Exhibit 4.2
SHAREHOLDERS' RIGHTS AGREEMENT
THIS SHAREHOLDERS' RIGHTS AGREEMENT (this "Agreement"), is dated as of
March 15, 2000, by and between BLUE SKY COMMUNICATIONS, INC. , a corporation
organized under the laws of the State of Georgia (the "Company"), TELECOM
WIRELESS SOLUTIONS, INC., a Delaware corporation ("TWS") and STANFORD FINANCIAL
GROUP COMPANY, a Florida corporation ("Stanford").
RECITALS
WHEREAS, TWS and Stanford are the two sole shareholders of Company,
holding, respectively, 60% and 40% of the Company's outstanding and issued
common stock, par value $ .001 per share, ("Common Shares"); and
WHEREAS, TWS and Stanford are the two sole shareholders of Blue Sky Com
International, Ltd.("BSI"), holding, respectively, 60% and 40% of BSI's
outstanding and issued common stock, par value $ .01 per share, ("Common
Shares"); and
WHEREAS, pursuant to a Contribution Agreement of even date herewith
between the Company, TWS and Stanford (the "Contribution Agreement"), TWS and
Stanford have agreed to contribute to the Company all the shares they each,
respectively, hold in BSI, subject to the terms and conditions contained
therein, resulting in BSI becoming a wholly owned subsidiary of Company;
WHEREAS, the parties hereto desire to set forth herein their mutual
agreement regarding various matters relating to the Company.
AGREEMENTS
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
set forth herein, the parties hereto, intending to be legally bound, agree as
follows:
ARTICLE 1 DEFINITIONS
Section 1.1 CERTAIN DEFINITIONS. As used in this Agreement, the following
terms shall have the following respective meanings:
"Affiliate" means, with respect to any Person, any Person that, directly
or indirectly, controls, is controlled by, or is under common control with such
first-named Person. For the purposes of this definition, "control" (including
with correlative meanings, the terms "controlled by" and "under common control
with") shall mean the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of such Person, whether
through the ownership of voting securities or by contract or otherwise.
"Board" means the Board of Directors of the Company, as constituted from
time to time.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday and Friday
which is not a day on which banking institutions in the City of Atlanta, Georgia
are authorized or obligated by law or executive order to close.
"Charter" means the Company's Certificate of Incorporation and Bylaws, as
amended, as the same may hereafter be amended in accordance with applicable law
and the terms thereof and hereof.
"Common Shares" means the common share, par value $0.01 per share, of the
Company.
"Commission" means the Securities and Exchange Commission.
"Contribution Agreement" shall have the meaning set forth in the
preambles.
"Fully-Diluted Basis" gives effect, without duplication, as applicable, to
(x) all shares of Common Share outstanding at the time of determination plus (y)
all shares of Common Share issuable upon conversion of any convertible
securities or the exercise of any option, warrant or similar right (whether or
not presently exercisable) to acquire shares of Common Share or pursuant to any
plan by the Company to cause the issuance of any of the foregoing, as if such
convertible securities had been so converted or such option, warrant or similar
right had been so exercised or such plan had been implemented.
"Person" means any individual, corporation, partnership, limited liability
company, joint venture, association, joint share company, trust, unincorporated
organization or government or any agency or political subdivision thereof.
"Representing Party" has the meaning set forth in Section 4.1 of this
Agreement.
"Securities Act" means the Securities Act of 1933, as amended, including
the rules and regulations of the Commission promulgated thereunder.
"Shares" means all shares of Common Share held by Stanford and any of its
Affiliates, and any and all shares of Common Shares from time to time acquired
by Stanford.
"Subsidiary" means, with respect to the Company, (i) any corporation more
than 50% of whose share of any class or classes having by the terms thereof
ordinary voting power to elect a
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majority of the directors of such corporation (irrespective of whether or not at
the time share of any class or classes of such corporation shall have or might
have voting power by reason of the happening of any contingency) is at the time
owned by the Company and/or one or more Subsidiaries of the Company and (ii) any
partnership, association, joint venture or other entity (a) in which the Company
and/or one or more Subsidiaries of the Company has more than a 50% equity
interest at the time or (b) as to which the Company and/or one or more of its
Subsidiaries has the power to direct or cause the direction of the management
and policies of such entity by contract or otherwise.
"Transfer" (including with correlative meaning the term "Transferred")
means any transfer, sale, assignment, pledge, encumbrance or other disposition
of Shares or any portion of the ownership interest therein, irrespective of
whether any of the foregoing are effected voluntarily or involuntarily, by
operation of law or otherwise, or whether inter vivos or upon death.
ARTICLE 2 TRANSFER OF SHARES
Section 2.1 TRANSFER OF SHARES. No Transfer of Shares, or any interest
therein, shall be made by Stanford unless (i) the Company, at its option, shall
have received a written opinion of counsel reasonably satisfactory to the
Company, addressed to the Company, to the effect that the proposed Transfer of
Shares, or an interest therein, may be effected without registration under the
Securities Act or under applicable state securities laws and (ii) the Company
shall have received such representation letters as it may reasonably require, in
form and substance reasonably satisfactory to the Company, to ensure compliance
with the provisions of the Securities Act and applicable state securities laws.
Notwithstanding the foregoing provisions of this Section 2.1, the restrictions
imposed by this Section 2.1 upon the transferability of any Shares shall
terminate when such Shares have been registered under the Securities Act and
sold by the holder thereof in accordance with such registration or Transferred
pursuant to Rule 144 under the Securities Act.
Section 2.2 RESTRICTIVE LEGEND. Unless and until otherwise permitted by
Section 2.1, each certificate for Shares issued to Stanford, or to any
subsequent Permitted Transferee of such certificate, shall be stamped or
otherwise imprinted with the following restrictive legend:
"The securities represented by this Certificate have been acquired
for investment and have not been registered pursuant to the
Securities Act of 1933, as amended (the "Act"), or any applicable
state statutes, and are subject to the provisions (including the
restrictions on transfer) set forth in that certain Shareholders'
Rights Agreement dated as of March 15, 2000, between Blue Sky
Communications, Inc. ("Company"), Telecom Wireless Solutions, Inc.,
and Stanford Financial Group Company (the "Shareholders'
Agreement"), a copy of which is on file with the Secretary of the
Company. Such securities may not be sold, transferred, pledged,
hypothecated, or otherwise disposed of except in
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compliance with the Shareholders' Agreement and unless (i) a
registration statement under the Act or applicable state securities
laws shall have become effective with regard thereto, or (ii) an
exemption from registration exists under the Act (or the regulations
promulgated thereunder) and applicable state securities laws and
such exemption is applicable thereto."
In connection with the termination of restrictions on transferability of Shares
provided for hereunder, the holder of a certificate representing such Shares as
to which such restrictions shall have terminated shall be entitled to receive
from the Company, without expense to such holder, one or more new certificates
for Shares not bearing the restrictive legend set forth in this Section 2.2.
Section 2.3 TRANSFER OF RIGHTS. The rights granted to Stanford under this
Agreement shall inure to the benefit of any transferee of Shares transferred by
Stanford; provided, however, that (i) the transfer does not contravene the
provisions of this Agreement, and (ii) such rights shall not be subject to
Transfer in a sale of the Shares in a registered public offering or pursuant to
a public sale transaction which qualifies for an exemption from the registration
requirements of the Securities Act pursuant to Rule 144 under the Securities
Act.
ARTICLE 3 BOARD OF DIRECTORS; MANAGEMENT
Section 3.1 NUMBER AND COMPOSITION OF BOARD OF DIRECTORS. The number of
members of the Company's Board of Directors shall be no fewer than 3 and is
expected to be 7. For so long as Stanford holds Shares representing, in the
aggregate, at least ten percent (10%) of the Company's then outstanding Common
Shares, Stanford shall have the right to nominate any one (1) individual, in its
sole discretion, to be a member of the Board. For so long as TWS holds shares
representing, in the aggregate, at least fifty five percent (55%) of the
Company's then outstanding Common Share, TWS shall have the right to nominate,
in its sole discretion, that number of individuals to be members of the Board
who shall constitute 2/3 of the Board's membership.
Section 3.2 REMOVAL. The directors designated as aforesaid by Stanford and
TWS, respectively, and duly elected to the Board shall be subject to removal
only at the request of Stanford or TWS, respectively.
Section 3.3 ELECTION OF STANFORD DIRECTOR. Stanford and TWS agree to vote
all of their Common Shares for election (or removal) of the nominee(s)
designated by Stanford and TWS, respectively, as provided in Sections 3.1 and
3.2 hereof and, in the event of a vacancy in the Board created by the death,
resignation or removal of any such director, to vote their Common Shares for the
election of a nominee to be designated by Stanford or TWS, as the case may be
(unless such vacancy has resulted from the termination of the power of Stanford
or TWS, as the case may be, to nominate such director). Such replacement
director shall hold office for the
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remainder of the term of the director for whom he or she is designated to
replace. The Company shall take such action as shall be reasonably required in
order to facilitate the nomination, removal and election of such director(s) as
aforesaid. Without limiting the foregoing, in the event that TWS and Stanford no
longer hold shares representing a majority of the voting interests of the
Company, at the request of Stanford or TWS, as the case may be, the Company
shall use its best efforts to cause additional shareholders to agree to vote
their shares in the same manner as Stanford and TWS have agreed in this Section
3.3.
Section 3.4 ACTIONS REQUIRING APPROVAL OF STANFORD. For so long as
Stanford holds Shares representing, in the aggregate, at least ten percent (10%)
of the Company's then outstanding Common ShareS, the following actions by, or
with respect to, the Company shall require the consent of Stanford or the
representative of Stanford on the Board:
(a) the amending, altering or repealing of the Charter of the Company or
any of its Subsidiaries in any manner that is materially adverse to Stanford's
rights under this Agreement;
(b) any merger or consolidation of the Company or any of its Subsidiaries
with or into another entity or Person, or entering into any binding share
exchange or similar transaction with any entity or Person;
(c) any sale, transfer or disposition of all or substantially all of the
assets of the Company in one transaction or series of related transactions, or
the liquidation, dissolution or winding up of the Company;
(d) the sale, transfer, disposition, lease, pledge or encumbrance in any
transaction or related series of transactions not in the ordinary course of
business, of any assets of the Company, or the capital share or securities of
any of its Subsidiaries (collectively, an "Unusual Disposition") in an amount
exceeding five per cent of the Company's aggregate revenues during the prior
twelve months; except that in the first year of the term of this Agreement,
Stanford consent shall be required for any Unusual Disposition in an amount
greater than $250,000. The initial capitalization to fund operations of a
Subsidiary is considered a transaction in the ordinary course of business;
(e) the purchase or acquisition by the Company of any assets in one
transaction or related series of transactions not in the ordinary course of
business (collectively, an "Unusual Acquisition") in an amount exceeding five
percent (5%) of the Company's aggregate revenues during the prior twelve months;
except that in the first year of the term of this Agreement, Stanford consent
shall be required for any Unusual Acquisition in an amount greater than
$250,000. The initial capitalization to fund operations of a Subsidiary is
considered a transaction in the ordinary course of business;
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(f) the incurrence by the Company of any indebtedness which results in a
debt to equity ratio exceeding eighty percent (80%) to twenty percent (20%);
(g) any material change in the businesses of the Company or any of its
Subsidiaries;
(h) the declaration or payment of cash dividends or extraordinary
distributions to holders of the Company's Common Shares, or the repurchase or
redemption of any shares of the Company's Common Shares (except pursuant to any
agreements to repurchase Common Share from employees);
(i) the Company's participation or investment in any joint venture, in any
single transaction or series of transactions, with any Person or Persons in an
amount exceeding five per cent of the Company's aggregate revenues during the
prior twelve months; and
The Company shall not permit any Subsidiary to take any action which, if taken
by the Company, would require the consent of Stanford in accordance with the
preceding sentence.
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND STANFORD
Each of the Company and Stanford (each, a "Representing Party") hereby
represents and warrants to the other Representing Party as follows:
Section 4.1 ORGANIZATION, QUALIFICATION AND POWER. Each Representing Party
is a company or corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization, and has the
requisite corporate power and authority to own and hold its properties, and to
carry on its business as conducted or proposed to be conducted. Each
Representing Party has requisite corporate power and authority to execute,
deliver and perform this Agreement.
Section 4.2 AUTHORIZATION OF AGREEMENT; NO CONFLICT. The execution,
delivery and performance by each Representing Party of this Agreement have been
duly authorized by all requisite corporate action of the Representing Party, if
any, and will not violate any provision of law, any order of any court or other
agency of government, any of such Representing Party's organizational documents,
or any provision of any indenture, agreement or instrument to which such
Representing Party or any of such Representing Party's properties or assets is
bound, or conflict, result in a breach of, or constitute (with due notice or
lapse of time or both) a default under any such indenture, agreement or other
instrument.
Section 4.3 VALIDITY. This Agreement has been duly executed and delivered
by each Representing Party and constitutes a legal, valid and binding obligation
of such Representing Party, enforceable against such Representing Party in
accordance with its terms, subject to the
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effect of bankruptcy, insolvency, moratorium, or other similar laws affecting
the enforcement of creditors' rights generally and except as to the extent the
availability of equitable remedies may be limited to general principles of
equity.
ARTICLE 5 COVENANTS AND AGREEMENTS
Section 5.1 FINANCIAL STATEMENTS, REPORTS, ETC. The Company covenants and
agrees with Stanford that for so long as Stanford continues to hold Shares, the
Company shall furnish to Stanford:
(a) within sixty (60) days of execution of this Agreement, an annual
budget showing projected monthly income and expenses for the years 2000
and 2001; thereafter such budget shall be provided for the upcoming year
within thirty (30) days after the end of the prior fiscal year of the
Company;
(b) within one hundred twenty (120) days after the end of each
fiscal year of the Company, audited consolidated financial statements,
including an audited balance sheet showing the financial condition of the
Company and its consolidated subsidiaries as of the close of such fiscal
year, together with statements of income and cash flow, setting forth in
comparative form with respect to such financial statements figures for the
previous fiscal year and to the current year's annual budget, all in
reasonable detail;
(c) as soon as reasonably possible, and in any event within thirty
(30) days after the end of each fiscal quarter beginning with the fiscal quarter
ending June 30, 2000 and ending when Stanford no longer holds any Shares, an
unaudited balance sheet, together with a statement of income and cash flows of
the Company and its consolidated subsidiaries for and as at the end of such
month, setting forth in comparative form with respect to the corresponding
period of the previous fiscal year and to the current month's budget;
(d) as soon as reasonably possible, and in any event within thirty
(30) days after the end of each fiscal quarter beginning with the fiscal quarter
ending June 30, 2000 and ending when Stanford no longer holds any Shares,
accounts receivable and accounts payable aging reports; and
(e) such other information regarding the business, affairs and
condition of the Company or any of its Subsidiaries as Stanford may from time to
time reasonably request and that is reasonably available to the Company.
Section 5.2 ACCESS TO COMPANY RECORDS. So long as Stanford continues to
hold Shares, Stanford shall be entitled to review the financial and corporate
books and records of the Company and to meet with the executive officers and
independent accountants of the Company for purposes reasonably related to
Stanford's ownership of Shares, which review and/or meetings
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shall take place at reasonable times during the normal business hours of the
Company and in such a manner as to not unduly interfere with the conduct of the
Company's business.
Section 5.3 REGISTRATION RIGHTS. If the Company grants registration rights
to any other Person which holds shares of Common Shares of the Company (the
"Investor"), then the Company shall xxxxx Xxxxxxxx registration rights on the
same terms and conditions as it has granted registration rights to the Investor
to the extent that such grant to Stanford does not adversely affect the price or
salability of the offering being, or to be, registered by the Company (the
"Public Offering"). If it is determined that such offering cannot, after
providing for the amount of shares which the Company desires to register in the
Public Offering, include all shares of Common Shares held by those with
registration rights ("Rights Holders"), then the Company shall make commercially
reasonable efforts to have the number of shares, if any, of the Rights Holders
which may be included in the Public Offering allocated to each of them in
proportion to the percentage of shares held by each to the aggregate number of
shares which are entitled to registration rights.
Section 5.4 PREEMPTIVE RIGHTS.
(a) For the period commencing on the date hereof and terminating 3 years
thereafter, the Company hereby grants to each of Stanford and TWS, respectively,
a preemptive right to purchase its PRO RATA share of all or any part of any New
Securities (as defined below) which the Company may, from time to time, propose
to sell and issue. For purposes of this preemptive right, Stanford's and TWS'
PRO RATA share of New Securities of the Company, is the ratio that the number of
shares of Common Shares of the Company on a Fully-Diluted Basis then held by
Stanford or TWS, as the case may be respectively, bears to the total number of
shares of Common Shares of the Company on a Fully-Diluted Basis then
outstanding; provided that in the case of Stanford's preemptive right, any
rights or agreements, including without limitation convertible securities,
options and warrants held by or for the benefit of the present or former
employees, directors or officers of, and consultants to, the Company shall not
be included as shares of the Common Shares of the Company for purposes of
determining Stanford's PRO RATA share.
(b) For the purposes of this Section 5.4, "New Securities" shall mean any
shares of the Company, including Common Shares, whether now authorized or not,
and rights, options or warrants to purchase said shares but does not include (i)
securities offered to the public generally pursuant to a registration statement
filed with the Commission and declared effective under the Securities Act in
connection with a public offering, (ii) securities issued in the acquisition of
another corporation or entity by the Company or by any Affiliate Company by
merger, purchase of substantially all of the assets or other reorganization or
transaction governed by Rule 145 under the Exchange Act, (iii) shares issued
pursuant to any rights or agreements, including without limitation convertible
securities, options and warrants, except, for purposes of Stanford's preemptive
right only, with respect to any such instruments held by or for the benefit of
the
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present or former employees, and directors of, and consultants to the Company or
any Affiliate Company, provided that the preemptive rights established by this
Section 5.4 shall apply with respect to the initial or subsequent sale or grant
by the Company or any Affiliate Company of such rights or agreements or (iv)
shares issued in connection with any PRO RATA share split, share dividend or
recapitalization by the Company or any Affiliate Company that otherwise is
consistent with this Agreement.
(c) In the event the Company proposes to undertake an issuance of New
Securities, the Company shall give Stanford and TWS written notice of such
intention, describing the type of New Securities, and the price and terms upon
which the Company proposes to issue the same. Stanford and TWS each,
respectively, shall have (i) seven (7) days from the date of receipt of any such
notice to agree to purchase up to fifteen percent (15%) of such New Securities
for the price and upon the terms specified in the notice by giving written
notice to the Company and stating therein the quantity of New Securities to be
purchased; and (ii) thirty (30) days from the date of receipt of any such notice
to agree to purchase up to the remainder of its PRO RATA share (E.G., up to its
PRO RATA share minus the number of shares which comprise the fifteen percent
(15%) provided in (i) above) of such New Securities for the price and upon the
terms specified in the notice by giving written notice to the Company and
stating therein the quantity of New Securities to be purchased.
(d) If Stanford or TWS fails to exercise either or both of its preemptive
rights within their respective periods in (c) above, the Company shall have
ninety (90) days after the expiration of the thirty (30) day period in (c)(ii)
above to sell or enter into an agreement (pursuant to which the sale of New
Securities covered thereby shall be closed, if at all, within sixty (60) days
from the date of said agreement) to sell the New Securities not elected to be
purchased by Stanford or TWS at the price and upon the terms no more favorable
to the purchasers of such securities than specified in the Company's notice. In
the event the Company has not sold the New Securities or entered into an
agreement to sell the New Securities within said 90-day period (or sold and
issued New Securities in accordance with the foregoing within sixty (60) days
from the date of said agreement), the Company shall not thereafter issue or sell
any of such new Securities, without first offering such securities in the manner
provided above.
(e) The preemptive right granted under this Section 5.4 shall expire with
respect to the Company upon the closing of an offering by the Company to the
general public which is effected pursuant to a registration statement filed
with, and declared effective by, the Commission under the Securities Act (or
similar entity under the laws of a jurisdiction other than the United States of
America), and such preemptive right and related right of notice shall not apply
to the offer or sale of shares pursuant to such public offering.
Section 5.5 CHARTER REVISION.Promptly after execution of this Agreement by
the parties, Company shall take such steps as are necessary and appropriate for
it to conform its
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Charter to the provisions hereof. TWS and Stanford agree to cooperate with such
steps, and vote for such actions required to implement such steps.
ARTICLE 6 MISCELLANEOUS
Section 6.1 SURVIVAL. The representations, warranties, obligations,
undertakings and agreements contained in this Agreement shall survive the
execution and delivery of this Agreement, and any disposition of Common Shares.
Section 6.2 ENTIRE AGREEMENT; AMENDMENT. This Agreement embodies the
entire agreement of the parties hereto with respect to the subject matter
hereof. Any provision of this Agreement may be amended, waived or modified if,
but only if, such amendment, waiver or modification is in writing and is signed
by the parties sought to be bound by such amendment, waiver or modification.
Section 6.3 BINDING EFFECT; BENEFITS. This Agreement and all the
provisions hereof shall be binding upon and inure to the benefit of the parties
hereto and their respective heirs, legal representatives, successors and
permitted assigns. Except as expressly provided herein, nothing in this
Agreement is intended to confer on any Persons, other than the parties hereto or
their respective successors and assigns, any rights, remedies, obligations or
liabilities under or by reason of this Agreement.
Section 6.4 RECAPITALIZATION, EXCHANGES, ETC. AFFECTING THE COMMON SHARES.
All the provisions of this Agreement shall apply, to the full extent set forth
herein with respect to the Shares and any and all securities of the Company or
any successor or assign of the Company (whether by merger, consolidation, sale
of assets or otherwise) which may be issued in respect of, in exchange for, or
in substitution of the Shares or by reason of any share dividend, split, reverse
split, combination, recapitalization, reclassification, merger, consolidation or
otherwise.
Section 6.5 NOTICES, ETC. All notices, requests, consents, and other
communications hereunder shall be in writing and shall be deemed effectively
given and received when delivered in person or by national overnight courier
service or by certified or registered mail, return receipt requested, or by
telecopier, addressed as follows:
(a) if to the Company:
Blue Sky Communications, Inc.
000 Xxxxxxxxxx Xxxxxx Xxxx, Xxx. 000
Xxxxxxxxxx, Xxxxxxx 00000
Attention: Xx. Xxxxx X. Xxxxxx, Chairman & CEO
Facsimile No.: (000) 000-0000
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with a copy to:
Attention: Xxxxxxx X. Xxxxx, Esq., General Counsel
Facsimile No.: (000) 000-0000
(b) if to Stanford:
Stanford Financial Group Company
0000 Xxxxxxxxxx
Xxxxxxx, Xxxxx 00000
Attention: Xx. Xxxxx X. Xxxxx, Chief Financial Officer
Facsimile No.: (000) 000-0000
with copies to:
Attention: Xxxxxxx X. Xxxxxx, Esq., General Counsel
Facsimile No.: (000) 000-0000
and
Xxxxxxxxx Xxxxxxx
0000 Xxxxxxxxxxx Xxxxxx, X.X.
Xxxxx 0000
Xxxxxxxxxx, XX 00000
Attention: Xxxxxxx Xxxxx, Esq.
Facsimile No.: (000) 000-0000
or, in any such case, at such other address or addresses as shall have been
furnished in writing by such party to the others.
Section 6.6 SEVERABILITY. The invalidity, illegality or unenforceability
of one or more of the provisions of this Agreement in any jurisdiction shall not
affect the validity, legality or enforceability of the remainder of this
Agreement in such jurisdiction or the validity, legality or enforceability of
this Agreement, including any such provision, in any other jurisdiction, it
being intended that all rights and obligations of the parties hereunder shall be
enforceable to the fullest extent permitted by law.
Section 6.7 HEADINGS. The headings of the sections of this Agreement are
inserted for convenience only and shall not constitute a part of this Agreement.
Section 6.8 APPLICABLE LAW. THE LAWS OF THE STATE OF FLORIDA SHALL GOVERN
THE INTERPRETATION, VALIDITY AND PERFORMANCE OF THE
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TERMS OF THIS AGREEMENT, REGARDLESS OF THE LAW THAT MIGHT BE APPLIED UNDER
PRINCIPLES OF CONFLICTS OF LAW.
Section 6.9 FURTHER ASSURANCES. Each party hereto shall do and perform or
cause to be done and performed all such further acts and things and shall
execute and deliver all such other agreements, certificates, instruments, and
documents as any other party hereto reasonably may request in order to carry out
the intent and accomplish the purposes of this Agreement and the consummation of
the transactions contemplated hereby.
Section 6.10 SPECIFIC PERFORMANCE. Each of the parties hereto acknowledges
and agrees that in the event of any breach of this Agreement, the non-breaching
party would be irreparably harmed and could not be made whole by monetary
damages. It is accordingly agreed that the parties hereto will waive the defense
in any action for specific performance that a remedy at law would be adequate
and that the parties hereto, in addition to any other remedy to which they may
be entitled at law or in equity, shall be entitled to compel specific
performance of this Agreement in any action instituted in any court of the
United States or any state thereof having subject matter jurisdiction of such
action.
Section 6.11 RIGHTS CUMULATIVE; WAIVER. The rights and remedies of the
parties under this Agreement shall be cumulative and not exclusive of any rights
or remedies which any party hereto would otherwise have hereunder or at law or
in equity or by statute, and no failure or delay by any such party in exercising
any right or remedy shall impair any such right or remedy or operate as a waiver
of such right or remedy, nor shall any single or partial exercise of any power
or right preclude such party's other or further exercise or the exercise of any
other power or right. The waiver by any party hereto of a breach of any
provision of this Agreement shall not operate or be construed as a waiver of any
preceding or succeeding breach and no failure by any party hereto to exercise
any right or privilege hereunder shall be deemed a waiver of such party's rights
or privileges hereunder or shall be deemed a waiver of such party's rights to
exercise the same at any subsequent time or times hereunder.
Section 6.12 TERMINATION. This Agreement shall remain in effect until
terminated at the mutual written agreement of all the parties hereto.
Section 6.13 CAPITAL ADJUSTMENTS.
(a) Pursuant to a First Amendment dated as of January 14, 2000 ("First
Amendment") to the Shareholder Rights Agreement dated as of October 12, 1999 by
and between BSI, TWS and Stanford ("BSI Shareholder Rights Agreement"), those
parties agreed, in material part, that a number of shares of BSI common stock
would be issued to TWS so that, subsequent to such issuance, TWS held 60% of the
outstanding and issued BSI common stock and Stanford 40%. Additionally,
consistent with the First Amendment, it is contemplated that TWS and Stanford
will enter into a transaction which will result in TWS holding 60%, and Stanford
40%, of the
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outstanding and issued common stock of the Company, and BSI will become a wholly
owned subsidiary of Company. It is acknowledged that the 17,999-to-1 dividend to
TWS of the Company's common stock, Stanford subscription for 1,200,000 shares of
common stock to be issued by Company, and the Contribution Agreement, all of
even date herewith, collectively constitute the contemplated transaction.
Further, consistent with the First Amendment, it is also agreed that, under
certain circumstances, TWS will be required to return to Company the number of
shares of Company common stock so that, after such return, TWS would hold 55% of
the Company's outstanding and issued common stock, and Stanford 45% of such
stock.
(b) If, prior to July 15, 2000 (the " End Date"), persons or entities
other than Stanford and TWS ("New Investors") have purchased Company common
stock (or stock issued by any Company subsidiary) in an aggregate amount for
consideration not less than US $ 5,000,000, then TWS shall not have any
obligation to return any Company common stock held by it to Company. Persons or
entities that (i) exercise currently-held options or other convertible
instruments into Company common stock (or stock issued by any Company
subsidiary) or (ii) come into possession of such options or other convertible
instruments in the ordinary course of their employ or positions with TWS, the
Company or any affiliate thereof, shall not be considered New Investors for
purposes of this section with respect to their exercise of such options or other
convertible instruments.
(c) If, on End Date, New Investors have not consummated purchase of
Company common stock for aggregate consideration of at least US $ 5,000,000,
then TWS shall promptly return that number of shares of Company common stock to
Company for cancellation so that, immediately subsequent to such return, TWS
shall hold 55% of Company issued and outstanding common stock, and Stanford 45%
of Company issued and outstanding common stock; and TWS shall have no further
right, title and interest in and to the returned shares. The number of Company
shares required to be returned by TWS is 335,000. If, prior to End Date Company
engages in any transaction resulting in increase, decrease or subdivision of its
capital, the number of shares to be returned by TWS shall be proportionately
adjusted so that, immediately subsequent to such return, TWS shall hold 55% of
Company issued and outstanding common stock, and Stanford 45%. If, at the time
of any return of shares by TWS under this subsection, there are third party
shareholders in Company other than Stanford and TWS, calculation of the number
of shares required to be returned shall also take into account any dilution of
TWS' and Stanford's respective interests resulting from presence of such third
party shareholders.
Section 6.14 BLUE SKY COM INTERNATIONAL, LTD. SHAREHOLDER RIGHTS
AGREEMENT. TWS and Stanford agree that the BSI Shareholder Rights Agreement is
terminated; and that they shall cause Blue Sky Com International, Ltd. to agree
to such termination.
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Section 6.15 MISCELLANEOUS; CONSTRUCTION. The use of the singular or
plural or masculine, feminine or neuter gender shall not be given an
exclusionary meaning and, where applicable, shall be intended to include the
appropriate number or gender, as the case may be.
Section 6.16 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, and all of which
when taken together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the undersigned have executed this Shareholders'
Rights Agreement as of the date set forth above.
BLUE SKY COMMUNICATIONS, INC.
By:_____________________________________
Name:
Title:
STANFORD FINANCIAL GROUP COMPANY
By:_____________________________________
Name:
Title:
TELECOM WIRELESS SOLUTIONS, INC.
By:_____________________________________
Name:
Title:
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