the Parties hereto hereby irrevocably submits with regard to any such action or proceeding for itself and in respect of its property, generally and unconditionally, to the personal jurisdiction of the aforesaid courts. Each of the Parties hereto hereby irrevocably waives, and agrees not to assert, by way of motion, as a defense, counterclaim or otherwise, in any action or proceeding with respect to this Letter Agreement (including the Term Sheet), (a) any claim that it is not personally subject to the jurisdiction of the above-named courts for any reason other than the failure to serve in accordance with paragraph (k) of this Section 6, (b) that it or its property is exempt or immune from jurisdiction of any such court or from any legal process commenced in such courts (whether through service of notice, attachment prior to judgment, attachment in aid of execution of judgment, execution of judgment or otherwise), and (c) to the fullest extent permitted by the applicable law, that (i) the suit, action or proceeding in such court is brought in an inconvenient forum, (ii) the venue of such suit, action or proceeding is improper and (iii) this Letter Agreement (including the Term Sheet), or the subject mater hereof, may not be enforced in or by such courts. (h) Waiver of Immunity. DoCoMo agrees that, to the extent that it or any of its subsidiaries or any of its property or the property of its subsidiaries is or becomes entitled to any immunity on the grounds of sovereignty or otherwise based upon its status as an agency or instrumentality of a government from any legal action, suit or proceeding or from set-off or counterclaim relating to this Agreement from the jurisdiction of any competent court, from service of process, from attachment prior to judgment, from attachment in aid of execution, from execution pursuant to a judgment or an arbitral award or from any other legal process in any jurisdiction, it, for itself and its property, and for each of its subsidiaries and its property, expressly, irrevocably and unconditionally waives, and agrees not to plead or claim, any such immunity with respect to matters arising with respect to this Letter Agreement (including the Term Sheet) or the subject matter hereof (including any obligation for the payment of money). DoCoMo agrees that the foregoing waiver is irrevocable and is not subject to withdrawal in any jurisdiction or under any statute, including the Foreign Sovereign Immunities Act, 28 U.S.C. ss. 1602 et seq. The foregoing waiver shall constitute a present waiver of immunity at any time any action is initiated against DoCoMo with respect to this Letter Agreement (including the Term Sheet) or the subject matter hereof (including any obligation for the payment of money). -6- (i) Counterparts. This Letter Agreement may be executed in counter- parts, each of which shall be deemed an original and all of which shall constitute one and the same instrument. (j) Effectiveness. This Letter Agreement shall not be effective as to or binding upon any Party until executed and delivered by all of the Parties. (k) Notices. Except as otherwise provided in this Letter Agreement or the Term Sheet, all notices, requests, claims, demands, waivers and other communications hereunder shall be in writing and shall be deemed to have been duly given when delivered by hand, when delivered personally or by courier, when received by facsimile transmission if promptly confirmed by telephone, or three days after being deposited in the U.S. mail (registered or certified mail, postage prepaid, return receipt requested), as follows: If to DoCoMo: Sanno Park Tower--41st Floor 11-1, Nagata-cho 2-chome Chiyoda-ku, Tokyo 100-6150 Attention: Global Business Department, Kiyoyuki Tsujimura, Managing Director Fax: 81-3-5156-0204 with a copy to: Sullivan & Cromwell 1888 Century Park East Los Angeles, CA 90067 Attention: Alison S. Ressler Fax: (310) 712-8800 If to AT&T: AT&T Corp. 295 North Maple Avenue Basking Ridge, New Jersey 07920 Attention: Marilyn J. Wasser Secretary and Vice President - Law Fax: (908) 221-6618 -7- with a copy to: Wachtell, Lipton, Rosen & Katz 51 West 52nd Street New York, NY 10019 Attention: Steven A. Rosenblum David M. Silk Fax: (212) 403-2000 If to AT&T-W: AT&T Wireless Services, Inc. 7277 164th Avenue, Northeast Redmond, Washington 98501 Attention: Greg Landis General Counsel Fax: (425) 580-8050 with a copy to: Wachtell, Lipton, Rosen & Katz 51 West 52nd Street New York, NY 10019 Attention: Steven A. Rosenblum David M. Silk Fax: (212) 403-2000 or to such other address, facsimile number or telephone as either party may, from time to time, designate in a written notice given in a like manner. [Remainder of Page Intentionally Left Blank] -8- If the foregoing is in accordance with your understanding please indicate your agreement by signing below. Very truly yours, AT&T CORP. By: /s/ C. Michael Armstrong -------------------------------------------------- Name: C. Michael Armstrong Title: Chairman and Chief Executive Officer AT&T WIRELESS SERVICES, INC. By: /s/ John D. Zeglis -------------------------------------------------- Name: John D. Zeglis Title: Chief Executive Officer Accepted and Agreed as of the date first above written: NTT DOCOMO, INC. By: /s/ Keiji Tachikawa ----------------------------------------- Name: Keiji Tachikawa Title: President and Chief Executive Officer -9- EX-10.2 3 0003.txt EXHIBIT 10.2 - EXHIBIT 1 TO LETTER AGREEMENT Exhibit 10.2 Exhibit 1 --------- Investment and Strategic Alliance Term Sheet 1. Issuer/Investor ABBA as issuer of New ABBA-W Tracking Stock (as defined below) / ABBA-W as issuer of Warrants (as defined below) / Dylan (which term shall include one or more of Dylan's wholly owned subsidiaries that acquires or holds securities as contemplated hereunder) as investor. After the Spin-off, ABBA-W will be the sole issuer and ABBA will have no further obligations under the agreements, except for ABBA's guarantee of a portion of the technology default obligation set forth in Section 15 of this term sheet, as described in such Section 15, and ABBA's indemnification obligations as described in Section 19. 2. Strategic Alliance ABBA-W and Dylan will create a mobile multimedia alliance involving the formation by ABBA-W of a mobile multimedia subsidiary (the "MMS"). Strategic, operating and other details relating to the alliance are set forth in this term sheet. 3. Securities -- Common Equity Dylan will acquire from ABBA shares of a new Equivalents class of ABBA-W tracking stock (the "New ABBA-W Tracking Stock") that will be a series of preferred stock of ABBA. Except as otherwise set forth herein, the New ABBA-W Tracking Stock will have the same economic terms as the existing ABBA-W tracking stock (the "Current ABBA-W Tracking Stock"), on a basis such that each share of the New ABBA-W Tracking Stock will be the economic and voting equivalent of 500 shares of Current ABBA-W Tracking Stock. -- Warrants In addition, Dylan will acquire from ABBA-W warrants to purchase additional shares of New ABBA-W Tracking Stock on the terms set forth in Annex A hereto (together with the warrants to be issued in exchange therefor in connection with the Spin-off, the "WARRANTS"). ABBA will agree to reserve for issuance and deliver to ABBA-W, as required, the shares of New ABBA-W Tracking Stock or Current ABBA-W Tracking Stock issuable upon exercise of the Warrants if exercised prior to the Spin-off. Unless otherwise expressly stated, all references to Dylan's ownership or economic or voting interest in ABBA or ABBA-W will be calculated without reference to any unexercised Warrants, but will include any ownership or economic or voting interest in ABBA or ABBA-W acquired or held by any of Dylan's wholly owned subsidiaries that acquires or holds New ABBA-W Tracking Stock, Current ABBA-W Tracking Stock or ABBA-W Common Stock as contemplated hereunder. -- Liquidation The New ABBA-W Tracking Stock will have an Preference involuntary liquidation preference per share equal to $3.65 billion divided by the total number of shares of New ABBA-W Tracking Stock. After receiving payment of such liquidation preference, the holder of the New ABBA-W Tracking Stock would be entitled to additional liquidation payments, if any, on a pro rata basis, equal to the amount receivable by a holder of the number of shares of Current ABBA-W Tracking Stock into which such New ABBA-W Tracking Stock is convertible, less such liquidation preference. The New ABBA-W Tracking Stock will not have any voluntary liquidation preference, and the holder thereof will be entitled to liquidation payments, on a pro rata basis, equal to the amount receivable by a holder of the number of shares of Current ABBA-W Tracking Stock into which such New ABBA-W Tracking Stock is convertible. -- Conversion Prior to the spin-off of ABBA-W in accordance with the Final Draft Separation Agreements (as defined below), as amended or revised to the extent not prohibited by this term sheet (the "Spin-off"), each share of the New ABBA-W Tracking Stock will be convertible, at Dylan's election, into 500 shares of Current ABBA-W Tracking Stock, provided that such conversion must be with respect to all (and not less than all) shares of New ABBA-W Tracking Stock held by Dylan. In the event that Dylan has not elected to convert as described in the immediately preceding sentence, then immediately prior to the Spin-off, each share of the New ABBA-W Tracking Stock automatically will convert into 500 shares of Current ABBA-W Tracking Stock and thereafter, in the Spin-off, such Current ABBA-W Tracking Stock shall be converted into or exchanged for an equal number of shares of ABBA-W Common Stock, assuming a one-for-one exchange rate in the Spin-off. (In the event the exchange rate in the Spin-off is other than one-for-one, the conversion rate applicable to such conversion or exchange from Current ABBA-W Tracking Stock into ABBA-W Common Stock will be adjusted appropriately.) Upon the Spin-off, any then-outstanding Warrants will be automatically exchanged for Warrants to purchase shares of ABBA-W Common Stock as set forth in Annex A. -- Date of Spin-off ABBA will use its commercially reasonable efforts to obtain a satisfactory tax ruling with respect to the Spin-off. In the event that ABBA has not spun off ABBA-W by January 1, 2002 (or, at ABBA's election, by March 15, 2002 in the event ABBA has not received a satisfactory tax ruling with respect to the Spin-off by January 1, 2002 but reasonably believes as of such date that it is possible to obtain such a ruling by, or effect the Spin-off without a ruling by, March 15, 2002, and is continuing in good faith to seek such a ruling or to effect the -2- Spin-off without a ruling), Dylan will have the right, at its election, to require ABBA to: (1) repurchase from Dylan the New ABBA-W Tracking Stock and Warrants initially issued to Dylan hereunder and in each case still held by Dylan, at Dylan's original purchase price plus Dylan's Cost of Carry thereon (as defined below) to the date of payment; or (2) enable Dylan to sell its shares, upon conversion of Dylan's shares of New ABBA-W Tracking Stock (including shares of New ABBA-W Tracking Stock issued upon exercise of Dylan's Warrants) into shares of Current ABBA-W Tracking Stock, by registering the sale of such shares of Current ABBA-W Tracking Stock through registrations in accordance with the registration rights procedures discussed at Paragraph 20. For purposes of this term sheet, Dylan's Cost of Carry shall mean an interest rate per annum that will vary based on the time period from closing to the applicable date of payment in accordance with a schedule to be included in the definitive agreements. Such schedule will set forth interest rates for the following time periods (expressed in days, based on a 360-day year of twelve 30-day months, except for periods of 12 months or less which will be expressed in actual days of 365 based on a 360-day year according to the money market convention), determined by adding the following spreads to the following reference rates in effect on the date of execution of the definitive agreements (such reference rates being determined by the average of each such rate for the five trading days immediately preceding the date of execution, but not including in such five-trading day period either December 22, 2000 or December 29, 2000). As used in the following table, "LIBOR" means the London Interbank Offered Rate; "treasuries" means the on the run United States treasury securities rate for maturities for which there are benchmarks and rates for other maturities will be on an as interpolated basis; and "bp" means basis points. Days Reference Rate Spread ---- -------------- ------ 90 3-month LIBOR -7 bp 180 6-month LIBOR -6 bp 360 1-year LIBOR +10 bp 540 18-month treasuries +100 bp 720 2-year treasuries +110 bp 1,080 3-year treasuries +120 bp 1,440 4-year treasuries +145 bp 1,800 5-year treasuries +150 bp -3- 2,160 6-year treasuries +160 bp 2,520 7-year treasuries +165 bp or more The interest rate that will apply to any time period between any two points in the foregoing table will be an interpolated rate, which interpolated rate will apply to the entire time period. As an example only: if the rate for 720 days were 6.5% and the rate for 1,080 days were 7.5%, then (i) the rate for 900 days (half way between the two points) would be 7.0% (half way between the two rates); (ii) the rate for 810 days (one quarter of the way between the two points) would be 6.75% (one quarter of the way between the two rates); and (iii) the rate for 990 days (three quarters of the way between the two points) would be 7.25% (three quarters of the way between the two rates). The applicable interest rate will be compounded over the applicable time period based on a semi-annual bond equivalent yield using a 360-day year of twelve 30-day months, except for periods of 12 months or less which will be expressed in actual days of 365 based on a 360-day year according to the money market convention. For purposes of this term sheet, in any calculation of Dylan's original purchase price, $3,162.602 shall be attributable to each Warrant to purchase New ABBA-W Tracking Stock and $11,750.00 shall be attributable to each share of New ABBA-W Tracking Stock (with appropriately adjusted allocations for Warrants to purchase Current ABBA-W Tracking Stock or ABBA-W Common Stock, and for shares of Current ABBA-W Tracking Stock and ABBA-W Common Stock, so that, subject to customary anti-dilution adjustments, $6.3252 shall be attributable to each Warrant to purchase one share of Current ABBA-W Tracking Stock or one share of ABBA-W Common Stock and $23.50 shall be attributable to each share of Current ABBA-W Tracking Stock and to each share of ABBA-W Common Stock). In the case of alternative (1), final payment will be due by April 15, 2002 if the trigger date is January 1, 2002, or as soon as reasonably practicable but no later than June 15, 2002 if the trigger date is March 15, 2002. In the case of alternative (2), the size and timing of such registered sales will be determined mutually by ABBA and Dylan in their good faith judgment, in consultation with their underwriters and taking into account Dylan's desire to sell its shares as quickly as reasonably practicable and ABBA's desire not to disrupt or depress the market for Current ABBA-W Tracking Stock. Dylan must exercise the right provided for in alternatives (1) and (2) within 30 days of January 1, 2002 or March 15, 2002, -4- whichever is the applicable triggering date. -- Limited Redemption Following the occurrence of a Tax Event (as defined in the ABBA articles of incorporation) and prior to the Spin-off, in the event that all of the Current ABBA-W Tracking Stock is redeemed and the adverse tax consequences with respect to the Current ABBA-W Tracking Stock giving rise to the Tax Event also apply (or comparable adverse tax consequences apply) with respect to the New ABBA-W Tracking Stock, ABBA may redeem all (but not less than all) the shares of New ABBA-W Tracking Stock and all of the Warrants, in each case still owned by Dylan, at Dylan's original purchase price plus Dylan's Cost of Carry plus 3% per annum thereon to the date of payment. In the event ABBA spins off all or substantially all of its wireless business within one year of such redemption, Dylan shall be entitled to reinvest directly in such spun off entity, at the redemption price, in a number of shares and warrants equal to the number of shares and Warrants held by Dylan at the time of redemption (subject to appropriate adjustment to reflect any revised capital structure), and otherwise on terms and conditions as nearly comparable as possible to the terms and conditions of this investment. In the event ABBA fails to complete the Spin-off on or prior to April 26, 2002, then ABBA may thereafter redeem all (but not less than all) the shares of New ABBA-W Tracking Stock and Warrants, in each case still owned by Dylan, so long as (1) ABBA shall have abandoned the Spin-off and shall have no intention at the time of such redemption to sell or otherwise dispose of its wireless business (and shall have delivered an officer's certificate to such effect to Dylan), and (2) all of the Current ABBA-W Tracking Stock shall also be redeemed concurrently. In such event, the redemption price for the New ABBA-W Tracking Stock and Warrants shall be at Dylan's original purchase price plus Dylan's Cost of Carry plus 3% per annum thereon to the date of payment. If ABBA announces the sale of all or substantially all of its wireless business within one year after such redemption and thereafter consummates such sale at a price that would have resulted in greater value being attributable to the New ABBA-W Tracking Stock and Warrants than the redemption price, ABBA shall pay Dylan the excess of such greater value over the redemption price promptly upon the consummation of such sale. In addition, if ABBA spins off all or substantially all of its wireless business within one year of such redemption, Dylan shall be entitled to reinvest directly in such spun off entity, at the redemption price, in a number of shares and warrants equal to the number of shares and Warrants held by Dylan at the time of redemption (subject to appropriate adjustment to reflect any revised capital structure), and otherwise on terms and -5- conditions as nearly comparable as possible to the terms and conditions of this investment. 4. Number of Shares; ABBA will issue to Dylan (or will cause Warrants; Purchase Price ABBA-W to issue to Dylan), in exchange for a total purchase price of $9,811,079,720 in cash: (1) 812,511.778 shares of the New ABBA-W Tracking Stock, representing a 16.000% economic interest in ABBA-W calculated on a fully-diluted basis as of the date hereof (using the treasury method) and (2) the Warrants. The total purchase price will be paid in full to ABBA, and ABBA will allocate the proceeds as contemplated by Paragraph 5 below. 5. Use of Proceeds $6,159,464,289 of the proceeds from the investment will be contributed to ABBA-W simultaneously with the closing and $3,651,615,431 of the proceeds from the investment will be retained by ABBA. In accordance with the determination of the ABBA board of directors pursuant to the ABBA articles of incorporation, upon such application of the proceeds, the numerator of the Wireless Group Allocation Fraction (as defined in the ABBA articles of incorporation) shall be increased by the total number of shares of Current ABBA-W Tracking Stock into which the New ABBA-W Tracking Stock is convertible and the denominator of the Wireless Group Allocation Fraction shall be increased by 228,128,307 (representing the total number of shares of Current ABBA-W Tracking Stock into which the New ABBA-W Tracking Stock deemed issued for the account of the Wireless Group is convertible). In the event any Warrants are exercised to purchase New ABBA-W Tracking Stock, the numerator and the denominator of the Wireless Group Allocation Fraction will be increased by the number of shares of Current ABBA-W Tracking Stock into which the New ABBA-W Tracking Stock issued upon exercise of the Warrants is convertible. No further adjustment of the numerator or the denominator of the Wireless Group Allocation Fraction shall be made upon any conversion of New ABBA-W Tracking Stock into Current ABBA-W Tracking Stock. For purposes of any calculation under the ABBA articles of incorporation that uses the Wireless Group Allocation Fraction, (1) all outstanding shares of New ABBA-W Tracking Stock will be treated as if they had fully converted into Current ABBA-W Tracking Stock, (2) any payments or exchange rights of the holder of New ABBA-W Tracking Stock will be deemed payments or exchange rights in respect of the underlying Current ABBA-W Tracking Stock, and (3) any payments or exchange rights of the holders of shares of Current ABBA-W Tracking Stock actually outstanding as of any calculation date shall be based on the foregoing adjusted Wireless Allocation Fraction further adjusted to subtract from the numerator thereof the number of -6- shares of Current ABBA-W Tracking Stock issuable upon conversion of the then outstanding New ABBA-W Tracking Stock. For the avoidance of doubt, the intent of the foregoing is (a) to treat 456,256.614 shares of New ABBA-W Tracking Stock (and the 228,128,307 shares of Current ABBA-W Tracking issuable upon conversion thereof) as having been issued for the account of ABBA-W as primary shares, and (b) to treat 356,255.164 shares of New ABBA-W Tracking Stock (and the 178,127,582 shares of Current ABBA-W Tracking Stock issuable upon conversion thereof) as having been issued for the account of ABBA as secondary shares. 6. Voting Rights With respect to all matters submitted to a vote of the ABBA shareholders, each share of New ABBA-W Tracking Stock will be entitled to that number of votes equal to the number of votes to which the Current ABBA-W Tracking Stock into which such share of New ABBA-W Tracking Stock is then convertible is entitled. Dylan will have no voting rights in respect of unexercised Warrants. 7. Investor Veto Rights -- Pre-Spin-off Prior to the consummation of the Spin-off, ABBA will not, and will not permit its subsidiaries to, take any of the following actions without the prior written consent of Dylan: - a sale of all or substantially all the assets of ABBA-W and its subsidiaries taken as a whole; - a merger, consolidation or similar business combination involving all or substantially all of the business of ABBA-W, other than any such trans- action in which the holders of the economic interests in ABBA-W as of immediately prior to the consummation of the first of such transactions continue to hold, directly or indirectly, at least two-thirds of such economic interests following each of such transactions; - the acquisition (including by merger or other similar transaction) of any business or assets by ABBA-W or by ABBA on behalf of or which are to be contributed to ABBA-W, provided that ABBA or ABBA-W may make such acquisitions to the extent that the consideration paid by ABBA or ABBA-W with respect to all such acquisitions does not exceed $17 billion (other than acquisitions of spectrum, which may be made without regard to and without counting against such dollar limitation); -7- - any further issuance of economic interests in or rights to ABBA-W (including the issuance of additional shares of New or Current ABBA-W Tracking Stock), except: (i) for issuances of economic interests in ABBA-W that do not, in the aggregate, exceed 15% of the market capitalization of ABBA-W as of the date of this term sheet; (ii) with respect to the issuance to officers, employees or directors of Current ABBA-W Tracking Stock or options to acquire shares of Current ABBA-W Tracking Stock (or options exercisable after the Spin-off to acquire ABBA-W Common Stock) in the ordinary course of business consistent with past practice or in connection with the Spin-off; (iii) issuances of Current ABBA-W Tracking Stock upon exercise of such options; (iv) issuances of Current ABBA-W Tracking Stock in connection with acquisitions or merger transactions not prohibited by the two immediately preceding bullet points; (v) issuances of New ABBA-W Tracking Stock upon exercise of the Warrants or of Current ABBA-W Tracking Stock upon conversion of shares of New ABBA-W Tracking Stock; and (vi) the issuance of shares of Current ABBA-W Tracking Stock that reflects the disposition of any portion of ABBA's retained interest, including without limitation in the publicly announced proposed exchange offer to be effected in connection with the Spin-off (provided that in any such disposition to a party unaffiliated with ABBA that is not in connection with the Spin-off or exchange offer, no person or group of related persons may acquire any governance or board participation rights in excess of the normal rights of ownership of Current ABBA-W Tracking stock); provided that the aggregate issuances permitted in clauses (i) through (iv) of this bullet point shall not result in the holders of the economic interests in ABBA-W immediately after giving effect to this investment ceasing to hold at least two-thirds of such economic interests following such issuances. - the payment of any cash dividends to holders of the Current ABBA-W Tracking Stock, any repurchase of Current ABBA-W Tracking Stock (other than repurchases (1) to offset option exercises by directors, officers and employees, (2) repurchases which are not material in amount in connection with employee settlements or similar matters, and (3) other repurchases not in excess of $5 million in the aggregate) or any repurchase of ABBA's retained -8- common interest (it being understood that the allocation of a portion of the proceeds of this investment to ABBA and the resulting adjustment of the Wireless Group Allocation Fraction to reduce ABBA's retained common interest shall not give rise to a veto right under this provision); - any (i) amendment to the articles of incorporation or by-laws of ABBA to the extent such amendments would have an adverse effect on the rights of the holders of the New ABBA-W Tracking Stock (it being understood that the proposed amendment to the articles of incorporation of ABBA to reduce the required vote for a merger or for a sale or other disposition of substantially all the assets does not violate this provision), (ii) changes to the Final Draft Separation Agreements (as defined below) that would, in the aggregate, have a material adverse effect on ABBA-W, or (iii) material new agreements between ABBA or its subsidiaries (other than ABBA-W and its subsidiaries), on the one hand, and ABBA-W or its subsidiaries, on the other hand, other than those that are on arm's- length terms comparable to those which ABBA-W would enter into with an unaffiliated third party. -- No Right to Veto Notwithstanding the foregoing, Dylan will Spin-off or not have any right to veto the Spin-off, any Redemption redemption of the New ABBA-W Tracking Stock that is permitted by Paragraph 3, or any redemption of the Current ABBA-W Tracking Stock. -- Loss of Pre-Spin-off Dylan will cease to be entitled to the Rights foregoing veto rights if Dylan's economic interest in ABBA-W falls below 10% and remains below 10% for a period of 60 days, provided that, so long as Dylan retains at least 10/16 of the number of shares acquired at the closing of this investment (measured on an as-converted-to-Current ABBA-W Tracking Stock or, after the Spin-off, ABBA-W Common Stock, -basis, the "Original Investment"), Dylan will only cease to be entitled to the foregoing veto rights if Dylan's economic interest in ABBA-W falls below 8% and remains below 8% for a period of 60 days. For purposes of the foregoing and any other calculation in this term sheet of Dylan's economic interest in ABBA-W, Dylan's ownership of ABBA-W Common Stock, or the portion of the Original Investment retained by Dylan, shares held by Dylan's wholly owned subsidiaries (so long as they remain wholly owned subsidiaries) will be deemed to be shares held by Dylan. -9- -- Post-Spin-off Following the Spin-off, ABBA-W will not take any of the following actions, without Dylan's prior written consent: (i) change the scope of its business such that its current businesses (including those businesses that are part of ABBA-W's current business plan and including any natural evolution of such current businesses) taken as a whole no longer constitute ABBA-W's primary business, or (ii) enter into a strategic alliance with another wireless operator that would result in such wireless operator owning more than 15% but less than 50% of the economic interest in ABBA-W (it being understood that a merger with a third party that results in a wireless operator owning more than 15% but less than 50% of the resulting entity by reason of such wireless operator's prior shareholdings in such third party shall not be deemed to violate this clause (ii) unless such merger is undertaken solely to effect such a strategic alliance with such wireless operator). Dylan will cease to be entitled to the foregoing veto rights if Dylan's ownership of ABBA-W Common Stock falls below 10% and remains below 10% for a period of 60 days, provided that, so long as Dylan retains at least 10/16 of its Original Investment in ABBA-W, Dylan will only cease to be entitled to the foregoing veto rights if Dylan's ownership of ABBA-W common stock falls below 8% and remains below 8% for a period of 60 days. 8. [Reserved] 9. ABBA and ABBA-W Board Representation and Other Board Matters -- General Up until the Spin-off, Dylan will receive one seat on the ABBA board of directors. Following the Spin-off, Dylan will cause such representative to resign from the ABBA board. Following the Spin-off, Dylan will receive a number of seats on the ABBA-W board of directors proportionate to Dylan's economic interest in ABBA-W (rounded up to the nearest whole number in the case of a fraction of .5 or greater and rounded down to the nearest whole number in the case of a fraction less than .5), without reference to any economic interest acquired after the closing date of this investment other than by the exercise of preemptive rights hereunder or by exercise of the Warrants. Other than as described below under "Loss of Board Rights", in no event will the number of Dylan's board designees fall below one. ABBA agrees to cause the board of directors of ABBA-W as of immediately prior to the consummation of the Spin-off to be classified into three classes. ABBA agrees to cause Dylan's nominees to be staggered among such classes, provided that in the event there are less than three Dylan nominees ABBA agrees to cause -10- Dylan's nominees (in the event there are two) to be appointed to the classes the terms of which will expire at the second and third annual meeting of shareholders following the Spin-off and to cause Dylan's nominee (in the event there is one) to be appointed to the class the term of which will expire at the third annual meeting of shareholders following the Spin-off. Dylan's nominees to the ABBA or ABBA-W board of directors will be senior officers of Dylan who will be reasonably acceptable to ABBA, prior to the Spin-off, and to ABBA-W, following the Spin-off. Prior to the Spin-off, as long as Dylan has the right to a nominee on the ABBA board, then one of its nominees will be a member of ABBA's ABBA-W Capital Stock Committee. -- Loss of Board Rights Dylan will cease to be entitled to the foregoing board rights if Dylan's ownership of ABBA-W Common Stock falls below 10% and remains below 10% for a period of 60 days, provided that, so long as Dylan retains at least 10/16 of its Original Investment in ABBA-W, Dylan will only cease to be entitled to the foregoing veto rights if Dylan's ownership of ABBA-W Common Stock falls below 8% and remains below 8% for a period of 60 days. Dylan will cause any excess nominees to resign at any time that it has more nominees on the board of ABBA-W than it is entitled to hereunder. Dylan will cause such resignation to occur within 60 days, in the case of a reduction in the number of nominees to which it is entitled, or within 10 business days in the case of a loss of its right to nominate any board nominees. In the case of a loss of the right to nominate any board nominees, no Dylan nominee will vote or exercise any other rights or powers of office during the period pending resignation. 10. Senior Leadership Team During the period prior to the Spin-off, and Alliance Advisory Dylan will be entitled to select one senior Committee executive of Dylan reasonably acceptable to ABBA-W to be a member of ABBA-W's Senior Leadership Team and to participate in its meetings, which will be scheduled regularly and no less frequently than monthly. ABBA-W's Senior Leadership Team is the current body (other than the ABBA board of directors and its committees) in which principal decisions with respect to ABBA-W are discussed by the principal decision-makers of ABBA-W. The members of the Senior Leadership Team as of the date hereof are set forth in Annex B hereto. ABBA-W will give Dylan's designee at least three business days' notice of meetings of its Senior Leadership Team, to the extent practicable, and in any event will use its reasonable efforts to provide such individual at least as much notice of meetings as is given to the other members of the Senior Leadership Team. Dylan's designee may participate in such meetings by telephone and, if -11- requested, will be given a briefing with respect to any meeting that such individual is unable to attend. The senior executive designated by Dylan will also be a member of any similar ABBA-W body that may be formed to address matters of similar importance to the matters currently considered by ABBA-W's Senior Leadership Team. Immediately upon closing, ABBA-W and Dylan will establish a management advisory committee to assist and advise the MMS CEO, as contemplated by paragraph 26A below. Dylan will have significant (but not majority) representation on the committee. 11. Management Positions -- ABBA-W Both before and after the Spin-off, Dylan will have the right to appoint at least two and no more than five of its employees as employees of ABBA-W with such titles as "Manager-Finance" and/or "Director of Technology" (and such other titles as may be agreed with ABBA-W) of ABBA-W and such employees will have powers, obligations and responsibilities consistent with such titles. Such employees will report directly to the Chief Financial Officer, Chief Technology Officer or, with respect to other titles, to other appropriate officers. Dylan's nominees for such appointments, and the continued employment by ABBA-W of such individuals, will be subject to the reasonable approval of ABBA-W. -- MMS Dylan and ABBA-W will appoint a mutually satisfactory MMS CEO, and Dylan will have a right to appoint the CTO of the MMS subject to approval by ABBA-W, in each case on the terms set forth in paragraph 26B below. -- Loss of Management Dylan will cease to be entitled to these Rights rights if Dylan's economic interest in ABBA-W falls below 10% or, after the Spin-off, Dylan holds less than 10% of the outstanding ABBA-W Common Stock, and in each case remains below 10% for a period of 60 days, provided that, so long as Dylan retains at least 10/16 of its Original Investment in ABBA-W, Dylan will only cease to be entitled to the foregoing rights if Dylan's economic interest in ABBA-W falls below 8% or, after the Spin-off, Dylan holds less than 8% of the outstanding ABBA-W Common Stock, and in each case remains below 8% for a period of 60 days. Dylan will cause the resignation of such representatives and managers to occur within 10 business days following the loss of the foregoing rights, and no Dylan appointee will vote or exercise any other rights or powers of office during this period. -12- 12. Anti-Dilution Provisions The New ABBA-W Tracking Stock will have the benefit of standard anti-dilution protections, as with the Current ABBA-W Tracking Stock. These protections will apply in the event of, among other things, recapitalizations, reorganizations, stock splits, stock dividends, and similar transactions with respect to ABBA and its capital stock. 13. Preemptive Rights -- General Dylan will be entitled to participate, at Dylan's option, in any new equity issuance by ABBA or ABBA-W to maintain its interest in ABBA-W calculated on a fully diluted basis, not to exceed 16% (exclusive of any shares issued upon exercise of the Warrants). This preemptive right will be subject to the following: (i) if Dylan did not, prior to the issuance of equity giving rise to the preemptive right, hold less than 12% of the economic interest (prior to the Spin-off) or the common stock (following the Spin-off) of ABBA-W, the number of shares necessary to maintain up to a 16% interest in ABBA-W (exclusive of any shares issued upon exercise of the Warrants) calculated on a fully diluted basis and (ii) if, prior to the issuance of equity giving rise to the preemptive right, Dylan held less than 12% of the economic interest (prior to the Spin-off) or the common stock (after the Spin-off) of ABBA-W, the number of shares necessary to maintain the percentage interest that Dylan held immediately prior to such equity issuance. The purchase price for such shares shall equal the issuance price for the issuance giving rise to such preemptive right, provided that, in the case of a preemptive right resulting from options or other securities granted to officers, directors or employees, the purchase price shall be based on the average closing price for the shares of Current ABBA-W Tracking Stock or ABBA-W Common Stock, as the case may be, for the 30 trading day period immediately preceding the relevant semi-annual stock option issuance date, and provided, further that, in the case of the exercise of a preemptive right under clause (i) for shares in excess of the number of shares necessary to maintain its then current interest, the purchase price for the excess shares shall be the greater of (x) the issuance price for the issuance giving rise to such exercise of preemptive right and (y) the issuance price for the issuance that previously diluted Dylan's interest and with respect to which the excess shares are being purchased to make up such previous dilution. Appropriate valuation mechanisms will be required with respect to sales of equity in connection with acquisitions by ABBA or ABBA-W of assets or businesses to determine the deemed issuance price of such issuances. In addition, appropriate procedures will be necessary to ensure that exercise of preemptive rights does not materially interfere -13- with or delay public sales of equity by ABBA or ABBA-W and to preserve Dylan's ability to account for the investment contemplated hereby under the equity method of accounting. Preemptive rights will not be triggered by issuances of securities upon exchange or conversion of previously outstanding securities (including without limitation issuances in connection with any rights plan) or by pro rata distributions to shareholders (including without limitation stock dividends and stock splits), except that this sentence will not prevent Dylan from exercising its preemptive rights hereunder upon the conversion of convertible securities that become outstanding after the closing date of this investment and that, because of the nature of the security, the number of shares of common stock into which such security is convertible was not calculable and therefore Dylan could not exercise its preemptive rights with respect thereto. Notwithstanding the foregoing, Dylan will not be entitled to exercise preemptive rights if and to the extent that the exercise of such preemptive rights would, taking into account all relevant facts in existence at the time of the issuance to Dylan, create a substantial risk that such issuance would cause the distribution to be taxable to ABBA under Code Section 355(e). -- Loss of Preemptive Dylan will cease to be entitled to these Rights rights if, prior to the Spin-off, Dylan's economic interest in ABBA-W falls below 10% or, after the Spin-off, Dylan holds less than 10% of the outstanding ABBA-W Common Stock and in each case remains below 10% for a period of 60 days, provided that, so long as Dylan retains at least 10/16 of its Original Investment in ABBA-W, Dylan will only cease to be entitled to these rights if Dylan's economic interest in ABBA-W falls below 8% or, after the Spin-off, Dylan holds less than 8% of the outstanding ABBA-W Common Stock, and in each case remains below 8% for a period of 60 days. 14. Technology Commitment ABBA-W will have launched service based on W-CDMA technology in 13 of the top 50 wireless markets (BTAs) in the United States by June 2004. Failure to achieve this target will be excused (1) if Dylan at any time ceases to actively support and promote W-CDMA technology as the primary standard for its 3G wireless services or if Dylan is no longer actively supporting and promoting 3G wireless services, (2) if the failure is due to factors beyond ABBA-W's reasonable power to affect or control, including, without limitation, delay in availability or unavailability of equipment, software, spectrum, cell sites or other items needed for the construction and operation of the W-CDMA service, provided that ABBA-W shall have used commercially reasonable efforts to take -14- reasonable steps to acquire such equipment, software, spectrum, cell sites or other items so needed, (3) if ABBA-W is unable to obtain regulatory approvals, licenses and permits necessary for the launch of services based on W-CDMA technology on a timely basis and without the imposition of burdensome conditions or restrictions, provided that ABBA-W shall have used commercially reasonable efforts to take reasonable steps to obtain such approvals, licenses and permits, or (4) if the ABBA board of directors or the ABBA-W board of directors, as the case may be, determines in good faith that ABBA-W's business plan for constructing such a system has deteriorated significantly due to regulatory or legal changes, intellectual property disputes, health, safety or other similar issues, or acts of God or other natural events. ABBA-W will not abandon W-CDMA technology without the approval of the Board of Directors of ABBA or ABBA-W, as the case may be. "W-CDMA" means the CDMA based radio access technology defined and specified in the Third Generation Partnership Project ("3GPP") for IMT-2000 systems, specifications of which may be modified from time to time by 3GPP. 15. Technology Default Obligation -- Trigger Dylan will have a right to require ABBA (if prior to the Spin-off) to repurchase the shares of New ABBA-W Tracking Stock and Warrants originally issued to Dylan and in each case still held by Dylan, or to require ABBA-W (if after the Spin-off) to repurchase the shares of ABBA-W Common Stock issued in exchange for such shares of New ABBA-W Tracking Stock and the new Warrants issued in exchange for the Warrants, in each case that are still held by Dylan, upon (1) the Board of Directors of ABBA or ABBA-W, as the case may be, requiring or approving a change in ABBA-W's 3G technology (other than migration to successor technologies and other than for one or more of the reasons set forth in clauses (1) through (4) of paragraph 14) prior to June 2004, or (2) if ABBA-W fails to meet the technology commitment set forth in paragraph 14 above; provided that this right will terminate, and Dylan will not be entitled to require such repurchase, if Dylan at any time ceases to actively support and promote W-CDMA technology as the primary standard for its 3G wireless services or if Dylan is no longer actively supporting and promoting 3G wireless services. Such repurchase right will be exercisable only if notice of exercise is given within 30 days of written notice to Dylan of such board action (in the case of clause (1) in the previous paragraph), which notice to Dylan will be given promptly -15- following any such board action, or of June 1, 2004 (in the case of clause (2) in the previous paragraph). In addition, such repurchase right is Dylan's sole remedy in the event that the technology commitment set forth in paragraph 14 is not met. Upon exercise of the repurchase right under this Section 15, Dylan shall cease to be entitled to any veto, board representation, management representation or other governance or management rights that it may have hereunder, and Dylan will cause the resignation of any of its appointees, nominees or representatives and managers to occur within 5 business days following the exercise of such rights, and no Dylan appointee will vote or exercise any other rights or powers of office during this period; provided, however, that until payment of the repurchase price, and so long as Dylan would otherwise be entitled to board representation hereunder, Dylan shall be entitled to designate one individual to serve on the ABBA board or the ABBA-W board, as the case may be, reasonably acceptable to ABBA or ABBA-W, for the purpose of monitoring ABBA's or ABBA-W's compliance with the repurchase obligations, which individual shall be unaffiliated with Dylan and shall agree not to provide Dylan or its affiliates with any confidential information of ABBA or ABBA-W other than information directly related to ABBA's or ABBA-W's compliance with the repurchase obligations. -- Repurchase Price The repurchase price will be Dylan's original purchase price plus Dylan's Cost of Carry thereon to the date of payment. Final payment will be due within 4 months from the exercise date. In lieu of paying all or part of the repurchase price, ABBA or ABBA-W, as the case may be, will have the right to cause Dylan to sell all or part of such shares into the market (upon registrations in accordance with the registration rights procedures discussed at Paragraph 20), subject to ABBA-W paying Dylan the difference if the proceeds received by Dylan (net of underwriting commissions and discounts) are less than the repurchase price. The size and timing of such registered sales will be determined mutually by ABBA or ABBA-W, as the case may be, and Dylan in their good faith judgment, in consultation with their underwriters and taking into account Dylan's desire to sell its shares as quickly as reasonably practicable and ABBA's or ABBA-W's desire not to disrupt or depress the market for Current ABBA-W Tracking Stock or ABBA-W Common Stock. Such sales will be completed as promptly as reasonably practicable, but if such sales are not completed within 10 months of the exercise date, ABBA or ABBA-W, as the case may be, will promptly (but in any event within 10 days) pay to Dylan the repurchase price with respect -16- to the portion of such shares not sold into the market. -- Limited ABBA ABBA will guarantee ABBA-W's obligations Guaranty pursuant to this paragraph 15 up to a maximum of $3.65 billion plus Dylan's Cost of Carry thereon to the date of payment; provided that ABBA will not be obligated to make any payment under such guarantee unless ABBA-W fails to make a payment that it is obligated to make pursuant to this paragraph 15; provided, further, that in the event there is a dispute as to ABBA-W's obligation to make all or any portion of any payment pursuant to this paragraph 15, ABBA will not be obligated to make such payment under such guaranty until such dispute is resolved in favor of Dylan by a final and nonappealable order and ABBA-W thereafter fails to make such payment; and provided, further, that in any event Dylan shall have used commercially reasonable efforts to collect payment from ABBA-W. In the event ABBA makes any payment to Dylan pursuant to this guarantee, ABBA-W shall be obligated to reimburse and indemnify ABBA for such payment (including any costs incurred by ABBA), provided that such reimbursement and indemnity obligation shall be subordinated to ABBA-W's obligations to Dylan pursuant to this paragraph 15. 16. Joint Research Effort ABBA, ABBA-W and Dylan will discuss in good faith joint research efforts within twelve months of the closing date or such other date as the parties mutually agree. 17. Public Announcements The initial press releases announcing the investment and the other transactions contemplated hereby shall be jointly coordinated and agreed. Thereafter, for so long as the agreements contemplated by this term sheet are in effect (or, if earlier, until the 15th day following the closing date), Dylan and ABBA, if prior to the Spin-off, and Dylan and ABBA-W, if after the consummation of the Spin-off, agree to consult with each other before issuing any press release or making any public statement with respect to the agreements and transactions contemplated by this term sheet and, subject to the immediately following sentence, will not issue any such press release or make any such public statement without the prior consent of the other party, which consent shall not be unreasonably withheld or delayed. Notwithstanding the foregoing, any such press release or public statement as may be required by applicable law or any listing agreement with any applicable securities exchange may be issued without such consent, if the party making such release or statement has used its reasonable efforts to consult with the other party. 18. Documentation Initial drafting responsibilities to be divided evenly between Sullivan & Cromwell and Wachtell, Lipton, Rosen & Katz, as -17- follows: Preferred Stock Certificate: S&C Purchase Agreement: S&C Warrants: WLR&K Investor Agreement: WLR&K ABBA has provided Dylan with drafts of the agreements (and/or term sheets with respect to such agreements) to be entered into between ABBA and/or its affiliates (other than ABBA-W or any of its subsidiaries), on the one hand, and ABBA-W or any of its subsidiaries, on the other hand, in connection with the Spin-off. (For the avoidance of doubt, a complete set of such delivered drafts, designated as such, have been compiled and provided to Dylan together with this term sheet. Annex C hereto provides an index of such delivered drafts.) These drafts reflect substantially negotiated forms of such agreements or arrangements (or term sheets that are intended to be reflected in full agreements) with respect to the Spin-off (such delivered drafts, the "Final Draft Separation Agreements"). 19. Agreements The terms set forth in this term sheet will be incorporated into definitive agreements that will contain representations and warranties as set forth in Annex D hereto, and other terms and provisions customary for a public company investment of this size and nature (consistent with the terms set forth in this term sheet). The representations and warranties will survive until 30 days following completion of the first year-end audit of ABBA-W completed after the date of the Spin-off or, if earlier, 30 days following completion of the second year-end audit of the Wireless Group completed after the date of closing this investment; except that ABBA's representations as to the valid issuance of the shares of New ABBA-W Tracking Stock and Current ABBA-W Tracking Stock, if any, issued to Dylan, and ABBA-W's representations as to the valid issuance of the Warrants and the ABBA-W Common Stock issued to Dylan shall expire only when the applicable statute of limitations runs. Subject to the limitations set forth below, ABBA will indemnify Dylan for losses arising from breach of the representations and warranties set forth in Annex D contained in Section 2.1(a)(i), Section 2.1(b) insofar as it relates to ABBA's articles of incorporation and bylaws, Section 2.1(c) insofar as it relates to ABBA, the first sentence of Section 2.1(d), Section 2.1(f) insofar as it relates to the New ABBA-W Tracking Stock or the Current ABBA-W Tracking Stock, Section 2.1(p) insofar as it relates to ABBA, and Section 2.1(q)(2). ABBA-W will indemnify Dylan for losses arising from breach of any other representations and warranties contained in Section 2.1 of Annex D. Dylan will indemnify ABBA and ABBA-W for losses arising from breach of the -18- representations and warranties set forth in Section 2.2 of Annex D. For purposes of such indemnification (but not for purposes of the closing conditions), the representations and warranties will be considered without regard to the materiality qualifiers contained therein, but no representation or warranty shall be deemed breached to the extent resulting from the impact of (i) changes in laws of general applicability or interpretations thereof by Governmental Entities, (ii) changes in generally applicable provisions of GAAP or (iii) changes in general economic conditions affecting companies in the wireless telecommunications industry generally. The indemnification will be limited to claims arising during the survival period and will be subject to a deductible basket of $200 million and a cap of $5 billion, provided that ABBA's cap shall be $3.65 billion, and provided, further, that there will be no cap on ABBA's representations as to the valid issuance of the shares of New ABBA-W Tracking Stock and Current ABBA-W Tracking Stock, if any, issued to Dylan, and there will be no cap on ABBA-W's representations as to the valid issuance of the Warrants and the ABBA-W Common Stock issued to Dylan. In addition, ABBA will guarantee ABBA-W's indemnity obligations pursuant to this paragraph 19; provided that any payments by ABBA on such guarantee will be applied against ABBA's indemnity cap; provided, further, that ABBA will not be obligated to make any payment under such guarantee unless ABBA-W fails to make an indemnity payment that it is obligated to make pursuant to this paragraph 19; provided, further, that in the event there is a dispute as to ABBA-W's obligation to make all or any portion of any indemnity payment pursuant to this paragraph 19, ABBA will not be obligated to make such payment under such guarantee until such dispute is resolved in favor of Dylan by a final and nonappealable order and ABBA-W thereafter fails to make such payment; and provided, further, that in any event Dylan shall have used commercially reasonable efforts to collect payment from ABBA-W. In the event ABBA makes any payment to Dylan pursuant to this guarantee, ABBA-W shall be obligated to reimburse and indemnify ABBA for such payment (including any costs incurred by ABBA), provided that such reimbursement and indemnity obligation shall be subordinated to ABBA-W's indemnity obligations to Dylan pursuant to this paragraph 19. Consummation of the transactions contemplated by the definitive agreements will be subject to the conditions set forth in the Letter Agreement to which this term sheet is attached. The definitive agreements will be governed by New York law. Any disputes arising under the definitive agreements will be resolved by arbitration, using a panel of three arbitrators, conducted in New York, New York, in accordance with the -19- rules of the American Arbitration Association or any successor thereof. Within 30 days of receipt of any award (which shall not be binding if an appeal is taken) any party may notify the AAA of an intention to appeal to a second three-arbitrator tribunal. At least two of the three appellate arbitrators shall be former judges in state or federal courts. The appeal tribunal shall be entitled to adopt the initial award as its own, modify the initial award or substitute its own award for the initial award. The appeal tribunal shall not modify or replace the initial award except for errors of law or because of clear and convincing factual errors. The award of the appeal tribunal shall be final and binding, and judgment may be entered by a court having jurisdiction thereof. The review by the appeal tribunal will be completed and its order issued within 30 days of the final submission of the parties to the panel. In addition, the following covenants shall be in effect from the date of this term sheet through the closing of the investment contemplated by this term sheet: (1) Subject to applicable law, attorney/client privilege and existing confidentiality obligations, ABBA shall, and shall cause its subsidiaries to, afford to Dylan and its officers, employees, counsel, accountants and other representatives reasonable access during normal business hours upon reasonable notice to all books, records, properties, personnel and such other information as Dylan may request in each case related to the Wireless Group (as defined in ABBA's articles of incorporation as of the date of this term sheet). All non-public information obtained by Dylan and its representatives shall be maintained in confidence and used only for the purposes related to the transactions and activities contemplated by this term sheet; (2) Without Dylan's prior written consent, ABBA shall not take, and shall not permit any of its subsidiaries to take, any action that would be subject to Dylan's pre-Spin-off veto rights set forth in Section 7 above if such action were to be taken after the closing of the investment contemplated by this term sheet; (3) ABBA shall, and shall cause its subsidiaries to, carry on the business of the Wireless Group in the ordinary course of business, and use commercially reasonable efforts to (A) preserve intact its present business organization, (B) keep available the services of its present officers and employees, and (C) preserve intact its relationships with customers, suppliers and others having business dealings with it (it being -20- understood that this covenant will not prohibit ABBA or ABBA-W from taking any action permitted under the foregoing paragraph (2)); and (4) ABBA shall not issue any equity securities to which Dylan's peemptive rights would apply if such equity securities were to be issued after the closing of the investment contemplated by this term sheet, except for shares of Current ABBA-W Tracking Stock issuable upon exercise of options outstanding as of the date hereof or issued pursuant to ABBA's stock option plans after the date of this term sheet in the ordinary course of business; provided that, ABBA may issue such equity securities following consultation with Dylan (but without the requirement of Dylan's consent) so long as such equity securities issued in the aggregate do not exceed 15% of the total economic interests in the Wireless Group; and provided, further, that, after the closing of the investment contemplated by this term sheet, Dylan shall have the preemptive right to acquire shares in respect of such issuance in accordance with Section 13. Such right shall be exercisable during the 30 day period beginning on the closing of the investment contemplated by this term sheet, and the price Dylan would pay to acquire shares upon the exercise of such preemptive right will be the price that would have applied pursuant to Section 13 of the term sheet had Dylan exercised such preemptive right at the time of the issuance giving rise to the preemptive right. For the avoidance of doubt, the parties agree that any issuance of Current ABBA-W Tracking Stock that reflects a disposition of all or part of ABBA's retained interest (I.E., that does not result in any adjustment to the denominator of the Wireless Allocation Fraction) shall not be an issuance of equity securities covered by this clause (4). 20. Registration Rights -- General ABBA will agree to customary registration rights with respect to any shares of Current ABBA-W Tracking Stock issued upon conversion of Dylan's New ABBA-W Tracking Stock, including piggy-back and no more than six demand registration rights (with each such demand involving securities worth not less than $500 million), and ABBA-W will agree to such registration rights with respect to Dylan's shares of ABBA-W Common Stock following the Spin-off. Dylan and ABBA and ABBA-W will also agree to customary commitments in connection with such registration rights (including customary blackout rights of no more than ninety -21- days in any one-year period). Dylan may not exercise more than one demand in any 7 1/2-month period. In connection with any demand registration for an underwritten offering, Dylan will be entitled to select the managing underwriter or underwriters, subject to the reasonable consent of ABBA or ABBA-W, as the case may be, provided that with respect to any registration effected in connection with the technology default obligation contemplated by Section 15, ABBA or ABBA-W, as the case may be, will be entitled to select the managing underwriter or underwriters. ABBA and ABBA-W shall also have the right to approve the selection of underwriter's counsel, which approval will not be unreasonably withheld. If requested in connection with such an underwritten offering, ABBA or ABBA-W, as the case may be, will make appropriate members of its management reasonably available for assistance (but without unduly burdening such individuals or ABBA or ABBA-W, as the case may be) as part of the road show in support of such offering (it being understood that the reasonable level of such assistance will take into account the size of the offering and other relevant factors). ABBA or ABBA-W, as the case may be, will pay the expenses associated with any demand registration, except for underwriting fees, commissions and discounts and except for the fees and expenses of legal counsel to Dylan, provided that with respect to any registration effected in connection with the technology default obligation contemplated by Section 15, ABBA or ABBA-W, as the case may be, will pay the reasonable fees and expenses of Dylan's counsel. Dylan will not be able to demand registration at any time that it is prohibited from transferring the relevant securities pursuant to the transfer restrictions contained in Section 22, provided that Dylan may make a demand no earlier than one month prior to the expiration of the relevant transfer restriction for a registration that would become effective on or after the expiration of such transfer restriction. -- Loss of Demand Dylan will be entitled to exercise demand Registration Rights registration rights only if at the time of exercise of such demands Dylan (including its wholly owned subsidiaries) owns securities of ABBA or ABBA-W, as the case may be, that either have an aggregate fair market value of at least $1 billion or represent at least 2% of the outstanding economic interests in ABBA-W (prior to the Spin-off) or of the outstanding voting securities of ABBA-W (after the Spin-off). 21. Timing The timing with respect to execution of definitive agreements -22- and funding is set forth in the letter agreement to which this term sheet is attached. 22. Transfer Restrictions Except as set forth under "Securities" above, without the consent of ABBA or ABBA-W, as the case may be, Dylan will not Transfer to any third party any shares of New ABBA-W Tracking Stock, and, for a period of 18 months following the closing of the investment contemplated by this term sheet, any shares of Current ABBA-W Tracking Stock or ABBA-W Common Stock, it being understood that Dylan will be entitled to transfer any such shares to any directly or indirectly wholly owned subsidiary of Dylan so long as such subsidiary remains so and agrees with ABBA-W to itself be bound by the provisions to which Dylan will be bound pursuant to this term sheet. Notwithstanding the foregoing, Dylan may transfer shares of Current ABBA-W Tracking Stock or ABBA-W Common Stock prior to the expiration of 18 months following closing, subject to the other provisions of this Section 22, upon the occurrence of either of the following events without Dylan's prior written consent: (1) a sale of all or substantially all the assets of ABBA-W, or a merger, consolidation or similar business combination involving all or substantially all of the business of ABBA-W, other than any such transaction in which the holders of the economic interests in ABBA-W as of immediately prior to the consummation of such transaction continue to hold, directly or indirectly, at least two-thirds of such economic interests in ABBA-W or the successor corporation following such transaction, or (2) the acquisition or acquisitions (including by merger or other similar transaction) of any business or assets by ABBA-W (other than acquisitions of spectrum) if the consideration paid by ABBA-W with respect to all such acquisitions exceeds $25 billion. In addition, Dylan may tender shares of Current ABBA-W Tracking Stock or ABBA-W Common Stock, prior to the expiration of 18 months following closing, into a tender offer or exchange offer that is approved by the ABBA board or the ABBA-W board, as the case may be. Except as set forth in the next sentence, Dylan's rights under this term sheet will not be transferable to a transferee of any such shares, other than a transferee that is and remains a wholly owned subsidiary of Dylan (and has agreed with ABBA-W as contemplated above). Dylan may transfer registration rights to any transferee of more than $1 billion of ABBA-W securities from Dylan and may transfer one of its demand registration rights to any transferee of the Warrants (which shall apply only to registration of the Current ABBA-W Tracking Stock or ABBA-W Common Stock issuable upon exercise of the Warrants and not to the Warrants themselves, but shall apply even if the amount of registrable securities is less than the $500 million minimum contemplated by Paragraph 20), -23- provided that no such transfers will alter or enlarge ABBA or ABBA-W's aggregate registration obligations hereunder. Without ABBA's approval (prior to the Spin-off) or ABBA-W's approval (following the Spin-off), Dylan may not at any time transfer securities to any one person such that, after giving effect to the transfer, such person would beneficially own in excess of 6% of the outstanding ABBA-W tracking stock (before the Spin-off) or ABBA-W Common Stock (following the Spin-off); provided, that in the case of a transfer of shares to a person specified in Rule 13d-1(b)(1)(ii) under the Securities Exchange Act that would be eligible based on such person's status and passive intent with respect to the ownership, holding and voting of such shares to report such person's ownership on Schedule 13G, Dylan may transfer to such person up to a number of shares such that, after giving effect to the transfer, such person would not beneficially own in excess of 10% of the outstanding ABBA-W tracking stock (before the spin-off) or ABBA-W Common Stock (following the spin-off). As set forth in Annex A, any transfer of the Warrants will be subject to the foregoing restrictions (applied as if the transferee had fully exercised the transferred Warrants). 23. Voting Provisions Dylan agrees to be present at any meeting of stockholders at which directors are to be elected and to vote its securities with respect to the election of directors in accordance with one of the following (as determined by Dylan): (1) in favor of the slate of directors nominated by the board of directors, or (2) for, against or abstain with respect to each nominee for director in the same proportion as the votes of all stockholders other than Dylan and its affiliates. The foregoing shall not apply at any time that ABBA or ABBA-W, as the case may be, is not in compliance with its obligations under paragraph 9 to appoint or nominate Dylan nominee(s) to the board of ABBA or ABBA-W, as the case may be, or following the loss of all of Dylan's board rights. 24. Standstill -- Initial 5-Year Prior to the fifth anniversary of the Period closing of the investment contemplated hereby, Dylan shall not, and shall not permit any of its controlled subsidiaries (which term will include, without limitation, each subsidiary and minority investment to whom Dylan has disclosed any non-public information concerning ABBA, ABBA-W, the MMS or the investment contemplated by this term sheet) or, when acting on behalf of Dylan or any of its controlled subsidiaries, its or their officers, directors, employees or agents (collectively, "affiliates") to, in any manner, whether publicly or otherwise, directly or indirectly, -24- without the prior written consent of ABBA (to the extent related to ABBA or its securities, subsidiaries or assets) or ABBA-W (to the extent related to ABBA-W or its securities, subsidiaries or assets), (i) acquire, agree to acquire or make any public proposal to acquire, directly or indirectly, beneficial ownership of any voting securities or assets of ABBA or ABBA-W or the subsidiaries of either, except as described above under "Preemptive Right" or with respect to its conversion rights as described above under "Security" or with respect to the shares issued upon exercise of the Warrants; (ii) enter into or publicly propose to enter into, directly or indirectly, any merger or other business combination or similar transaction or change in control transaction involving ABBA or ABBA-W, or the subsidiaries of either; (iii) make, or in any way participate, directly or indirectly, in any "solicitation" of "proxies" (as such terms are used in the proxy rules of the SEC) to vote, or seek to advise or influence any person with respect to the voting of, any securities of ABBA or ABBA-W, or the subsidiaries of either; (iv) call, or seek to call, a meeting of the shareholders of ABBA or ABBA-W or initiate any shareholder proposal for action by shareholders of ABBA or ABBA-W; (v) bring any action or otherwise act to contest the validity of this standstill or seek a release of the restrictions contained herein, in each case in any manner that would require or lead to public disclosure thereof; (vi) form, join or in any way participate in a "group" (within the meaning of Section 13(d)(3) of the Exchange Act) that, with respect to any securities of ABBA or ABBA-W or any subsidiary of either, would be required under Section 13(d) of the Exchange Act and the rules and regulations thereunder to file a Statement on Schedule 13D with the SEC as a "person" (within the meaning of Section 13(d)(3) of the Exchange Act); (vii) seek representation on the board of directors of ABBA or ABBA-W, other than any seat on the board of directors granted in the term sheet, or seek the removal of any directors from either such board or seek a change in size or composition of either such board (including, without limitation, by voting for any directors not nominated by the board of directors of ABBA or ABBA-W); (viii) enter into any discussions, negotiations, arrangements (whether written or oral) with any other Person with respect to any of the foregoing (other than action taken by a Director in his or her capacity as a member of the board of directors of ABBA or ABBA-W or taken by an employee of ABBA-W in the authorized course of such employment); (ix) disclose any intention, plan or arrangement inconsistent with the foregoing; (x) take, or solicit, propose to or agree with any other Person to take, any actions designed to, obtain, affect or change the control of the board of directors, senior executive management or voting equity of ABBA or ABBA-W (other than action -25- taken by a Director in his or her capacity as a member of the board of directors of ABBA or ABBA-W and, with respect to the senior executive management of ABBA-W, as expressly contemplated hereunder); or (xi) advise, assist or encourage any other persons in connection with any of the foregoing. In the event Dylan's ultimate parent or any of its subsidiaries (other than Dylan and its controlled subsidiaries), or, when acting on behalf of such parent or subsidiaries, any affiliate thereof, takes any action of the types referred to in any of clauses (i) - (xi) of the previous sentence, then, without limiting any of its or their obligations under the previous sentence, Dylan and its controlled subsidiaries shall not, (A) with respect to any matter proposed or supported by Dylan's parent (or subsidiaries or affiliates) or any vote of ABBA or ABBA-W's stockholders related to or occurring as a result of any such action by Dylan's parent (or subsidiaries or affiliates), vote any of their ABBA or ABBA-W shares other than, at Dylan's election, either (1) as directed by the ABBA board of directors (before the Spin-off) or the ABBA-W board (after the Spin-off) or (2) in proportion to the votes cast by the stockholders who are not affiliated with Dylan or with Dylan's parent, and (B) with respect to any tender offer or other offer to purchase securities proposed or supported by Dylan's parent (or affiliates or subsidiaries), tender, offer, sell or transfer any of their ABBA or ABBA-W shares to the person making such offer without the prior written consent of the ABBA board of directors (before the Spin-off) or the ABBA-W board (after the Spin-off); provided, however, that Dylan may tender its shares into such a tender offer after (but only after) such time as all material conditions to such offer (including any financing condition and any condition with respect to removal of ABBA-W's rights plan or any other takeover protections) that are capable of being satisfied prior to expiration of the offer have been satisfied or irrevocably waived by the offeror; provided, further, that Dylan shall not, prior to such time, announce or disclose its intent to tender its shares into such offer following satisfaction or waiver of such conditions. Dylan agrees not to provide to Dylan's parent or its controlled subsidiaries (including as a result of any representation Dylan's parent may have on the Dylan board or in Dylan management) any non-public information concerning ABBA or ABBA-W or any of their respective subsidiaries or businesses obtained by Dylan as a result of its board, management or other rights hereunder or as a result of its investment in ABBA or ABBA-W. The foregoing restrictions will terminate with respect to ABBA-W and its subsidiaries if (a) a third party unaffiliated -26- with ABBA-W commences a tender or exchange offer seeking to acquire 15% or more of ABBA-W's outstanding voting securities and ABBA-W does not (within 10 business days following such commencement) publicly recommend that its shareholders not accept such offer, (b) ABBA-W enters into a definitive agreement (or binding letter of intent) with a third party (or group of related parties) to effectuate a merger or consolidation with or sale of all or substantially all of its assets and properties to, any unaffiliated third party, unless immediately following such transaction the persons that immediately prior to such transaction held the ABBA-W Common Stock hold, directly or indirectly, at least 50% of the equity and at least 50% of the voting power of the entity surviving such merger or consolidation or to whom such assets will be transferred or (c) if ABBA-W enters into a definitive agreement (or binding letter of intent) providing for a sale by ABBA-W of ABBA-W securities, or a merger or consolidation, in either case that would result in any one person (or group of related persons) acquiring in excess of 35% of the voting power of ABBA-W outstanding after completion of such transaction; provided that (x) if the acquiror of the greater-than 35% block is subject to a standstill that restricts its ability to acquire more than its initial percentage of the voting power of ABBA-W or a majority of its board of directors (and such standstill is otherwise on substantially similar terms as this standstill or, to the extent such other terms are not substantially similar to this standstill, ABBA-W amends this standstill to make its terms substantially similar to such terms of the other standstill), then Dylan shall not be freed from the standstill restrictions (as so amended, if applicable) by virtue of this clause (c) unless and until the standstill restrictions on the acquiror lapse or are waived, and (y) anything in this clause (c) not withstanding, Dylan shall continue to be subject to each provision of the standstill to the extent such provision relates to the ability of Dylan to support, encourage, cooperate with, participate with or act as a group or in concert with the greater-than-35% acquiror with respect to the securities of ABBA-W or ABBA-W's board or management. In addition, the foregoing restrictions will terminate, with respect to ABBA and its subsidiaries and assets, but not with respect to ABBA-W and its subsidiaries and assets, on the second anniversary of the Spin-off. -27- -- Post-Initial 5-Year After the initial 5 year period, and for so Period long as Dylan has the right to nominate a director, Dylan shall continue to be subject to the same standstill provisions except that Dylan shall be released from the standstill provisions on the 91st day after both of the following events have occurred: (1) all Dylan representatives on the ABBA board or the ABBA-W board shall have resigned and Dylan shall not have replaced any of them with new representatives, and (2) all other Dylan representatives or designees appointed to the management or any governance body or committee of ABBA-W (including under Sections 10 and 11 hereof) shall have resigned and shall not have been replaced with new Dylan representatives or designees. Immediately upon the resignation of all of Dylan's representatives or designees appointed to the management or any governance body or committee of ABBA-W (including under Sections 10 and 11 hereof) as contemplated by the foregoing clause (2), (a) Dylan shall be deemed to have irrevocably waived its rights to board representation and to designate any representatives or designees to the management or any governance body or committee hereunder (including under Sections 10 and 11 hereof), but shall not be deemed to have waived any rights it may have as a result of being a shareholder of ABBA-W, and (b) ABBA-W may take such action with respect to any other employees of, or persons providing service to, ABBA-W (including the MMS) in its sole discretion, including terminating or sequestering or separating such employees, without regard to the fact that any such persons may have been appointed or nominated by Dylan. Notwithstanding the foregoing, in the event the resignations contemplated by foregoing clauses (1) and (2) occur concurrently with the delivery by Dylan to ABBA or ABBA-W, as the case may be, of a notice to the effect that such resignations are not intended to commence the 90-day time-period for releasing Dylan from the standstill provisions and that Dylan intends to replace the individuals who have resigned, then such 90-day time period will not commence and the consequences set forth in the foregoing clauses (a) and (b) will not apply. 25. Alliance Purpose Dylan and ABBA-W (the "Alliance Partners") will form a mobile multimedia alliance (the "Alliance"). The Alliance represents the mutual commitment by the Alliance Partners to cooperate in operational and technological matters affecting the delivery of i-mode mobile multimedia services to subscribers, as well as the development and delivery of i-mode mobile multimedia content and applications. ABBA-W will form a wholly-owned and controlled subsidiary (the "MMS") that will be responsible for the development and -28- commercialization of i-mode mobile multimedia content and applications over the ABBA-W network in the ABBA-W Home Territory. For purposes of this term sheet, "Home Territory" means the nation of Japan for Dylan. For ABBA-W, "Home Territory" means the United States, Canada and Mexico. 25A. i-mode Mobile Multi-Media To develop wireless internet access and related mobile multimedia applications and services from wireless phones and other wireless access devices based on Dylan's i-mode and multimedia expertise, experience, know-how and technology. 26. Alliance Goals 1. Achieve Synergies with ABBA-W's Mobility Division. Develop and provide advanced data and multimedia services offerings that create and enhance customer loyalty and create new revenue sources for ABBA-W. 2. Accelerate the Growth of Mobile Multimedia Businesses. Accelerate the growth of each Alliance Partner's existing mobile multimedia and data service businesses by utilizing each other's current and future technology, experience and know-how in their respective Home Territories. 26A. Advisory Committee Upon closing of the investment, ABBA-W and Dylan will establish a management advisory committee to assist and advise the MMS CEO. The committee will, among other things, assist the MMS CEO in reviewing and updating the MMS business plan and strategy. The parties anticipate that the committee will meet on a regular basis or as requested by the CEO. The composition and size of the advisory committee will be mutually agreed upon by ABBA-W and Dylan. Dylan will have significant (but not majority) representation on the committee. 26B. MMS Senior Management Dylan and ABBA-W will appoint a mutually satisfactory MMS CEO, who shall, as MMS CEO, be an ABBA-W employee and work in ABBA-W headquarters or such other location as may be determined for the MMS. ABBA-W will appoint an interim MMS CEO, following consultation with Dylan, to oversee and manage the initial activities of the MMS, or to manage the MMS during any periods of vacancy. Dylan and ABBA-W will use their commercially reasonable efforts to select a permanent CEO within 6 months after the investment is closed or within 6 months of the creation of any vacancy. The MMS CEO will have extensive experience and -29- background in with data related services or similar skills in the United States and be sufficiently familiar with US markets. In addition, Dylan shall have a right to appoint the CTO of the MMS, subject to ABBA-W's approval. 27. Technology Evolution and 1. Alliance Technology Commitments. Timing - The Alliance Partners will pursue two mutually beneficial goals: (1) to enable users to access diverse HTML and x-HTML appli- cations and content on mobile wireless terminals, and (2) to jointly encourage terminal manufacturers to produce a variety of attractive and economical devices that are compatible with the following technology path: HDML/WML -> cHTML (as commercially reasonable in USA) -> xHTML/WAP-NG - Dual Browser Handsets -- As an interim step toward xHTML/WAP-NG, the Alliance Partners will agree to jointly approach terminal manufacturers concerning the development, production and marketing of dual browser handsets, and will work jointly with manufacturers with respect to functions, specifications and design for such handsets. - The Alliance Partners will work to adopting third-generation technology paths that target convergence upon worldwide standards for data and air interface protocols (i.e., WAP-NG and W-CDMA). 2. Technology Plan. - After closing of the investment, the Alliance Partners will begin study on Dylan's service platform elements that may be of benefit to the MMS (e.g., profiling engines, data warehouses, clickstream analysis). - Dylan and ABBA-W will study the feasibility of accelerating the delivery to market of advanced devices and related technologies that can increase the growth and performance of ABBA-W and the MMS. -30- - Any business plan should be efficient and have a benefit/cost relationship that is positive in terms of economics and market position for ABBA-W. 28. ABBA-W's Resources 1. ABBA-W's multimedia resources that will be contributed to the MMS will include: - PocketNet service, experience and personnel; - Rights to current content, commerce and applications; and, - Gateway, e-mail and related application servers. 2. Cash (up to $200M) sufficient to fund the business plan of the MMS to cash flow positive will be earmarked by ABBA-W from the proceeds of the investment. 28A. Dylan's Contributions Dylan will among other things assist ABBA-W and the MMS in achieving the Alliance Goals by providing the MMS with information exchange opportunities and access to technology, know-how, and resources, including support in the categories outlined in part in Annex E. These contributions on the part of Dylan shall include: - The exclusivity and non-compete agreement found in paragraph 31. - Subject to mutual agreement by ABBA-W and Dylan based on MMS needs and resource availability, Dylan will second such employees to ABBA-W as may be mutually beneficial for the free exchange of information. The parties anticipate that Dylan will provide approxi- mately 2 to 3 employees for the initial two years following closing of the investment, approximately 3 to 5 employees during the period of ABBA-W's 3G deployment, and 2 to 3 employees thereafter. The ultimate number of Dylan secondees each year shall be determined by the advisory committee. Dylan will also accept up to two employees from ABBA-W to work in Tokyo with Dylan's gateway, mobile multimedia, or other appropriate division in the Tokyo region. Dylan will commit to credit $1.0M per year to cover the cost of Dylan secondees to ABBA-W, and the parties have agreed to discuss whether such amount would also cover ABBA-W employees exchanged to Dylan. The parties also agree to use commercially -31- reasonable efforts to set up regular meetings to facilitate transfer of know-how. The qualifications of Dylan personnel available for secondment will be provided to ABBA-W for consideration as opportunities arise for placement within the MMS; - Handset specifications and development expertise and influence; - Standardization influence; - i-mode experience, such as negotiations with content providers; and - Licenses to all Dylan know-how, technology and intellectual property rights related to i-mode and mobile multimedia services (up to and including 3G) as it is developed; sole use of the i-mode brand in the USA, and other know- how developed for mobile multimedia services. It is understood, for purposes of clarification, that "i-mode and mobile multimedia technology (up to and including 3G)" as used herein includes mobile Internet gateway designs, and user interface designs, but does not include technology which solely relates to 3G network architecture and infrastructure, which will be subject to separate negotiations based upon commercially reasonable licensing terms and conditions. 29. MMS Business Plan 1. The parties will use commercially reasonable efforts to establish the MMS within 3 months of the closing of the investment. 2. Following closing of the investment, a business strategy and plan for the first 18 months of operations will be prepared in consultation with Dylan. The business plan will be updated as appropriate in light of changing business dynamics and business needs. 3. Subject to the business plan in effect from time to time, it is anticipated that MMS will have responsibility for ABBA-W's mobile multimedia business, such as: - Mobile Internet server operation; - Application/service deployment, including streaming of music and video and e-commerce applications; -32- - Negotiations with content providers; - Terminal functions planning, design and specifications in conjunction with ABBA-W's mobile services division; - Development of operational and technical standards in conjunction with ABBA-W's mobile services division; and - Brand development for the MMS. 30. Termination All obligations of the parties with respect to the Alliance may be terminated by either Dylan or ABBA-W if Dylan's interest in ABBA-W is less than 10% (or 8% if Dylan owns at least 10/16 of its original number of ABBA-W shares) for a period of least 90 days, except that Dylan's non-compete obligations (set forth in Section 31) shall continue for one full year after termination and all Dylan technology and IPR licenses shall continue for 18 months after termination. In the event that Dylan's interest in ABBA-W is less than the percentages noted above due to exercise of its rights to cause ABBA-W to repurchase Dylan's interest as described in "Date of Spin-off" under paragraph 3, or in paragraph 15, or due to redemption of Dylan's interest as described in "Conversion/Redemption" under paragraph 3, all obligations of the Alliance Partners with respect to the Alliance will terminate at the end of the 90-day period referenced above. In the event that Dylan ceases to provide access to i-mode and mobile multimedia technology on the basis and as described in paragraph 28A, ABBA-W may terminate all obligations of the Alliance Partners with respect to the Alliance. 31. Exclusivity and See Annex F. Non-Competition 32. Other Operational The following principles would be Cooperation memorialized in separate definitive agreements: Dylan and ABBA-W will each recognize the other party as its primary and preferred operating partner for mobile wireless services in the other party's home territory. Specific areas of operational cooperation by Dylan and ABBA-W will include: - Roaming. Dylan and ABBA-W will, subject to technical and commercial feasibility, each recognize the other party as its primary and preferred roaming partner in the other party's home territory service area, subject to both parties' -33- existing roaming arrangements and agreements as of the date hereof. Nothing contained herein shall provide either party with any rights that would conflict with such existing roaming agreements for so long as such existing roaming agreements remain in effect. Dylan and ABBA-W shall use commercially reasonable efforts to negotiate in good faith roaming arrangements with each other on reciprocal terms no less favorable than those provided to similar wireless providers; provided that such arrangements shall not in any way conflict with either party's existing roaming agreements. Nothing contained herein shall be deemed to create any obligation of exclusivity between Dylan and ABBA-W with respect to their roaming agreements in each other's home territory. - Joint-Marketing Programs and Offers. Dylan and ABBA-W will make commercially reasonable efforts to cooperate in designing, to the extent commercially feasible, programs and offers that market and provide mobile wireless services that are intended to extend from one party's home territory into the other party's home territory. The sharing of customer information will be subject to such limitations as may be imposed by applicable law and regulation. - Major Account Services. Dylan and ABBA-W will both participate, to the extent commercially feasible, in programs that will enable each to provide differentiated services to major customers with global mobile wireless telecommunication needs in the United States and Japan. Such programs will include ABBA-W's Worldview program, which allows large business customers to receive monthly consolidated reports covering wireless usage in relevant territories. -34- EX-10.3 4 0004.txt EXHIBIT 10.3 - ANNEX A TO THE TERM SHEET Annex A ------- Warrant Term Sheet ------------------ - -------------------------------------------------------------------------------- Issuer: ABBA Wireless - -------------------------------------------------------------------------------- Number of Warrants: 83,496.546 - -------------------------------------------------------------------------------- Exercise Terms: The Warrants shall be exercisable at any time from the date of issuance through the Expiration Date. Prior to the Spin-off, each Warrant shall be exercisable into one newly issued share of New ABBA-W Tracking Stock; provided that, in the event of any transfer of the Warrants prior to the Spin-off as permitted below, each Warrant shall automatically become exercisable only for the number of shares of Current ABBA-W Tracking Stock into which the New ABBA-W Tracking stock previously issuable upon exercise of the transferred Warrant was convertible (with the exercise price under the transferred Warrants adjusted as set forth below under "Exercise Price"); and provided, further, that, in the event Dylan elects to convert its shares of New ABBA-W Tracking Stock into Current ABBA-W Tracking Stock, each Warrant then held by Dylan shall automatically become exercisable only for the number of shares of Current ABBA-W Tracking Stock into which the New ABBA-W Tracking stock previously issuable upon exercise of the such Warrant was convertible (with the exercise price under such Warrants adjusted as set forth below under "Exercise Price"). Upon the Spin-off, each then outstanding Warrant shall automatically be exchanged for Warrants to purchase a number of shares of ABBA-W Common Stock equal to the number of shares of Current ABBA-W Tracking Stock into which the New ABBA-W Tracking stock previously issuable upon exercise of the Warrant was previously convertible, assuming a one-for-one exchange rate in the Spin-off. (In the event the exchange rate in the Spin-off is other than one-for-one, the number of new Warrants and/or the number of shares of ABBA-W Common Stock purchasable under each new Warrant will be adjusted appropriately.) The exercise price under the new Warrants will be adjusted as set forth below under "Exercise Price." The Warrants shall be exercisable in whole or in part at the holder's option, and will be subject to customary anti-dilution adjustments. Such anti-dilution adjustments will include an adjustment so that, in the event the shares of Current ABBA-W Tracking Stock or ABBA-W Common Stock for which the Warrants are exercisable are converted into other securities or consideration, the Warrants will thereafter be exercisable for an amount of such securities or consideration that would have been received by the holder of the number of shares of Current ABBA-W Tracking Stock or ABBA-W Common Stock for which the Warrants were previously exercisable (with the exercise price adjusted appropriately) and the Warrants will otherwise retain the same terms and conditions as were previously in effect. - -------------------------------------------------------------------------------- ABBA and ABBA-W Covenants: ABBA or ABBA-W, as the case may be, will agree to keep available and reserve for issuance (and ABBA will deliver to ABBA-W as required) such number of shares of New ABBA-W Tracking Stock, Current ABBA-W Tracking Stock and/or ABBA-W Common Stock as are required to provide for the exercise of the Warrants (and for the conversion of New ABBA-W Tracking Stock issuable upon exercise of the Warrants into Current ABBA-W Tracking Stock). - -------------------------------------------------------------------------------- Exercise Price: $17,500.00 in cash per share of New ABBA-W Tracking Stock or $35.00 in cash per share of Current ABBA-W Tracking Stock, in each case prior to the Spin-off, or $35.00 in cash per share of ABBA-W Common Stock after the Spin-off (assuming a one-for-one exchange rate between Current ABBA-W Tracking Stock and ABBA-W Common Stock in the Spin-off, with appropriate adjustment if the exchange rate is other than one-for-one), subject to customary anti-dilution adjustments. - -------------------------------------------------------------------------------- Expiration Date: 5th anniversary of the date of issuance, unless redeemed or repurchased earlier. - -------------------------------------------------------------------------------- Transferability: The Warrants shall not be transferable for a period of 18 months following issuance, except upon the occurrence of one of the events set forth in clause (1) or (2) of paragraph 22 of the investment term sheet to which this Annex is attached. Thereafter, the Warrants shall be transferable in whole or in up to, but no more than, three blocks in a private placement but not in a public offering, provided that the Warrants will not be divided into more than three blocks in the aggregate over the life of the Warrants (and such limitation shall travel with the Warrants). Any transfer of the Warrants will be subject to the -2- restrictions set forth in the second paragraph of paragraph 22 of the investment term sheet, which test will be applied as if the transferee had fully exercised the transferred Warrants. A transferee of Warrants shall not receive any of Dylan's rights under the investment term sheet except for registration rights as and to the extent provided for in the last sentence of the first paragraph of paragraph 22 of the investment term sheet. - -------------------------------------------------------------------------------- Registration Rights: The Warrants and the shares of New ABBA-W Tracking Stock issuable upon exercise of the Warrants shall not be registrable. The shares of Current ABBA-W Tracking Stock into which shares of New ABBA-W Tracking Stock issuable upon exercise of the Warrants may be converted (prior to the Spin-off) and the ABBA-W Common Stock issuable upon exercise of the Warrants (after the Spin-off) shall be eligible for inclusion in registrations and sales pursuant to and in accordance with the registration rights set forth in the investment term sheet, provided that the foregoing shall not alter or enlarge ABBA or ABBA-W's aggregate registration obligations thereunder. - -------------------------------------------------------------------------------- Repurchase and Redemption: The Warrants shall be subject to repurchase obligations and redemption as set forth in investment term sheet. Such provisions shall apply only to Warrants continued to be held by Dylan and its subsidiaries and not to any transferred Warrants. - -------------------------------------------------------------------------------- -3- EX-10.4 5 0005.txt EXHIBIT 10.4 - ANNEX F TO THE TERM SHEET Exhibit 10.4 Annex F ------- NON-COMPETITION AND CONFIDENTIALITY ----------------------------------- A. Restrictions ------------ 1. Each of ABBA and ABBA-W, on the one hand, and Dylan, on the other, agrees with respect to itself and with respect to each of its Controlled Subsidiaries, not to own or operate, or acquire or increase, except pursuant to existing preemptive rights, any equity interest in, any entity that owns (or has entered an agreement to acquire) or operates (or whose affiliate owns (or has entered an agreement to acquire) or operates) a Mobile Telecommunications Infrastructure (as defined below) in the other party's home territory. 2. Each of ABBA and ABBA-W, on the one hand, and Dylan, on the other, agrees with respect to itself and with respect to each of its Controlled Subsidiaries, that it will not be a Reseller (as defined below) in the other party's home territory nor will it acquire or increase, except pursuant to existing preemptive rights, any equity interest in any entity that is, or has entered an agreement to acquire, (or whose affiliate is (or has entered an agreement to acquire)) a Reseller in the other party's territory. 3. Each of ABBA and ABBA-W, on the one hand, and Dylan, on the other, agrees with respect to itself and with respect to each of its Controlled Subsidiaries, not to provide any, or provide rights to any, Mobile Multimedia Contribution (as defined below) to any entity that is (or whose affiliate is) engaged in any of the businesses described in sections A.1. and A.2. in the other party's home territory, except that, Dylan may provide such contribution outside of ABBA-W's home territory if the recipient thereof is bound by non-exportation restrictions with respect to ABBA-W's home territory similar to those imposed upon ABBA-W. 3A. Nothing in sections A.1. or A.2. prohibit any party from entering into customary commercial roaming agreements. 4. Without limiting sections A.1. through A.3. above, for a period of 48 months from the closing of the investment, each of ABBA and ABBA-W, on the one hand, and Dylan, on the other, agrees with respect to itself and with respect to each of its Controlled Subsidiaries, not to provide Mobile Multimedia Contribution to any entity that engages or intends, to the party's actual knowledge, to engage (or whose affiliate engages or intends, to the party's actual knowledge, to engage) in the other party's home territory in the business of developing or maintaining a Mobile Portal (as defined below). After the expiration of the 48-month period, Dylan and ABBA-W will discuss in good faith appropriate revisions to the restrictions on competition or the termination of such restrictions with respect to Mobile Portals in light of the then current state of the mobile telecommunications markets. Unless an alternate agreement is reached, after 48 months, Dylan may take any of the actions otherwise prohibited under the first paragraph of this section A.4, but only in accordance with the Release Conditions (as defined below). After 48 months, ABBA and ABBA-W shall no longer be subject to the restrictions contained in this Section A.4. B. Definitions ----------- 1. An entity "Competes" if (a) it (and/or its affiliate) offers products and/or services that are substantially substitutable with products and/or services of the other party's products and/or services by customers (including resellers) located in substantially similar geographic locales in each party's home territory such that there is a reasonable likelihood of customers (including resellers) substituting the competing product or service, and (b) the competing products and services, taken together, compete for a substantial portion of the customers (including resellers) of ABBA-W, the MMS or Dylan, as the case may be, in the geographic locale where such competition occurs. 2. A "Controlled Subsidiary" of any entity means any entity with respect to which such first entity directly or indirectly owns or controls more than 50% of the voting power or the power to nominate or designate a majority of the board of directors or similar governing body. 3. "home territory" means (a) North America, with respect to ABBA and ABBA-W, and (b) the nation of Japan, with respect to Dylan. 4. "Mobile Multimedia Contribution" means the provision of the support, advice, services, activities, and technology included in Section 28A of the Term Sheet (including Annex D thereto) by way of any joint venture agreement, technology and know-how transfer agreement, services and support agreement that has been reduced to writing or any similar type of written agreement or in any other manner at a level that would not be considered to be DE MINIMIS. 5. "Mobile Portal" means the provision of portal functionality by aggregating content or providing content that includes third party content to be supplied to consumers through a cell phone browser or other wireless access device. Without limiting the foregoing, it is agreed and understood that the portal functionality provided or enabled by the i-mode services is included within the definition of Mobile Portal. 6. "Mobile Telecommunications Infrastructure" means a wireless mobile radio network to provide digital or analog voice and data transmission services to mobile communications terminals anywhere in the relevant home territory, unless such network does not have more than 100,000 subscribers and does not, or when operational would not, cover more than 10 million POPs. -2- 7. "MMS" means the Mobile Multimedia Subsidiary created pursuant to the term sheet. 8. Under the "Release Conditions" actions will be permitted as follows: (a) if the written consent of ABBA-W has been obtained or (b) if prior to taking such action all Dylan representatives on the ABBA board, but not the ABBA-W board, and all other Dylan representatives or designees appointed to the management or any governance body or committee of the MMS (including under Sections 10 and 11 of the term sheet) shall have resigned, and in each case Dylan shall have relinquished its right to nominate, appoint or designate any such directors, representatives or designees in the future. In the case of any such resignations, Dylan shall be released from any and all of its obligations duties relating any management, directorships or membership or participation in any such governance body. 9. "Reseller" is an entity that (a) provides mobile telecommunication services without owning its own infrastructure but by using a third party's Mobile Telecommunications Infrastructure, (b) has at least 100,000 subscribers and (c) serves, or has the right or licenses to offer services in, an area or areas covering at least 10 million POPs. C. Duration of Restrictions ------------------------ 1. With respect to Sections A.1, A.2 and A.3 above, Dylan shall be subject to these restrictions unless and until (i) 90 days after any of the circumstances described in the second paragraph of Section 30 of the term sheet (i.e., reduction in interest due to spin put, technology default repurchase or redemption) or (ii) Dylan's voting and economic interest in ABBA-W has been less than 10% (or 8% if Dylan still owns 10/16 of its original shares) for a continuous period of at least 12 months (i.e., test relates to Dylan's board and management rights). 2. ABBA shall be subject to the Section A restrictions until the earlier of the Spin-off and the first date that Dylan exercises any put, liquidation or registration right as a result of the non-occurrence of the Spin-off. 3. ABBA-W shall be subject to the Section A restrictions until the earlier of (A) the date Dylan first ceases to be subject to the Restrictions, and (B) the date Dylan first relinquishes its board and management rights in accordance with clause (b) of the definition of Release Condition. 4. ABBA's and ABBA-W's investment in JT shall not be subject to the Section A restrictions and JT shall not be deemed to be a Controlled Subsidiary of ABBA or ABBA-W, provided that nothing herein shall diminish or limit Section 17 of the term sheet. 5. Nothing in the restrictions above will prohibit either party from making any investment if the investing party (i) does not hold a beneficial interest in the target entity in excess of 5% of any equity or management class of shares of such target entity and (ii) does -3- not exercise control of, or management authority in, or provide any Mobile Multimedia Contribution to such target entity. 6. If ABBA or ABBA-W, on the one hand, or Dylan, on the other, materially breaches any of its obligations hereunder and fails to cure such breach within 30 days of receiving notice from the other party or parties, than such other party or parties shall immediately be released from all of the restrictions hereunder. D. Non-Disclosure Commitment/Dylan Parent and Other. ------------------------------------------------ 1. ABBA-W and Dylan each hereby agree (and each intends to cause the agreement in this Section D to be set forth in a more complete definitive agreement) to keep confidential and protect each other's Proprietary Information. This will include ensuring that directors, secondees and any other employees with access to Proprietary Information of the other party remain bound by strict nondisclosure policies and procedures consistent with this Section D, and only utilize Proprietary Information for purposes related to the purposes for which such information was disclosed. In addition, each party further agrees that in no case shall any Proprietary Information of the other party be transferred in any form (including orally and visually) outside of the respective home territories. "Proprietary Information" shall mean any and all information of either party of a confidential nature, including without limitation non-public information relating to the disclosing party's technology, technical data, trade secrets, know how, customers, business plans, marketing activities, financial data and other business affairs that is disclosed by one party to the other party or that is otherwise learned by a party in the course of its discussions or business dealings with, or its physical or electronic access to the premises of, the other party that, if disclosed in written form, is conspicuously marked at the time of initial disclosure, or promptly thereafter, as the disclosing party's Proprietary Information, and, if in oral or visual form, is promptly followed by a writing delivered to the receiving party designating the information considered confidential; PROVIDED, HOWEVER, that "Proprietary Information" does not include any information that: (i) was in possession of or known to the receiving party, without any obligation of confidentiality to the disclosing party, prior to receiving it from the disclosing party; (ii) is, or subsequently becomes, publicly available without breach of these confidentiality provisions; (iii) is or becomes known or available to the receiving party from a source other than the disclosing party that, to the receiving party's knowledge, is not prohibited from disclosing such Proprietary Information to the receiving party by a contractual, legal or fiduciary obligation owed by such other third party to the disclosing party; (iv) is developed by or for the receiving party without use of the Proprietary Information; or (v) is or becomes available to the receiving party by lawful inspection or analysis of products or services offered for sale; or (vi) is disclosed to the receiving party by the disclosing party after receiving written notification from the receiving party that does not desire to receive any further Proprietary Information. 2. The foregoing notwithstanding, the terms of confidentiality hereunder shall not be construed to in any way limit either party's right to independently develop or acquire products, services or other information without use of the other party's Proprietary Information. Each party acknowledges that the other party has developed and intends to continue to develop, both internally and with the assistance of third parties, products, -4- services and other information related to Mobile Portals and data networks, including products, services and other information which may be similar to Proprietary Information disclosed by the other party. Accordingly, nothing herein, or any other agreement between the parties, will be construed as a representation or agreement that the receiving party will not develop or have developed for it (or deploy) products, services, concepts, systems or techniques that are similar to or compete with the products, concepts, systems or techniques contemplated by or embodied in the Proprietary Information of the other party, provided that the receiving party does not violate any of its obligations under this Section D in connection with such development. Further, notwithstanding any other provision hereof or agreement between the parties, both parties shall be free to use for any lawful purpose the residuals resulting from access to or work with any Proprietary Information, provided that such party shall maintain the confidentiality of the Proprietary Information as provided herein. The term "residuals" means information in non-tangible form, which may be retained by persons who have had access to the Proprietary Information, including ideas, concepts, know-how or techniques contained therein so long as such "residuals" are not themselves substantially identical to the Proprietary Information on which any such residual is based. Neither party shall have any obligation to limit or restrict the assignment of such persons or to make payment of any kind to the other party for any work resulting from the use of residuals. 3. In the event that the receiving party is requested or becomes legally compelled to disclose any Proprietary Information, then before substantively responding to any such request or requirement, the receiving party will provide the disclosing party with prompt written notice of any such request or requirement so that the disclosing party may seek a protective order or other appropriate remedy, or both, or waive compliance with the provisions of this Section D or other appropriate remedy, or if the disclosing party so directs, the receiving party will exercise its own reasonable best efforts to assist the disclosing party in obtaining a protective order or other appropriate remedy at the disclosing party's expense. If, failing the entry of a protective order or other appropriate remedy or the receipt of a waiver hereunder, disclosure of any Proprietary Information is, in the opinion of the receiving party's counsel, required, the receiving party may furnish only that portion of the Proprietary Information which is in the opinion of the receiving party's counsel legally required to be furnished. In any event, the receiving party will cooperate fully with any action by the disclosing party to obtain an appropriate protective order or other reliable assurance that confidential treatment will be accorded the Proprietary Information. 4. The obligations and covenants contained in this Section D shall be subject to and performed in accordance with any applicable U.S. and Japanese laws and regulations. -5- EX-99.1 6 0006.txt EXHIBIT 99.1 - AT&T CORP. PRESS RELEASE [AT&T LOGO] NEWS RELEASE - ------------------------------------------------------------------------------ For Further Information: Jane O'Donaghue David Caouette AT&T Wireless AT&T (201) 967-3568 (908) 221-6382 (201) 294-2404 (wireless) (888) 602-8132 (pager) AT&T AND NTT DOCOMO ANNOUNCE STRATEGIC WIRELESS ALLIANCE CREATE NEW AT&T WIRELESS UNIT TO DEVELOP ADVANCED SERVICES NTT DOCOMO TO INVEST NEARLY $10 BILLION FOR 16 PERCENT STAKE IN AT&T WIRELESS AT&T WIRELESS ACCELERATES TRANSITION TO GLOBAL BROADBAND WIRELESS STANDARD FOR IMMEDIATE RELEASE: THURSDAY, NOVEMBER 30, 2000 NEW YORK AND TOKYO - AT&T and NTT DoCoMo today announced that NTT DoCoMo will form a strategic alliance with AT&T Wireless to develop the next generation of mobile multimedia services on a global-standard, high-speed wireless network. NTT DoCoMo, the leading mobile communications company in Japan, will invest approximately $9.8 billion for AT&T preferred stock, equivalent to 406 million shares of AT&T Wireless tracking stock (a 16 percent economic interest). In addition, NTT DoCoMo will acquire five-year warrants to purchase the equivalent of an additional 41.7 million shares of AT&T Wireless tracking stock at $35 per share. The tracking stock held by NTT DoCoMo will convert to AT&T Wireless common stock upon the spin off of AT&T Wireless. AT&T will reduce its retained interest in the AT&T Wireless Group by 178 million shares and will receive $20.50 per share from NTT DoCoMo. The balance of the 406 million shares will come from the issuance of 228 million new primary shares of AT&T Wireless tracking stock at $27.00 per share. AT&T Wireless will create a new, wholly owned subsidiary to develop multimedia applications for its current network and a new, high-speed wireless network built to global standards for "third generation" (3G) services such as graphic presentation of data, video e-mail, high quality music downloads, and streaming audio and video. Both companies will share technical resources and support staffing of the new unit. AT&T Wireless plans to be one of the first major companies in North America to deploy such a network based upon the global standard called UMTS (Universal Mobile Telecommunications System) also known as WCDMA (wideband code division multiple access). By mid-2001 in Japan, NTT DoCoMo will be the first carrier in the world to offer advanced mobile multi-media services using WCDMA. AT&T Wireless plans to be the first national wireless carrier in the United States to introduce WCDMA services. "AT&T Wireless has a solid track record of growth, built on the largest base of high value customers in the industry," said AT&T Chairman C. Michael Armstrong. "NTT DoCoMo is the world's leader in mobile Internet services. Combining the strengths of these two industry leaders will speed a new generation of mobile data services to AT&T Wireless customers throughout North America. I can't think of a better gift for our customers as we prepare to spin AT&T Wireless as a separate company." "This alliance allows AT&T Wireless to realize its vision of creating a high performing mobile Internet more quickly that we anticipated," said John D. Zeglis, chairman and CEO of AT&T Wireless. "This brings together two of the most innovative and dynamic wireless companies with all the right stuff to transform the industry. NTT DoCoMo has developed a rich mobile Internet experience with 15 million customers, setting a new global standard. AT&T Wireless changed the competitive landscape in North America and attracted millions of high-use customers with its Digital One Rate offer. Together, AT&T Wireless and NTT DoCoMo will take wireless communications to a new place, bringing our customers leading edge wireless data applications and an exceptional service experience." "I am delighted to announce that we are launching our business together in the U.S., the world's largest mobile telecommunications market in terms of number of subscribers," said Dr. Tachikawa, president and CEO of NTT DoCoMo. "AT&T Wireless and NTT DoCoMo expect to bring communications to a new level by combining our experience and prominent expertise in leading-edge wireless data applications and services." As part of the agreement, AT&T Wireless will license from NTT DoCoMo its i-mode technology platform. The companies will also become partners in the U.S. and Japan for handling the wireless needs of multi-national companies and traffic on each other's network. Additionally, both companies expect to benefit from a buying consortium for network equipment and handsets. The strategic alliance will implement technology that enables users to access diverse and superior HTML applications and content on mobile wireless terminals and to promote common global standards such as Wireless Application Protocol Next Generation (WAP NG). As part of the agreement, NTT DoCoMo will obtain a seat on AT&T's Board of Directors until AT&T Wireless is spun off from AT&T as a separate public company later next year. At that time, NTT DoCoMo will retain representation on the new public wireless company's board, and both companies will agree on certain key executives for the multi-media subsidiary. AT&T Wireless will use the approximately $6.2 billion it receives from the share sale to continue executing its strategy to expand its capacity, enlarge its footprint, create an advanced mobile Internet, and invest in other strategic growth initiatives, as well as strengthening its balance sheet. AT&T said it intends to use the remaining $3.6 billion it will receive for debt reduction. AT&T said that until the time of the planned spin off of AT&T Wireless by mid-2001, the company will record a non-cash carrying cost on the preferred stock of just under 7 percent, which will result in a 3 to 4 cent negative impact to AT&T's 2001 full-year earnings. This excludes any non-cash charges that AT&T may be required to incur with respect to the warrants but does include interest expense savings AT&T is expected to realize by reducing its debt. NTT DoCoMo's investment will be in the form of preferred stock, with each share equivalent to 500 shares of AT&T Wireless tracking stock. Otherwise, the preferred stock will have essentially the same economic interest as the AT&T Wireless tracking stock. As a result of this transaction, excluding the warrants, AT&T will retain a 69.8 percent economic interest in AT&T Wireless' operating results, and approximately 14.2 percent of the economic interest in AT&T Wireless' operating results will continue to be represented by the existing AT&T Wireless tracking stock publicly traded on the New York Stock Exchange. AT&T also said it is proceeding with its plan to offer AT&T shareowners an opportunity to exchange their AT&T common shares for AT&T Wireless tracking stock early in 2001. Later next year, AT&T also intends to complete the spin-off of AT&T Wireless by exchanging AT&T Wireless common stock for the tracking stock and distributing a special dividend of AT&T Wireless common stock to AT&T shareowners. AT&T WIRELESS ACCELERATES PACE TO GLOBAL WIRELESS STANDARD AT&T Wireless said it will accelerate the introduction of wireless data services by overlaying a GSM (Global System for Mobile Communications) / GPRS (General Packet Radio Service) platform to its existing nationwide network. The company's deployment of GSM will begin early next year and bring with it the higher speed data capabilities of so-called "2.5 G" technology, or GPRS, along with the full array of mobile devices available from vendors for the world's GSM carriers. The company will also deploy a high-speed 3G technology known as EDGE (Enhanced Data rates for Global Evolution) beginning near the end of 2001 and extending to most of its markets by the end of 2002. AT&T Wireless and its partners and affiliates already have sufficient spectrum to deploy GSM/GPRS/EDGE in virtually all of the nation's top 100 markets. AT&T Wireless will begin deploying the highest performing 3G technology, UMTS, when equipment and devices become available, sometime in 2002. The company's existing spectrum licenses, along with its partners and affiliates, will permit installation of UMTS in more than 70 of the country's top 100 markets in 2003 and 2004 - even before additional spectrum for new markets is added to the portfolio. "With this new technology, people will be able to do things with their wireless devices they never could before," said John Zeglis, chairman and CEO of AT&T Wireless. "We see a future taking shape where our customers will have access in their pocket to all the information and all the people of the world, from wherever our customers happen to be in the world." The company said existing customers would continue to receive the same reliable services they expect from AT&T Wireless because the new network will not replace its TDMA (Time Division Multiple Access) and CDPD (Cellular Digital Packet Data) networks. These networks will continue to be supported, maintained and expanded, as needed, to deliver the reliable, high-quality, second-generation voice and data services that have made AT&T Wireless an industry leader. VENDOR SUPPORT FOR TRANSITION The company said it will deliver its advanced third generation wireless services faster than planned, and yet at costs similar to its existing plan, because of strategic agreements reached with a number of network equipment vendors, including Nokia, Nortel, Lucent and Ericsson and handset providers, including Nokia, Ericsson, Siemens and Motorola. AT&T Wireless expects other members of the AT&T Wireless network, such as Rogers AT&T Wireless of Canada, and its domestic affiliates Telecorp PCS and Triton PCS, Inc. to join this strategy. Affiliates and partners of AT&T Wireless can also take advantage of these agreements and receive similar prices for equipment and services. AT&T and AT&T Wireless were advised by Salomon Smith Barney and Credit Suisse First Boston. NTT DoCoMo was advised by Goldman Sachs. ABOUT AT&T WIRELESS AT&T Wireless (NYSE: AWE) operates one of the largest digital wireless networks in North America. With more than 15 million subscribers (including partnership markets), AT&T Wireless is committed to being the premier provider of high-quality wireless communications services, whether mobile or fixed, voice or data, to businesses or consumers, in the U.S. and internationally www.attws.com. The foregoing are "forward-looking statements" which are based on management's beliefs as well as on a number of assumptions concerning future events made by and information currently available to management. Readers are cautioned not to put undue reliance on such forward-looking statements, which are not a guarantee of performance and are subject to a number of uncertainties and other factors, many of which are outside AT&T's control, that could cause actual results to differ materially from such statements. For a more detailed description of the factors that could cause such a difference, please see AT&T's filings with the Securities and Exchange Commission. AT&T disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. This information is presented solely to provide additional information to further understand the results of AT&T. EDITOR'S NOTE: NEW YORK NEWS CONFERENCE AND CONFERENCE CALLS AT&T will host an analysts' call to discuss the AT&T and NTT DoCoMo strategic alliance beginning at 9:30 A.M. (Eastern time) today with John D.Zeglis, chairman and CEO AT&T Wireless Group. Reporters are invited to listen-only by calling 1-800-230-1093 (US) or 1-612-332-0632 (international). No access code is required. A replay will be available beginning at 1 p.m. today by dialing 1-800-475-6701, access code 552841 (US) or 1-320-365-3844, access code 552841 (international). The analysts' conference will also be webcast live over the Internet at www.att.com/ir http://www.att.com/ir/. AT&T will hold a news conference at 11:00 A.M. (Eastern time) in the first-floor auditorium of the company's World Headquarters at 32 Avenue of the Americas. John Zeglis will make remarks and take questions. Reporters who are unable to attend in person can participate by dialing 1-800-230-1074 (US) or 1-612-332-0335 (international). No access code is required. The trouble number is 1-800-932-1100 (US) and 1-612-334-6983 (international). A replay of the news conference will be available for 72 hours beginning this afternoon at 3 p.m. (Eastern time) at 1-800-475-6701, access code 553640 (US), or 1-320-365-3844, access code 553640 (international). SATELLITE COORDINATES - A satellite feed of the 11:00 a.m. (Eastern time) news conference in New York is available at the following coordinates: (KUBAND) GE3, KU/T-19 Horizontal (KU-12080/L-1330MHz) down-link, Audio 6.2 +6.8 MHZ, Orbital Location: 87 West. ALSO: Galaxy 3R, Transponder: C/T-11 Horizontal (C-3920/L-1230 MHz) down-link, C/T-11 Analog (27 Mhz), Audio 6.2 +6.8 MHZ, Orbital Location: 87 West. #### -----END PRIVACY-ENHANCED MESSAGE-----