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EXHIBIT 10.26
EXECUTION COPY
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SHAREHOLDERS AGREEMENT
OF
WESTERN PCS CORPORATION
BY AND BETWEEN
WESTERN WIRELESS CORPORATION,
a Washington corporation,
XXXXXXXXX TELECOMMUNICATIONS PCS (USA) LIMITED,
a British Virgin Islands corporation,
AND
WESTERN PCS CORPORATION,
a Delaware corporation
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TABLE OF CONTENTS
Page
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1. EFFECTIVE DATE OF AGREEMENT.................................................1
2. DEFINITIONS.................................................................1
3. BOARD COMPOSITION; ELECTION OF REPRESENTATIVES TO THE
BOARD; COMPENSATION COMMITTEE. .............................................9
4. CERTAIN AFFILIATE TRANSACTIONS.............................................10
5. TRANSFER...................................................................10
6. RIGHTS OF FIRST OFFER AND FIRST REFUSAL....................................11
7. DRAG ALONG RIGHT...........................................................16
8. TAG ALONG RIGHT............................................................18
9. ISSUANCE OF COMPANY SECURITIES.............................................19
10. DISPOSITION TRANSACTIONS...................................................21
11. REGISTRATION RIGHTS........................................................25
12. CERTAIN COVENANTS OF THE COMPANY AND WWC...................................37
13. MISCELLANEOUS..............................................................40
14. TERMINATION OF RIGHTS AND OBLIGATIONS......................................45
15. INVESTOR 50% TRANSFEREE AND WWC 50% TRANSFEREE; OTHER
TRANSFEREES ...............................................................47
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SHAREHOLDERS AGREEMENT
This SHAREHOLDERS AGREEMENT OF WESTERN PCS CORPORATION (this
"Agreement") is made as of February 17, 1998, by and between Western Wireless
Corporation, a Washington corporation ("WWC"), Xxxxxxxxx Telecommunications PCS
(USA) Limited, a British Virgin Islands corporation (the "Investor"; WWC and the
Investor being referred to herein as the "Shareholders"), and Western PCS
Corporation, a Delaware corporation (the "Company").
WHEREAS, the Shareholders, Xxxxxxxxx Telecommunications Limited, a Hong
Kong corporation ("HTL"), the owner of 100% of the issued and outstanding share
capital of the Investor, and the Company have entered into a Purchase Agreement
dated as of October 14, 1997 (the "Purchase Agreement"), pursuant to which the
Investor has agreed to purchase from the Company, and the Company has agreed to
issue and sell to the Investor, 2,484 shares of the Company's Common Stock,
$0.001 par value ("Common Stock"), representing 19.9% of the Company's
outstanding shares of Common Stock after giving effect to such issuance and
sale, all on the terms and subject to the conditions set forth in the Purchase
Agreement. WWC is the owner of 10,000 shares of Common Stock, which will
represent 80.1% of the outstanding shares of Common Stock after giving effect to
the issuance and sale of the foregoing shares of Common Stock to the Investor.
WHEREAS, the Shareholders and the Company wish to set forth certain
agreements concerning the management and control of the Company, the ownership
and transfer of shares of Common Stock, and certain other matters as provided
herein.
NOW, THEREFORE, in consideration of the mutual and dependent promises
set forth herein, each Shareholder hereby agrees with each other Shareholder and
with the Company, and the Company hereby agrees with each of the Shareholders,
as follows
1. EFFECTIVE DATE OF AGREEMENT.
This Agreement shall become effective upon the Closing, pursuant to and
as defined in the Purchase Agreement.
2. DEFINITIONS.
(a) Unless the context requires otherwise, capitalized terms used
but not defined in this Agreement have the meanings given in the Purchase
Agreement.
(b) As used in this Agreement, the following terms have the
respective meanings set forth below (applicable to both the singular and plural
forms of such terms):
"$" means United States dollars.
"Affiliate Change of Ownership" has the meaning given in Section
10(b)(ii).
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"Agreement" means this Shareholders Agreement of Western PCS
Corporation, as amended, modified, supplemented or restated from time to time in
accordance with the terms hereof.
"Appraisal Procedure" means a procedure whereby two independent
appraisers, one chosen by WWC and one by the Investor, shall mutually agree upon
the determination of the Private Market Value. Each party shall deliver a notice
to the other appointing its appraiser within ten Business Days after the
Appraisal Procedure is invoked. If, within 30 days after appointment of the two
appraisers, they are unable to agree upon the Private Market Value, then (i) if
the difference between the two appraisers' respective determinations is an
amount that is not greater than 20% of the average of such determinations, such
average shall be binding and conclusive on the Company and the Shareholders or
(ii) if the difference between the two appraisers' respective determinations is
an amount that is greater than 20% of such average, then a third independent
appraiser shall be chosen within five Business Days thereafter by the mutual
agreement of such first two appraisers or, if such first two appraisers fail to
agree upon the appointment of a third appraiser, such appointment shall be made
by the then-President of the American Arbitration Association within five
Business Days of request. The decision of the third appraiser so appointed and
chosen shall be given within 30 days after the selection of such third
appraiser. The decisions of the appraisers with the two closest determinations
shall be averaged and such average shall be binding and conclusive on the
Company and the Shareholders. Each appraiser selected shall have expertise in
mergers and acquisitions, valuation analysis and the Company's then-current
business activities and in arriving at its determination shall take into account
the terms of this Agreement and the amount a willing buyer would pay a willing
seller for 100% of the outstanding capital stock of the Company on the basis set
forth in the definition of "Private Market Value". In the case of any Appraisal
Procedure carried out pursuant to Section 10(a) or 10(c) or pursuant to an
exercise of the Demand Event Drag Along Right, the costs of all such appraisers
shall be borne by WWC; provided, that WWC shall not be required to pay any
amounts to the appraiser selected by the Investor in excess of the amounts paid
by WWC to the appraiser selected by WWC (or, if greater, an arm's length fee
payable to a comparable independent appraiser). In the case of any Appraisal
Procedure carried out pursuant to Section 10(b) or an exercise of the Demand
Event Tag Along Right, (i) the cost of the appraiser selected by WWC shall be
borne by WWC, (ii) the cost of the appraiser selected by the Investor shall be
borne by the Investor, and (iii) the cost of a third appraiser, if any, shall be
borne by the Company.
"Arbitrators" has the meaning set forth in Section 13(k) hereof.
"Assignable Investor Rights" has the meaning given in Section 15(a)(i).
"Bid" has the meaning given in Section 6(c)(ii).
"Bid Closing Period" has the meaning given in Section 6(c)(iv).
"Blackout Period" has the meaning given in Section 11(e)(ii).
"Board" means the board of directors of the Company.
"Class A Stock" has the meaning given in Section 10(f)(i).
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"Commission" means the United States Securities and Exchange Commission.
"Common Stock" means the Company's Common Stock, par value $0.001, and
shall include any new, substituted and additional securities issued at any time
in replacement of the Common Stock or issued or delivered with respect to the
Common Stock.
"Company" means Western PCS Corporation, a Delaware corporation, and its
successors and assigns.
"Company Debt" has the meaning given in Section 12(g).
"Company Group" means the Company, its Subsidiaries and Xxxx Inlet
Western Wireless PV/SS PCS L.P.
"Consideration Securities" has the meaning given in Section 7(c)(ii).
"Controlling WWC Shareholders" means Xxxx X. Xxxxxxx, Xxxxxxx Xxxxxxxxx,
Xxxxxxx & Friedman, Goldman, Sachs & Co. and Providence Ventures, Inc.
"Demand Event" means the acquisition in a single transaction or series
of related transactions by a third party or group of related third parties
(other than the Controlling WWC Shareholders or Affiliates of the Controlling
WWC Shareholders) of capital stock of WWC representing more than 50% of the
total number of issued and outstanding shares of Class A and Class B Common
Stock of WWC (after giving effect to such acquisition transaction), including
pursuant to an amalgamation, exchange offer, business combination, consolidation
or corporate reorganization.
"Demand Event Consideration" has the meaning given in Section 10(g)(ii).
"Demand Event Drag Along Right" has the meaning given in Section
10(g)(i).
"Demand Event Tag Along Right" has the meaning given in Section
10(g)(i).
"Demand Event Transaction" has the meaning given in Section 10(g)(i).
"Disposition Event" means the occurrence before a Terminating Reduction
of any of the following without the prior approval of at least one of the
directors on the Board designated by the Investor (it being understood that
following a Terminating Reduction there shall be no further Disposition Events
or rights with respect thereto):
(a) Any incurrence (including in a refinancing or pursuant to a
guarantee or like undertaking of liability) of indebtedness for borrowed money
(including the issuance of non-voting, non-convertible preferred stock) in
excess of $10,000,000 in a single instance or $25,000,000 in the aggregate in a
fiscal year, other than pursuant to any loan or financing agreement of the
Company or any of its Subsidiaries in existence on the date hereof (it being
understood that as described in Section 9(a), the Company will first seek
capital when needed in the form of loans from, or debt offerings to, third
parties); provided, that there shall be no Disposition Event in respect of
individual borrowings (regardless of amount) under a loan or
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financing facility if such loan or financing facility has been approved by at
least one of the Investor's designated directors.
(b) Adoption of any annual Operating Plan and Budget or any material
amendment or modification to a previously adopted annual Operating Plan and
Budget; provided, that if at least one of the directors of the Board designated
by the Investor (i) does not approve an annual Operating Plan and Budget, the
prior year's Operating Plan and Budget shall be the Operating Plan and Budget
for the Company for the next year, in which case there shall be no Disposition
Event (unless the Board, without the approval of at least one of the Investor's
designated directors, adopts and implements a new Operating Plan and Budget) and
(ii) does not approve any material amendment or modification to an Operating
Plan and Budget, then the Operating Plan and Budget prior to such material
amendment or modification shall continue, in which case there shall be no
Disposition Event (unless the Board, without the approval of at least one of the
Investor's designated directors, adopts and implements the material amendment or
modification).
(c) Any acquisition (by means of a purchase of stock or assets, or a
merger, consolidation or otherwise, other than a transaction in which the Drag
Along Right is exercised) of a PCS system or wireless telecommunications
business (or interest therein) in a single transaction or series of related
transactions involving an aggregate acquisition cost in excess of $100,000,000,
provided, that there shall be no Disposition Event in respect of any individual
bid (regardless of amount) in an FCC auction or reauction of spectrum allocated
to wireless telecommunications so long as the maximum aggregate bids with
respect to such auction or reauction has been approved by at least one of the
Investor's designated directors.
(d) Any disposition by the Company (by means of a sale of stock or
assets, or a merger, consolidation or otherwise, but other than a transaction in
which the Drag Along Right is exercised) of a PCS system or wireless
telecommunications business (or interest therein) in a single transaction or
series of related transactions involving an aggregate sale price in excess of
$50,000,000.
(e) Adoption of any annual capital expenditures budget, or (i) any
material variation with respect to any capital expenditure project or group of
related capital expenditure projects, which project or group of related projects
is material, or (ii) any amendment or modification to an approved annual capital
expenditures budget which amendment or modification is material to the annual
capital expenditures budget, taken as a whole; provided, that if at least one of
the directors of the Board designated by the Investor (i) does not approve an
annual capital expenditures budget, the prior year's capital expenditures budget
shall be the capital expenditures budget for the Company for the next year, in
which case there shall be no Disposition Event (unless the Board, without the
approval of at least one of the Investor's designated directors, adopts and
implements a new annual capital expenditure budget) or (ii) does not approve any
such material variation, amendment or modification, the capital expenditures
budget prior to such variation, amendment or modification shall be the capital
expenditures budget, in which case there shall be no Disposition Event (unless
the Board, without the approval of at least one of the Investor's designated
directors, adopts and implements such material variation, amendment or
modification).
"Disposition Transaction" has the meaning given in Section 10 of this
Agreement.
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"Dispute" has the meaning given in Section 13(k).
"Drag Along Notice" has the meaning given in Section 7(d).
"Drag Along Right" has the meaning given in Section 7(a).
"Employment Agreement" has the meaning given in the Services Agreement.
"Excepted Transfer" means a Transfer of Common Stock which occurs in (a)
a Public Sale, (b) a transaction in which the Drag Along Right or Demand Event
Drag Along Right is exercised, (c) a transaction in which the Tag Along Right or
Demand Event Tag Along Right is exercised, (d) a merger or acquisition in which
the Company is not the surviving entity, or (e) in the case of WWC, Transfers in
an aggregate amount up to 10% of the outstanding shares of Common Stock to
transferees which are entities with substantial assets and business operations
in the telecommunications industry.
"Exercise Period" has the meaning given in Section 6(d)(iii).
"HTL" means Xxxxxxxxx Telecommunications Limited, a corporation
organized under the laws of Hong Kong.
"Investor" means Xxxxxxxxx Telecommunications PCS (USA) Limited, a
British Virgin Islands corporation, and, unless otherwise specified herein or
unless the context requires otherwise, includes its successors and all Permitted
Affiliate Transferees of the Investor which hold shares of Common Stock and any
Investor 50% Transferee to the extent such transferee becomes entitled to the
rights, and subject to the obligations, of the Investor hereunder in accordance
with the express provisions of Section 15.
"Investor 50% Block" means a number of shares of Common Stock
representing a Percentage Ownership of 9.95% or more of the outstanding shares
of Common Stock.
"Investor 50% Transfer" means the Transfer by the Investor of an
Investor 50% Block to a third party or group of related third parties, other
than in an Excepted Transfer.
"Investor 50% Transferee" means a third party (or, collectively, a group
of related third parties) which is the transferee in an Investor 50% Transfer.
"Investor Change of Ownership" has the meaning given in Section
10(b)(i).
"Investor Deemed Class A Shares" has the meaning given in Section
10(g)(ii).
"Mandatory WWC Rights" has the meaning given in Section 15(a)(ii)
"NASD" has the meaning given in Section 11(a)(iii).
"New Issue Securities" has the meaning given in Section 9(c)(i).
"Offer" has the meaning given in Section 6(c)(ii).
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"Offeree-Shareholder" has the meaning given in Section 6(d)(ii).
"Offeror-Shareholder" has the meaning given in Section 6(d)(ii).
"Operating Plan and Budget" has the meaning given in the Services
Agreement.
"Order Period" has the meaning given in Section 6(c)(ii).
"Other Holder" has the meaning given in Section 12(e).
"Other Shareholders" has the meaning given in Section 11(b)(iii)(A).
"PCS" means broadband personal communications services operating in the
1850-1910 MHz and 1930-1990 MHz bands.
"Percentage Ownership" means, as to any Shareholder, the percentage of
the outstanding shares of Common Stock owned by such Shareholder, including for
this purpose, shares owned by such Shareholder's Permitted Affiliate
Transferees.
"Permitted Affiliate Transferee" means:
(a) in the case of the Investor, (i) HTL, (ii) any
Subsidiary of HTL, (iii) any other entity acceptable to WWC in which HTL owns,
directly or indirectly, more than 40% of the outstanding voting power, and (iv)
in the case of any Person referred to in clause (i), (ii) or (iii), the
Investor;
(b) in the case of WWC, (i) any Subsidiary of WWC other than
the Company and its Subsidiaries and (ii) in the case of any Person referred to
in clause (i), WWC.
"Person" means an individual, partnership, joint-stock company,
corporation, trust or unincorporated organization, limited liability company, or
a government or agency or political subdivision thereof or any other entity.
"Private Market Value" means the fair private market value of the
Company as of the date of the event triggering the right to make or require a
Disposition Transaction under Section 10, as determined in accordance with the
Appraisal Procedure. The appraised Private Market Value shall be calculated as
the price an arm's length buyer would pay for 100% of the Company, without
application of any discount for the fact that the Company is or may be a
Subsidiary of any other Person or for the fact that any relevant Shareholder may
hold a minority interest in the Company. The Private Market Value of the Company
will include the value of the Company's accumulated tax attributes, including
from net operating losses, on a basis consistent with the Tax Sharing Agreement.
"Proposed Transfer" has the meaning given in Section 7(a).
"Proposed Transferee" has the meaning given in Section 7(a).
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"public float" means the portion of the outstanding equity securities
(other than non-voting, non-convertible preferred stock) of a relevant issuer or
class which were obtained by the holders thereof (other than the Company, the
issuer thereof, WWC, the Investor, or any Affiliate or member of senior
management of any of the foregoing) in Public Sales of such securities.
"Public Sale" means a public offer and sale or other public distribution
of securities, including (i) pursuant to an effective registration statement
under the Securities Act, (ii) pursuant to Regulation S under the Securities Act
and any applicable securities or stock exchange regulations in any non-United
States market or stock exchange in which the Common Stock is publicly traded, or
(iii) pursuant to an exemption from registration under Rule 144 under the
Securities Act, or (iv) in the case of WWC, a Spin-Off Distribution.
"Qualifying IPO" means a Public Sale of the Common Stock (whether of
newly issued shares or in secondary Transfers) which results in a listing of the
Common Stock on a national securities exchange or quotation of the Common Stock
on the NASDAQ National Market System and an aggregate public float of the Common
Stock of at least 15% of the Common Stock outstanding after giving effect to
such Public Sale.
"Registrable Securities" has the meaning given in Section 11(a)(ii).
"Registration Expenses" has the meaning given in Section 11(a)(iii).
"Representative" has the meaning given in Section 11(b)(iv).
"Repurchase" has the meaning given in Section 10(f)(i).
"Sale" has the meaning given in Section 6(c)(i).
"Sale Shares" has the meaning given in Section 6(a)(i).
"Sales Notice" has the meaning given in Section 6(c)(i).
"Sales Price" has the meaning given in Section 6(c)(i).
"Seller" has the meaning given in Section 6(c)(i).
"Selling Expenses" has the meaning given in Section 11(a)(iv).
"Senior Officers" has the meaning given in the Services Agreement.
"Shareholder" means, initially, the Investor and WWC, and shall include
any other shareholder of the Company who becomes entitled to the rights and
subject to the obligations of the Investor or WWC hereunder in accordance with
the express provisions of Section 15 hereof. Unless otherwise specified herein
or unless the context requires otherwise, references to any "Shareholder" shall
be deemed to include all Permitted Affiliate Transferees of such Shareholder
holding any shares of Common Stock.
"Shareholder Closing Period" has the meaning given in Section 6(d)(iv).
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"Spin-Off Distribution" means a distribution by WWC to its shareholders
on a pro rata basis of the shares of Common Stock owned by WWC.
"Subsidiary" means, as to any Person, another Person which is an entity
as to which such Person owns more than 50% of the outstanding voting power.
"Tag Along Rights" shall mean the rights described in Section 8.
"Terminating Reduction" shall mean the earliest to occur of the
following: (A) the Investor's Percentage Ownership shall have fallen below 15%
as a result of the Transfer of shares of Common Stock to Persons other than its
Permitted Affiliate Transferees; (B) the Investor's Percentage Ownership shall
have fallen below 12% as a result of dilution due to new issuances of Common
Stock by the Company or a combination of dilution due to new issuances of Common
Stock and Transfers of Common Stock by the Investor to Persons other than its
Permitted Affiliate Transferees; (C) the Common Stock shall have become a
registered class of equity securities under Section 12 of the Exchange Act (or
the Company shall have become a reporting company under the Exchange Act by
reason of Section 15(d) of the Exchange Act), the Common Stock shall have become
listed on a national securities exchange or quoted on the NASDAQ National Market
System and there shall exist a public float of the Common Stock representing not
less than 15% of the issued and outstanding Common Stock, or (D) the Investor
shall have made an Investor 50% Transfer.
"third party" means a Person who is not a party to this Agreement or an
Affiliate (including a Permitted Affiliate Transferee) of any party to this
Agreement.
"Third-Party Closing Period" has the meaning given in Section 6(c)(iii).
"Third-Party Offer" has the meaning given in Section 6(c)(iii).
"Third-Party Offer Period" has the meaning given in Section 6(c)(iii).
"Transfer" means any sale, assignment, pledge, hypothecation, or other
transfer, disposition or encumbrance of any interest (and includes an exchange
of shares in a merger, consolidation or similar transaction).
"WWC" means Western Wireless Corporation, a Washington corporation, and,
unless the context requires otherwise, includes its successors and all Permitted
Affiliate Transferees of WWC which hold shares of Common Stock and any WWC 50%
Transferee to the extent such transferee may become entitled to the rights, and
subject to the obligations, of WWC hereunder in accordance with the express
provisions of Section 15 hereof.
"WWC Non-Company Group" means WWC and its Subsidiaries, other than the
Company Group.
"WWC 50% Block" means a number of shares of Common Stock representing a
Percentage Ownership of more than 50% of the outstanding shares of Common Stock.
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"WWC 50% Transfer" means the Transfer by WWC of a WWC 50% Block to a
third party or group of related third parties, other than in an Excepted
Transfer.
"WWC 50% Transferee" means a third party (or, collectively, a group of
related third parties) which is the transferee in a WWC 50% Transfer.
"Unsolicited Bid" has the meaning given in Section 6(a)(ii).
"Unsolicited Bid Notice" has the meaning given in Section 6(d)(i).
"Unsolicited Bidder Closing Period" has the meaning given in Section
6(d)(vi).
"U.S. GAAP" has the meaning given in Section 12(a).
"WWC Debt" has the meaning given in Section 12(g).
When a reference is made in this Agreement to a Section, such reference
shall be to a Section of this Agreement unless otherwise indicated. Whenever the
words "include," "includes" or "including" are used in this Agreement, they
shall be deemed to be followed by the words "without limitation". The use of a
gender herein shall be deemed to include the neuter, masculine and feminine
genders whenever necessary or appropriate. Whenever the word "herein,"
"hereunder" or "hereof" is used in this Agreement, it shall be deemed to refer
to this Agreement and not to a particular Section of this Agreement unless
expressly stated otherwise.
3. BOARD COMPOSITION; ELECTION OF REPRESENTATIVES TO THE BOARD;
COMPENSATION COMMITTEE.
(a) Pursuant to the Company's by-laws, the Board shall be
constituted of ten (10) directors, subject to increase as provided in this
Section 3. The Investor shall initially have the right to designate to the Board
two directors (its initial designees being Xx. Xxxxxxx Xxx and Xx. Xxxx Xxxxx),
which directors will be appointed or elected to the Board effective as of the
Closing. Thereafter, the number of directors whom the Investor is entitled to
designate to the Board shall be adjusted in proportion with the aggregate
Percentage Ownership of the Investor. For purposes of this adjustment, the
Investor shall be entitled to retain the right to designate two directors until
its aggregate Percentage Ownership is less than 15% and the right to designate a
single director until its aggregate Percentage Ownership is less than 9.95%. The
Investor shall gain the right to designate an additional director (and the Board
shall in each case be expanded by one member to accommodate such new designee)
when the Investor's aggregate Percentage Ownership exceeds 27.25%, 33.33%,
38.5%, 42.9%, 46.67%, and 50%. Each Shareholder shall vote all of the Common
Stock over which such Shareholder has voting control (and shall take all other
necessary or desirable actions within such Shareholder's control, whether in the
capacity of a stockholder, director or member of a board committee of the
Company or otherwise, and including attendance at meetings in person or by proxy
for purposes of obtaining a quorum and execution of written consents in lieu of
meetings) for the election, removal and replacement of the Board designees named
by the Investor or WWC, as the case may be, all as directed by the Investor or
WWC, as the case may be, from time to time in accordance with this Section 3.
The rights and obligations of
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WWC and the Investor under this Section 3 shall terminate when the Investor's
Percentage Ownership exceeds 50% or otherwise as set forth in Section 14 or 15.
(b) Prior to the occurrence of a Terminating Reduction, the Company
shall maintain a compensation committee of the Board, a majority of the members
of which shall be directors who are not Senior Officers or senior executive
officers of the Company.
4. CERTAIN AFFILIATE TRANSACTIONS.
Prior to the occurrence of a Terminating Reduction, the Company shall
not, without the prior approval of at least one of the Investor's designated
directors, enter into:
(a) Any transaction or series of related transactions (other than
those in accordance with the terms of the Intercompany Agreements) involving the
Company or any of its Subsidiaries, on the one hand, and WWC or any of its
Affiliates (other than the Company and Subsidiaries of the Company), on the
other hand, that (i) is not provided for in the approved annual Operating Plan
and Budget then in effect and involves an amount in excess of $500,000, or (ii)
is not on terms at least as favorable to the Company as would be obtained in an
arm's length transaction with an independent third party.
(b) Any employment agreement with any Senior Officer who at the time
has an Employment Agreement.
5. TRANSFER.
The Common Stock may not be Transferred by any Shareholder except as
provided in this Section 5.
(a) Each Shareholder (and each Permitted Affiliate Transferee of
such Shareholder) shall have the unrestricted right to Transfer its Common Stock
to any Permitted Affiliate Transferee of such Shareholder, provided, that each
such transferee shall become bound by and entitled to all the rights and
obligations hereunder applicable to such Shareholder.
(b) The Investor and its Permitted Affiliate Transferees shall have
the right to Transfer shares of Common Stock to Persons other than Permitted
Affiliate Transferees of the Investor in a transaction other than an Excepted
Transfer, provided, that (i) such Transfer shall be subject to the rights of
first offer or, if applicable, first refusal under Section 6 hereof in favor of
WWC or its designees and (ii) the transferee shall be subject to the approval of
WWC (which approval will not be unreasonably withheld or delayed).
(c) WWC and its Permitted Affiliate Transferees shall have the right
to Transfer shares of Common Stock to Persons other than Permitted Affiliate
Transferees of WWC in transactions other than Excepted Transfers, subject to the
rights of first offer or, if applicable, first refusal under Section 6 hereof in
favor of the Investor.
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(d) No Shareholder shall effect any pledge, mortgage, assignment by
way of security, or other lien or encumbrance of any nature ("Lien") (other than
such as may be deemed to arise pursuant to this Agreement) on or with respect to
any shares of Common Stock owned by it, provided, that WWC shall be permitted,
when required under instruments governing its indebtedness for borrowed money,
to place Liens on shares of Common Stock owned by it to secure such indebtedness
if such Liens and all rights of the secured party thereunder with respect to the
Common Stock are subject to the rights and obligations of the Shareholders under
this Agreement, and provided further , that in connection with any foreclosure
or enforcement of remedies by such secured lender upon the shares subject to
such Lien, the Tag Along Right and the Drag Along Right (but not the other
rights and obligations of the parties hereunder) shall terminate. In connection
with any such Transfer by WWC to a secured lender by way of the granting of a
Lien (but not any action by such secured lender to foreclose or enforce remedies
on, or subsequently Transfer, the shares of Common Stock subject to its Lien),
no rights of first offer, first refusal, Tag Along Rights or other rights of any
other Shareholder hereunder shall be applicable.
(e) Notwithstanding anything to the contrary in this Section 5, but
subject, in the case of WWC, to Sections 12(h) and 12(j), each Shareholder shall
have the right to Transfer shares of Common Stock at any time in an Excepted
Transfer.
(f) The Shareholders and the Company each agree to cooperate in all
reasonable respects (without any obligation to incur any liability or expense)
in connection with any Transfer by a Shareholder permitted by this Section 5, so
as to enable such Transfer to be effected on an optimal basis for tax and other
applicable regulatory purposes.
6. RIGHTS OF FIRST OFFER AND FIRST REFUSAL.
(a) Investor.
(i) If the Investor proposes to Transfer shares of Common
Stock (the shares which are the subject of a proposed Transfer being hereinafter
referred to as "Sale Shares"), other than to a Permitted Affiliate Transferee
and other than by means of an Excepted Transfer, then the Investor shall first
offer to Transfer such Sale Shares to WWC or its designees in accordance with
the procedures for rights of first offer set forth in Section 6(c) hereof.
(ii) In the event such proposed Transfer by the Investor
shall arise as a result of the Investor's receipt of an unsolicited written
offer from a third party or group of related third parties to purchase shares of
Common Stock in a bona fide Transfer that would not be an Excepted Transfer (an
"Unsolicited Bid"), which the Investor intends to accept, the Investor shall
first offer to Transfer such Sale Shares to WWC (or its designees) in accordance
with the procedures for rights of first refusal set forth in Section 6(d)
hereof.
(b) WWC.
(i) If WWC proposes to make a Transfer of Sale Shares (other
than to a Permitted Affiliate Transferee or by means of an Excepted Transfer
(subject to Sections
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12(h) and 12(j) hereof)) WWC shall first offer to Transfer such Sale Shares to
the Investor in accordance with the procedures for rights of first offer set
forth in Section 6(c) hereof.
(ii) In the event such proposed Transfer by WWC shall arise
as a result of an Unsolicited Bid to WWC which WWC intends to accept, WWC shall
first offer to Transfer such Sale Shares to the Investor in accordance with the
procedures for rights of first refusal set forth in Section 6(d) hereof.
(c) Procedures for Rights of First Offer.
(i) Any Shareholder (the "Seller") desiring to Transfer any
Sale Shares held by such Seller in a transaction subject to rights of first
offer pursuant to Section 6(a)(i) or 6(b)(i) above shall give written notice (a
"Sales Notice") to the other Shareholders that the Seller desires to effect such
a Transfer (a "Sale") and setting forth the number of Sale Shares proposed to be
Transferred by the Seller in such Sale and the purchase price per share in cash
it desires for such Sale Shares (the "Sales Price").
(ii) The receipt of the Sales Notice by each other
Shareholder shall constitute an offer revocable only as provided below in this
Section 6(c) (the "Offer") by the Seller to sell to such Shareholder for cash
the relevant Sale Shares at the Sales Price. Each Shareholder, or any group of
one or more Shareholders, receiving an Offer shall have a 30-day period (the
"Order Period") in which to give a written notice (a "Bid") to the Seller, which
written notice shall state the number of Sale Shares that such Shareholder or
group of Shareholders proposes to purchase at the Sales Price; provided,
however, that all Bids must in the aggregate be for all of the Sale Shares the
Seller proposes to Transfer as stated in the Sales Notice, unless the Seller, in
its sole discretion, elects to accept Bids for less than all of the Sale Shares
proposed to be sold.
(iii) Upon the receipt of any Bids, which Bids in the
aggregate are for the purchase of not less than all the Sale Shares, the Seller
shall have the right to solicit offers for the Sale Shares from any third party
(a "Third-Party Offer") for a period of 90 days from the date the Order Period
expires (the "Third-Party Offer Period"). To the extent the Seller receives a
Third-Party Offer and such Third-Party Offer contains a proposed sales price in
excess of the Sales Price, then the Seller shall have the right to sell the Sale
Shares to the third party pursuant to its Third-Party Offer. If no Bids are
delivered during the Order Period, or if the Bids received are not in the
aggregate for all the Sale Shares, then the Seller shall be entitled to accept,
in its sole discretion, any Third-Party Offer it so chooses within the
Third-Party Offer Period at a sales price and on terms and conditions no less
favorable to the Seller than those set forth in the Sales Notice. If such sale
pursuant to a Third-Party Offer is not consummated within 60 days from the end
of the Third-Party Offer Period (the "Third Party Closing Period") (or such
longer period as may be provided pursuant to clause (v) below), then no such
sale shall be consummated without once again following the procedures under this
Section 6.
(iv) The Shareholder or group of Shareholders providing a Bid
which is accepted by the Seller shall be under a binding obligation to purchase
and pay for all the Sale Shares accepted pursuant to their Bid within a 60-day
period (or such longer period as may be provided pursuant to clause (v) below)
from the date on which the purchasing Shareholder (or group of Shareholders)
receives written notice of the Seller's acceptance of their Bid (the
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"Bid Closing Period"), which notice shall be given promptly after the expiration
of the Third-Party Offer Period if no qualifying Third-Party Offers have been
received or, if earlier, the Seller's determination to accept the Bid. At the
closing of any purchase of the Sale Shares by any purchasing Shareholders, the
Seller shall deliver to the purchasing Shareholders, against receipt of the
purchase price therefor by cash or certified or bank cashier's check, the
certificate or certificates representing the Sale Shares each such purchasing
Shareholder has elected to purchase, properly endorsed for transfer, with all
necessary transfer and documentary stamps affixed, and in a form such that upon
presentation to the Company, the Sale Shares represented thereby may be
registered in the names of the respective purchasers.
(v) If the purchase and sale of the Sale Shares pursuant to
a Third-Party Offer or any Bid, as the case may be, is subject to any prior
regulatory approval, consent, waiver, notice or like requirement, then, provided
that the third party or the purchasing Shareholder(s), as the case may be, shall
promptly make any necessary filings or applications for, and diligently pursue,
the satisfaction of such regulatory requirements, the time period during which
such purchase and sale must be consummated shall be extended until the earlier
of (i) five Business Days after all such regulatory requirements have been
satisfied and (ii) 90 days after the expiration of the Third-Party Closing
Period or the Bid Closing Period, as the case may be, provided, that such 90-day
period shall be extended by an additional 90 days upon written request of the
Seller or the third party or the purchasing Shareholder(s), as the case may be,
unless the Seller shall deliver to such third party or Shareholder(s), as the
case may be, an opinion of counsel experienced in the relevant area of law or
regulation that such regulatory requirements cannot be satisfied by such third
party or Shareholder(s), as the case may be.
(vi) If the aggregate number of shares offered to be
purchased in all Bids received by the Seller exceeds the number of Sale Shares,
and if such Bids are accepted, the Sale Shares shall be allocated among such
Bids pro rata based on the number of Sale Shares offered to be purchased in each
Bid. Each Bid shall be irrevocable, regardless of whether the number of Sale
Shares to be delivered upon acceptance of such Bid shall be reduced in
accordance with the foregoing, and shall be deemed to constitute a Bid to
purchase such lesser number of Sale Shares as shall be determined on such pro
rata basis. Any Shareholder which fails to deliver a Bid before the expiration
of the Order Period shall be deemed to have elected not to purchase any of the
Sale Shares pursuant to the Sales Notice.
(d) Procedure for Rights of First Refusal.
(i) If at any time a Shareholder receives an Unsolicited Bid
to which Section 6(a)(ii) or 6(b)(ii) applies, and which such Shareholder
intends to accept, such Shareholder shall, prior to making any Transfer of Sale
Shares pursuant to such Unsolicited Bid, give written notice (the "Unsolicited
Bid Notice") to the other Shareholders, accompanied by a copy of such
Unsolicited Bid.
(ii) An Unsolicited Bid Notice shall constitute an
irrevocable offer of the Shareholder giving such notice to sell the Sale Shares
to the other Shareholders, on the terms and conditions and at the price
specified in such notice (including the exact form and type of consideration
offered in the Unsolicited Bid). A Shareholder making an offer to sell pursuant
to an Unsolicited Bid Notice is hereinafter referred to as an
"Offeror-Shareholder", and a
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Shareholder receiving such offer pursuant to an Unsolicited Bid Notice is
hereinafter referred to as an "Offeree-Shareholder".
(iii) Within 30 days after delivery of the Unsolicited Bid
Notice to the Offeree-Shareholders (the "Exercise Period"), each
Offeree-Shareholder shall have the right, subject to the pro rata allocation of
purchase rights set forth in clause (iv) below, to accept the offer pursuant to
an Unsolicited Bid Notice as to all or any portion of the Sale Shares, by notice
to the Offeror-Shareholder, with copies to each other Offeree-Shareholder and
the Company. Each Offeree-Shareholder shall specify in such notice any maximum
number of Sale Shares such Offeree-Shareholder is willing to purchase.
(iv) Each election to purchase Sale Shares pursuant to this
Section 6(d) shall be irrevocable, regardless of whether the number of Sale
Shares deliverable upon the exercise of such election shall be reduced in
accordance with the provisions of this clause (iv), and shall be deemed to
constitute an election to purchase such lesser number of Sale Shares as shall be
determined in accordance with this clause (iv). If an Offeree-Shareholder shall
fail to deliver notice of its election to purchase Sale Shares before the
expiration of the Exercise Period, it shall be deemed to have elected not to
purchase any Sale Shares pursuant to the relevant Unsolicited Bid Notice. If
elections to purchase more than 100% of the Sale Shares are made by the Offeree
Shareholders, the right to purchase Sale Shares shall be allocated among the
Offeree-Shareholder(s) electing to purchase Sale Shares pro rata based on the
number of Sale Shares each has elected to purchase. The Offeree-Shareholders
electing to purchase Sale Shares shall be under a binding obligation to purchase
and pay for all the Sale Shares accepted pursuant to their elections within 60
days after the expiration of the Exercise Period (the "Shareholder Closing
Period") (or such longer period as may be provided pursuant to clause (vii)
below).
(v) All timely elections by Offeree-Shareholders to purchase
Sale Shares shall be binding on the Offeror-Shareholder, provided, that such
elections shall not be binding on the Offeror-Shareholder if the
Offeree-Shareholders do not in the aggregate elect to purchase all of the Sale
Shares on the terms and conditions of the Unsolicited Bid Notice, including the
exact form and type of consideration. In such event, no sales pursuant to such
elections need be made by the Offeror-Shareholder, and the Offeror-Shareholder
shall be entitled to sell such Sale Shares to the Person(s) named in the
Unsolicited Bid Notice in accordance with clause (vi) (and, if applicable,
clause (vii)) below at a sales price and on terms and conditions (including the
form of consideration) no less favorable to the Offeror-Shareholder than those
in the Unsolicited Bid Notice. Notwithstanding the foregoing, the
Offeror-Shareholder may, by written notice to the Offeree-Shareholders within 10
days after the Offeree-Shareholders give notice of their elections to purchase
Sale Shares, waive its right not to sell that part of the Sale Shares for which
elections have been made, and accept and confirm all such elections so made, in
which case the time period set forth in clause (iv) above shall run from the
date such notice is delivered by the Offeror-Shareholder rather than the
expiration of the Exercise Period (or for such longer period as may be
applicable in accordance with clause (vii) below). If the form of consideration
to be paid by the Person(s) making the Unsolicited Bid shall differ from that
described in the Unsolicited Bid Notice in respect of any non-cash component
specified in the Unsolicited Bid Notice, and if the Offeree-Shareholders were
unable to deliver the exact form and type of non-cash consideration provided for
in such notice, but would be able to provide the new form of
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consideration, the Sale Shares shall be required to be reoffered to the
Offeree-Shareholders in accordance with this Section 6(d).
(vi) Any Transfer of Sale Shares to the prospective
transferee named in the Unsolicited Bid Notice shall be consummated within a
period of 60 days after the expiration of the Exercise Period (the "Unsolicited
Bidder Closing Period") (or such longer period as may be provided pursuant to
clause (vii) below).
(vii) If the purchase and sale of such Sale Shares pursuant to
an Unsolicited Bid or any election by an Offeree-Shareholder, as the case may
be, is subject to any prior regulatory approval, consent, waiver, notice or like
requirement, then, provided that the third party making such Unsolicited Bid or
such Offeree-Shareholder, as the case may be, shall promptly make any necessary
filings or applications for, and diligently pursue, the satisfaction of such
regulatory requirements, the time period during which such purchase and sale
must be consummated shall be extended until the earlier of (i) five Business
Days after all such regulatory requirements have been satisfied and (ii) 90 days
after the expiration of the Unsolicited Bidder Closing Period or Shareholder
Closing Period, as the case may be, provided, that such 90-day period shall be
extended by an additional 90 days upon written request of the
Offeror-Shareholder, the third party or the purchasing Offeree-Shareholder(s),
as the case may be, unless the Offeror-Shareholder shall deliver to such third
party or Offeree-Shareholder(s), as the case may be, an opinion of counsel
experienced in the relevant area of law or regulation that such regulatory
requirements cannot be satisfied by such third party or Offeree-Shareholder(s),
as the case may be.
(viii) At the closing of any purchase of the Sale Shares by any
Offeree-Shareholders, the Offeror-Shareholder shall deliver to the
Offeree-Shareholders, against receipt of the purchase price therefor by cash or
certified or bank cashier's check, in respect of the cash portion of such
purchase price and such other relevant instruments or securities as are required
to comprise the consideration offered in the Unsolicited Bid, the certificate or
certificates representing the Sale Shares each such Offeree-Shareholder has
elected to purchase, properly endorsed for transfer, with all necessary transfer
and documentary stamps affixed, and in a form such that upon presentation to the
Company the Sale Shares represented thereby may be registered in the names of
the respective purchasers.
(f) Exclusions. The provisions of this Section 6 shall not apply to:
(i) a Transfer permitted by the provisions of Section 5(a),
5(d) or 5(e) hereof;
(ii) a Transfer of shares of Common Stock between WWC and the
Investor;
(iii) a Transfer by WWC if the Investor is unable to purchase
or own all of the Sale Shares as a result of its inability to satisfy any
applicable legal or regulatory requirements for such purchase or ownership
within the time period specified in Sections 6(c)(v) or 6(d)(vii), as the case
may be.
(g) Tag Along Rights Unaffected. The Tag Along Rights of the
Investor shall not be deemed waived, limited or otherwise adversely affected by
any determination by the Investor not to exercise an applicable right of first
offer or first refusal under this Section 6 or
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any inability of the Investor to deliver any required non-cash consideration in
the exact form and type offered in an Unsolicited Bid to WWC.
7. DRAG ALONG RIGHT.
(a) If at any time WWC proposes to make a bona fide Transfer (the
"Proposed Transfer") of all the shares of Common Stock owned by it and all other
shareholders of the Company which are subject to drag along rights in favor of
WWC to a third party or group of related third parties (the "Proposed
Transferee") WWC shall have the right (the "Drag Along Right"), subject to the
further requirements of this Section 7, to require all (but not less than all)
of the other Shareholders (which term includes, for purposes of this Section 7,
all other shareholders of the Company which are subject to drag along rights in
favor of WWC) to sell in the Proposed Transfer all (but not less than all) of
the shares of Common Stock then owned by such other Shareholders on the same
terms and conditions per share as are obtained by WWC. Each Shareholder agrees
to take all reasonable steps necessary to enable such Shareholder to comply with
the provisions of this Section 7, including executing and performing a purchase
and sale, merger or other applicable acquisition agreement on the same terms as
WWC. WWC and the Investor each agree to make full disclosure to the other
concerning the details of any relationship and dealings it may have with the
other party or parties to the Proposed Transfer. WWC shall keep each other
Shareholder advised in writing of, and consult on a timely basis with each other
Shareholder concerning, any Transfer with respect to which it has exercised the
Drag Along Right.
(b) The Investor, WWC and Xxxx X. Xxxxxxx each hereby agree that for
a period of one year after the closing of any transaction in which the Drag
Along Right is exercised and all the Common Stock of the Company subject to drag
along rights in favor of WWC is Transferred solely for cash, such Person shall
not acquire or hold, directly or indirectly, any equity interest in any entity
which, directly or indirectly, acquired in the transaction which gave rise to
the Drag Along Right the continuing business of the Company, other than in
nominal amounts of publicly traded securities.
(c) This Section 7 shall only apply to the Investor if the
consideration to be received by the shareholders of the Company in the Proposed
Transfer:
(i) comprises solely cash and the gross amount to be
received by the Investor is sufficient to provide it with a return of its
invested capital on the shares of Common Stock sold by it, together with an
internal rate of return thereon of at least 23%; or
(ii) comprises solely equity securities of the surviving
entity in such transaction ("Consideration Securities"), representing 50% or
less of the total outstanding voting power of such entity after giving effect to
the transaction, and (A) the value of such Consideration Securities to be
received by the Investor is sufficient to provide it with an implied return of
its invested capital on the shares of Common Stock sold by it, together with an
internal rate of return thereon of at least 15% (the value of the Consideration
Securities being measured for this purpose as of the date immediately preceding
the announcement of the Proposed Transfer transaction, (x) if there is a public
trading market for such Consideration Securities, as an amount equal to the
average of the mean of the high and low sales prices of such Consideration
Securities on the principal market on which such securities
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are traded on each of the 30 consecutive trading days immediately preceding the
announcement of the transaction or (y) if there is no such public trading
market, as mutually agreed by WWC and the Investor within 14 days after the
definitive terms of the transaction have been announced or, if not mutually
agreed within such period, as determined pursuant to a private market value
appraisal in the same manner as the Appraisal Procedure (with the expense of
such appraisal to be borne by WWC)) and (B) the Investor is provided with demand
registration rights with respect to the Consideration Securities received by it
containing terms and conditions substantially the same as those in Section 11,
which rights shall be exercisable twice in any 12-month period until all of the
Consideration Securities received by the Investor have been Transferred to
transferees who would not be entitled to the benefit of such registration rights
under Section 15(a) or can be Transferred in Public Sales to U.S. persons in the
United States without registration under the Securities Act and without
imposition of volume limitations under Rule 144 under the Securities Act; or
(iii) comprises solely Consideration Securities representing
more than 50% of the total outstanding voting power of the surviving entity
after giving effect to the transaction, and either (A) if such Consideration
Securities are not a class of equity securities which, after giving effect to
the transaction, has a public float representing at least 15% of the outstanding
equity securities of such class, the rights and obligations of the Investor
hereunder shall continue in effect and there is substantial management
continuity from the Company to such surviving entity, or (B) if the
Consideration Securities are a class of equity securities which, after giving
effect to the transaction, has a public float representing at least 15% of the
outstanding securities of such class, the only rights and obligations of the
Investor hereunder which continue in effect shall be those which survive after a
Qualifying IPO as provided in Section 14 hereof; or
(iv) comprises a combination of cash and Consideration
Securities, in which case, (A) if the Consideration Securities to be received by
the shareholders of the Company represent 50% or less of the total outstanding
voting power of the surviving entity after giving effect to the transaction,
then (1) the value of such consideration to be received by the Investor is
sufficient to provide it with an implied return of its invested capital on the
shares of Common Stock sold by it, together with an internal rate of return
thereon of at least the sum of (x) 15% and (y) 8% multiplied by the percentage
of the total consideration that is represented by cash, and (2) demand
registration rights are provided to the Investor with respect to such
Consideration Securities as provided in clause (ii) above, or (B) if the
Consideration Securities to be received by the shareholders of the Company
represent more than 50% of the total outstanding voting power of the surviving
entity after giving effect to the transaction, the provisions of (iii) above
shall apply to the Investor and no return of invested capital or internal rate
of return requirement shall apply.
(d) To exercise the Drag Along Right, WWC shall give each other
Shareholder and the Company a written notice (a "Drag Along Notice") containing
(i) confirmation that the Proposed Transferee proposes to acquire or make an
exchange for all the then outstanding shares of Common Stock owned by WWC and
the Investor (and all other shareholders of the Company which are subject to
drag along rights in favor of WWC), (ii) the name and address of the Proposed
Transferee and (iii) the proposed purchase price, terms of payment and other
material terms and conditions of the Proposed Transferee's offer. Each
Shareholder shall thereafter be obligated, subject, in the case of the Investor,
to Section 7(c) and the other requirements for the exercise of the Drag Along
Right under this Section 7, to sell all (but not
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less than all) of its shares of Common Stock as provided in such Drag Along
Notice, provided, that the transaction is consummated within 180 days of
delivery of the Drag Along Notice (or such longer period as may reasonably be
required for any applicable FCC approval or waiver to be obtained and become
final). If the sale is not consummated within such 180-day (or longer) period,
then each Shareholder shall no longer be obligated to sell such Shareholder's
shares of Common Stock pursuant to that specific Drag Along Notice but shall
remain subject to the provisions of this Section 7 with respect to any
subsequent Transfer to which the Drag Along Right would apply.
(e) The Drag Along Right and the obligations of the Investor with
respect thereto, shall terminate when there shall be one or more shareholders of
the Company holding in the aggregate a Percentage Ownership of more than 10% of
the outstanding Common Stock, which shareholders are not subject to the Drag
Along Right.
8. TAG ALONG RIGHT.
(a) If at any time after the date of this Agreement WWC wishes to
Transfer, in one transaction or a series of related transactions, a majority of
the then issued and outstanding Common Stock to any third party or group of
related third parties (other than pursuant to (i) a Spin-Off Distribution or
(ii) a transaction to which the Drag Along Right is exercised), WWC shall notify
the Investor and the Company, in writing, of such Transfer and its terms and
conditions. Within 20 days after the date that such notice is delivered to the
Investor, the Investor shall notify WWC if it elects to participate in such
Transfer (which notice shall be irrevocable). The Investor, if it so notifies
WWC, shall have the right to sell up to all of the shares of Common Stock owned
by the Investor, as the Investor may elect in its notice to WWC. WWC shall cause
the transferee to purchase at the same time as the purchase from WWC all the
shares of Common Stock elected to be Transferred by the Investor in accordance
with the foregoing on the same terms and conditions per share as are obtained by
WWC and as were specified in WWC's notice to the Investor pursuant to this
Section 8(a).
(b) If at any time or from time to time after the date of this
Agreement WWC wishes to Transfer, in one transaction or a series of related
transactions, a number of shares of Common Stock representing more than 10% and
up to 50% of the then issued and outstanding Common Stock to any third party or
group of related third parties (other than pursuant to a Spin-Off Distribution),
WWC shall notify the Investor and the Company in writing of such Transfer and
its terms and conditions. Within 20 days of the date that such notice is
delivered to the Investor, the Investor shall notify WWC if it elects to
participate in such Transfer (which notice shall be irrevocable). The Investor,
if it so notifies WWC, shall have the right to Transfer up to the same
percentage of the shares of Common Stock owned by it as are being Transferred by
WWC. WWC shall cause the transferee to purchase at the same time as the purchase
from WWC all the shares of Common Stock elected to be Transferred by the
Investor in accordance with the foregoing on the same terms and conditions per
share as are obtained by WWC and as were specified in WWC's notice to the
Investor pursuant to this Section 8(b).
(c) WWC and the Investor each agree to make full disclosure to the
other concerning the details of any relationship and dealings it may have with
the proposed
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transferee in any transaction to which this Section 8 applies. WWC shall keep
the Investor advised in writing of, and consult on a timely basis with the
Investor concerning, any transfer it may propose to make with respect to which
the tag along rights under this Section 8 may apply.
9. ISSUANCE OF COMPANY SECURITIES.
(a) At such times as the Company requires additional funding, the
Company will be responsive to the then existing conditions in the capital
markets in determining how to raise such funding. As a general rule, the Company
will first seek such capital in the form of loans from, or debt offerings in the
capital markets to, third parties (it being understood that WWC and the Company
recognize the rights of the Investor as a result of the events described in
clause (a) of the definition of "Disposition Event"). The Company's second
source of funding shall be debt in the form of loans from its shareholders,
participation in which shall be offered to the Shareholders pro rata based on
their respective Percentage Ownerships in the same manner as under the
preemptive rights for equity offerings provided below in this Section 9. If
additional funding is still required, the Company's third source of funding
shall be equity offerings to the Shareholders pursuant to the preemptive rights
provided below in this Section 9. In no event will the Investor or WWC be
obligated to provide any further funding without their express prior written
consent. It is understood that, notwithstanding the foregoing priorities, the
Board will determine the appropriate timing of any public offerings of the
Company's equity securities, subject to Section 12(j) hereof.
(b) For purposes of this Section 9, the term "equity securities"
shall include any warrants, options or other rights to acquire equity securities
or debt securities convertible into equity securities, but shall not include
non-voting, non-convertible preferred stock or nominal equity features included
in the terms of a debt financing. This Section 9 shall not apply with respect to
issuances of the Company's equity securities in connection with (i) a Public
Sale by the Company, (ii) a conversion or exchange of any outstanding
securities, (iii) a stock dividend, (iv) a merger, amalgamation, acquisition,
reclassification or other reorganization in which the then-current shareholders
of the Company would continue to be the only shareholders of the Company or
which is effected to carry out an acquisition transaction or (v) the grant or
exercise of stock options or other grants or purchases of equity securities of
the Company pursuant to any stock option, stock purchase or other employee
benefit plan now or hereafter adopted for employees, directors or consultants of
the Company.
(c) If at any time after the date hereof, the Company proposes to
issue equity securities of any kind (except as provided in Section 9(b)), then,
as to each Shareholder who holds Common Stock at such time, the Company shall:
(i) give written notice setting forth in reasonable detail
(A) the designation and all of the terms and provisions of the equity securities
proposed to be issued (the "New Issue Securities"), including, where applicable,
the voting powers, preferences and relative participating, optional or other
special rights, and the qualifications, limitations or restrictions thereof and,
if applicable, the dividend rate and maturity; (B) the price and other terms of
the proposed sale of such securities; (C) the amount of such securities proposed
to be issued; and (D) such other material information as may reasonably be
requested in order to evaluate the proposed issuance; and
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(ii) offer to issue to each such Shareholder a portion of the
New Issue Securities equal to such Shareholder's Percentage Ownership on the
terms and conditions stated in such notice.
(d) Each such Shareholder that wishes to exercise its purchase
rights hereunder must deliver a written notice to that effect to the Company
within 15 days after the date the notice specified in Section 9(c) was delivered
by the Company. If all of the New Issue Securities offered to such Shareholders
are not fully subscribed by such Shareholders, the remaining New Issue
Securities (other than any which WWC or its Permitted Affiliate Transferees may
have declined to purchase as provided in Section 9(f)) will be reoffered (A)
first to the Investor, (whereupon the Investor shall have five days from the
date notice of such reoffer is delivered to the Investor to exercise its
purchase right), and (B) if not fully taken up by the Investor, to the other
Shareholders purchasing their full allotment upon the terms set forth in this
Section 9 (whereupon such Shareholders shall have five days from the date notice
of such reoffer is delivered to such Shareholders to exercise their purchase
rights), until all such New Issue Securities are fully subscribed for or until
the Investor and all such Shareholders have subscribed for all such New Issue
Securities which they desire to purchase. To the extent that the Company offers
two or more securities in units, Shareholders must purchase such units as a
whole and will not be given the opportunity to purchase only one of the
securities making up such units. Such Shareholders must complete the purchase of
such New Issue Securities at the same time in a single closing within five
Business Days after the expiration of the 15-day period referred to in the first
sentence of this Section 9(d) (or, if applicable, the expiration of the five-day
period referred to in the second sentence of this Section 9(d)). If the purchase
and sale of such New Issue Securities by a subscribing Shareholder is subject to
any prior regulatory approval, consent, waiver, notice or like requirement, then
provided that such Shareholder shall promptly make any necessary filings or
applications for, and diligently pursue, the satisfaction of such regulatory
requirements, the time period during which such purchase and sale must be
consummated shall be extended until the earlier of (i) five Business Days after
all such regulatory requirements have been satisfied and (ii) 90 days after the
expiration of the applicable period set forth above for the completion of a
purchase by the Investor or any other subscribing Shareholders, as the case may
be, provided, that such 90-day period shall be extended by an additional 90 days
upon written request of the Investor or such subscribing Shareholder, as the
case may be, unless the Company shall deliver to the Investor or such
subscribing Shareholder, as the case may be, an opinion of counsel experienced
in the relevant area of law or regulation that such regulatory requirements
cannot be satisfied by the Investor or such Shareholder, as the case may be. The
closing of all purchases of the New Issue Securities by Shareholders shall occur
simultaneously, at which time the Company shall deliver to the purchasing
Shareholders, against receipt of the purchase price therefor by cash or
certified or bank cashier's check, duly issued certificate or certificates
representing the New Issue Securities that each such Shareholder has elected to
purchase.
(e) Upon the expiration of the offering periods described in the
first two sentences of Section 9(d), or upon any failure of any Shareholders to
complete the purchase of New Issue Securities in the time required under Section
9(d), the Company will be free to sell such New Issue Securities that the
Shareholders have not elected to purchase (or have failed to purchase within the
required time) during the 90 days (or applicable longer period under Section
9(d)) following such expiration (or failure) on terms and conditions per share
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no more favorable to the purchasers thereof than those offered to the
Shareholders. Any New Issue Securities offered or proposed to be sold by the
Company after such 90-day period (or applicable longer period under Section
9(d)) or on more favorable terms and conditions per share to the purchaser must
be reoffered to the Shareholders pursuant to this Section 9. The election by a
Shareholder not to exercise its purchase rights under this Section 9 in any one
instance shall not affect its rights (other than in respect of a reduction in
its Percentage Ownership) as to any subsequent proposed issuance. Any sale of
such securities by the Company without first giving the Shareholders the rights
described in this Section 9 shall be void and of no force and effect and the
Company shall cause any required correction to the registration and transfer
books of the Company to be effected.
(f) The right of the Investor and any other Shareholder to purchase
New Issue Securities which have not been subscribed for by other Shareholders
under Section 9(d) shall not apply to New Issue Securities which are not
subscribed for by WWC and which constitute (or represent the right to acquire)
an aggregate of up to 10% of the Company's outstanding Common Stock (after
giving effect to the sale of the New Issue Securities, including pursuant to the
exercise of preemptive rights), provided, that each purchaser of such New Issue
Securities is an entity having substantial assets or business operations in the
telecommunications industry. If WWC shall so agree at the time, such New Issue
Securities may at any time and from time to time be offered and sold by the
Company to purchasers pursuant to the preceding sentence without being required
to be offered first to other Shareholders pursuant to this Section 9. The
provisions of this Section 9 shall not apply to the issuance of equity
securities by the Company if the Investor is unable to subscribe for or own its
portion of the New Issue Securities as a result of its inability to satisfy any
applicable legal or regulatory requirements for such subscription or ownership
within the time period specified in Section 9(d).
(g) The Company hereby agrees that it shall cause each of its
wholly-owned Subsidiaries to comply with the terms of this Section 9 with
respect to the issuance of any equity securities by such Subsidiary (except for
issuances of stock dividends or in connection with a merger, amalgamation,
reclassification or other reorganization resulting in no reduction in the
Company's direct or indirect equity interest in such Subsidiary).
10. DISPOSITION TRANSACTIONS.
In the circumstances specified in this Section 10, WWC or the Company,
as applicable, shall have the right, or be subject to the obligation, as the
case may be, to effect in the manner provided in this Section 10 a Repurchase
(as defined below) or, if applicable, a Public Sale (such Repurchase or Public
Sale being referred to as a "Disposition Transaction") of all (or such portion
as may be specified in this Section 10) of the shares of Common Stock held by
the Investor.
(a) Upon delivery of notice by the Investor of any exercise of the
Investor's demand registration rights under Section 11(b)(i), the Company shall
proceed to register under the Securities Act, in accordance with Section 11(b),
the amount of Registrable Securities owned by the Investor specified in such
notice delivered by the Investor. WWC (or, if WWC so elects, the Company) will
have the right, exercisable by delivery of written notice to the Investor within
30 days from the Investor's delivery of its notice pursuant to
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Section 11(b)(i), to require, concurrently with all actions necessary to effect
the registration of the specified amount of Registrable Securities, the
determination of the Private Market Value pursuant to the Appraisal Procedure.
Upon determination of the Private Market Value, the Company shall complete the
registration of such amount of Registrable Securities (which shall be pursuant
to Section 11 and not this Section 10, which shall not be applicable) unless WWC
elects, in its sole discretion, instead, to effect (or, if WWC so elects, to
cause the Company to effect) a Repurchase of said securities at the Private
Market Value per share so determined; provided, that any such Repurchase shall
be completed within six months of the Investor's delivery of the demand
registration notice pursuant to Section 11(b)(i).
(b) (i) If at any time Xxxxxxxxx Whampoa Limited ("HWL"),
currently the 100% indirect owner of HTL, shall not, directly or indirectly, (A)
hold at least 40% of the outstanding voting power of HTL and the Investor, and
(B) be the single largest shareholder of HTL and the Investor, (the failure to
maintain either of (A) or (B) above being hereinafter referred to as an
"Investor Change of Ownership"), WWC (or, if WWC so elects, the Company) will
have the right, exercisable by delivery of written notice to the Investor within
90 days after receipt of notice of the Investor Change of Ownership, to effect a
Disposition Transaction covering all (and not less than all) of the shares of
Common Stock owned by the Investor and its Subsidiaries. Such Disposition
Transaction shall be completed within six months of the delivery to the Investor
of WWC's or the Company's, as the case may be, notice of exercise of its right
to effect such Disposition Transaction under this Section 10(b)(i).
(ii) Subject to Section 10(d) hereof, if at any time HTL
shall not, directly or indirectly, (A) hold at least 40% of the outstanding
voting power of any Permitted Affiliate Transferee referred to in clause
(a)(iii) of the definition of "Permitted Affiliate Transferee", or (B) be the
single largest shareholder of such Permitted Affiliate Transferee (the failure
to maintain either of (A) or (B) above being hereinafter referred to as an
"Affiliate Change of Ownership"), WWC (or, if WWC so elects, the Company) will
have the right, exercisable by delivery of written notice to such Permitted
Affiliate Transferee within 90 days after receipt of notice of such Affiliate
Change of Ownership, to effect a Disposition Transaction covering all (and not
less than all) of the shares of Common Stock owned by such Permitted Affiliate
Transferee and its Subsidiaries. Such Disposition Transaction shall be completed
within six months of the delivery to the Permitted Affiliate Transferee of WWC's
or the Company's notice of exercise of its right to effect such Disposition
Transaction under this Section 10(b)(ii).
(iii) The Investor will give prompt written notice to WWC and
the Company of any Investor Change of Ownership or Affiliate Change of
Ownership.
(c) Within 90 days after a Disposition Event, the Investor shall
have the right to deliver written notice to WWC demanding that WWC (or, at WWC's
election, the Company) effect a Repurchase. Upon receipt of such notice WWC (or,
at WWC's election; the Company) shall effect a Repurchase of all the shares of
Common Stock owned by the Investor within six months after the delivery to WWC
of such notice. It is understood that if no written notice is delivered within
said 90 day period, neither WWC nor the Company shall have any obligation to
effect a Repurchase with respect to such Disposition Event, nor shall the
Investor have any other rights solely as a result of such Disposition Event.
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(d) In the event that WWC (or, at WWC's election, the Company) has
given notice that it is electing to effect a Disposition Transaction as a result
of an Affiliate Change of Ownership, and if no Investor Change of Ownership has
occurred with respect to HTL, then HTL shall have the prior right, within 30
days after delivery by WWC (or, at WWC's election, the Company) of notice to the
Permitted Affiliate Transferee of such election, to purchase all the shares of
Common Stock owned by the Permitted Affiliate Transferee (and its Subsidiaries)
that are the subject of such Affiliate Change of Ownership, such purchase to be
completed within 90 days after delivery of such notice by WWC (or, if WWC so
elects, the Company).
(e) (i) If WWC (or, at WWC's election, the Company) has
delivered written notice pursuant to Section 10(b)(i) or 10(b)(ii) hereof of its
election to effect a Disposition Transaction as a result of an Investor Change
of Ownership or an Affiliate Change of Ownership, then the Company shall cause
to be made a Public Sale, using the procedures under Section 11(b) hereof, of
all the shares of Common Stock owned by the Investor and its Subsidiaries, or
(subject to Section 10(d) hereof) by the Permitted Affiliate Transferee and its
Subsidiaries, as the case may be. WWC (or, if WWC so elects, the Company) will
have the right, exercisable by delivery of written notice to the Investor or the
Permitted Affiliate Transferee, as applicable, concurrently with the notice of
WWC's (or at WWC's election, the Company's) election to effect such Disposition
Transaction, to require, concurrently with all actions necessary to effect the
Public Sale of such shares of Common Stock, the determination of the Private
Market Value pursuant to the Appraisal Procedure. Upon determination of the
Private Market Value, the Company shall complete the Public Sale of such shares
of Common Stock unless WWC, in its sole discretion, elects, instead, to effect
(or, if WWC so elects, to cause the Company to effect) a Repurchase of such
Common Stock at the Private Market Value per share so determined; provided, that
any such Repurchase or Public Sale shall be completed within six months of WWC's
(or, at WWC's election, the Company's) notice of election to effect the
Disposition Transaction.
(ii) If the Investor has delivered to WWC written notice
demanding that WWC effect a Repurchase of the Investor's shares of Common Stock
pursuant to Section 10(c), then upon delivery of such notice an appraisal of the
Private Market Value shall be completed as soon as practicable pursuant to the
Appraisal Procedure. The closing of the Repurchase shall be effected promptly
after the determination of the Private Market Value, and in any event within six
months after the written demand for a Repurchase was delivered by the Investor
pursuant to Section 10(c). The Repurchase shall result in the repurchase of all
the relevant shares required to be repurchased at a purchase price per share of
Common Stock equal to the Private Market Value divided by the number of shares
of Common Stock outstanding (on a fully diluted basis) prior to giving effect to
the Repurchase.
(f) The Disposition Transaction shall be effected by one of the
following methods, as WWC (or at WWC's election, the Company) may elect:
(i) Repurchase. WWC (or, at WWC's election, the Company) may
repurchase all the relevant shares of Common Stock to be disposed of in
accordance with this Section 10 at a per share price equal to the Private Market
Value per share determined by dividing the Private Market Value by the number of
shares of Common Stock outstanding, on a fully diluted basis, prior to giving
effect to such transaction (a "Repurchase"). Such repurchase shall be made for
cash or, if WWC (or, at WWC's election, the Company) so
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elects by written notice to the Investor for shares of WWC's Class A Common
Stock ("Class A Stock"), the value of which shall be measured as an amount equal
to the average of the mean of the high and low sales prices of the Class A Stock
on the NASDAQ National Market on each of the 30 consecutive Trading Days
immediately preceding the event which gave rise to the Company's right so to
effect the Disposition Transaction or the Disposition Event, as the case may be.
At the closing of the Disposition Transaction, any shares of Class A Stock to be
delivered to the Investor shall be delivered pursuant to an effective resale
registration statement on Form S-3 or other form under the Securities Act
appropriate for a delayed or continuous offering of such shares.
(ii) Public Sale. Except in the case of a Disposition
Transaction pursuant to Section 10(a) (with respect to which the Public Sale
shall be consummated pursuant to Section 11, without regard to this Section 10
unless WWC (or, at WWC's election, the Company) has elected to make a
Repurchase) or 10(c) (with respect to which only the provisions relating to
Repurchase are applicable), the Company may effect a Disposition Transaction by
means of a Public Sale of the relevant shares of Common Stock using the
procedures set forth in Section 11(b).
(g) (i) The Investor shall have the right (the "Demand Event Tag
Along Right"), by delivery of written notice to WWC and the Company within 30
days after the announcement of a transaction which would give rise to a Demand
Event (a "Demand Event Transaction"), which notice shall be revocable only if
such transaction is not completed, to require that the Investor be permitted to
participate in such transaction through the Transfer (including through an
exchange of shares in a merger) of all of the shares of Common Stock owned by
the Investor as provided in this Section 10(g). Notwithstanding the foregoing,
WWC shall have the right (the "Demand Event Drag Along Right"), by delivery of
written notice to the Investor within 30 days after the announcement of the
Demand Event Transaction (which notice shall be revocable only if such
transaction is not completed), to require the Investor to Transfer all the
shares of Common Stock owned by it in accordance with the following provisions
of this Section 10(g). The Investor agrees that if WWC shall so exercise the
Demand Event Drag Along Right, the Investor will so Transfer all the shares of
Common Stock owned by the Investor.
(ii) Upon delivery of the Investor's notice of exercise of
the Demand Event Tag Along Right (or WWC's notice of exercise of the Demand
Event Drag Along Right, as the case may be), an appraisal of the Private Market
Value shall be completed as soon as practicable pursuant to the Appraisal
Procedure. For purposes hereof, the Investor shall be treated as if there had
been issued to it the number of shares of Class A Stock that would have been
issued to the Investor pursuant to Section 10(f)(i) in a Repurchase at such
Private Market Value per share of all the Investor's shares of Common Stock in
which WWC elected to deliver shares of Class A Stock in lieu of cash (the
"Investor Deemed Class A Shares"). WWC shall cause the acquiror in the Demand
Event Transaction to deliver to the Investor, for each Investor Deemed Class A
Share, the same consideration per Investor Deemed Class A Share (including the
exact form and type of consideration) as is delivered to the shareholders of WWC
for each share of Class A Stock in the Demand Event Transaction (the "Demand
Event Consideration"), all on the same per share terms and conditions (other
than any delay in such delivery required for the determination of the Private
Market Value or for the satisfaction of any regulatory requirements applicable
to the Investor and the delivery
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of the Demand Event Consideration to it) as are applicable to the outstanding
shares of Class A Stock in the Demand Event Transaction.
(iii) The delivery of the Demand Event Consideration shall be
made upon the closing of the Demand Event Transaction or, if later, as soon as
practicable after the Private Market Value has been determined pursuant to the
Appraisal Procedure and any regulatory requirements applicable to the Investor
and the delivery of the Demand Event Consideration to it have been satisfied.
Such delivery of the Demand Event Consideration shall be made against delivery
of all the Investor's shares of Common Stock to the Company, WWC or the acquiror
in the Demand Event Transaction, as such acquiror may specify.
11. REGISTRATION RIGHTS.
The Investor shall have the right to have its Registrable Securities (as
hereinafter defined) registered under the Securities Act and applicable United
States state securities laws in accordance with the express terms of the
following provisions.
(a) Definitions. As used in this Section 11:
(i) the terms "register," "registered" and "registration"
refer to a registration effected by preparing and filing a registration
statement in compliance with the Securities Act (and any post-effective
amendments filed or required to be filed) and the declaration or ordering of
effectiveness of such registration statement;
(ii) the term "Registrable Securities" shall mean (A) Common
Stock issued to the Investor, (B) any additional Common Stock acquired by the
Investor from the Company or another Shareholder other than in a Public Sale,
and (C) any Common Stock issued as a dividend or other distribution with respect
to, or in exchange for or in replacement of, the Common Stock referred to in
clauses (A) and (B) above;
(iii) "Registration Expenses" shall mean all expenses incident
to the Company's performance of or compliance with its obligations under this
Section 11, including, without limitation, all Commission, National Association
of Securities Dealers ("NASD") and stock exchange or NASDAQ registration,
listing and filing fees and expenses, fees and expenses of compliance with
applicable state securities or "blue sky" laws (including, without limitation,
reasonable fees and disbursements of counsel for the underwriters in connection
with "blue sky" qualifications of Registrable Securities), printing expenses,
messenger and delivery expenses, fees and disbursements of counsel for the
Company and all independent certified public accountants (including the expenses
of any annual audit and "cold comfort" letters required by or incident to such
performance and compliance), the fees and disbursements of underwriters
customarily paid in connection with secondary registered Public Sales of
securities (including the fees and expenses of any "qualified independent
underwriter" required by the NASD), the reasonable fees of one U.S. counsel
plus, if reasonably required by the Investor, one local counsel retained by the
Investor in connection with each such registration pursuant to this Section 11
for purposes of obtaining advice concerning applicable securities laws and
securities exchange regulations, review of the registration statement and
prospectus and limited due diligence concerning the Company, the reasonable fees
and expenses of any special experts retained by the Company
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in connection with such registration, and fees and expenses of other Persons
retained by the Company (but not including any underwriting discounts or
commission or transfer taxes, if any, attributable to the sale of Registrable
Securities by the Investor); and
(iv) "Selling Expenses" shall mean all underwriting discounts
and selling commissions applicable to the sale of Registrable Securities and
transfer tax, if any, attributable to the sale of Registrable Securities by the
Investor.
(b) Demand Registration.
(i) Upon the earlier of (A) the third anniversary of the
Closing Date and (B) the occurrence of a Demand Event (but only if a Demand
Event Tag Along Right or Demand Event Drag Along Right has not been exercised),
the Investor shall have the right, upon delivery of written notice to the
Company (not more than twice in any 12-month period and subject, in each case,
to Section 10(a) hereof) to require the Company to register under the Securities
Act such amount of Registrable Securities owned by the Investor as may be
specified in such notice in accordance with the procedures set forth in this
Section 11(b), provided, that any such registration demanded by the Investor
under this Section 11(b)(i) must be for an amount of Common Stock having an
aggregate anticipated sales price of at least $25,000,000. The rights of the
Investor to demand the registration of its Registrable Securities shall continue
until (x) all the Registrable Securities owned by it shall have been Transferred
to transferees who are not entitled to the registration rights of the Investor
hereunder in accordance with Section 15 hereof or, if earlier, (y) all its
remaining Registrable Securities are already included in an effective resale
registration statement on Form S-3 or other appropriate form for continuous or
delayed offerings or are eligible to be Transferred in Public Sales to U.S.
persons in the United States without registration under the Securities Act and
without being subject to volume limitations under Rule 144 under the Securities
Act, provided, in the case of (y), that there is a public float of the Common
Stock equal to at least 15% of the total outstanding shares of Common Stock.
(ii) If, by the fifth anniversary of the Closing Date, the
Company has not completed one or more Public Sales which have resulted in a
public float of the Common Stock equal to at least 15% of the total outstanding
shares of Common Stock, then the Investor shall have the right to require the
Company to register and effect a Public Sale of a sufficient number of shares of
newly issued Common Stock which, together with shares of Common Stock being
resold by WWC or any Other Shareholders (as defined below) and shares of Common
Stock previously sold in Public Sales, will result in a public float of at least
15% of the total outstanding shares of Common Stock, all in accordance with the
procedures set forth in this Section 11(b) for the registration of Registrable
Securities.
(iii) If the Investor shall have demanded a registration of
Registrable Securities (which term will include for this purpose newly issued
shares of Common Stock referred to in Section 11(b)(ii) hereof) then the Company
will:
(A) promptly give written notice of the proposed
registration to all other shareholders entitled to piggyback
registration rights under Section 11(c) hereof or any other contractual
agreement of the Company (the "Other Shareholders") and
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(B) as soon as practicable, use its best efforts to prepare
and file with the Commission and cause to become effective such
registration statement as would permit or facilitate the sale and
distribution of all the Registrable Securities required to be covered
thereby pursuant to the notice delivered by the Investor, together
(subject to Section 11(b)(iv) below) with all or such portion of the
securities of any Other Shareholders joining in such registration as are
specified in written requests received by the Company within ten
Business Days after written notice from the Company is delivered under
Section 11(b)(iii)(A) above.
(iv) The Investor, at its election, shall have the
Registrable Securities covered by its request distributed by means of an
underwritten public offering with a single or managing underwriter selected by
the Company and reasonably acceptable to the Investor. If any Other Shareholders
so request, the securities of such Other Shareholders shall be included in the
registration and underwriting being effected pursuant to this Section 11(b),
subject to this Section 11(b)(iv). The Investor and the Company shall (together
with all Other Shareholders proposing to distribute their securities through
such underwriting) enter into an underwriting agreement in customary form with
the representative of the underwriter or underwriters selected for such
underwriting by the Company and reasonably acceptable to the Investor (the
"Representative"). Notwithstanding any other provision of this Section 11(b), if
the Representative advises the Investor and the Company in writing that (x)
marketing factors require a limitation on the number of shares to be
underwritten or (y) the inclusion of shares held by officers and directors of
the Company in the offering could, in the Representative's best judgment,
materially reduce the offering price per share, then, in the case of the
preceding clause (x), the Common Stock held by Other Shareholders shall be
excluded from such underwriting to the extent so required by such limitations
and, in the case of the preceding clause (y), the Common Stock held by officers
and directors of the Company shall be excluded from such underwriting to the
extent advised by the Representative. If, after the exclusion of such shares,
further reductions are required to meet the limitation on the number of shares
to be underwritten as advised by the Representative, then the Investor may
elect, in its sole discretion, to reduce the number of shares that will be
included in the underwriting by it by such number of shares as is necessary to
comply with such limitation, but in no event to an amount which is below the
minimum amount for a demand registration as provided in Section 11(b)(i). If the
Investor does not so elect, then the registration of its shares under Section
11(b)(i) will not proceed and will be terminated without liability to any other
Person. If the Representative has not limited the number of Registrable
Securities or other securities to be underwritten, the Company may include its
securities for its own account in such registration if the Representative so
agrees and if the number of Registrable Securities which would otherwise have
been included in such registration and underwriting will not thereby be limited.
(v) Notwithstanding the foregoing, if the Company shall
furnish to the Investor and the Other Shareholders a certificate signed by the
President or Chief Executive Officer of the Company stating that, in the good
faith judgment of the Board, it would be materially detrimental to the Company
and its shareholders for such registration statement to be filed and that it is
therefore essential to defer the filing of such registration statement, then the
Company shall have the right to defer such filing for a period of not more than
90 days after the delivery of such certificate, provided that the Investor shall
not be required to accept such a deferral more than twice in any 12-month
period.
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(c) Piggyback Registration.
(i) If the Company shall determine to register any of its
Common Stock either for its own account or for the account of any holder or
holders of Common Stock (other than a registration on Form S-8 (or similar or
successor form) relating solely to stock option, stock purchase or other
employee benefit plans, or a registration on Form S-4 (or similar or successor
form), or a registration on any registration form which does not permit
secondary sales or does not include substantially the same information as would
be required to be included in a registration statement covering the sale of
Registrable Securities), the Company will:
(A) promptly give to the Investor a written notice thereof
(which shall include a list of the jurisdictions in which the Company
intends to attempt to qualify such securities under the applicable blue
sky or other state securities laws); and
(B) subject to Section 11(c)(ii) below, include in such
registration (and any related qualification under blue sky laws or other
compliance), and in any underwriting involved therein, all the
Registrable Securities specified in a written request or requests made
by the Investor within fifteen (15) days after the date written notice
as described in Section 11(c)(i)(A) above is delivered by the Company.
Such written request may specify all or a part of the Registrable
Securities.
(ii) If the registration of which the Company gives notice is
for a Public Sale consisting of an underwritten public offering (in which event
the underwriter shall be selected by the Company, in its sole discretion), the
Company shall so advise the Investor as a part of the written notice given
pursuant to Section 11(c)(i)(A). In such event, the right of the Investor to
registration pursuant to this Section 11(c) shall be conditioned upon the
Investor's participation in such underwriting and the inclusion of the
Investor's Registrable Securities in the underwriting to the extent provided
herein. The Investor, if its shares are to be included in such registration,
shall (together with the Company and the Other Shareholders distributing their
Common Stock through such underwriting) enter into an underwriting agreement in
customary form with the Representative. Notwithstanding any other provision of
this Section 11(c), if the Representative advises the Investor or the Company in
writing that (x) the inclusion of shares held by the officers and directors of
the Company in the offering could, in the Representative's best judgment,
materially reduce the offering price per share, or (y) that marketing factors
require a limitation on the number of shares to be underwritten, then, in the
case of the preceding clause (x), the Common Stock held by officers and
directors of the Company shall be excluded from such underwriting to the extent
so advised by the Representative and, in the case of the preceding clause (y),
the number of shares that may be included in the underwriting by the Investor
and Other Shareholders requesting inclusion in such registration (but not the
Company or WWC) shall be reduced, on a pro rata basis (based on the number of
shares requested by the Investor and such Other Shareholders to be included in
such registration), by such minimum number of shares as is necessary to comply
with such limitation. If the Investor disapproves of the terms of any such
underwriting, it may elect to withdraw therefrom by written notice to the
Company and the Representative, given a reasonable period of time prior to the
finalization of the underwriting arrangements. Any Registrable Securities or
other securities excluded or withdrawn from such underwriting shall not be
included in such registration. If at any time prior to the effective date of the
registration statement, the Company shall determine for any reason not to
register such securities, the Company may, at its election, give written notice
of
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such determination to the Investor and, thereupon, shall be relieved of its
obligation under this Section 11(c) to register any of the Registrable
Securities in connection with such registration.
(iii) Number and Duration. The Investor shall be entitled to
have its shares included in an unlimited number of registrations pursuant to
this Section 11(c). The rights of the Investor to registration of its
Registrable Securities under this Section 11(c) shall continue until (x) all the
Registrable Securities owned by it shall have been Transferred to transferees
who are not entitled to the registration rights of the Investor hereunder in
accordance with Section 15 hereof or, if earlier, (y) all its remaining
Registrable Securities are already included in an effective resale registration
statement on Form S-3 or other appropriate form for continuous or delayed
offerings or are eligible to be Transferred in Public Sales to U.S. persons in
the United States without registration under the Securities Act and without
being subject to volume limitations under Rule 144 under the Securities Act,
provided, in the case of (y), that there is a public float of the Common Stock
equal to at least 15% of the total outstanding shares of Common Stock.
(d) Expenses of Registration. Upon the exercise of registration
rights set forth in this Section 11, the Company shall pay all Registration
Expenses incurred in connection with any registration, qualification or
compliance pursuant to this Section 11, provided, that such expenses shall not
include Selling Expenses, which shall be borne by the Investor pro rata on the
basis of the number of its shares so registered.
(e) Registration Procedures. In the case of each registration
effected by the Company pursuant to this Section 11, the Company will keep the
Investor advised in writing as to the initiation of each registration and as to
the completion thereof. In connection with any offering of Registrable
Securities registered pursuant to clause (b) or (c) of this Section 11, at its
expense, the Company shall:
(i) prepare and file with the Commission, as promptly as
practical after receipt of a request for registration pursuant to this Section
11, a registration statement on any form for which the Company then qualifies,
and which form shall be available for the sale of the Registrable Securities in
accordance with the intended methods of distribution thereof, and use its best
efforts to cause such registration statement to become and remain effective as
provided herein; provided, that before filing with the Commission a registration
statement or prospectus or any amendments or supplements thereto, the Company
will (A) furnish to the Investor copies of all such documents proposed to be
filed for review and comment and (B) notify the Investor of any stop order
issued or threatened by the Commission and take all reasonable actions required
to prevent the entry of such stop order or to remove it if entered;
(ii) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration effective (A) during the
ten Business Day period immediately following the date on which such
registration statement shall be declared effective, and (B) subject to any
obligation of the Investor to refrain from selling or offering to sell any
Registrable Securities during a Blackout Period (as defined below), for 120 days
after the date of effectiveness or (C) if earlier, until the Investor has
completed the distribution described in the registration statement relating
thereto (but not before the expiration of the time periods referred to in
Section 4(3) of the Securities Act and Rule 174
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promulgated thereunder, or any successor provisions, if applicable). The Company
shall be entitled to elect that a registration statement not be usable, for a
reasonable period of time, but not in excess of one hundred twenty (120)
consecutive days (a "Blackout Period"), if the Company determines in good faith
that the use of such registration statement or the related prospectus would
interfere with any pending financing, acquisition, corporate reorganization or
any other material corporate development involving the Company, WWC or any of
their Subsidiaries or would require premature disclosure thereof, and the
Company promptly gives the Investor written notice of such determination,
containing a general statement of the reasons for such postponement or
restriction on use and an approximation of the anticipated delay; provided,
however, that (x) the Company shall not be entitled to initiate a Blackout
Period unless it shall concurrently forbid purchases or sales in the open market
by directors, senior executives and other Affiliates of the Company, (y) the
aggregate number of days included in all Blackout Periods during any consecutive
twelve (12) month period shall not exceed two hundred forty (240) days, and (z)
the period that the Company shall be required to maintain the effectiveness of
the registration statement shall be increased by the aggregate number of days in
the Blackout Periods. The Company shall give written notice to each shareholder
of record included in the registration statement of the commencement and the
termination of any Blackout Period;
(iii) furnish to each underwriter, if any, and the Investor
such number of copies of such registration statement, each amendment and
supplement thereto (in each case including all exhibits thereto), and the
prospectus included in such registration statement (including each preliminary
prospectus) in conformity with the requirements of the Securities Act, and such
other documents incident thereto as the Investor may reasonably request from
time to time in order to facilitate the disposition of the Registrable
Securities owned by the Investor;
(iv) use its best efforts to register or qualify such
Registrable Securities under the state securities or "blue sky" laws of such
states as the Investor or the Representative reasonably request and do any and
all other acts and things that may be reasonably necessary or advisable to
enable the Investor and the underwriters to consummate the disposition in such
jurisdictions of the Registrable Securities owned by the Investor; provided,
that the Company will not be required as a result thereof to (A) qualify
generally to do business in any jurisdiction where it would not otherwise be
required to qualify but for this clause (iv), (B) subject itself to taxation or
regulation of its business in any such jurisdiction in which it would not
otherwise be so subject or (C) consent to general service of process in any
jurisdiction in which it would not otherwise be subject to general service of
process;
(v) use its best efforts to cause the Registrable Securities
covered by such registration statement to be registered with or approved by such
other governmental agencies or authorities as may be necessary by virtue of the
business and operations of the Company to enable the Investor to consummate the
disposition of such Registrable Securities;
(vi) immediately notify the Investor at any time when a
prospectus relating thereto is required to be delivered under the Securities Act
of the happening of any event that comes to the Company's attention, if as a
result of such event the prospectus included in such registration statement
contains an untrue statement of a material fact or omits to state any material
fact required to be stated therein or necessary to make the
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statements therein not misleading; and subject to the Blackout Period provisions
in clause (ii) above, the Company will promptly prepare and furnish to the
Investor a supplement or amendment to such prospectus so that, as thereafter
delivered to the purchasers of such Registrable Securities, such prospectus will
not contain an untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein
not misleading;
(vii) use its best efforts to cause all such Registrable
Securities to be listed on a national securities exchange in the United States
or quoted on the NASDAQ National Market System and listed or quoted on each
securities exchange or automated quotation system on which similar securities
issued by the Company may then be listed or quoted, and enter into such
customary agreements including a listing application and indemnification
agreement in customary form, and, subject to applicable law, to provide a
transfer agent and registrar for such Registrable Securities covered by such
registration statement no later than the effective date of such registration
statement;
(viii) enter into such customary agreements (including an
underwriting agreement or qualified independent underwriting agreement, in each
case, in customary form) and take all such other actions as the Investor
requesting registration of the Registrable Securities being covered by such
registration statement or the underwriter reasonably requests in order to
expedite or facilitate the disposition of such Registrable Securities, including
customary representations, warranties, indemnities and agreements;
(ix) make available (after reasonable notice and execution of
customary confidentiality agreements satisfactory to the Company) for
inspection, during business hours of the Company, by the Investor or its
representatives (if it has requested registration of Registrable Securities) and
any underwriter participating in any disposition pursuant to such registration
statement (to the extent provided in the applicable underwriting agreement),
(collectively, the "Inspectors"), all financial and other records, pertinent
corporate documents and properties of the Company and its Subsidiaries
(collectively, "Records"), if any, as shall be reasonably necessary to enable
them to exercise their due diligence responsibility, and cause the Company's
officers, directors and employees, and those of the Company's Affiliates, to
supply all information and respond to all inquiries reasonably requested by any
such Inspector in connection with such registration statement;
(x) use its best efforts to obtain a "cold comfort" letter
from the Company's appointed auditors in customary form and covering such
matters of the type customarily covered by "cold comfort" letters as the
Representative reasonably requests; and
(xi) otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission and all conditions imposed by
relevant governmental authorities or under applicable law and make available to
the Investor, as soon as reasonably practicable, an earnings statement covering
a period of at least twelve months beginning after the effective date of the
registration statement (as the term "effective date" is defined in Rule 158(c)
under the Securities Act), which earnings statement shall satisfy the provisions
of Section 11(a) of the Securities Act and Rule 158 thereunder.
It shall be a condition precedent to the obligation of the Company to
take any action with respect to any Registrable Securities that the Investor
shall furnish to the Company such
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information regarding the Registrable Securities and any other securities of the
Company held by the Investor and the intended method of disposition of the
Registrable Securities held by the Investor and such other information regarding
the Investor as the Company shall reasonably request and as shall be required in
connection with the action taken by the Company.
The Investor agrees that, upon receipt of any notice from the Company of
the happening of any event of the kind described in Section 11(e)(vi) hereof,
the Investor will forthwith discontinue disposition of Registrable Securities
pursuant to any prospectus or registration statement until the Investor's
receipt of the copies of the supplemented or amended prospectus contemplated by
Section 11(e)(vi) hereof, and, if so directed by the Company (at the Company's
expense), the Investor will deliver to the Company all copies (including,
without limitation, any and all drafts), other than permanent file copies, then
in the Investor's possession, of the prospectus covering such Registrable
Securities current at the time of receipt of such notice.
(f) Indemnification.
(i) In the event of any registration of any shares of Common
Stock under the Securities Act pursuant to this Agreement, the Company will
indemnify and hold harmless the Investor, its directors and officers, each
Person who participates as an underwriter in the offering or sale of such
securities and each other Person, if any, who controls the Investor or any such
underwriter within the meaning of the Securities Act against any and all losses,
claims, damages and liabilities (or actions in respect thereof), joint or
several, and expenses (including any amounts paid in any settlement effected
with the Company's consent, which consent will not be unreasonably withheld) to
which the Investor, any such director or officer or any such underwriter or
controlling Person may become subject under the Securities Act, the Exchange
Act, United States state securities or "blue sky" laws, common law or otherwise,
insofar as such losses, claims, damages or liabilities (or actions or
proceedings in respect thereof) or expenses arise out of or are based upon (A)
any untrue statement (or alleged untrue statement) of any material fact
contained in any registration statement under which such securities were
registered under the Securities Act, any preliminary, final or summary
prospectus contained therein, or any amendment or supplement thereto, (B) any
omission (or alleged omission) to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, or
(C) any violation (or alleged violation) by the Company of any United States
federal, state or common law rule or regulation applicable to the Company and
relating to action required of or inaction by the Company in connection with any
such registration, qualification or compliance. The Company will reimburse the
Investor and each such director, officer, underwriter and controlling Person for
any legal and any other expenses reasonably incurred in connection with
investigating or defending such claim, loss, damage, liability or action, as
such expenses are incurred; provided, however, that the Company shall not be
liable in any such case to the extent that any such claim, loss, damage,
liability (or action or proceeding in respect thereof) or expense arises out of
or is based on any untrue statement (or alleged untrue statement) or omission
(or alleged omission) made in such registration statement or amendment or
supplement thereto or in any such preliminary, final or summary prospectus in
reliance upon and in conformity with written information furnished to the
Company by the Investor or any such director, officer, underwriter or
controlling Person specifically stating that it is for use therein; provided
further, however, that the Company shall not be liable to
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any of the foregoing indemnitees pursuant to this Section 11(f) with respect to
any untrue statement or omission or alleged untrue statement or omission made in
any preliminary prospectus or the final prospectus or the final prospectus as
amended or supplemented, as the case may be, to the extent that any such loss,
claim, damage or liability of such indemnitee results from the fact that the
Investor or underwriter sold Registrable Securities (x) to a Person to whom
there was not sent or given, at or prior to the written confirmation of such
sale, a copy of the final prospectus or of the final prospectus as then amended
or supplemented, whichever is most recent, if the Company has previously
furnished copies thereof to the Investor or underwriter and such final
prospectus, as then amended or supplemented, had corrected any such misstatement
or omission or (y) during a Blackout Period or after receipt of a notice
pursuant to Section 11(e)(vi) hereof (prior to the amendment or supplement
thereunder having been furnished).
The indemnity provided for herein shall remain in full force and effect
regardless of any investigation made by or on behalf of the Investor or any such
director, officer, underwriter or controlling Person and shall survive the
transfer of such securities by the Investor or such underwriter.
(ii) The Investor will, if Registrable Securities held by it
are included in any registration statement filed in accordance with the
provisions hereof, (x) indemnify the Company, its directors, officers and
controlling Persons, all other prospective sellers, each person who participates
as an underwriter, and their respective directors, officers and controlling
Persons against all claims, losses, damages and liabilities (or actions in
respect thereof) and expenses to which any such Person may become subject under
the Securities Act, the Exchange Act, United States state securities or "blue
sky" laws, common law or otherwise, insofar as such losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) or expenses arise out
of or are based upon (A) any untrue statement (or alleged untrue statement) of a
material fact with respect to the Investor contained in any such registration
statement, preliminary, final or summary prospectus contained therein, or any
amendment or supplement thereto, in reliance on and in conformity with written
information furnished to the Company by the Investor specifically for use
therein, or (B) any omission (or alleged omission) to state therein a material
fact with respect to the Investor required to be stated therein or necessary to
make the statements made by the Investor therein not misleading and (y)
reimburse the Company and its directors, officers, controlling Persons and all
other prospective sellers, each person who participates as an underwriter, and
their respective directors, officers, and controlling Persons for any legal or
any other expenses reasonably incurred in connection with investigating or
defending any such claim, loss, damage, liability or action, in the case of both
clause (x) and clause (y), to the extent, and only to the extent, that such
untrue statement (or alleged untrue statement) or omission (or alleged omission)
is made in such registration statement, preliminary, final or summary prospectus
contained therein, or any amendment or supplement thereto in reliance upon and
in conformity with written information furnished to the Company by the Investor
with respect to the Investor specifically for use therein; provided, however,
that the obligations of the Investor hereunder shall be limited to an amount
equal to the proceeds to be received by the Investor from securities sold by the
Investor pursuant to such registration statement or prospectus.
The indemnity provided for herein shall remain in full force and effect
regardless of any investigation made by or on behalf of the Company or the
Investor, the underwriters or
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any of their respective directors, officers, or controlling Persons and shall
survive the transfer of such securities by the Investor and such underwriters.
(iii) Each party entitled to indemnification under this
Section 11(f) (an "Indemnified Party") shall give notice to the party required
to provide indemnification (the "Indemnifying Party") promptly after such
Indemnified Party has actual knowledge of any claim as to which indemnity may be
sought, and shall permit the Indemnifying Party to assume the defense of any
such claim or any litigation resulting therefrom (it being understood that the
Indemnifying Party shall not be responsible for more than one counsel for all
Indemnified Parties in any single action or claim (or group of related actions
or claims), unless the Investor shall have reasonably concluded that it may have
a conflict of interest with one or more other Indemnified Parties with respect
to any actions or claims). Counsel for the Indemnifying Party, who shall conduct
the defense of such claim or any litigation resulting therefrom, shall be
approved by the Indemnified Party (whose approval shall not unreasonably be
withheld or delayed). The Indemnified Party may participate in such defense at
the Indemnified Party's expense (unless the Indemnified Party shall have
reasonably concluded that there may be a conflict of interest between the
Indemnifying Party and the Indemnified Party in such action, in which case the
reasonable fees and expenses of the Indemnified Party's counsel shall be at the
expense of the Indemnifying Party and shall be reimbursed as they are incurred).
The failure of any Indemnified Party to give notice as provided herein shall not
relieve the Indemnifying Party of its obligations under this Section 11 except
to the extent the Indemnifying Party is actually materially prejudiced thereby.
No Indemnifying Party, in the defense of any such claim or litigation, shall,
except with the consent of each Indemnified Party, consent to entry of any
judgment or enter into any settlement which does not include as a term thereof
the giving by the claimant or plaintiff to such Indemnified Party of an
unconditional release from all liability with respect to such claim or
litigation. Each Indemnified Party shall promptly furnish such information
regarding itself or the claim in question as an Indemnifying Party may
reasonably request in writing and as shall be reasonably required in connection
with the defense of such claim and litigation resulting therefrom.
(iv) In order to provide for just and equitable contribution
in circumstances in which the foregoing indemnities provided for in this Section
11(f) are for any reason held to be unenforceable although applicable in
accordance with their terms, the Company and the Investor shall contribute to
the aggregate losses, liabilities, claims, damages and expenses of the nature
contemplated by such indemnities in such proportion as shall be appropriate to
reflect (A) the relative benefits received by the Company, on the one hand, and
the Investor, on the other hand, from the offering of the Registrable Securities
and any other securities included in such offering, and (B) the relative fault
of the Company, on the one hand, and the Investor, on the other hand, with
respect to the statements or omissions that resulted in such loss, liability,
claim, damage or expense, or action in respect thereof, as well as any other
relevant equitable considerations; provided, however, that no Person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to a contribution from any Person who was not
guilty of such fraudulent misrepresentation. The relative fault shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or omission or alleged omission to state a
material fact relates to information supplied by the Company or the Investor,
the intent of the parties and their relative knowledge, access to information
and opportunity to correct or prevent such statement or omission. The Company
and the Investor
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agree that it would not be just and equitable if a contribution pursuant to this
Section 11(f) were to be determined by pro rata allocation or by any other
method of allocation that does not take into account the equitable
considerations referred to herein. Notwithstanding anything to the contrary
contained herein, the Company and the Investor agree that any contribution
required to be made by the Investor pursuant to this Section 11(f) shall not
exceed the net proceeds from the offering of Registrable Securities (before
deducting expenses) received by the Investor with respect to such offering. For
purposes of this Section 11(f), each Person, if any, who controls the Investor
within the meaning of Section 15 of the Securities Act shall have the same
rights to contribution as the Investor, and each director of the Company, each
officer of the Company who signed the registration statement, and each Person,
if any, who controls the Company within the meaning of Section 15 of the
Securities Act shall have the same rights to contribution as the Company.
(v) The foregoing indemnities of the Company and the
Investor are subject to the condition that, insofar as they relate to any untrue
statement (or alleged untrue statement) of a material fact contained in a
preliminary prospectus, or any omission (or alleged omission) to state therein a
material fact required to be stated therein or necessary to make the statements
contained therein not misleading, which was eliminated or remedied in the
amended prospectus on file with the Commission at the time the registration
statement in question became effective or the amended prospectus filed with the
Commission pursuant to Rule 424(b) under the Securities Act (the "Final
Prospectus"), such indemnities shall not inure to the benefit of any underwriter
if a copy of the Final Prospectus was furnished to the underwriter and was not
furnished to the Person asserting the loss, liability, claim or damage at or
prior to the time such action is required by the Securities Act.
(g) Information by the Investor. The Investor shall furnish to the
Company such information regarding the Investor and the distribution proposed by
the Investor as the Company may reasonably request in writing in connection with
any registration of Registrable Securities of the Investor and as shall be
reasonably required in connection with any registration, qualification or
compliance referred to in this Section 11.
(h) Rule 144 Reporting. With a view to making available the benefits
of certain rules and regulations of the Commission which may permit the sale of
the restricted securities to the public without registration, the Company agrees
to:
(A) make and keep public information available as those
terms are understood and defined in Rule 144 under the Securities Act,
at all times from and after the effective date of the first registration
statement under the Securities Act filed by the Company for an offering
of its securities to the general public;
(B) use its best efforts to file with the Commission in a
timely manner all reports and other documents required of the Company
under the Securities Act and the Exchange Act at any time after it has
become subject to such reporting requirements; and
(C) so long as the Investor owns any Registrable Securities,
furnish to the Investor upon request a written statement by the Company
as to its compliance with the current information requirements of Rule
144 under the Securities Act (at any time from and after the effective
date of the first registration statement filed by the
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Company for an offering of its securities to the general public), a copy
of the most recent annual or quarterly report of the Company, and such
other reports and documents filed with the Commission pursuant to the
reporting requirements of the Exchange Act as the Investor may
reasonably request in availing itself of any rule or regulation of the
Commission allowing the Investor to sell any such securities without
registration.
(i) "Market Stand-off" Agreement.
(i) If any registration of Common Stock (or other
securities) of the Company shall be in connection with an underwritten public
offering, the Investor agrees not to effect any sale or distribution of any
Registrable Securities, including any private placement or any sale pursuant to
Rule 144A under the Securities Act (or any successor provision) or otherwise or
any sale pursuant to Rule 144 under the Securities Act (or any successor
provision), other than by pro-rata distribution to its shareholders, partners or
other beneficial holders, and not to effect any such sale or distribution of any
other equity security of the Company or of any security convertible into or
exchangeable or exercisable for any equity security of the Company (in each
case, other than as part of such underwritten public offering) during the
anticipated ten calendar days prior to, and during the 180 calendar day period
(or such other period as may be agreed upon between the Investor and the
Representative) that begins on the effective date of such registration
statement, without the consent of the Representative; provided, however, that
written notice of such registration has been delivered to the Investor at least
two Business Days prior to the anticipated beginning of the ten calendar day
period referred to above.
(ii) If requested by the Representative the Investor shall
execute a separate agreement to the foregoing effect. The Company may impose
stop-transfer instructions with respect to the shares (or securities) subject to
the foregoing restriction until the end of said 180-day or other period. The
provisions of this Section 11(i) shall be binding upon any transferee who
acquires Registrable Securities, including, without limitation, any Permitted
Affiliate Transferee of the Investor, the Investor's shareholders, partners or
other beneficial holders, if such transferee is entitled to the registration
rights provided hereunder. The Company agrees that any agreement entered into
after the date hereof pursuant to which the Company issues or agrees to issue
any privately placed equity securities shall contain a provision under which the
holders of such securities agree not to effect any sale or distribution of any
such securities during the period and in the manner referred to in this Section
11(i)(ii).
(iii) If any registration of Registrable Securities shall be
in connection with an underwritten public offering, the Company agrees (A) not
to effect any Public Sale of any of its equity securities or of any security
convertible into or exchangeable or exercisable for any equity security of the
Company (other than any such sale or distribution of such securities as part of
such public offering, in connection with any amalgamation, merger or
consolidation by the Company or any Subsidiary of the Company, the acquisition
by the Company or a Subsidiary of the Company of the shares or any assets of any
other Person, or in connection with a stock option, stock purchase or other
employee benefit plan) during the ten days prior to, and during the 180-day
period (or such other period as may be agreed upon between the Company and the
Representative) which begins on the effective date of such registration
statement without the consent of the Representative.
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(j) WWC agrees that it will cooperate in all reasonable respects in
any due diligence investigation contemplated under Section 11(e)(ix) hereof that
is required in connection with a registration and public offering pursuant to
this Section 11 and provide reasonable access to books, records and personnel of
WWC which are material to a customary due diligence investigation of the Company
and its business, assets and operations in connection with a registered public
offering.
12. CERTAIN COVENANTS OF THE COMPANY AND WWC.
(a) Auditors. The Company shall maintain a system of accounting
established and administered in accordance with United States generally accepted
accounting principles ("U.S. GAAP") and shall set aside on its books all such
proper reserves as shall be required by U.S. GAAP. The Company shall retain a
firm of independent certified public accountants of recognized standing (which
may be the auditors of WWC) to audit and report on the Company's annual
consolidated balance sheets and statements of operations, shareholders' equity
and cash flows and to report to the Board. All major accounting policies and
principles shall be determined by the Board in accordance with U.S. GAAP.
(b) Financial and Other Information.
(i) The Company shall prepare annual consolidated balance
sheets and statements of operations, shareholders' equity and cash flows of the
Company and its Subsidiaries, which shall be prepared in accordance with U.S.
GAAP, set forth in each case in comparative form the figures for the previous
year, and be audited by the auditors referred to in Section 12(a) hereof. The
Company shall also prepare quarterly unaudited consolidated balance sheets and
statements of operations, shareholders' equity and cash flows of the Company and
its Subsidiaries, certified by the Chief Financial Officer or the Chief
Executive Officer of the Company and prepared in accordance with U.S. GAAP and
setting forth in each case in comparative form the same figures for the
comparable period of the previous year and, in addition, year-to-date figures.
The Company will furnish to the Investor the following information within the
time specified: (i) as soon as practicable after the end of each fiscal quarter
and, in any event within 50 days thereafter, all of the quarterly financial
information referred to herein, (ii) as soon as practicable after the end of
each fiscal year, and in any event within 120 days thereafter, all of the annual
financial information referred to herein, and (iii) on a timely basis, such
other monthly management operational and financial reports and information as
the Investor may reasonably request.
(ii) As part of the annual audit of WWC, WWC's independent
public accountants shall provide to the Investor a certificate as to the
compliance by WWC and the Company with the allocation of credits, fees, charges
and expenses in accordance with the terms of the Intercompany Agreements.
(c) Inspection and Audit Rights.
(i) From and after the date hereof, the Company will permit
the Investor, or its representatives, to visit and inspect any of the properties
of the Company, to examine all its books of account, records, reports and other
papers which are not contractually
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required of the Company to be kept confidential or secret, to discuss its
affairs, finances and accounts with its officers, directors, key employees and
independent public accountants or any of them (and by this provision the Company
authorizes such accountants to discuss with the Investor and its representatives
the finances and affairs of the Company and its Subsidiaries), and WWC will
permit the Investor to discuss the affairs of WWC, if material to the Company,
with the Senior Officers all at such reasonable times and as often as may be
reasonably requested.
(ii) The Investor shall have the right to carry out an audit
(by its independent auditor) once each year to determine compliance by WWC and
the Company with the allocation of credits, fees, charges and expenses in
accordance with the terms of the Intercompany Agreements. Each such audit shall
be at the Investor's sole cost and expense unless it is determined that the
allocations made with respect to the Company differed from the allocations which
should have been made in accordance with the Intercompany Agreements by more
than 10%, in which event the cost of such audit shall be borne by WWC.
(d) PCS and Future Spectrum Allocations.
(i) WWC shall develop and conduct the United States domestic
PCS business (which shall include for this purpose any expansion spectrum
allocated by the FCC to broadband personal communications services), only
through the Company Group. WWC will transfer, or cause to be transferred, to the
Company Group any licenses (or interests therein) for United States domestic PCS
systems acquired by the WWC Non-Company Group promptly after such assets are
acquired, at WWC's cost therefor. For this purpose, to the extent WWC shall have
issued shares of its Class A Stock as all or any portion of the consideration
paid to acquire such assets, the cost of such assets to be paid to WWC by the
Company shall be measured based on the market price of such WWC securities
immediately before the announcement of such acquisition, measured as provided in
Section 7(c)(ii).
(ii) The Company and the Investor agree that WWC shall
continue to conduct cellular businesses (which shall mean for this purpose
wireless telecommunications businesses using frequencies in the range of 800-900
MHz and include any expansion spectrum allocated by the FCC to cellular
services) through the WWC Non-Company Group. The Company will transfer, or cause
to be transferred, to the WWC Non-Company Group any licenses (or interests
therein) for cellular systems acquired by the Company Group promptly after such
assets are acquired, at the Company's cost therefor.
(iii) If additional frequencies are allocated to wireless
telecommunications which are not expansion spectrum for PCS or cellular
services, then the WWC Non-Company Group and the Company Group shall divide as
between them any business and acquisition opportunities for the provision of
services using such additional spectrum in accordance with the geographical
areas in which each then operates or has specific plans to begin operating
within 12 months under licenses then held. Subject to clause (iv) below, in the
case of overlapping geographic areas or areas in which neither WWC nor the
Company has operations, WWC and the Company shall mutually agree as to the
allocation of such opportunities, and if they are unable to agree, such
opportunities shall be shared equally by them pursuant to a joint venture or
arrangement which is mutually agreed (it being
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understood that the Company and WWC recognize the rights of the Investor as a
result of the events described in clause (c) of the definition of "Disposition
Event").
(iv) If either the Company or WWC determines not to pursue
any opportunity with respect to the application for or purchase of existing or
newly allocated spectrum, including either PCS spectrum or cellular spectrum
(which determination, in the case of the Company, shall be made by majority vote
of the Board with, prior to a Terminating Reduction, at least one of the
Investor's designees to the Board voting in the majority) and so confirms to the
other party, then the other party may make such application for or purchase such
existing or new spectrum for its own use free of any rights of the declining
party.
(e) Rights and Obligations of Other Holders. If the Company shall
enter into any agreement with a holder of equity securities of the Company
(other than WWC or the Investor) (an "Other Holder") which contains terms and
conditions with respect to corporate governance (including rights to designate
directors to the Board), liquidity (including transfer rights and restrictions,
rights of first offer or first refusal, and tag along and drag along rights),
preemptive rights, or other rights and obligations of such Other Holder as a
shareholder of the Company, the Company shall notify the Investor of such terms
and conditions in writing, which notice shall constitute an offer to the
Investor to grant it such terms and conditions in lieu of the terms and
conditions of this Agreement. The Investor shall have the right, by delivery of
written notice to the Company within 30 days after delivery of such notice from
the Company, to accept such terms and conditions in lieu of this Agreement, in
which case the Company and the Investor will enter into an agreement
satisfactory to them in form and substance to implement such complete
substitution of terms and conditions.
(f) Dividends. Subject to compliance with the Company's and its
Subsidiaries' loan agreements, indentures and other financing agreements and
subject to the retention by the Company of adequate working capital and reserves
for the needs of its and its Subsidiaries businesses (including reserves for
anticipated capital expenditures provided for in the Company's approved annual
Operating Plan and Budget and/or capital expenditures budget and reserves for
acquisitions), the Shareholders agree that the Company shall, commencing as soon
as practicable and in any event with the year beginning on January 1, 2000, pay
dividends pari passu to all its shareholders as and in such amounts as are
legally available for distribution.
(g) Liability for Indebtedness. After the Closing, unless the
Investor shall otherwise consent in writing, no member of the Company Group
shall have any liability under or in respect of any indebtedness of any member
of the WWC Non-Company Group ("WWC Debt"), and the assets of the Company Group
shall not be subject to any Lien under or in respect of any WWC Debt. After the
Closing, unless WWC shall otherwise consent in writing, no member of the WWC
Non-Company Group shall have any liability under or in respect of any
indebtedness of any member of the Company Group ("Company Debt"), and the assets
of the WWC Non-Company Group shall not be subject to any Lien under or in
respect of any Company Debt.
(h) Spin-Off Distribution. WWC agrees that it shall not effect any
Spin-Off Distribution unless, after giving effect thereto:
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(i) there shall be a public float of the Common Stock of at
least 15% of the outstanding Common Stock;
(ii) the Common Stock is listed on a national securities
exchange or quoted on the NASDAQ National Market System;
(iii) the Roaming Agreement remains in full force and effect;
and
(iv) if the Investor then retains the right hereunder to
designate one or more directors to the Board, the Company implements either (A)
measures reasonably satisfactory to the Investor (which may include voting
agreements, or the issuance of a separate class of voting securities to the
Investor), or (B) cumulative voting, in either case effective at or before the
Spin-Off Distribution to assure the Investor of the election to the Board of its
designee(s) in accordance with Section 3 hereof.
(i) Performance of Intercompany Agreements. WWC and the Company
agree that they will duly and timely perform their respective obligations under
the Intercompany Agreements in accordance with their respective terms (subject
to any amendments, modifications or waivers with respect thereto in accordance
with the terms of the Intercompany Agreements), except in respects which are not
material and which would not, in accordance with the terms thereof, give rise to
the right to claim a breach or default thereunder. The Company agrees with the
Investor that it will use all reasonable and prudent efforts to cause WWC so to
perform the Intercompany Agreements.
(j) IPO. Until the date that is 18 months after the Closing Date,
the Company and WWC will not effect any initial Public Sale of the Company's
equity securities (whether a primary offering of newly issued shares or a
secondary offering of shares owned by WWC) without the prior approval of at
least one of the Investor's designees to the Board; provided, that such approval
will not be required under this Section 12(j) for (1) any Public Sale of
non-voting, non-convertible preferred stock for which approval is obtained as
referred to in clause (a) of the definition of "Disposition Event", (2) any
Spin-Off Distribution by WWC which meets the requirements set forth in Section
12(h) hereof, (3) subject to the rights of the Investor under Section 10(c) in
respect of clauses (c) and (d) of the definition of "Disposition Event", any
merger, acquisition or consolidation involving a Public Sale of the Company's or
the surviving entity's equity securities, or (4) any transaction giving rise to
the Drag Along Right under Section 7.
13. MISCELLANEOUS.
(a) Legends. In addition to any other legends required by applicable
law, the Company's By-laws or any other agreement restricting the Transfer of
the Common Stock, each certificate evidencing the Common Stock acquired by the
Shareholders will bear a legend reflecting the restrictions on the transfer of
such shares contained in this Agreement and in the Purchase Agreement.
(b) Waiver; Amendments. Except as expressly provided otherwise
herein, neither this Agreement nor any provision hereof may be changed, waived,
discharged or
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terminated orally, but only by an instrument in writing signed by the Company
and each of the Investor and WWC; provided, that if, at the time of such
proposed change, waiver, discharge or termination, any other Shareholder is
party to this Agreement, no change, waiver, discharge or termination that would
adversely affect the rights or alter the obligations of such other Shareholder
will be effective without the written approval of such Shareholder.
(c) Recapitalization, Exchanges, Etc. The provisions of this
Agreement shall apply to the full extent set forth herein with respect to shares
or other securities of the Company that may be issued to any Shareholder in
respect of, in exchange for, or in substitution of the Common Stock.
(d) Specific Performance. Each of the parties hereto acknowledges
and agrees that, in the event of any breach of this Agreement, the non-breaching
parties would be irreparably harmed and could not be made whole by monetary
damages. Accordingly, each of the parties hereto agrees that the other parties,
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
pursuant to Section 13(k)(x).
(e) Notices. All notices, requests, demands and other communications
hereunder shall be in writing and, except to the extent otherwise expressly
provided in this Agreement, shall be deemed to have been duly given if delivered
by same day or next day courier (guaranteed delivery) or mailed, registered
mail, return receipt requested, or transmitted by telegram, telex or facsimile
(i) if to a Shareholder, at such Shareholder's address appearing below or at any
other address such Shareholder may have provided in writing to the Company and
the other Shareholders then party to this Agreement and (ii) if to the Company,
at 0000 XX Xxxxxxxxx Xxxx, Xx. 000, Xxxxxxxx, XX 00000, U.S.A., Tel: (425)
000-0000, Fax: (000) 000-0000; Attention: Xxxx X. Xxxxxx, Esq., or such other
address as the Company may have furnished to the Shareholders in writing, with a
copy (which shall not constitute notice) to Xxxxx Xxxx Xxxxx Constant &
Xxxxxxxx, 00 Xxxxxxxxxxx Xxxxx, Xxx Xxxx, XX 00000, XXX, Tel: (000) 000-0000,
Fax: (000) 000-0000; Attention: Xxxxx X. Xxxxxxx. If a notice hereunder is
transmitted by confirmed fax so as to arrive during normal business hours during
a Business Day at the place of receipt, then such notice shall be deemed to have
been given on such Business Day at the place of receipt or, if so transmitted to
arrive after normal business hours during a Business Day at the place of
receipt, then such notice shall be deemed to have been given on the following
Business Day at the place of receipt. If such notice is sent by next-day courier
it shall be deemed to have been given on the third Business Day at the place of
receipt following sending and, if by registered air mail, on the tenth Business
Day at the place of receipt following sending, provided, that the date of
sending shall be deemed to be the date at the place of receipt at the time such
notice is posted.
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The Investor:
Xxxxxxxxx Telecommunications PCS (USA) Limited
c/o Offshore Incorporations Limited
P.O. Box 957
Offshore Incorporations Centre
Road Town, Tortola
British Virgin Islands
Tel: (000) 000-0000
Fax: (000) 000-0000
and
Xxxxxxxxx Telecommunications PCS (USA) Limited
22nd Floor, Xxxxxxxxx Xxxxx
00 Xxxxxxxx Xxxx
Xxxx Xxxx
Xxxxxxxxx: Xxxxx Xxxx
Tel: (000) 0000-0000
Fax: (000) 0000-0000
With a copy (which shall not constitute notice) to:
Xxxxx Xxxxxxxxxx LLP
Suite 3907, Asia Pacific Finance Xxxxx
Xxxxxxxx Xxxxx
0 Xxxxxx Xxxx
Xxxxxxx, Xxxx Xxxx
Attention: Xxxx X. Xxxxxx
Tel: (000) 0000-0000
Fax: (000) 0000-0000
WWC:
0000 XX Xxxxxxxxx Xxxx, Xx. 000
Xxxxxxxx, XX 00000
X.X.X.
Attention: Xxxx X. Xxxxxx, Esq.
Tel: (000) 000-0000
Fax: (000) 000-0000
With a copy (which shall not constitute notice) to:
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Xxxxx Xxxx Xxxxx Constant & Xxxxxxxx
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, XX 00000
XXX
Attention: Xxxxx X. Xxxxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
(f) Successors and Assigns. Except as otherwise provided herein,
this Agreement shall inure to the benefit of, and be binding upon, the
successors and assigns of each of the parties; provided, however, that this
Agreement may not be assigned by any party hereto other than in compliance with
the terms hereof, including the restrictions on transfers of Common Stock as set
forth in Section 5 and the transfer of the rights and obligations hereunder as
set forth in Section 15.
(g) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original and all of which
together shall be considered one and the same agreement.
(h) Entire Agreement. This Agreement constitutes the entire
understanding of the parties hereto with respect to the subject matter hereof
and supersedes all prior understandings among such parties with respect to such
subject matter.
(i) Applicable Law. The validity of this Agreement, its
construction, interpretation and enforcement, and the rights of the parties
hereunder, shall be determined under, governed by and construed in accordance
with the internal laws of the State of New York applicable to contracts formed
in such State. Each party hereto agrees that, subject to Section 13(k) hereof,
any suit, action or other proceeding arising out of this Agreement shall be
brought and litigated in the courts of the State of New York or the United
States District Court for the Southern District of New York and each party
hereto hereby irrevocably consents to personal jurisdiction and venue in any
such court and hereby waives any claim it may have that such court is an
inconvenient forum for the purposes of any such suit, action or other
proceeding.
(j) Section Headings. The headings of the sections and subsections
of this Agreement are inserted for convenience only and shall not be deemed to
constitute a part thereof.
(k) Arbitration. Any and all disputes, controversies or claims (each
a "Dispute") between the Shareholders relating to the interpretation or
enforcement or performance of this Agreement shall be resolved by binding
arbitration by the Arbitration Institute of the Stockholm Chamber of Commerce in
accordance with its rules, subject to the following provisions:
(i) There shall be three arbitrators (the "Arbitrators").
Each party shall appoint one arbitrator within 30 days after giving or receiving
notice of the submission of a Dispute to arbitration. The two arbitrators
appointed by the parties shall appoint the third arbitrator. If a party does not
appoint an arbitrator within such designated period, or if the two
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46
appointed arbitrators fail to appoint a third arbitrator within 30 days after
their appointment, the relevant appointment shall be made by the Arbitration
Institute of the Stockholm Chamber of Commerce.
(ii) The expenses of the arbitration shall be borne equally
by WWC, on the one hand, and the Investor, on the other hand, and each party
shall bear its own legal fees and expenses; provided, however, that the
Arbitrators shall have discretion to require that one party pay all or a portion
of the expenses of arbitration or the other party's legal fees and expenses in
connection with any particular arbitration.
(iii) The Arbitrators shall determine whether and to what
extent any party shall be entitled to damages or equitable relief. No party
shall be entitled to punitive damages or consequential damages or shall be
required to post a bond in connection with equitable relief.
(iv) The Arbitrators shall not have the power to add to nor
modify any of the terms or conditions of this Agreement. The Arbitrators'
decision shall not go beyond what is necessary for the interpretation and
application of the provisions of this Agreement in respect of the issue before
the Arbitrators. The Arbitrators' decision and award or permitted remedy, if
any, shall be based upon the issue as drafted and submitted by the respective
parties and the relevant and competent evidence adduced at the hearing(s).
(v) The Arbitrators shall have the authority to award any
remedy or relief provided for in this Agreement, in addition to any other remedy
or relief (including provisional remedies and relief) that a court of competent
jurisdiction could order or grant (but subject to the remedial limitations
elsewhere set forth in this Agreement, including, but without limitation, the
aforesaid prohibition against punitive and consequential damages). The
Arbitrators written decision shall be rendered within sixty (60) days of the
hearing. The decision reached by the Arbitrators shall be final and binding upon
the parties as to the matter in dispute. To the extent that the relief or remedy
granted by the Arbitrators is relief or remedy on which a court could enter
judgement, a judgement upon the award rendered by the Arbitrators may be entered
in any court having jurisdiction thereof (unless in the case of an award of
damages, the full amount of the award is paid within ten (10) days of its
determination by the Arbitrators). Otherwise, the award shall be binding on the
parties in connection with their continuing performance of this Agreement and in
any subsequent arbitral or judicial proceeding between the parties.
(vi) The arbitration shall take place in Stockholm, Sweden,
unless otherwise agreed by the parties, and shall be conducted in the English
language.
(vii) The arbitration proceeding and all filing, testimony,
documents and information relating to or presented during the arbitration
proceeding shall be disclosed exclusively for the purpose of facilitating the
arbitration process and for no other purpose.
(viii) The parties shall continue performing their respective
obligations under this Agreement notwithstanding the existence of a Dispute
while the Dispute is being resolved unless and until such obligations are
terminated, expire or are suspended in accordance with the provisions hereof.
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(ix) The Arbitrators may, in their sole discretion, order a
pre-hearing exchange of information including production of documents, exchange
of summaries of testimony or exchange of statements of position, and shall
schedule promptly all discovery and other procedural steps and otherwise assume
case management initiative and control to effect an efficient and expeditious
resolution of the Dispute. At any oral hearing of evidence in connection with an
arbitration proceeding, each party and its counsel shall have the right to
examine its witnesses and to cross-examine the witnesses of the other party. No
testimony of any witness shall be presented in written form unless the opposing
party or parties shall have the opportunity to cross-examine such witness,
except as the parties otherwise agree in writing.
(x) Notwithstanding the dispute resolution procedures
contained in this Section 13(k), either party may apply to any court having
jurisdiction (a) to enforce this Agreement to arbitrate, (b) to seek provisional
injunctive relief so as to maintain the status quo until the arbitration award
is rendered or the Dispute is otherwise resolved, or (c) to challenge or vacate
any final judgment, award or decision of the Arbitrators that does not comport
with the express provisions of this Section 13(k).
(l) Failure to Pursue Remedies. The failure of any party to seek
redress for violation of, or to insist upon the strict performance of, any
provision of this Agreement shall not prevent a subsequent act, which would have
originally constituted a violation, from having the effect of an original
violation.
(m) Cumulative Remedies. The rights and remedies provided by this
Agreement are cumulative and the use of any one right or remedy by any party
shall not preclude or waive its right to use any or all other remedies except as
otherwise expressly provided in this Agreement. Such rights and remedies are
given in addition to any other rights the parties may have by law, statute,
ordinance or otherwise.
(n) Severability. The invalidity or unenforceability of any
particular provision of this Agreement shall not affect the other provisions
hereof, and this Agreement shall be construed in all respects as if such invalid
or unenforceable provision were omitted.
(o) HTL. In the event the Investor shall elect to purchase Sale
Shares pursuant to its rights of first offer or, if applicable, first refusal
under Section 6 or to exercise its preemptive rights under Section 9, HTL agrees
to cause the Investor to perform its obligations under such Sections in
accordance with their respective terms in connection with any such purchases
(including causing or enabling the Investor to make payment).
14. TERMINATION OF RIGHTS AND OBLIGATIONS.
(a) Investor and WWC. Except as provided in Sections 14(b) and
14(c), and except for any earlier termination in accordance with the express
terms of any provisions hereof with respect to any right or obligation of the
Investor or WWC under this Agreement, all rights and obligations of the
Investor, WWC or any other Shareholder hereunder shall terminate upon the
earlier of (i) the completion of a Qualifying IPO, the completion of a Spin-Off
Distribution, the completion of a transaction in which the Drag Along Right is
exercised or a merger or consolidation of the Company with another entity in
which the
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Company is not the surviving entity, (ii) in the case of the Investor, an
Investor 50% Transfer or any Transfer as a result of which the Investor's
Percentage Ownership falls to below 9.95%, and (iii) subject to the surviving
rights of any WWC 50% Transferee in the case of WWC, any Transfer (including a
Spin-Off Distribution) as a result of which WWC ceases to own any Common Stock.
(b) Investor's Surviving Rights.
(i) Qualifying IPO; Spin-Off Distribution; and Drag Along
Right Event. After a Qualifying IPO, the completion of a Spin-Off Distribution,
the completion of a transaction in which the Drag Along Right is exercised
(except as provided in Section 7(c)) or in connection with a merger or
consolidation of the Company with another entity in which the Company is not the
surviving entity, the following rights of the Investor shall survive (and all
other rights of the Investor hereunder shall terminate): (i) the right to
designate directors to the Board under Section 3, which shall survive until
terminated in accordance with Section 3; (ii) the Investor's preemptive right
under Section 9, which shall survive until the termination in its entirety of
the Investor's right to designate directors to the Board under Section 3 or, if
earlier, the completion of an Investor 50% Transfer; and (iii) the demand and
piggyback registration rights of the Investor under Section 11, which shall
survive until terminated in accordance with Section 11.
(ii) Investor 50% Transfer.
(A) After an Investor 50% Transfer, the following rights of
the Investor shall survive and the benefit thereof (subject to any
diminution or termination of such rights in accordance with their terms
after giving effect to such Transfer) shall be allocated between the
Investor and the Investor 50% Transferee in accordance with Section 15
(and all other rights of the Investor or the Investor 50% Transferee
hereunder shall terminate): (i) the right to designate directors to the
Board under Section 3, which shall survive until terminated in
accordance with Section 3; (ii) the Tag Along Right under Section 8 and
Demand Event Tag Along Right under Section 10(g), which shall survive
until the Investor's right to designate directors to the Board under
Section 3 shall terminate or, if earlier, the termination of the Tag
Along Right and Demand Event Tag Along Right pursuant to the provisions
of Section 14(b)(i); and (iii) the demand and piggyback registration
rights under Section 11, which shall survive until terminated in
accordance with Section 11.
(B) After an Investor 50% Transfer, WWC shall retain all of
its rights under this Agreement, including the Drag Along Right under
Section 7 hereof and the Demand Event Drag Along Right under Section
10(g) hereof, however, such Drag Along Right shall be modified so that
regardless of whether the consideration to be received by all
Shareholders is cash, Consideration Securities or a combination thereof,
the Investor and any Investor 50% Transferee shall receive the same per
share consideration as WWC and there shall be no return of invested
capital or internal rate of return requirement.
(iii) Percentage Ownership Below 9.95%. After any Transfer
which results in the Investor's Percentage Ownership falling below 9.95%, the
Investor's demand and piggyback registration rights under Section 11 shall
survive until terminated in accordance with Section 11 (and all other rights of
the Investor shall terminate).
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(iv) Further Assurances. The Investor agrees that it shall
enter into such further instruments in form and substance satisfactory to WWC,
the Company and any transferee of WWC which, pursuant to Section 15, becomes
subject to the rights and obligations of the Investor hereunder, as shall
reasonably be required or advisable to effectuate or evidence the termination of
the rights of the Investor (and the associated obligations of WWC, the Company
and such transferee) as provided in this Section 14.
(c) WWC's Surviving Rights.
(i) Qualifying IPO; Spin-Off Distribution; and Drag Along
Right Event. After a Qualifying IPO, the completion of a Spin-Off Distribution,
the completion of a transaction in which the Drag Along Right is exercised or in
connection with a merger or consolidation of the Company with another entity in
which the Company is not the surviving entity, the following rights of WWC shall
survive (and all other rights of WWC hereunder shall terminate): (A) the right
to require the Investor to vote in favor of WWC's designees to the Board under
Section 3, which shall survive until the Investor's right to designate directors
is terminated in accordance with Section 3; (B) WWC's preemptive rights under
Section 9, which shall survive until the termination of each other Shareholder's
preemptive rights under Section 9; (C) the right (but not the obligation) to
effect a Repurchase under Section 10(a), which shall survive until the demand
registration rights of the Investor are terminated in accordance with Section
11; and (D) the right to effect a Disposition Transaction under Section 10(b),
which shall survive until the termination of the Investor's right to designate
directors under Section 3.
(ii) WWC 50% Transfer. After a WWC 50% Transfer, all the
rights of WWC hereunder shall survive and the benefit thereof (subject to any
termination or diminution thereof in accordance with their terms after giving
effect to such Transfer) shall be allocated between WWC and the WWC 50%
Transferee in accordance with Section 15.
(iii) Further Assurances. WWC agrees that it shall enter into
such further instruments in form and substance satisfactory to the Company, the
Investor and any transferee of the Investor which, pursuant to Section 15,
becomes subject to the rights of WWC, as shall reasonably be required or
advisable to effectuate or evidence the termination of the rights of WWC (and
the associated obligations of the Investor, the Company and such transferee) as
provided in this Section 14.
(d) Pledged Shares. In connection with any foreclosure or exercise
of remedies upon any shares of Common Stock subjected to a Lien for the benefit
of a lender (including pursuant to Section 5(d)), the Tag Along Right and the
Drag Along Right shall terminate automatically without further action of any
party.
15. INVESTOR 50% TRANSFEREE AND WWC 50% TRANSFEREE; OTHER TRANSFEREES.
(a) Investor.
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(i) Investor 50% Transfer. If the Investor shall have made
an Investor 50% Transfer, and unless the Investor shall have agreed otherwise
with the Investor 50% Transferee, both the Investor and the Investor 50%
Transferee (including, for this purpose, such transferee's Permitted Affiliate
Transferees) shall remain entitled, as to the shares of Common Stock owned
respectively by each of them, to the rights which survive such Transfer as
provided in Section 14(b)(ii) (the "Assignable Investor Rights") (and all other
rights under this Agreement of the Investor and any Investor 50% Transferee
shall terminate). The benefits of the Assignable Investor Rights shall be
subject to any termination or diminution thereof in accordance with their terms
after giving effect to such Transfer. Both the Investor and such transferee
shall be deemed to be the "Investor" and a "Shareholder" for purposes of the
provisions of this Agreement governing the rights so shared by them and shall
remain subject to all the rights of WWC hereunder. The Investor shall be
permitted to Transfer the benefit of the Assignable Investor Rights to an
Investor 50% Transferee on one occasion only.
(ii) Other Transfers. If the Investor shall make a Transfer
of shares of Common Stock representing less than an Investor 50% Block to a
Person or Persons other than its Permitted Affiliate Transferees, or if the
Investor shall have made an Investor 50% Transfer, but shall have agreed with
the Investor 50% Transferee not to share the Assignable Investor Rights, then
(A) the Investor shall remain entitled to all its rights, and subject to all its
obligations, hereunder, subject to any termination or diminution thereof in
accordance with their respective terms after giving effect to such Transfer, (B)
no such transferee shall receive any of the rights of the Investor hereunder or
be deemed to become the "Investor" or a "Shareholder" hereunder for purposes of
any entitlement to the rights of the Investor hereunder and (C) each such
transferee shall be required to become subject to (and the Investor shall remain
subject to) the obligations of the "Investor" and a "Shareholder" with respect
to, (1) the obligation to vote in favor of the designees of WWC to the Board
under Section 3, (2) the approval rights of WWC under Section 5 as to
transferees of such transferees, (3) the first offer and first refusal rights of
WWC under Section 6, (4) the Drag Along Right of WWC under Section 7 (except
that with respect to the transferee, the Drag Along Right provisions of Section
14(b)(ii)(B) shall be applicable), (5) the preemptive rights of WWC under
Section 9, and (6) the Demand Event Drag Along Right under Section 10(g)(the
"Mandatory WWC Rights").
(iii) Excepted Transfers. If the Investor shall make a
Transfer of Common Stock in an Excepted Transfer, no transferee in such Transfer
shall become entitled to the rights or subject to the obligations of the
Investor hereunder unless mutually agreed by the Investor and WWC.
(iv) Permitted Affiliate Transferees. If the Investor shall
make a Transfer of Common Stock to a Permitted Affiliate Transferee, such
Permitted Affiliate Transferee shall become entitled to all the rights of the
Investor hereunder (without any diminution of the Percentage Ownership deemed
held by the Investor hereunder), and subject to all the obligations of the
Investor hereunder, provided, that the Investor and its Permitted Affiliate
Transferees shall be treated, unless the context requires otherwise, as a single
collective party under this Agreement, and no Transfer to a Permitted Affiliate
Transferee shall relieve the Investor of any liability for its obligations
hereunder.
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(b) WWC.
(i) WWC 50% Transfer. If WWC shall have made a WWC 50%
Transfer, and unless WWC shall have agreed with the WWC 50% Transferee not to
Transfer to such transferee the benefit of the rights of WWC hereunder (but
rather to retain all or a portion of such rights), the WWC 50% Transferee and
WWC shall be permitted to share only (A) the right to require the Investor to
vote in favor of WWC's designees to the Board under Section 3, which right of
WWC shall survive until the Investor's right to designate directors is
terminated in accordance with Section 3, and (B) WWC's preemptive rights under
Section 9, which shall survive until no other Shareholder has preemptive rights
under Section 9. In each case, the rights of WWC and such transferee shall be
subject to any termination or diminution thereof after giving effect to such
Transfer, in accordance with the terms of this Agreement. All other rights may
be either retained by WWC or transferred by WWC to a WWC 50% Transferee, with
WWC or such transferee, as the case may be; being the sole party entitled to the
benefit of such rights thereafter. Except where the context requires otherwise,
such transferee shall be deemed to be "WWC" and a "Shareholder" for purposes of
the provisions of this Agreement governing the rights held exclusively by it,
and both WWC and such transferee shall be deemed to be "WWC" and a "Shareholder"
for purposes of the provisions hereof governing rights shared by them.
(ii) If WWC shall make a Transfer of shares of Common Stock
representing less than a WWC 50% Block to a Person or Persons other than its
Permitted Affiliate Transferees, or if WWC shall have made a Transfer of a WWC
50% Block to a WWC 50% Transferee, but shall have elected not to Transfer its
rights to such transferee, then (A) WWC shall remain entitled to all its rights,
and subject to all its obligations, hereunder, subject to any termination or
diminution thereof in accordance with their respective terms after giving effect
to such Transfer, and (B) such transferee shall not be entitled to any of the
rights, or subject to any of the obligations of WWC hereunder. other than the
obligation to vote for the Investor's designees to the Board under Section 3.
(iii) Excepted Transfers. If WWC shall make an Excepted
Transfer, no transferee in such Transfer shall become entitled to the rights, or
subject to the obligations, of the Investor hereunder unless mutually agreed by
the Investor and WWC.
(iv) Permitted Affiliate Transferees. If WWC shall make a
Transfer of Common Stock to a Permitted Affiliate Transferee, such Permitted
Affiliate Transferee shall become entitled to all the rights of WWC hereunder
(without diminution of the Percentage Ownership deemed held by WWC hereunder),
and subject to all the obligations of WWC hereunder, provided, that WWC and its
Permitted Affiliate Transferees shall be treated, unless the context requires
otherwise, as a single collective party under this Agreement, and no Transfer to
a Permitted Affiliate Transferee shall relieve WWC of liability for its
obligations hereunder.
(c) Further Assurances.
(i) The Investor agrees that each transferee of the Investor
(including any Permitted Affiliate Transferee), other than in an Excepted
Transfer, shall be required to enter into such further instruments in form and
substance satisfactory to WWC and the Company as shall reasonably be required or
advisable to effectuate or evidence any transfer or
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assumption of the rights and obligations of the Investor to or by such
transferee in accordance with this Section 15 or Section 14.
(ii) WWC agrees that each transferee of WWC (including any
Permitted Affiliate Transferee), other than in an Excepted Transfer, shall be
required to enter into such further instruments in form and substance
satisfactory to the Investor and the Company as shall reasonably be required or
advisable to effectuate or evidence the transfer or assumption of the rights and
obligations of WWC to or by such transferee in accordance with this Section 15
or Section 14; provided, that upon a Transfer to any Person in a transaction
which gave rise to a right of first offer or right of first refusal in favor of
the Investor and in which the Investor did not exercise any such rights, the
transferee shall not be subject to any obligations or rights hereunder except to
the extent agreed to between the transferee and WWC.
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IN WITNESS WHEREOF, the parties hereto have executed this Shareholders Agreement
of Western PCS Corporation as of the date first above written.
WESTERN WIRELESS CORPORATION
/s/ Xxxxxx Xxxxxxx
----------------------------------------
Name: Xxxxxx Xxxxxxx
Title: Vice Chairman and
Chief Financial Officer
XXXXXXXXX TELECOMMUNICATIONS
PCS (USA) LIMITED
/s/ Khoo Chek Ngee
----------------------------------------
Name: Khoo Chek Ngee
Title: Director
WESTERN PCS CORPORATION
/s/ Xxxx X. Xxxxxxx
----------------------------------------
Name: Xxxx X. Xxxxxxx
Title: Chief Executive Officer
51
54
The undersigned joins as a party to this Agreement in his individual
capacity solely for the purpose of acknowledging and becoming bound by the
provisions of Section 7(b) hereof but only to the extent such provision relates
to the undersigned. The undersigned shall have no further rights or obligations
in his individual capacity under this Agreement.
/s/ Xxxx X. Xxxxxxx
----------------------------------------
XXXX X. XXXXXXX
The undersigned joins as a party to this Agreement solely for the
purpose of acknowledging and becoming bound by the provisions of Section 13(o)
hereof. The undersigned shall have no further rights or obligations under this
Agreement (other than as a Permitted Affiliate Transferee of the Investor upon
any Transfer of shares of Common Stock to the undersigned by the Investor).
XXXXXXXXX TELECOMMUNICATIONS
LIMITED
/s/ Xxxxx Xxxx
----------------------------------------
Name: Xxxxx Xxxx
Title: Director
52
