Exhibit 99.2
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INVESTOR AGREEMENT
DATED AS OF July 23, 2000
BY AND BETWEEN
DEUTSCHE TELEKOM AG,
an AKTIENGESELLSCHAFT organized under
the laws of the Federal Republic of Germany,
AND
VOICESTREAM WIRELESS CORPORATION,
a Delaware corporation.
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INVESTOR AGREEMENT
This INVESTOR AGREEMENT (this "Agreement") is made as of , 2000,
by and between DEUTSCHE TELEKOM AG, an AKTIENGESELLSCHAFT organized under the
laws of the Federal Republic of Germany (the "Investor"), and VOICESTREAM
WIRELESS CORPORATION, a Delaware corporation (the "Company").
WHEREAS, the Investor and the Company have entered into a Stock
Subscription Agreement, dated as of July 23, 2000, (the "Subscription
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, 3,906,250
shares of the Company's Convertible Voting Preferred Stock, par value $0.001 per
share (the "Preferred Stock"), all on the terms and subject to the conditions
set forth in the Subscription Agreement.
WHEREAS, the Preferred Stock is convertible into shares of the Company's
Common Stock, par value $0.001 per share (the "Common Stock"), in accordance
with the terms of the Certificate of Designation of the Powers, Preferences and
Relative, Participating, Optional and Other Special Rights and Qualifications,
Limitations and Restrictions thereof of the Preferred Stock attached hereto as
Exhibit A (the "Certificate of Designation").
WHEREAS, the Investor and the Company wish to set forth certain agreements
concerning the ownership and transfer of shares of Common Stock, and certain
other matters as provided herein.
NOW, THEREFORE, in consideration of the mutual and dependent promises set
forth herein, the Investor hereby agrees with the Company, and the Company
hereby agrees with the Investor, as follows
1. EFFECTIVE DATE OF AGREEMENT.
This Agreement shall become effective upon the Closing, pursuant to and as
defined in the Subscription Agreement (the "Effective Date").
2. DEFINITIONS.
(a) Unless the context requires otherwise, capitalized terms used but not
defined in this Agreement have the meanings given in the Subscription Agreement.
(b) As used in this Agreement, the following terms have the respective
meanings set forth below (applicable to both the singular and plural forms of
such terms):
"$" means United States dollars.
"Actual Voting Power" means, as of the date of determination, the total
number of votes attaching to the outstanding securities entitled to vote for the
election of directors of the Company.
"Affiliate" has the meaning set forth in Rule 12b-2 of the rules and
regulations promulgated under the Exchange Act; provided, however, that for
purposes of Section 3 of this Agreement, none of the following shall be deemed
to be an Affiliate of the Investor: (i) the Company, (ii) the Xxxx Inlet
Parties, or (iii) any Person who would be an Affiliate of Investor solely
because such Person is an Affiliate of any of the Persons referred to in clause
(i) or (ii) of this provision.
"Affiliated Director" means any member of the Board who has been
designated by Investor for nomination or appointment as a director of the
Company pursuant to a Voting Agreement.
"Agreement" means this Investor Agreement, as amended, modified,
supplemented or restated from time to time in accordance with the terms hereof.
"Beneficially Owned" and "Beneficial Ownership" have the meaning set forth
in Rule 13d-3 of the Exchange Act.
"Blackout Period" has the meaning given in Section 6(e)(ii).
"Board" means the board of directors of the Company.
"Certificate of Designation" has the meaning set forth in the
second recital.
"Change of Control" means (i) the acquisition by any Person or 13D Group
of direct or indirect Beneficial Ownership of Voting Securities representing
fifty per cent (50%) or more of the Total Voting Power, (ii) any merger,
consolidation or business combination involving the Company or any material
portion of its business, (iii) a sale of all or a substantial portion of the
assets of the Company or (iv) a recapitalization, restructuring, liquidation,
dissolution or similar extraordinary transaction relating to the Company or any
material portion of its business.
"Commission" means the United States Securities and Exchange
Commission.
"Common Stock" means the Company's Common Stock, $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 the Company and its successors and assigns.
"Xxxx Inlet Parties" means (i) Xxxx Inlet VoiceStream PV/SS PCS, L.P.,
(ii) Xxxx Inlet VoiceStream PCS, LLC, (iii) Xxxx Inlet VoiceStream II, LLC, (iv)
Xxxx Inlet VoieStream III, LLC and any similar joint venture in which the
Company or its Subsidiaries from time to time are principals.
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"Disinterested Board Approval" means the affirmative vote or written
consent of a majority of the Board (excluding Affiliated Directors) then in
office.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Imputed Cost of Funds" means LIBOR plus 275 basis points.
"Includable Security" means any convertible securities, options, warrants
or other rights which are convertible into or exchangeable or exercisable for
securities entitled to vote for the election of directors, in later than 60
days, if the effect of excluding the foregoing from the calculation of Voting
Securities is to deprive the Company of the protections or to deprive the
Investor of the benefits of the provisions of this Agreement to any substantial
degree.
"Incremental Shares" has the meaning given in Section 3(d)(i).
"Investor" means the Investor or a wholly-owned subsidiary thereof, and,
unless otherwise specified herein or unless the context requires otherwise,
includes its successors and all Permitted Affiliate Transferees of the Investor
which from time to time hold shares of Voting Securities.
"Investor Group" means Investor and any of its Affiliates.
"Investor's Percentage Ownership" has the meaning given in
Section 3(a).
"Investor Tender Offer" means a bona fide public tender offer subject to
the provisions of Regulation 14D when first commenced within the meaning of Rule
14d-2(a) of the rules and regulations under the Exchange Act, by any of the
Investor Group (or any 13D Group that includes any of the Investor Group, other
than the Special 13D Group) to purchase or exchange for cash or other
consideration any Common Stock and which consists of an offer to acquire one
hundred per cent (100%) of the outstanding Common Stock and is conditioned
(which condition may not be waived) on a majority of the shares of outstanding
Common Stock held by shareholders other than any of the Investor Group being
tendered and not withdrawn with respect to such offer.
"Merger Agreement" means the Agreement and Plan of Merger, dated as of
July 23, 2000, between the Company and the Investor.
"NASD" has the meaning given in Section 6(a)(iii).
"New Issue Securities" has the meaning given in Section 5(c)(i).
"Other Shareholders" has the meaning given in Section
6(b)(iii)(A).
"Permitted Affiliate Transferee" means, in the case of the Investor, any
entity in which the Investor owns, directly or indirectly, more than forty per
cent (40%) of the
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outstanding voting power and of which the members of the Investor Group
collectively are the largest shareholder.
"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.
"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.
"Registrable Securities" has the meaning given in Section
6(a)(ii).
"Registration Expenses" has the meaning given in Section
6(a)(iii).
"Representative" has the meaning given in Section 6(b)(iv).
"Selling Expenses" has the meaning given in Section 6(a)(iv).
"Special 13D Group" means any 13D Group that now or hereafter may exist by
virtue of a Voting Agreement.
"Standstill Period" has the meaning given in Section 3(b)(i).
"Standstill Termination Event" means the date on which the first of the
following occurs: (i) the Investor Group Beneficially Owns, in the aggregate,
less than five percent (5%) of the Total Voting Power, (ii) the Investor Group
Beneficially Owns, in the aggregate, more than ninety percent (90%) of the Total
Voting Power, or (iii) a Terminating Change of Control.
"Subsidiary" means, as to any Person, another Person which is an entity as
to which such Person owns more than fifty per cent (50%) of the outstanding
voting power and more than fifty per cent (50%) of the equity.
"Terminating Change of Control" means (i) the acquisition by any Person
(other than the Special 13D Group) of direct or indirect Beneficial Ownership of
Voting Securities representing fifty per cent (50%) or more of the Total Voting
Power, (ii) a sale of all or substantially all of the assets of the Company or
(iii) a liquidation or dissolution of the Company.
"Third Party Offer" has the meaning given in Section 3(b)(i)(D).
"Threshold Percentage" means (i) from the date hereof until the second
anniversary of the Effective Date, thirty-three per cent (33%), (ii) thereafter
and until the
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third anniversary of the Effective Date, thirty-six per cent (36%), and (iii)
thereafter until the fifth anniversary of the Effective Date, forty per cent
(40%). The Threshold Percentage shall be calculated as set forth in Section 3(a)
below and subject to adjustment as provided below in Section 3(d)(iii).
"Total Voting Power" means, as of the date of determination, the total
number of votes which may be cast in the election of directors of the Company at
any meeting of shareholders of the Company if all Voting Securities then
outstanding are present and voted to the fullest extent possible at such
meeting, assuming the conversion, exchange or exercise of all then outstanding
convertible securities, options, warrants or other rights which, within 60 days
of such date, are convertible into or exchangeable or exercisable for securities
entitled to vote for the election of directors or which are Includable
Securities.
"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).
"Triggering Person" has the meaning given in Section 3(c)(i)(A).
"Voting Agreement" means a voting or similar agreement to which the
Investor and the Company are party from time to time which provides, among other
things, for the voting of securities for the election of directors of the
Company.
"Voting Security" means, as of the date of determination, the Common Stock
of the Company, the Preferred Stock, any other security generally entitled to
vote for the election of directors and any outstanding convertible securities,
options, warrants or other rights which, within sixty (60) days of such date,
are convertible into or exchangeable or exercisable for securities entitled to
vote for the election of directors or which are Includable Securities.
"13D Group" means any group of persons formed for the purpose of
acquiring, holding, voting or disposing of Voting Securities which would be
required under Section 13(d) of the Exchange Act, and the rules and regulations
promulgated thereunder, to file a statement on Schedule 13D or a Schedule 13G
with the Commission as a "person" within the meaning of Section 13(d)(3) of the
Exchange Act if such group Beneficially Owned sufficient securities to require
such a filing under the Exchange Act. When references herein are to a group
under Section 13(d) and not to members of such group, such references shall be
deemed to refer to actions of the group acting as such group and not to the
individual actions of any members of such group.
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
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Agreement, it shall be deemed to refer to this Agreement and not to a particular
Section of this Agreement unless expressly stated otherwise.
3. STANDSTILL.
(a) General. For purposes of this Section 3, at any relevant date, the
ownership percentage of the Investor Group (the "Investor's Percentage
Ownership") and the Threshold Percentage shall be calculated after giving effect
to:
(i) the Common Stock issuable under outstanding options and stock
purchase rights, exercisable within sixty (60) days of the date of
calculation, granted under the Company's employee stock plans (including
pursuant to obligations under employee benefit plans of acquired
businesses that are assumed in the acquisitions of such businesses);
(ii) the number of shares of Common Stock issuable upon conversion
of the Preferred Stock pursuant to the Certificate of Designation whether
or not the Preferred Stock is, on the relevant date of determination of
Investor's Percentage Ownership, convertible into Common Stock; and
(iii) the issuance of Common Stock pursuant to the conversion,
exchange or other exercise of any other options, warrants, convertible or
exchangeable securities or other rights or instruments carrying the right
to acquire Common Stock to the extent that such are convertible,
exchangeable or exercisable within sixty (60) days of the date of
calculation or are Includable Securities.
The Investor's Percentage Ownership shall be equal to the number of shares
of Common Stock Beneficially Owned by the Investor Group plus the number of
shares of Common Stock issuable upon conversion of the Preferred Stock whether
or not the Preferred Stock is, on the relevant date of determination of
Investor's Percentage Ownership, convertible into Common Stock.
(b) Standstill Obligations.
(i) Limitation. Unless there shall have occurred a Standstill
Termination Event, until the fifth anniversary of the date of this Agreement
(the "Standstill Period"), except with Disinterested Board Approval, no member
of the Investor Group shall, directly or indirectly,
(A) acquire or agree to acquire any Voting Securities (except by way
of (x) stock splits, stock dividends or other distributions or offerings
made available to holders of Common Stock generally, or (y) stock options,
warrants or other rights to purchase Voting Securities the acquisition of
which by Investor have received Disinterested Board Approval) if, in any
such case, the effect of such acquisition would be to increase the
Investor's Percentage Ownership to more than the Threshold Percentage;
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(B) (other than in connection with an actual sale of such
securities) exercise any stock options, warrants or other rights to
purchase Voting Securities approved by the Board of the Company if, in any
such case, the effect of such exercise would be to increase the Investor's
Percentage Ownership to more than the Threshold Percentage;
(C) solicit proxies with respect to the Voting Securities or become
a "participant" in any "election contest" (as such terms are used in Rule
14(a)-11 of Regulation 14A promulgated under the Exchange Act) relating to
the election of directors of the Company (it being understood that
Purchaser shall not be deemed to be such a participant merely by reason of
the membership of any Affiliated Directors on the Board pursuant to the
terms of the Voting Agreement); provided that if any other party (a
"Breaching Party") shall be in breach under the Voting Agreement (which
breach, in the reasonable judgment of Investor, could likely result in an
Affiliated Director not being elected in accordance with the terms of the
Voting Agreement), Investor may engage in such activities for the limited
purpose of electing the Affiliated Director and, if Investor so elects,
for nominees other than the nominees which the Breaching Party otherwise
would be entitled to designate under the Voting Agreement; or
(D) join a 13D Group (other than the Special 13D Group) with any
Person or otherwise induce, attempt to induce or in any manner act in
concert with any such Person for the purpose of initiating or effectuating
a tender offer or exchange offer for any Voting Securities (a "Third Party
Offer") or a transaction which would result in a Change of Control (a
"Third Party Change of Control"); provided that the provisions of this
clause (D) shall not be applicable if any member of a Special 13D Group
holding more than five per cent (5%) of the Voting Securities (other than
a member of the Investor Group) shall have engaged in any material respect
in any of the activities referred to in this clause (D).
(E) initiate, induce, attempt to induce or in any manner act in
concert with any such Person for the purpose of initiating or effectuating
a tender or exchange offer or Change of Control;
(F) disclose to any Person any intention, plan or arrangement
inconsistent with the foregoing;
Nothing in this Section 3(b)(i) shall have the effect of precluding a member of
the Investor Group from participating in a Third Party Offer or voting or
agreeing to vote its shares in favor of a Third Party Change of Control in which
the Investor Group would receive consideration on the same basis as is generally
available to other holders of Common Stock or (z) prohibiting the Affiliated
Directors (acting in their capacity as such) from (1) participating in
discussions with other members of the Board or (2) in meetings of the Board.
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If any member of the Investor Group makes such an acquisition or exercise
that would increase the percentage interest of the Investor Group in the Actual
Voting Power to more than the Threshold Percentage, whether during the period
that the Merger Agreement shall be in full force and effect or after the
termination of the Merger Agreement, such excess shares shall (for so long as
the Actual Voting Power exceeds the Threshold Percentage) be voted in a manner
proportionate to shares voted by the shareholders of the Company other than the
Investor Group; provided, that if the excess shares shall result from the bad
faith actions of the Investor Group or its Affiliates, it shall promptly divest
such excess; provided, further, however, that no member of the Investor Group
shall be obligated to divest itself of such excess pursuant to this Section
3(b)(i) until such time as such divestment would not subject such member of the
Investor Group to liability under Section 16(b) of the Exchange Act or any other
applicable provision of Federal or state law.
(ii) Recapitalizations, Etc. Notwithstanding Section 3(b)(i), no
member of the Investor Group shall be obligated to dispose of any Voting
Securities if the aggregate percentage ownership of the Investor Group is
increased as a result of (A) a recapitalization of the Company, (B) a repurchase
of Voting Securities by the Company, (C) any other action taken by the Company
or its Affiliates other than the Investor Group.
(iii) Reinstatement of Standstill. If a Standstill Termination Event
shall have occurred by virtue of the Investor Group's Beneficially Owning less
than five per cent (5%) of the Voting Power and thereafter the Investor Group
shall thereafter Beneficially Own more than five per cent (5%) of the Voting
Power, the provisions of this Section 3 shall be deemed to have been reinstated.
(c) Exception for Certain Third-Party Acquisitions.
(i) Exception to Standstill Obligation. Notwithstanding
Section 3(b)(i), the Investor Group may:
(A) acquire Voting Securities without regard to the limitations set
forth above but in accordance with Section 3(c)(ii) if at any time any
person or 13D Group (other than the Special 13D Group in the case of
clause (y) below) of persons (such person or persons together with any of
their Affiliates, collectively, a "Triggering Person"), directly or
indirectly, (x) makes a bona fide offer to acquire, or (y) acquires,
Beneficial Ownership of Voting Securities which, if added to the Voting
Securities (if any) already Beneficially Owned by such Triggering Person,
would represent ownership of Voting Securities greater than the Threshold
Percentage;
(B) with Disinterested Board Approval, make an Investor
Tender Offer during the Standstill Period; and
(C) with Disinterested Board Approval, acquire Voting Securities
without regard to the limitations set forth above.
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The Company shall give Investor written notice of the occurrence of any event of
the type referred to in clause (A) promptly after it obtains knowledge of such
event.
(ii) Competing Offers. If an event identified in Section 3(c)(i)(A)
occurs and shall not have been withdrawn or terminated, the Investor Group shall
be permitted to take such action and make such offers as may be considered to be
of the same nature and type of action or offer and for the same resulting number
of shares as that which is being taken by the Triggering Person; provided that
the Investor Group may only acquire that number of shares which when added to
the number of shares already owned by the Investor Group shall not exceed the
number of shares acquired or to be acquired (assuming any proposals or offers to
purchase have been consummated) by the Triggering Person. In proceeding with any
action or offer permitted under this Section 3(c)(ii), the Investor Group shall
be permitted to offer more favorable terms such as price, cash versus securities
or other such terms as may be consistent with an offer of the same nature and
type of consideration as that which is being proposed by the Triggering Person.
(iii) No Contesting. If the Investor Group shall take any such
action permitted by this Section 3(c), the Company agrees that it shall not in
any way (whether by active opposition, Board announcement or otherwise) contest
such action, subject in all events to the fiduciary obligations of the Company's
Board and officers to the Company's stockholders.
(d) Option to Purchase Incremental Shares.
(i) Incremental Shares. If an event identified in Section 3(c)(i)
occurs and as a result the Investor Group acquires Voting Securities which
increase the Investor Group's percentage interest in the Actual Voting Power to
more than the Threshold Percentage (the "Incremental Shares"), and thereafter
the Triggering Person holds Voting Securities representing a percentage of the
Total Voting Power less than the Threshold Percentage, then, upon the expiration
of the Investor Group 's right to dispose of the Incremental Shares as provided
in Section 3(d)(ii) below, the Investor hereby grants to the Company or a
designee selected with Disinterested Board Approval, for a period of ninety (90)
days (subject to extension in the event of Investor's exercise of rights under
Section 3(d)(ii) below), an option to acquire any Incremental Shares at a price
equal to the price paid by the Investor Group for such shares, plus such
expenses and costs reasonably necessary to acquire the Incremental Shares and
incurred by the Investor Group in acquiring the Incremental Shares (including
the Imputed Cost of Funds of the Investor Group of holding the incremental
Shares until acquired by the Company or such designee); provided, however, that
the Investor Group shall not be obligated to sell any Voting Securities pursuant
to this Section 3(d)(i) until such time as such sale would not subject the
Investor Group to liability under Section 16(b) of the Exchange Act or any other
applicable provision of Federal or state law.
(ii) Disposition. In the event that the Investor Group has acquired
Incremental Shares from a seller or sellers other than the Company, for a period
of sixty (60) days from the date on which the Investor Group holds Incremental
Shares, the
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Investor Group shall have the right to sell such Incremental Shares as follows:
(A) to an independent third party in a bona fide transaction or transactions;
(B) if Rule 144 is available, into the public market in accordance with the
terms of Rule 144; or (C) as provided under both (A) and (B). In the event that
the Investor Group elects to dispose of the Incremental Shares as provided in
this Section 3(d)(ii), Investor shall provide written notice to the Company of
such disposition and the purchase option granted to the Company pursuant to
Section 3(d)(i) shall apply only to those Incremental Shares which have not been
so disposed of; provided, however, that the Investor Group shall not be
obligated to sell any Voting Securities pursuant to this Section 3(d)(ii) until
such time as such sale would not subject the Investor Group to liability under
Section 16(b) of the Exchange Act or any other applicable provision of Federal
or state law.
(iii) Adjustment for Failure to Exercise Option. In the event that
the Company or its designee fails to exercise its option as provided in Section
3(d)(i), the Threshold Percentage shall be increased to a percentage equal to
the percentage of the Actual Voting Power held by the Investor Group upon the
expiration of the right to exercise such option by the Company or such designee.
(iv) Voting of Incremental Shares. Until the Incremental Shares
shall have been disposed of as provided in Section 3(d)(ii) and, if applicable,
the option of the Company or its designee provided in Section 3(d)(i) shall have
expired, the Incremental Shares shall be voted in a manner proportionate to
shares voted by the shareholders of the Company other than the Investor.
(v) No Intentional Circumvention. The Investor shall not attempt to
circumvent the provisions of this Section 3(d) by taking any action that would
have the effect of extending the periods for which Section 16(b) liability would
apply.
(e) Nothing in this Section 4 shall be deemed to prevent the Investor
Group or the Company from consummating the transactions contemplated by the
Merger Agreement.
4. TRANSFER.
(a) The Investor Group shall not be permitted to Transfer any shares of
the Preferred Stock prior to the termination of the Merger Agreement. The Common
Stock shall be freely tradable and may be Transferred by the Investor as
provided in this Section 4.
(b) Provided that it shall have provided prior written notice to the
Company, the Investor (and each Permitted Affiliate Transferee) shall have the
unrestricted right to Transfer its Common Stock and the rights and obligations
hereunder to any Permitted Affiliate Transferee who agrees in writing to be
bound by the terms of this Agreement.
(c) The Investor and its Permitted Affiliate Transferees shall also have
the right to Transfer shares of Common Stock (but not the rights and obligations
hereunder
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unless otherwise provided herein or with Disinterested Board Approval) to
Persons other than Permitted Affiliate Transferees of the Investor.
(d) The Company agrees to cooperate in all reasonable respects (without
any obligation to incur any liability or expense) in connection with any
Transfer by the Investor permitted by this Section 4, so as to enable such
Transfer to be effected on an optimal basis for tax and other applicable
regulatory purposes.
5. ISSUANCE OF COMPANY SECURITIES.
(a) Subject to the provisions of this Section 5, the Board shall have the
ability to determine the manner in which the Company shall raise any additional
funding.
(b) For purposes of this Section 5, the term "equity securities" shall
(without duplication of previously issued equity securities in the case of
exercise or conversion) mean any equity securities, including 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 5 shall not apply with respect to issuances of
the Company's equity securities in connection with (i) a stock dividend, (ii) 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, (iii) 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 or (iv) a bona fide public
offering of equity securities.
(c) If at any time after the date hereof, the Company proposes to issue
equity securities of any kind (except as provided in Section 5(b)), then the
Company shall:
(i) give Investor 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
(ii) offer Investor a right to purchase a portion of the New Issue
Securities up to the Investor's Percentage Ownership on the terms and conditions
stated in such notice.
(d) If the Investor wishes to exercise its purchase rights hereunder, it
must deliver a written notice to that effect to the Company within 15 days after
the date the notice specified in Section 5(c) was delivered by the Company. To
the extent that the
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Company offers two or more securities in units, the Investor 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. The Investor must complete the purchase of
such New Issue Securities at the same time and 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 5(d). If the purchase and sale of such New Issue
Securities by the Investor is subject to any prior regulatory approval, consent,
waiver, notice or like requirement, then provided that the Investor 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, provided, that
such 90-day period shall be extended by an additional 90 days upon written
request of the Investor, unless the Company shall deliver to the Investor an
opinion of counsel experienced in the relevant area of law or regulation that
such regulatory requirements cannot be satisfied by the Investor. At the closing
of the purchases of the New Issue Securities by the Investor, the Company shall
deliver to the Investor, 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 the Investor has elected to purchase.
(e) Upon the expiration of the offering periods described in the first
sentence of Section 5(d), or upon any failure of the Investor to complete the
purchase of New Issue Securities in the time required under Section 5(d), the
Company will be free to sell such New Issue Securities that the Investor has not
elected to purchase (or have failed to purchase within the required time) during
the 90 days (or applicable longer period under Section 5(d)) following such
expiration (or failure) on terms and conditions per share no more favorable to
the purchasers thereof than those offered to the Investor. Any New Issue
Securities offered or proposed to be sold by the Company after such 90-day
period (or applicable longer period under Section 5(d)) or on more favorable
terms and conditions per share to the purchaser must be reoffered to the
Investor pursuant to this Section 5. The election by the Investor not to
exercise its purchase rights under this Section 5 in any one instance shall not
affect its rights as to any subsequent proposed issuance other than the decrease
in Investor's Ownership Percentage resulting therefrom. Any sale of such
securities by the Company without first giving the Investor the rights described
in this Section 5 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 Company hereby agrees that it shall cause each of its wholly-owned
Subsidiaries to comply with the terms of this Section 5 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).
11
(g) The Company represents that it has taken all action, and covenants to
take all such further action, to ensure that the provisions of Section 203 of
the Delaware General Corporation Law shall not be applicable to Investor. The
Company shall not adopt a "poison pill" share purchase rights plan (or similar
plan) unless any such plan excludes Investor and its Affiliates from the
definition of "Acquiring Person" (or similarly exempts Investor and its
Affiliates from the application of such plan). Unless there shall have been a
Terminating Change of Control or the Investor Group Beneficially Owns in the
aggregate less than ten percent (10%) of the Total Voting Power, the Company
shall not take any further action not contemplated by this Agreement which is
not generally applicable to stockholders of the Company and which has the effect
of discriminating against Investor with respect to ownership, voting rights or
rights to acquire or Transfer securities of the Company.
(h) During the term of this Agreement, the Company shall not issue any
equity security (including, without limitation, any Voting Security) which
provides the holder(s) thereof with any extraordinary or special voting rights
or any right to veto any action of the Company, unless such issuance is approved
in writing in advance by the Investor. Further, the Company shall not consider
or approve any such issuance prior to the Effective Date.
6. 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 6:
(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
owned by the Investor or any affiliate of the Investor as of the date of this
Agreement, (B) any additional Common Stock acquired by the Investor from the
Company, 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), (B) and (C);
(iii) "Registration Expenses" shall mean all expenses incident to
the Company's performance of or compliance with its obligations under this
Section 6, 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),
12
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 6 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 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) Commencing on the date that is forty-five (45) days after the
termination of the Merger Agreement, the Investor shall have the right, upon
delivery of written notice to the Company (not more than twice in any
twelve-month period) 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 6(b),
provided that the Company need effect only eight (8) such demand registrations
(in the aggregate for all Persons entitled to the benefit of this provision by
virtue of this Agreement) pursuant hereto; provided further, that any such
registration demanded by the Investor under this Section 6(b)(i) must be for an
amount of Common Stock having an aggregate anticipated sales price of at least
$25,000,000.
(ii) The rights of the Investor to demand the registration of its
Registrable Securities shall continue until (A) 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 the terms
hereof or, if earlier, (B) all its remaining Registrable Securities 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
(B), that there is a public float of the Common Stock equal to at least fifteen
per cent (15%) of the total outstanding shares of Common Stock.
(iii) If the Investor shall have demanded a registration of
Registrable Securities then the Company shall:
13
(A) promptly give written notice of the proposed registration to all
other shareholders entitled to piggyback registration rights under Section
6(c) hereof or any other contractual agreement of the Company (the "Other
Shareholders") and
(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 6(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 6(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 6(b), subject to this
Section 6(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 6(b), if the Representative
advises the Investor and the Company in writing that (A) marketing factors
require a limitation on the number of shares to be underwritten or (B) 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 (A), 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 (B), 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 shall 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 6(b)(i). If the Investor does not so elect, then the
registration of its shares under Section 6(b)(i) shall not proceed and shall 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 shall not thereby be limited.
14
(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, then the Company shall
have the right to defer such filing for a period of not more than ninety (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 twelve-month
period; provided, that notwithstanding the provisions of clause (b)(i) above,
the Investor shall have the right to up to two demand registrations within the
nine-month period following the expiration of such deferral period.
(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 shall:
(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 6(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
6(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 6(c)(i)(A). In such event, the right of the Investor to
registration pursuant to this Section 6(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 6(c), if the Representative advises the Investor or the Company in
writing that (A) the inclusion of
15
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 (B) that marketing factors require a limitation on the number of
shares to be underwritten, then, in the case of the preceding clause (A), 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 (B), 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) 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 such determination to the
Investor and, thereupon, shall be relieved of its obligation under this Section
6(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 6(c). The rights of the Investor to registration of its Registrable
Securities under this Section 6(c) shall continue until (A) 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
the terms hereof or, if earlier, (B) 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
(B), that there is a public float of the Common Stock equal to at least fifteen
per cent (15%) of the total outstanding shares of Common Stock.
(d) Expenses of Registration. Upon the exercise of registration rights set
forth in this Section 6, the Company shall pay all Registration Expenses
incurred in connection with any registration, qualification or compliance
pursuant to this Section 6, 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 6, the Company shall 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 6, at its expense, the
Company shall:
16
(i) prepare and file with the Commission, as promptly as practical
after receipt of a request for registration pursuant to this Section 6, 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
shall (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 (10) 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 one
hundred twenty (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 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 or any of its 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
17
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 shall
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 statements therein not misleading;
and subject to the Blackout Period provisions in clause (ii) above, the Company
shall 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 shall 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
18
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, 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 (12) 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 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 6(e)(vi) hereof, the
Investor shall 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 6(e)(vi) hereof, and, if so directed by the Company (at the Company's
expense), the Investor shall 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.
19
(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 shall indemnify
and hold harmless the Investor, its directors, officers, employees, agents, 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 (a "Bega Indemnified Party"
and collectively, "Bega Indemnified Parties") against any and all losses, fines,
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 shall not be unreasonably withheld) to
which such Bega Indemnified Party 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 shall reimburse the
Investor and each Bega Indemnified Party 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 any of the foregoing indemnitees pursuant to this Section 6(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 6(e)(vi) hereof (prior to the amendment or
supplement thereunder having been furnished).
20
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 Bega
Indemnified Party and shall survive the transfer of such securities by the
Investor or such underwriter.
(ii) The Investor shall, if Registrable Securities held by it are
included in any registration statement filed in accordance with the provisions
hereof, (A) indemnify the Company, its directors, officers, employees, agents
and controlling Persons, all other prospective sellers, each person who
participates as an underwriter, and their respective directors, officers and
controlling Persons (each a "Xxxxxx Indemnified Party" and collectively, "Xxxxxx
Indemnified Parties") against all claims, fines, losses, damages and liabilities
(or actions in respect thereof) and expenses to which such Xxxxxx Indemnified
Party 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 (x) 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 (y) 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 (B) reimburse the Company and each Xxxxxx
Indemnified Party 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 (A) and clause (B), 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, the
Investor or any Xxxxxx Indemnified Party, the underwriters or 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 6(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
21
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 6 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
6(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 agree that it would not be just and equitable if a contribution
pursuant to this Section 6(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 6(f) shall not
exceed the net proceeds from
22
the offering of Registrable Securities (before deducting expenses) received by
the Investor with respect to such offering.
(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 6.
(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:
(i) 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;
(ii) 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
(iii) 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 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.
23
(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 (10) calendar days prior to, and during the ninety (90) 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 (2) Business Days prior to the anticipated beginning of the ten (10)
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 ninety-day or other period. The provisions of
this Section 6(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 6(i)(ii).
(iii) If any registration of Registrable Securities shall be in
connection with an underwritten public offering, the Company agrees 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 (10) days prior to, and during the
ninety-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.
(j) Transfer. If the Investor shall have made a Transfer as permitted by
the terms of this Agreement of an amount of Common Stock representing more than
five per
24
cent (5%) of the Actual Voting Power, and unless the Investor shall have agreed
otherwise with the transferee of such Transfer (including for this purpose, such
transferee's Permitted Affiliate Transferees) (a "Transferee"), both the
Investor and the Transferee shall remain entitled, as to the shares of Common
Stock owned respectively by each of them, to the demand and piggyback
registration rights set forth in this Section 6, which shall survive such
Transfer. Unless agreed otherwise, all rights of the Investor under this Section
6 with respect to such shares of Common Stock Transferred shall terminate upon
Transfer.
7. 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
Investor shall bear a legend reflecting the restrictions on the transfer of such
shares contained in this Agreement and in the Subscription Agreement.
(b) Waiver; Amendments. Except as expressly provided otherwise herein,
neither this Agreement nor any provision hereof may be changed, waived,
discharged or terminated orally, but only by an instrument in writing signed by
the Company and the Investor.
(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 the Investor 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 party hereto agrees that the other party, 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.
(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 the Investor, at the Investor's address appearing below or at any
other address the Investor may have provided in writing to the Company and (ii)
if to the Company, at 0000 000xx Xxxxxx XX, Xxxxxxxx, Xxxxxxxxxx 00000,
Attention: _________, or such other address as the Company may have furnished to
the Investor in writing, with a copy (which shall not constitute notice) to
Xxxxxxxx Xxxxxx & Xxxxxx LLP, 000 Xxxxx Xxxxxx, Xxx Xxxx, XX 00000, U.S.A.,
Telephone: (000) 000-0000, Facsimile: (000) 000-0000; Attention: Xxxxx X.
Xxxxxxx, Esq. 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
25
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.
if to the Company, to it at:
VoiceStream Wireless Corporation
0000 000xx Xxxxxx X.X.
Xxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxx X. Xxxxxx
Telephone: 000-000-0000
Facsimile: 000-000-0000
with a copy (which shall not constitute notice) to:
Xxxxxxxx Xxxxxx & Xxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxxx, Esq.
Telephone: 000-000-0000
Facsimile: 000-000-0000
if to the Investor, to it at :
Deutsche Telekom AG
140 Xxxxxxxxx-Xxxxx Allee
S3113 Bonn
Germany
Attention: Xxxxx Xxxx
Telephone: 00-000-000-00000
Facsimile: 49-228-181-44177
with a copy (which shall not constitute notice) to:
Xxxxxx Xxxxxxxx, Xxxxx & Xxxxxxxx
Xxx Xxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxx, Esq.
Telephone: 000-000-0000
Facsimile: 000-000-0000
with a copy (which shall not constitute notice) to:
26
Hengeler Xxxxxxx Xxxxxxx Xxxxx
Trinkausstrasse
D-40213 Dusseldorf
Germany
Attention: Xx. Xxxxxx Xxxxxx
Telephone:
Facsimile:
(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.
(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 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) 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 fshall 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.
27
(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.
28
IN WITNESS WHEREOF, the parties hereto have executed this Investor
Agreement as of the date first above written.
DEUTSCHE TELEKOM AG
/s/ Xxxxx Xxxx
---------------------------------
Name: Xxxxx Xxxx
Title: Head of International
Legal Affairs
VOICESTREAM WIRELESS CORPORATION
/s/ Xxxx X. Xxxxxxx
----------------------------------
Name: Xxxx X. Xxxxxxx
Title: Chief Executive Officer
29
