XXXXXX COMMUNICATIONS CORPORATION
(FORMERLY, XXXXXX HOLDINGS CORPORATION)
AN OKLAHOMA CORPORATION
SHAREHOLDERS' AGREEMENT
DATED AS OF FEBRUARY 26, 1997
TABLE OF CONTENTS
Page
SECTION 1 - RIGHTS OF SHAREHOLDERS 1
SECTION 2 - DEFINITIONS 2
2.1 Definitions
2.2 Construction
SECTION 3 - REGISTRATION RIGHTS 8
3.1 Requested Registration
3.2 Company Registration
3.3 Expenses of Registration
3.4 Registration Procedures
3.5 Registration on Form S-3
3.6 Indemnification
3.7 Information by Holder
3.8 Rule 144 Reporting
3.9 Transfer of Registration Rights
3.10 Termination of Registration Rights
3.11 Other Registration Rights
SECTION 4 - AFFIRMATIVE COVENANTS OF THE COMPANY 18
AND THE SHAREHOLDERS
4.1 Board of Representation and Voting Agreement
of the Shares
SECTION 5 - PREEMPTIVE RIGHTS 20
5.1 Right to Purchase
5.2 Price
5.3 Closing
SECTION 6 - RIGHTS OF REFUSAL 22
6.1 Right of Refusal
6.2 Price
6.3 Closing
6.4 Termination
SECTION 7 - RIGHT OF CO-SALE 24
7.1 Co-Sale
7.2 Exclusions
i
SECTION 8 - RESTRICTIONS ON TRANSFER 25
8.1 Transfer Restrictions
8.2 Exceptions
8.3 Termination
SECTION 9 - PUT RIGHTS 25
9.1 Right to Put
9.2 Repurchase Price
9.3 Failure to Purchase
9.4 Payment
SECTION 10 - CALL RIGHTS 28
10.1 Right to Call
10.2 Call Price
10.3 Payment
10.4 Termination
SECTION 11 - MISCELLANEOUS 29
11.1 Waivers and Amendments
11.2 Governing Law
11.3 Successors and Assigns
11.4 Entire Agreement
11.5 Notices
11.6 Severability
11.7 Counterparts
11.8 Descriptive Headings
ii
SHAREHOLDERS' AGREEMENT
This Shareholders' Agreement is entered into as of February ___, 1997, by
and among Xxxxxx Communications Corporation (formerly, Xxxxxx Holdings
Corporation), an Oklahoma corporation (the "Company"), and the Persons named
in SCHEDULE A attached hereto and made a part hereof (collectively the
"Shareholders").
RECITALS
WHEREAS, the Company has authorized capital stock consisting of 1,000,000
shares of Class A Voting Common Stock, $1.00 par value per share (the "Class
A Common Stock"), 31,000 shares of Class B Common Stock, $1.00 par value per
share (the "Class B Common Stock") (collectively the "Common Shares"),
100,000 shares of Class A 5% Non-Cumulative, Non-Voting, Non-Convertible
Preferred Stock, $1.00 par value per share (the "Class A Preferred Stock"),
100,000 shares of Class B Convertible Preferred Stock (the "Class B Preferred
Stock") and 100,000 shares of Class C 8% Cumulative, Non-Voting,
Non-Convertible Preferred Stock (collectively the "Preferred Shares" and
together with the Common Shares, the "Shares");
WHEREAS, each Shareholder has a substantial investment in the Company by
reason of such Shareholder's ownership of the Shares shown on SCHEDULE A;
WHEREAS, the terms "Shareholder" or "Shareholders" as used herein shall
include the parties hereto other than the Company, and any future holder of
any Shares who become a party to this Agreement; and
WHEREAS, the parties believe that it is in the best interest of the
Company and the Shareholders to make provision for (a) the future disposition
of certain Shares of the Company, and (b) other matters relating to the
governance of the Company;
NOW, THEREFORE, in consideration of the mutual promises and covenants
hereinafter set forth, the parties hereto agree as follows:
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SECTION 1
RIGHTS OF SHAREHOLDERS
The Company hereby grants to the Shareholders the registration rights,
rights of first refusal, rights of transfer, information rights, sale and
co-sale rights, rights regarding representation on the Board of Directors and
the other rights set forth herein (collectively the "Rights"). The
Shareholders accept the Rights and agree to be bound by the obligations
contained herein.
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SECTION 2
DEFINITIONS
2.1 DEFINITIONS. Capitalized terms used herein and not otherwise
defined herein shall have the following meanings:
"AFFILIATE" has the meaning given such term in the Purchase
Agreement.
"AGREEMENT" shall mean this Shareholders' Agreement, as the same may
be amended, supplemented, restated, replaced or otherwise modified, in each
case from time to time and whether in whole or in part.
"APPLICABLE RATE" shall mean 8% per annum, except during any period
a Noncompliance Event exists, the Applicable Rate shall mean 16% per annum.
"CAPITAL TRANSACTION" shall mean (i) a voluntary or involuntary
liquidation, dissolution or winding up of the affairs of the Company, (ii) a
merger or consolidation of the Company into or with another corporation in
which the shareholders of the Company shall own less than 50% of the voting
securities of the surviving corporation or its parent, (iii) the sale,
transfer or lease (but not including a transfer or lease by pledge or
mortgage by a bona fide lender) of all or substantially all of the assets of
the Company, (iv) the consummation of a Public Offering of the Company's
Common Shares, or (v) the sale or transfer (but not including a transfer or
lease by pledge or mortgage by a bona fide lender) of the Purchasers' equity
ownership interest in the Company, whether by redemption or otherwise.
"CHANGE OF CONTROL EVENT" shall mean (i) any merger or consolidation of
the Company with or into another Person as a result of which the Shareholders
shall own less than fifty and one tenth percent (50.1%) of the Voting
Securities of the consolidated or surviving corporation or its parent, (ii)
the sale, transfer or lease of all or substantially all of the assets of the
Company or the consolidated assets of the Company and its Subsidiaries, (iii)
the issuance of Equity Securities of the Company as a result of which the
Shareholders of the Company prior to such issuance own less than fifty and
one tenth percent (50.1%) of the Voting
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Securities of the Company immediately following such issuance, (iv) the
failure of Xxxxxxx Xxxxxx to control, directly or indirectly through Persons
controlled by him, fifty and one tenth percent (50.1%) of the Company's
Voting Securities, and (v) the failure of the Persons comprising the
Company's Board of Directors as of the date hereof or Persons approved by
fifty and one tenth percent (50.1%) of the Company's incumbent Board of
Directors to comprise the majority of the directors of the Company.
"COMMON SHARES" shall have the meaning ascribed thereto in the
Recitals of this Agreement.
"COMPANY REGISTRATION CUTBACK" shall have the meaning ascribed
thereto in SECTION 3.2(b).
"COMMISSION" shall mean the Securities and Exchange Commission or
any other federal agency at the time administering the Securities Act.
"CONVERTIBLE SECURITIES" shall mean, with respect to any Equity
Securities, (a) any warrants, options or other rights to subscribe for or to
acquire, directly or indirectly, such Equity Securities, and (b) any shares
of stock, partnership interests, other ownership or beneficial interests,
bonds, notes, debentures or other securities convertible into, exchangeable
for, or otherwise entitling the holder thereof to, directly or indirectly,
such Equity Securities, in each case outstanding at any time.
"DCC" shall mean Xxxxxx XX Limited Partnership, an Oklahoma limited
partnership.
"DEMAND REGISTRATION CUTBACK" shall have the meaning ascribed
thereto in SECTION 3.1(b).
"XXXXXX" shall mean Xxxxxxx Xxxxxx.
"EQUITY SECURITIES" shall mean, with respect to any Person, any
shares of stock of, or partnership interest or other ownership or beneficial
interest in, such Person, in each case outstanding at any time.
"FAIR MARKET VALUE" shall mean with respect to any Common Shares an
amount equal to the greater of (i) the total value of the
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consideration which would be received by a holder of one Common Share upon a
Public Offering by the Company of Common Shares representing at least 25% of
the Common Shares of the Company on a Fully Diluted Basis, and (ii) the total
value of the consideration which would be received by a holder of one Common
Share upon the sale of all of the Equity Securities of the Company in a
single transaction to a buyer willing to pay the highest purchase price which
could be received in an auction conducted by a nationally recognized
investment banking firm which has experience valuing telecommunications
companies, which such buyer is under no compulsion to buy and the holders of
such Equity Securities are under no compulsion to sell, all parties having
reasonable knowledge of all relevant facts, in each case without any discount
for illiquidity, minority ownership, transfer restrictions, call or option
rights to purchase the Common Shares, the existence of Noncompliance Events
or the termination, death or disability of key officers of the Company;
PROVIDED, HOWEVER, that any liability of the Company in respect of the Trust
Loan, whether direct, contingent or otherwise, shall not be included as a
liability of the Company for purposes of calculation Fair Market Value; and
PROVIDED, FURTHER, however, that the face amount plus all accrued but unpaid
interest on any promissory notes outstanding to employees, officers or
directors of the Company shall be included as an asset of the Company for
purposes of calculating Fair Market Value.
"FAMILY MEMBER" shall mean, as applied to any Person who is an
individual, a spouse, parent, sibling, child, grandchild, cousin or other
lineal descendent thereof and a trust created for the exclusive benefit of
one or more of such Persons.
"FEP" shall mean Fleet Equity Partners VI, L.P., a Delaware limited
partnership, and its successors and assigns.
"FINANCING AGREEMENT" shall mean that certain Second Amended and
Restated Credit Agreement of February 26, 1997 herewith by and among
CoreStates Bank, N.A., in its capacity as Administrative Agent and a Bank,
other Banks listed therein, the Corporate Borrower listed therein, or any
credit agreement evidencing a senior debt facility that replaces the facility
evidenced by such Second Amended and Restated Credit Agreement.
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"FULLY DILUTED BASIS" with respect to any Equity Securities issued
or issuable by any Person shall include, without duplication, (a) all shares
or units of, or interests in, such Equity Securities outstanding at the time
of determination, and (b) all Convertible Securities with respect to such
Equity Securities, whether or not exercisable or convertible at the time of
such determination.
"FVR" shall mean Fleet Venture Resources, Inc., a Rhode Island
corporation, and its successors and assigns.
"KPP" shall mean Xxxxxxx Plaza Partners, a Rhode Island general
partnership.
"MAJORITY PURCHASERS" shall mean, at any time of determination
thereof, Purchasers holding at such time at least fifty-one percent (51%) of
the aggregate issued and outstanding Shares held, whether beneficially or of
record, by the Purchasers.
"NEW SHARES" shall mean any Equity Securities or Convertible
Securities of the Company, whether now authorized or not, and any rights,
options or warrants to purchase said Equity Securities or Convertible
Securities, including, without limitation, any Common Shares or Preferred
Shares, PROVIDED, HOWEVER, that "New Shares" does not include (i) securities
offered pursuant to a Public Offering; (ii) Common Shares issued to the
Company's Shareholders in connection with any stock split or stock dividend;
(iii) Common Shares issued to a Purchaser upon conversion of the Class B
Preferred Stock, and (iv) the issuance of a total of 30,166 Common Shares
upon the exercise of Qualified Options.
"NONCOMPLIANCE EVENTS" shall have the meaning given such term in the
Purchase Agreement.
"NOTICE OF PROPOSED ISSUANCE" shall have the meaning ascribed
thereto in SECTION 5.1(a).
"NOTICE OF PROPOSED TRANSFER" shall have the meaning ascribed
thereto in SECTION 6.1(a).
"OFFERED SHARES" shall have the meaning ascribed thereto in SECTION
6.1(a).
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"OFFERED NEW SHARES" shall have the meaning ascribed thereto in
SECTION 5.1(a).
"PCS" shall mean personal communications services.
"PERMITTED TRANSFERS" shall mean, in the case of a Purchaser, (i)
any Transfer of Shares to any Person controlled, directly or indirectly, by
Fleet Financial Group, Inc. ("FFG") or in which FFG, directly or indirectly,
owns a majority of the Equity Securities, (ii) a Transfer of all of the
Shares owned by such Purchaser in connection with a sale by such Purchaser of
50% or more of the fair value of its investment portfolio, (iii) a Transfer
pursuant to a Public Offering, and (iv) Transfer of Shares pursuant to
SECTION 7 or 9 hereof.
"PERSON" shall have the meaning ascribed thereto in the Purchase
Agreement.
"POPS" shall mean the total number of population equivalents in a
defined market.
"PREFERRED SHARES" shall mean the Class B Preferred Stock authorized
as of this date.
"PROPOSED BUYER" shall have the meaning ascribed thereto in SECTION
5.1(a).
"PROPOSED PURCHASER" shall have the meaning ascribed thereto in
SECTION 6.1(a).
"PROPORTIONATE SHARE" shall have the meaning ascribed thereto in
SECTION 5.1(c).
"PUBLIC OFFERING" shall mean the sale or distribution of Common
Shares or other Equity Securities of the Company pursuant to an underwritten
public offering registered under the Securities Act.
"PURCHASERS" shall mean FVR, FEP and KPP, and "PURCHASER" shall mean
any one of them.
"PURCHASE AGREEMENT" shall mean that certain Securities Purchase
Agreement, of March 19, 1996, by and among the Purchasers
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and Xxxxxx Communications Corporation, as amended by that certain Amendment
No.1 to Securities Purchase Agreement dated as of February ___, 1997, and as
the same may be amended, supplemented, restated, replaced or otherwise
modified, in each case from time to time and whether in whole or in part.
"QUALIFIED OPTIONS" shall mean those certain options for the right
to purchase up to 30,166 Common Shares issued to key employees acceptable to
the Majority Purchasers and in the amounts, at the price and on other terms
and conditions acceptable to the Majority Purchasers.
The terms "REGISTER", "REGISTERED" and "REGISTRATION" shall refer to
a registration effected by preparing and filing a registration statement in
compliance with the Securities Act, and the declaration or ordering of the
effectiveness of such registration statement.
"REGISTRABLE SECURITIES" shall mean (i) the Common Shares held by
any Shareholder, including but not limited to any Common Shares issued or
issuable pursuant to the conversion of Preferred Shares and any Common Shares
issued upon exercise of any warrant or option held by a Shareholder, in each
case which have not been sold to the public, and (ii) any Common Shares or
other securities issued or issuable pursuant to the conversion of, or with
respect to, the Preferred Shares held by any Shareholder, upon any stock
split, stock dividend, recapitalization or similar event, which shares have
not been sold to the public, and (iii) securities issued in replacement or
exchange of any of the securities referred to in clauses (i) or (ii) above.
"REGISTRATION EXPENSES" shall mean all expenses incurred by the
Company in complying with SECTION 3.1, 3.2 and 3.5, including, without
limitation, all registration, qualification and filing fees, printing
expenses, escrow fees, fees and disbursements of counsel for the Company,
fees and disbursements of counsel for the Purchasers, blue sky fees and
expenses, and the expense of any special audits incident to or required by
any such registration (but excluding the compensation of regular employees of
the Company which shall be paid in any event by the Company).
"RESTRICTED SHARES" shall have the meaning ascribed thereto in
SECTION 6.1.
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"SECURITIES ACT" shall mean the Securities Act of 1933, as amended,
or any similar federal statute and the rules and regulations of the
Commission thereunder, each as in effect from time to time.
"SELLING EXPENSES" shall mean all underwriting fees, discounts,
selling commissions and stock transfer taxes applicable to the Registrable
Securities registered by the Shareholders.
"SHAREHOLDERS" shall have the meaning ascribed thereto in the
Recitals to this Agreement.
"SUBSIDIARY" shall have the meaning ascribed thereto in the Purchase
Agreement.
"TRANSFER" shall mean, with respect to any Share, property, asset or
other right or interest, when used as a verb, to sell, assign, transfer,
exchange, distribute, devise, gift, xxxxx x xxxx on, encumber or otherwise
dispose of such Share, property, asset or other right or interest, in whole
or in part, or, when used as a noun, the sale, assignment, transfer,
exchange, distribution, devise, gift, granting of a lien, encumbrance or
other disposition of such Share, property, asset or other right or interest,
in whole or in part, in either case, whether pursuant to a sale, merger,
combination, consolidation, reclassification or otherwise, except for pledges
and assignments made pursuant to the Financing Agreement or collateral
documents executed in connection therewith.
"TRUST LOAN" shall mean that certain $6 million term loan to the
Xxxxxxx X. Xxxxxx Irrevocable Family Trust, Xxxxxxx X. Xxxxxx Irrevocable
Family Trust and Xxxxx X. Xxxxxx Irrevocable Family Trust pursuant to the
Financing Agreement.
"VOTING SECURITIES" shall mean equity securities of a Person having
the right to vote generally in the election of the directors of such Person.
2.2 CONSTRUCTION. Unless the context of this Agreement clearly requires
otherwise (i) references to the plural include the singular and to the
singular include the plural, (ii) the term "including" is not limiting, and
(iii) the term "or" has the inclusive meaning represented by the term
"and/or". The terms
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"hereof", "herein", "hereby", "hereunder" and similar terms in this Agreement
refer to this Agreement as a whole and not to any particular provision of
this Agreement. Article, Section, clause, Schedule and Exhibit references
are to Articles, Sections, clauses, Schedules and Exhibits (as each such
Schedule or Exhibit may be amended, modified or supplemented from time to
time) of this Agreement unless otherwise specified.
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SECTION 3
REGISTRATION RIGHTS
3.1 REQUESTED REGISTRATION.
(a) REQUEST FOR REGISTRATION BY PURCHASERS. If at any time after the
effective date of a Public Offering the Company shall receive from the
Majority Purchasers a written request that the Company effect the
registration under the Securities Act of the Registrable Securities held by,
or issuable to, the Purchasers (each such request a "Request for
Registration"), the Company will:
(i) promptly, and in any event within fifteen (15) days of its
receipt of such Request for Registration, give written notice of the
proposed registration to all other Shareholders; and
(ii) use its best efforts to effect such registration of the
Registrable Securities (including, without limitation, the execution of an
undertaking to file post-effective amendments, appropriate qualification
under applicable blue sky or other state securities laws and appropriate
compliance with applicable regulations issued under the Securities Act and
any other governmental requirements or regulations) as may be so requested
and as would permit or facilitate the sale and distribution of all or such
portion of such Registrable Securities as are specified in such Request for
Registration, together with all or such portion of the Registrable
Securities of each Shareholder joining in such request as are specified in
a written request received by the Company within fifteen (15) days after
receipt by such Shareholder of such written notice from the Company;
PROVIDED, HOWEVER, that the Company shall not be obligated to take any action
to effect any such registration pursuant to this SECTION 3.1(a):
(A) In any particular state jurisdiction in which the Company would
be required to execute a general consent to service of process in effecting
such registration, qualification or compliance unless the Company is
already subject to service in such jurisdiction and except as may be
11
required by the Securities Act, PROVIDED THAT the Company shall be required
to take all such necessary action in the State of New York; or
(B) After the Company has effected three such Requests for
Registration on Form S-1 (or any successor form to Form S-1) pursuant to
this SECTION 3.1(a), such registrations have been declared or ordered
effective and the securities offered pursuant to such registrations have
been sold.
Subject to the foregoing clauses (A) and (B), the Company shall file a
registration statement covering the Registrable Securities so requested to be
registered as soon as practicable after receipt of a Request for Registration.
The Majority Purchasers may make three Requests for Registration on Form
S-1 (or any successor form to Form S-1); PROVIDED, HOWEVER, that the Majority
Purchasers may not request registration of the Registrable Securities on Form
S-1 (or any successor form to Form S-1) if Form S-3 (or any successor form to
Form S-3) is available for such registration; and PROVIDED FURTHER that at
least nine months shall have elapsed between the date of any Request for
Registration and any subsequent Request for Registration. Any Shareholder
may participate in any offering conducted pursuant to a Request for
Registration so long as all of the Registrable Securities held by the
Purchasers requested to be registered in such registration are permitted to
be included in such registration. If as a result of a Demand Registration
Cutback the Purchasers are not allowed to include in any such registration at
least eighty percent (80%) of their Registrable Securities requested to be
registered, then such registration shall not count as one of the Majority
Purchasers' three Requests for Registration.
(b) UNDERWRITING. The distribution of the Registrable Securities
subject to a Request for Registration shall be effected by means of a firm
commitment underwriting. The right of any Shareholder to registration
pursuant to SECTION 3.1 shall be conditioned upon such Shareholder's
participation in such underwriting and the inclusion of such Shareholder's
Registrable Securities in the underwriting to the extent requested by such
Shareholder, unless otherwise mutually agreed, in writing, by the Majority
Purchasers.
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The Company, together with each Shareholder proposing to distribute his,
her or its securities through such underwriting, shall enter into an
underwriting agreement in customary form with the managing underwriter(s)
selected by such underwriting by the Company which underwriter(s) shall be
reasonably acceptable to the Majority Purchasers. Notwithstanding any other
provision of this SECTION 3.1, if the managing underwriter(s) advises the
Company and the Purchasers in writing that because the number of shares
requested to be included in the registration exceeds the number which can be
sold in an orderly manner in such offering within a price range acceptable to
the Purchasers or that other marketing factors require a limitation of the
number of shares to be underwritten (the "Demand Registration Cutback"), then
the Company will include in such registration, to the extent of the number
and type which the Company is so advised can be sold in (or during the time
of) such offering, FIRST, all Registrable Securities of the Purchasers
requested to be included in such registration, SECOND, the securities
proposed to be sold by the Company for its own account, and THIRD, the
Registrable Securities of Shareholders other than the Purchasers requested to
be included in such registration. In the event a Demand Registration Cutback
results in less than all of the securities of a particular category (i.e.,
Registration Securities of the Purchasers, Registrable Securities of the
Shareholders other than the Purchasers and securities of the Company) that
are requested to be included in such registration actually to be included in
such registration shall be shared pro rata among all of the holders of
securities of such category that were requested to be included in such
registration based on the number of shares held by each such holder of
securities of such category.
If any Purchaser disapproves of the terms of the underwriting, such
Person may elect to withdraw therefrom by written notice to the Company, the
managing underwriter(s) and the other Purchasers. The Registrable Securities
so withdrawn shall be withdrawn from registration; PROVIDED, HOWEVER, that if
by the withdrawal of such Registrable Securities a greater number of
Registrable Securities held by any other Purchaser may be included in such
registration (up to the maximum of any limitation imposed by the
underwriters), then the Company shall offer to each Purchaser who has
included Registrable Securities in the registration the right to include
additional Registrable Securities in the same proportion used in determining
the underwriter limitation in this SECTION 3.1(b).
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3.2 COMPANY REGISTRATION.
(a) NOTICE OF REGISTRATION TO SHAREHOLDERS. If at any time or from time
to time, the Company shall determine to register any of its Equity
Securities, either for its own account or the account of a holder thereof,
other than (i) a registration relating solely to employee benefit plans or
(ii) a registration relating solely to a Commission Rule 145 transaction, the
Company will:
(i) promptly give to each Shareholder written notice thereof; and
(ii) 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 within twenty (20) days after receipt of such written notice
from the Company, by any Shareholder or Shareholders.
(b) UNDERWRITING. If the registration of which the Company gives notice
is for a registered Public Offering involving an underwriting, the Company
shall so advise the Shareholders as a part of the written notice given
pursuant to SECTION 3.2(a)(i). In such event the right of any Shareholder to
registration pursuant to this SECTION 3.2 shall be conditioned upon such
Shareholder's participation in such underwriting and the inclusion of such
Shareholder's Registrable Securities in the underwriting to the extent
provided herein. All Shareholders proposing to distribute their securities
through such underwriting shall (together with the Company and the other
Shareholder distributing their Registrable Securities through such
underwriting) enter into an underwriting agreement in customary form with the
managing underwriter selected for such underwriting by the Company.
Notwithstanding any other provision of this SECTION 3.2, if the managing
underwriter determines that the number of shares requested to be included in
the registration exceeds the number which can be sold in an orderly manner in
such offering within a price range acceptable to the Company or that
marketing factors require a limitation of the number of shares to be
underwritten on behalf of the Company (the "Company Registration Cutback"),
then the Company will include in such registration, to the extent of the
number and type which the Company is so advised can be sold in (or during the
time of) such offering without such effect on the price, FIRST, all
securities of
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the Company proposed to be sold by the Company for its own account, SECOND,
the Registrable Securities requested by the Purchasers and the other
Shareholders to be included in such registration, and FINALLY, any other
securities of the Company requested to be included in such registration. In
the event a Company Registration Cutback results in less than all of the
securities of a particular category (i.e., securities proposed to be
registered by the Company; securities proposed to be registered by Purchasers
and the other Shareholders; and securities proposed to be registered by
Persons other than the Shareholders) that are requested to be included in
such registration to actually be included in such registration, then the
number of securities of such category that will be included in such
registration shall be shared pro rata among all of the holders of securities
of such category that were requested to be included in such registration
based on the number of shares held by each holder of securities of such
category.
3.3 EXPENSES OF REGISTRATION. The Company shall bear all
Registration Expenses (exclusive of Selling Expenses) incurred in connection
with registrations pursuant to SECTION 3.1, 3.2 and 3.5 and, in the case of
any registrations in which one or more Purchasers are registering Registrable
Securities, the Company shall pay the fees and expenses of one counsel for
the Purchasers. The one such counsel representing the Purchasers in
connection with any registration under this Agreement shall be selected by
the Majority Purchasers. All Selling Expenses relating to Registrable
Securities registered by the Shareholders shall be borne by such Shareholders
pro rata on the basis of the number of shares so registered.
3.4 REGISTRATION PROCEDURES. In the case of each registration effected
by the Company pursuant to this Agreement, the Company will keep each
Shareholder advised in writing as to the initiation of each registration,
qualification and compliance and as to the completion thereof. At its
expense the Company will:
(a) keep such registration, qualification or compliance effective and
current for a period of one hundred eighty (180) days (or such longer
period as may be necessary to accommodate the filing of amendments or
supplements necessary to comply with the Securities Act) or until the
Shareholder or Shareholders have completed the distribution described in
the
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registration statement relating thereto, whichever first occurs;
(b) furnish such number of prospectuses and other documents incident
thereto as a Shareholder from time to time may reasonably request;
(c) use its best efforts to register or qualify the securities
covered by such registration statement under such other securities or blue
sky laws of such jurisdictions as any seller of Registrable Securities
reasonably requests and do any and all other acts and things which may be
reasonably necessary or advisable to enable such seller to consummate the
disposition in such jurisdictions of the Registrable Securities owned by
such seller;
(d) in the event of any underwritten Public Offering, enter into and
perform its obligations under an underwriting agreement, in usual and
customary form, with the managing underwriter of such offering. Each
Shareholder and the Company participating in such underwriting shall also
enter into and perform its obligations under such an agreement;
(e) notify each Shareholder of Registrable Securities covered by such
registration statement, at any time when a prospectus relating thereto
covered by such registration statement is required to be delivered under
the Securities Act, of the happening of any event as a result of which the
prospectus included in such registration statement, as then in effect,
includes an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing and of any Commission stop orders or other material modifications
in connection therewith;
(f) cause all such Registrable Securities covered by such
registration statement to be listed on each securities exchange on which
the same class of securities issued by the Company are then listed, if the
listing of such Registrable Securities is then permitted under the rules
and regulations of such exchange and, in the case of a Request for
Registration, if requested by the Majority Purchasers of
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Registrable Securities, cause all such Registrable Securities that are of
a different class or series than those Company securities already listed
or traded to be listed on any securities exchange reasonably requested by
the Majority Purchasers;
(g) provide a transfer agent and registrar for all such Registrable
Securities not later than the effective date of such registration
statement;
(h) in the case of a Request for Registration, enter into such
customary agreements (including underwriting agreements in customary form)
and take all such other actions (including effecting a stock split or a
combination of shares) as the Majority Purchasers reasonably request in
order to expedite or facilitate the disposition of such Registrable
Securities;
(i) make available for inspection by any seller of Registrable
Securities, any managing underwriter participating in any disposition
pursuant to such registration statement and any attorney, accountant or
other agent retained by any such seller or underwriter, all financial and
other records, pertinent corporate documents and properties of the Company,
and cause the Company's officers, directors, employees and independent
accountants to supply all information reasonably requested by any such
seller, underwriter, attorney, accountant or agent in connection with such
registration statement;
(j) otherwise use its best efforts to comply with all applicable
rules and regulations of the Commission, and make available to its security
holders, as soon as reasonably practicable, an earnings statement covering
a period of at least twelve months beginning with the first day of the
Company's first full calendar quarter after the effective date of the
registration statement, which earnings statement shall satisfy the
provisions of Section 11(a) of the Securities Act and Rule 158 thereunder.
(k) permit any Shareholder of Registrable Securities which might be
deemed to be an underwriter or a controlling Person of the Company, to
participate in the preparation of
17
such registration or comparable statement and to require the insertion
therein of material, furnished to the Company in writing, which in the
reasonable judgment of such Shareholder and its counsel should be
included;
(l) in the event of the issuance of any stop order suspending the
effectiveness of a registration statement, or of any order suspending or
preventing the use of any related prospectus or suspending the
qualification of any Registrable Securities included in such registration
statement for sale in any jurisdiction, the Company shall use its best
efforts promptly to obtain the withdrawal of such order;
(m) use its best efforts to cause such Registrable Securities covered
by such registration statement to be registered with or approved by such
other governmental agencies or authorities as may be necessary to enable
the sellers thereof to consummate the disposition of such Registrable
Securities; and
(n) in the case of a Request for Registration, obtain a cold comfort
letter from the Company's independent public accountants in customary form
and covering such matters of the type customarily covered by cold comfort
letters as the Majority Purchasers may reasonably request.
3.5 REGISTRATION ON FORM S-3. In addition to the rights set
forth in SECTION 3.1 and 3.2, if the Majority Purchasers request that the
Company file a registration statement on Form S-3 (or any successor form
to Form S-3) for a Public Offering of shares of Registrable Securities,
and the Company is a registrant entitled to use Form S-3 to register the
Registrable Securities for such an offering, the Company shall use its
best efforts to cause such shares to be registered for the offering as
soon as practicable on Form S-3 (or any successor form to Form S-3). The
procedures and limitations for effecting the registration of the
Registrable Securities on Form S-3 (or any successor form to Form S-3),
including the procedure used for any underwriting limitation, shall be as
set forth in SECTION 3.1; provided, however, that there shall not be any
limit on the number of registrations that may be requested by the
Majority Purchasers on Form S-3 (or any successors form to Form S-3).
18
3.6 INDEMNIFICATION.
(a) The Company will indemnify each Shareholder, each of its
officers and directors and partners and such Shareholder's legal counsel
and independent accountants, and each Person controlling any such Persons
within the meaning of Section 15 of the Securities Act, with respect to
which registration, qualification or compliance has been effected
pursuant to this Agreement, against all expenses, claims, losses, damages
and liabilities (or actions in respect thereof), including any of the
foregoing incurred in the investigation or settlement of any litigation,
commenced or threatened, arising out of or based on any untrue statement
(or alleged untrue statement) of a material fact contained in any
registration statement, prospectus, offering circular or other document,
or any amendment or supplement thereto, incident to any such
registration, qualification or compliance, or based on 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
any violation by the Company of any rule or regulation promulgated under
the Securities Act or any state securities laws applicable to the Company
and relating to action or inaction required of the Company in connection
with any such registration, qualification or compliance, and will
reimburse each such Shareholder, each of its officers and directors and
such Shareholder's legal counsel and independent accountants, and each
Person controlling any such Persons, each such underwriter and each
Person who controls any such underwriter, for any legal and any other
expenses reasonably incurred in connection with investigating, preparing
or defending any such claim, loss, damage, liability or action, provided
that the Company will not be liable in any such case to the extent that
any such claim, loss, damage, liability or expense arises out of or is
based on any untrue statement or omission or alleged untrue statement or
omission, made in reliance upon and in conformity with written
information furnished to the Company by an instrument duly executed by
such Shareholder or underwriter and stated to be specifically for use
therein.
(b) Each Shareholder will, if Registrable Securities held by such
Shareholder are included in the securities as to which such registration is
being effected, indemnify the Company, each of its directors and officers and
its legal counsel and independent accountants, each underwriter, if any, of the
Company's securities
19
covered by such a registration statement, each Person who controls the
Company or such underwriter, within the meaning of Section 15 of the
Securities Act, and each other such Holder, each of its officers and
directors and each Person controlling such Shareholder within the meaning
of Section 15 of the Securities Act, against all claims, losses, damages
and liabilities (or actions in respect thereof) arising out of or based
on any untrue statement (or alleged untrue statement) of a material fact
contained in any such registration statement, prospectus, offering
circular or other document, or 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, and will reimburse the
Company, such Shareholders, such directors, officers, legal counsel,
independent accountants, underwriters or control 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 each
case to the extent, but only to the extent, that such untrue statement
(or alleged untrue statement) or omission (or alleged omission) is made
in such registration statement, prospectus, offering circular or other
document in reliance upon and in conformity with written information
furnished to the Company by an instrument duly executed by such
Shareholder and stated to be specifically for use therein; provided,
however, that the obligation of such Shareholder hereunder shall be
limited to an amount equal to the proceeds received by such Shareholder
upon the sale of the Registrable Securities sold in the offering covered
by such registration.
(c) Each party entitled to indemnification under this SECTION 3.6
(the "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, provided
that counsel for the Indemnifying Party, who shall conduct the defense of
such claim or litigation, shall be approved by the Indemnified Party
(whose approval shall not unreasonably be withheld). The Indemnified
Party may participate in such defense at such party's expense; provided,
however, that the Indemnifying Party shall bear the expense of such
defense of the Indemnified Party if representation of both parties by the
same counsel would be inappropriate due to actual or potential conflicts
of interest (as determined in good
20
faith by the Indemnified Party). The failure of any Indemnified Party to
give notice as provided herein shall not relieve the Indemnifying Party
of its obligations under this Agreement. 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 an unconditional term thereof
the giving by the claimant or plaintiff to such Indemnified Party of a
release from all liability in respect to such claim or litigation.
(d) The obligations of the Company and Shareholders under this
SECTION 3.6 shall survive the completion of any offering of Registrable
Securities under this Agreement.
(e) The Company shall make payment in satisfaction of its
obligations under this SECTION 3.6 within thirty (30) days upon receiving
written confirmation from the Indemnified Party of the nature and amount
of the expenses to be indemnified.
(f) If the indemnification provided for in this SECTION 3.6 is
unavailable or insufficient to hold harmless an Indemnified Party, then
each Indemnifying Party shall contribute to the amount paid or payable to
such Indemnified Party as a result of the losses, claims, damages, or
liabilities referred to in this SECTION 3.6 in such proportion as is
appropriate to reflect the relative fault of the Indemnifying Party or
parties on the one hand and the Indemnified Party on the other in
connection with the statements or omissions which resulted in such
losses, claims, demands or liabilities as well as any other relevant
equitable considerations. The relative fault shall be determined by
reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Indemnifying Party
or parties on the one hand or the Indemnified Party on the other and the
parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such untrue statement or omission. The
amount paid to an Indemnified Party as a result of the losses, claims,
damages or liabilities referred to in the first sentence of this SECTION
3.6(f) shall be deemed to include any legal or other expenses reasonably
incurred by such Indemnified Party in connection with investigating or
defending any action or claim which is the subject of this SECTION 3.6.
No Person guilty of fraudulent misrepresentation (within the meaning
21
of Section 11(f) of the Securities Act) shall be entitled to contribution
from any Person who was not guilty of such fraudulent misrepresentation.
(g) The indemnification provided for under this Agreement shall
remain in full force and effect regardless of any investigation made by
or on behalf of the Indemnified Party or any officer, director or
controlling Person of such Indemnified Party and shall survive the
transfer of securities.
3.7 INFORMATION BY SHAREHOLDER. The Shareholder or Shareholders of
Registrable Securities included in any registration shall furnish to the
Company such information regarding such Shareholder or Shareholders and
the distribution proposed by such Shareholder or Shareholders as the
Company may request in writing and as shall be required in connection
with any registration, qualification or compliance referred to in this
Agreement.
3.8 RULE 144 REPORTING. With a view to making available the benefits
of certain rules and regulations of the Commission which may at any time
permit the sale of securities of the Company to the public without
registration, after such time as a public market exists for the Common
Stock of the Company, 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
after the effective date of the first registration under the Securities Act
filed by the Company for an offering of its securities to the general
public;
(b) Use its best efforts to then file with the Commission in a timely
manner all reports and other documents required of the Company under the
Securities Act and the Securities Exchange Act of 1934, as amended (at any
time after it has become subject to such reporting requirements);
(c) So long as a Shareholder owns any Registrable Securities, to
furnish to the Shareholder forthwith upon request a written statement by
the Company as to its compliance with the reporting requirements of said
Rule 144 (at any time after 90 days after the effective date of the first
registration statement filed by the Company for an
22
offering of its securities to the general public) and of the Securities
Act and the Securities Exchange Act of 1934 (at any time after it has
become subject to such reporting requirements), a copy of the most recent
annual or quarterly report of the Company and such other reports and
documents of the Company as a Shareholder may reasonably request in
availing itself of any rule or regulation of the Commission allowing a
Shareholder to sell any such securities without registration.
3.9 TRANSFER OF REGISTRATION RIGHTS. The rights to cause the
Company to register securities granted the Purchasers under SECTION 3.1,
3.2 and 3.5 may be assigned to a transferee or assignee in connection
with the transfer or assignment of the Registrable Securities, PROVIDED,
THAT, (i) such transfer may otherwise be effected in accordance with
applicable securities laws, and (ii) the Company is given reasonably
prompt written notice of such assignment.
3.10 TERMINATION OF REGISTRATION RIGHTS. The rights granted
pursuant to this SECTION 3 shall terminate as to any Shareholder at such
time as such Shareholder may sell under Rule 144 in a three month period
all Registrable Securities then held by such Shareholder.
3.11 OTHER REGISTRATION RIGHTS. The Company shall not grant any
Person registration rights for any Shares or other Equity Securities of
the Company, other than as specified in this SECTION 3, without the prior
written consent of the Majority Purchasers.
SECTION 4
AFFIRMATIVE COVENANTS OF THE COMPANY
AND THE SHAREHOLDERS
4.1 BOARD OF REPRESENTATION AND VOTING AGREEMENT OF THE SHARES.
(a) From and after the date hereof and until the provisions of this
Section cease to be effective, each Shareholder shall vote all of the
voting securities of the Company (including the Common Shares and
Preferred Shares) over which such Person has voting control and shall
take all other necessary or desirable actions
23
within his or its control (whether in his or its capacity as a
stockholder, director, member of a board, committee or officer of the
Company or otherwise, and including, without limitation, attendance at
meetings in person or by proxy for purposes of obtaining a quorum and
execution of written consents in lieu of meetings), and the Company shall
take all necessary or desirable actions within its control (including,
without limitation, calling special board and shareholders' meetings) so
that:
(i) the authorized number of directors of the Company's Board of
Directors (the "Board") shall be established at six (6) directors;
(ii) the following Persons shall be elected to the Board at each
election of directors during the term of this Agreement:
(A) four (4) representatives designated by DCC, one of whom shall be
Xxxxxx and one of whom (1) shall be reasonably acceptable to the
Majority Purchasers, and (2) is not an Affiliate or employee of the
Company or a Family Member of such Affiliate or employee or of Xxxxxx;
(B) one (1) representative designated by FVR; and
(C) one (1) representative designated by FEP; PROVIDED, HOWEVER, AT
ANY TIME FOLLOWING THE SIX MONTH ANNIVERSARY OF THE DATE OF THIS
AGREEMENT, UPON THE WRITTEN REQUEST OF XXXXXX, THE REPRESENTATIVE
DESIGNATED BY FEP SHALL BE A PERSON who is (i) reasonably acceptable
to Xxxxxx and (ii) is not an officer, director or employee of FEP or
FVR;
(iii) FVR shall have the right to (A) designate one representative
to each committee established by the Board, and (B) have an observer,
selected by FVR in its sole discretion, attend each meeting of the Board
and each meeting of any committee of the Board;
(iv) any director designated hereunder shall be removed from the Board
(and thereupon from all committees of the Board) (with or without cause) at
the written request of the Person or Persons which have the right to
designate such
24
director hereunder; and a director so designated hereunder shall not be
removed from the Board by any Person other than the Person or Persons which
have the right to designate such director, except if such director has
engaged in conduct constituting "cause" under Oklahoma law, in which case
such director may be removed in accordance with Oklahoma law and such
vacancy shall be filled by the Person or Persons who appointed the removed
director;
(v) in the event that any representative designated hereunder for any
reason ceases to serve as a member of the Board or any committee thereof
during such representative's term of office, the resulting vacancy on the
Board or committee shall be filled by a representative designated by a
Person or Persons which have the right to designate such representative
hereunder; and
(vi) after the date hereof, the Board shall hold bi-monthly meetings.
(b) Each and every transferee or assignee of Shares from any Shareholder
shall be bound by and subject to all terms and conditions of this SECTION
4.1. So long as the provisions of this SECTION 4.1 are in effect, the Company
shall require, as a condition precedent to the Transfer of any Shares subject
to this SECTION 4.1, that the applicable transferee agrees in writing to be
bound by, and subject to, the terms and conditions of this SECTION 4.1 and to
ensure that such transferee's transfers of Shares shall be likewise bound.
(c) The Company and the Shareholders agree that, so long as the
provisions of this SECTION 4.1, SECTIONS 5, 6, 7, 8 OR 9 are in effect, all
Shares now or hereafter held by each Shareholder will be stamped or otherwise
imprinted with a legend in substantially the following form:
THE SHARES EVIDENCED BY THIS CERTIFICATE ARE SUBJECT TO AGREEMENTS,
COVENANTS AND RESTRICTIONS IN REGARD TO THE VOTING OF SUCH SHARES AND THEIR
TRANSFER, AS PROVIDED IN THE PROVISIONS OF A SHAREHOLDERS' AGREEMENT, DATED
AS OF FEBRUARY ___, 1997, BY AND AMONG XXXXXX COMMUNICATIONS CORPORATION,
AN OKLAHOMA CORPORATION (THE "COMPANY") AND THE SHAREHOLDERS
25
NAMED THEREIN, A COPY OF WHICH IS ON FILE IN THE OFFICE OF THE SECRETARY
OF THE COMPANY.
(d) Each of the parties acknowledge that all other parties hereto will
be irreparably damaged in the event that the provisions of this Section are
not specifically enforced. Accordingly, should any dispute arise pursuant to
SECTION 4.1, the parties agree that a decree of specific performance shall be
an appropriate remedy. Such remedy shall be cumulative and shall be in
addition to any other remedies which any party may have at law or in equity.
(e) The Company shall pay the out-of-pocket travel, lodging and other
related expenses of the observer selected by FVR pursuant to SECTION
4.1(a)(iii) and all directors elected pursuant to SECTION 4.1 who are not
employees of the Company.
SECTION 5
PREEMPTIVE RIGHTS
5.1 RIGHT TO PURCHASE. The Company shall only issue New Shares in
accordance with the following terms:
(a) In the event the Company desires to issue any New Shares, it shall
first deliver to each Purchaser a written notice (each such notice, a "Notice
of Proposed Issuance") specifying the name and address of the proposed
purchaser of the New Shares (each such purchaser, a "Proposed Buyer"), the
type and total number of such New Shares which the Company then desires to
issue to such Proposed Buyer (such New Shares, the "Offered New Shares"), all
of the terms, including the price, upon which the Company proposes to issue
such Offered New Shares to such Proposed Buyer, and stating that the
Purchasers shall have the right to purchase such Offered New Shares in the
manner specified in SECTION 5.1 at the price and in accordance with the terms
and provisions specified in such Notice of Proposed Issuance.
(b) During the thirty consecutive day period commencing on the date on
which the Purchasers receive the Notice of Proposed Issuance, each Purchaser
shall have the option to purchase the Offered New Shares subject to such
Notice of Proposed Issuance at the price and terms specified in such Notice
of Proposed Issuance and in the amount specified in SECTION 5.1(c). Each
Purchaser
26
shall give written notice of its election to the Company on or before the
last day of such thirty (30) day period and if a Purchaser has not given such
written notice within such period, such Purchaser shall be deemed to have
rejected its right to purchase the Offered New Shares. The Purchaser shall
have the right to condition its purchase of the Offered New Shares upon the
closing of the sale of the balance of such Offered New Shares to the Proposed
Buyer.
(c) Each Purchaser shall have the right to purchase that number of the
Offered New Shares as shall be equal to the number of such Offered New Shares
multiplied by a fraction, the numerator of which shall be the number of
Common Shares then owned by such Purchaser (assuming full conversion of all
Preferred Shares owned by such Purchaser), and the denominator of which shall
be the aggregate number of Common Shares then owned by all of the
Shareholders. The amount of such Offered New Shares that each Purchaser is
entitled to purchase under this SECTION 5.1(c) shall be referred to as its
"Proportionate Share."
(d) Each Purchaser shall have a right of oversubscription such that if
any Purchaser fails to elect to purchase its full Proportionate Share of the
Offered New Shares, the remaining Purchasers shall, among them, have the
right to purchase up to the balance of such Offered New Shares not so
purchased. The Purchasers may exercise such right of oversubscription by
electing to purchase more than their Proportionate Share of the Offered New
Shares. If, as a result thereof, such oversubscriptions exceed the total
number of the Offered New Shares available in respect to such
oversubscription privilege, the oversubscribing Purchasers shall be cut back
with respect to oversubscriptions on a PRO RATA basis in accordance with
their respective Proportionate Shares or as they may otherwise agree among
themselves.
(e) The Company shall have the right, until the expiration of ninety
(90) consecutive days commencing on the first day immediately following the
expiration of the thirty (30) day period specified in SECTION 5.1(b) to issue
the remaining Offered New Shares to the applicable Proposed Buyer at the
price and terms specified in the applicable Notice of Proposed Issuance. If
for any reason the remaining Offered New Shares are not issued to such
Proposed Buyer within such period and at such stated price and on such stated
terms, the right to issue in accordance with such
27
Notice of Proposed Issuance shall expire and the provisions of this Agreement
shall continue to be applicable to such Offered New Shares.
(f) The Company shall not issue any shares in the name of such Proposed
Buyer unless and until such Proposed Buyer shall have agreed in writing to
become bound by the terms hereof.
(g) The purchase price for any Offered New Shares to be paid by the
Purchasers or the applicable Proposed Buyer shall be the price set forth in
the Notice of Proposed Issuance relating to such Offered New Shares.
(h) The Purchasers purchasing the greatest percentage of any Offered New
Shares shall set the place, time and date for the closing of the purchase of
the Offered New Shares, which closing shall not be later than the date of the
closing of the sale of the Offered New Shares to the Proposed Buyer. In the
event that none or only a portion of the consideration to be paid by a
Proposed Buyer with respect to any Offered New Shares is in cash, the
purchase price therefor shall be the fair value of the consideration to be
paid by such Proposed Buyer. In the event the Purchasers and the Company
cannot agree, acting reasonably, upon the fair value of the consideration to
be paid for such Offered New Shares, such parties shall immediately submit
the issue of determining such fair value to binding arbitration which shall
be held in Chicago, Illinois in accordance with the rules and procedures of
the American Arbitration Association applicable to commercial transactions.
The closing of the sale of the Offered New Shares to the Purchasers and
the Proposed Buyer shall be delayed until at least ten (10) days following
the final determination of such fair value.
5.2 PRICE. The purchase price for any Offered New Shares sold to the
Purchasers shall be paid by the Purchasers in cash or by certified check at
the date of the closing.
5.3 CLOSING. At the closing of the purchase of any Offered New Shares,
the Purchasers and the applicable Proposed Buyer shall deliver the
consideration required by SECTION 5.2, and the Company shall deliver
certificates representing the Offered New Shares.
28
SECTION 6
RIGHT OF FIRST REFUSAL
6.1 RIGHT OF FIRST REFUSAL. Except for Permitted Transfers, no
Purchaser shall transfer any Shares or any Convertible Securities with
respect to any Shares held by such Purchaser (each, a "Restricted Share"),
except in accordance with the specific terms of this SECTION 6.1 as follows:
(a) In the event that any Purchaser desires to Transfer all or any
portion of the Restricted Shares owned by such Purchaser (in such capacity,
the "Offeror") pursuant to a bona fide written offer, such Offeror shall
first deliver to the Company a written notice (each, a "Notice of Proposed
Transfer") specifying the name and address of the proposed transferees of the
Restricted Shares (each, a "Proposed Purchaser") the type and total number of
such Restricted Shares which such Offeror then desires to transfer to such
Proposed Purchaser (the "Offered Shares"), all of the terms, including the
price, upon which such Offeror proposes to transfer such Offered Shares to
such Proposed Purchaser, and stating that the Company shall have the right to
purchase such Offered Shares at the price and in accordance with the terms
and provisions specified in such Notice of Proposed Transfer.
(b) During the fifteen (15) consecutive day period commencing on the
date of the Company's receipt of the Notice of Proposed Transfer, the Company
shall have the option to purchase all (but not less than all) of the Offered
Shares, before the same may be Transferred to any other Person. The Company
must give written notice of its election to the applicable Offeror during
such fifteen (15) day period. If the Company does give written notice of its
election to purchase all of the Offered Shares to the applicable Offeror
within such fifteen (15) day period, the closing for the sale of such Offered
Shares shall occur no later than thirty (30) days after the Company provides
such written notice of its election to purchase such Offered Shares to the
applicable Offeror.
(c) If all of the Offered Shares subject to a Notice of Proposed
Transfer have not been purchased by the Company pursuant to SECTION 6.1(b),
then the applicable Offeror shall have the right until the expiration of
three hundred sixty (360) consecutive days
29
commencing on the first day immediately following the expiration of the
fifteen (15) day period specified in Section 6.1(b), to Transfer such Offered
Shares to the applicable Proposed Purchaser at the price (or a higher price)
specified in the applicable Notice of Proposed Transfer and on terms not
materially more favorable to the Proposed Purchaser than set forth in the
Notice of Proposed Transfer, provided that such Proposed Purchaser agrees in
writing to become bound by the terms hereof. If for any reason such Offered
Shares are not Transferred to the Proposed Purchaser within such period and
at such price (or a higher price) and on such terms, the right to Transfer in
accordance with such Notice of Proposed Transfer shall expire and the
provisions of this Agreement shall continue to be applicable to such Offered
Shares.
(d) The Company shall not be obligated to issue any shares in the name
of a Proposed Purchaser unless and until such Proposed Purchaser shall have
agreed in writing to become bound by the terms hereof.
(e) The purchase price to be paid by the Company or a Proposed Purchaser
for any Offered Shares shall be the price set forth in the Notice of Proposed
Transfer relating to such Offered Shares.
(f) For purposes of this SECTION 6, if any of the Purchasers transfers
its Shares to an entity (the "New Entity") which is, directly or indirectly,
controlled by FFG or in which FFG, directly or indirectly, owns a majority of
the Equity Securities and the stock of such New Entity is sold or
transferred, the sale of such stock of the New Entity shall be deemed a
Transfer which would trigger the right of first refusal provisions of this
SECTION 6.
6.2 PRICE. The purchase price for any Offered Shares shall be paid in
cash or by certified check at the date of the closing of the sale of such
Offered shares.
6.3 CLOSING. At the closing of the sale of any Offered Shares, the
Company shall deliver the consideration required by SECTION 6.2, and such
Offeror shall deliver certificates representing the Offered Shares together
with stock transfer powers duly endorsed in blank for transfer thereof.
30
6.4 TERMINATION. The provisions of this SECTION 6 shall terminate upon
the consummation of an initial Public Offering.
SECTION 7
RIGHT OF CO-SALE
7.1 CO-SALE. At least thirty days prior to any Transfer of Shares by
any Shareholder who, together with Affiliates of such Shareholder, owns 10%
or more of the Common Shares, on a Fully Diluted Basis, such Shareholder (the
"Transferring Shareholder") shall deliver written notice (the "Sale Notice")
to each Purchaser specifying in reasonable detail the identity of the
proposed transferee(s) and the terms and conditions of the Transfer. A
Purchaser may elect to participate in the contemplated Transfer by delivering
written notice to the Transferring Shareholder within fifteen days after
receipt of the Sale Notice. If any Purchaser has elected to participate in
such Transfer, such Purchaser shall be entitled to sell in the contemplated
Transfer, at the price and on the terms upon which the Transferring
Shareholder will make such Transfer, a number of Common Shares equal to the
product of (i) the quotient determined by dividing (A) the number of
outstanding Common Shares owned by such Purchaser by (B) the aggregate number
of Common Shares, on a Fully Diluted Basis, owned or held by the Transferring
Shareholder and all other Purchasers participating in such sale, and (ii) the
number of Common Shares to be sold in the contemplated Transfer; provided,
however, in the event Purchaser owns Preferred Shares, such Purchaser shall
have the right to sell in convertible, at the then conversion price, into the
number of Common Shares which such Purchaser would otherwise have the right
to sell in the proposed Transfer pursuant to this SECTION 7 if all the
Preferred Shares held by such Purchaser had been converted into Common Shares.
7.2 EXCLUSIONS. The provisions of SECTION 7.1 shall not apply to (i)
a Transfer by a Purchaser to any Person or (ii) a Transfer for estate
planning purposes to be made by Xxxxxx or by Family Members of Xxxxxx to
other Family Members of Xxxxxx or their respective Family Members ("Xxxxxx
Estate Planning Transfers"); provided, however, in any case, that any such
transferee shall, as a condition of such Transfer, agree in writing to become
bound by the terms hereof.
31
SECTION 8
RESTRICTIONS OF TRANSFER
8.1 TRANSFER RESTRICTIONS. Except as provided in SECTION 8.2 hereof,
no Shareholder other than a Purchaser shall Transfer any Shares of the
Company except as specifically permitted by this Agreement.
8.2 EXCEPTIONS. The restrictions on Transfers set forth in SECTION
8.1 shall not apply to (i) Xxxxxx Estate Planning Transfers, and (ii)
transfers between Family Members of Xxxxxx or entities controlled by the
Family Members of Xxxxxx, so long as such transfers do not violate Section
8.1(i) of the Purchaser Agreement.
8.3 TERMINATION. The provision of this SECTION 8 shall terminate upon
the earliest to occur of (i) the consummation of an Initial Public Offering,
(ii) the sale of all or substantially all of the Company's assets, and (iii)
the consummation of a merger or consolidation of the Company which
constitutes a Change of Control Event.
SECTION 9
PUT RIGHTS
9.1 RIGHT TO PUT. At any time and from time to time after the earliest
to occur of (i) the fifth anniversary of the date hereof, (ii) a Change of
Control Event, (iii) a Noncompliance Event, or (iv) the six month anniversary
of the death of Xxxxxx, each Purchaser shall have the right to sell all of
the Shares held by such Purchaser to the Company (the "Put"), and upon
exercise of such right (the "Put Rights"), the Company shall have the
obligation to purchase the Shares as to which the Put Rights are exercised;
provided, however, a Purchaser may not exercise the Put Rights as to more
than 50% of the Shares then owned by it prior to the sixth anniversary of the
date hereof unless one or more of the events referred to in clauses (ii)-(iv)
above shall have occurred.
Any Purchaser may exercise the Put Rights by providing the Company with a
written request (a "Request Notice") that the Company redeem all or a portion
of the Shares owned by such
32
Purchaser. The Company shall, within sixty (60) days after the determination
of the Repurchase Price (as defined in SECTION 9.2 below) redeem all of the
Shares then held by such Purchaser as to which the Put Rights have been
exercised, by paying to such Purchaser an amount for each Share held by such
Purchaser equal to the Repurchase Price. The closing of any redemption
pursuant to this SECTION 9.1 shall take place at the office of the Purchaser
which sent the Request Notice. If any required redemption is prohibited by
applicable corporate law restricting the ability of a corporation to
repurchase its shares, the Company shall make such repurchases as, when and
to the extent that it is permitted to do so.
9.2 REPURCHASE PRICE. The "Repurchase Price" for each Common Share
repurchased pursuant to this SECTION 9 shall be the Fair Market Value
thereof. The Repurchase Price for a Preferred Share shall be the greater of
(i) its Liquidation Value (as defined in the Company's Certificate of
Incorporation) plus all accrued but unpaid dividends thereon to the date of
repurchase and (ii) the produce of (x) the Fair Market Value of a Common
Share and (y) the number of Common Shares into which a Preferred Share is
then convertible. The Fair Market Value shall be initially determined by
those directors of the Company who are not Affiliated with any of the
Purchasers, Xxxxxx, Family Members of Xxxxxx or Family Members of any such
Person (the "Disinterested Directors"). The Disinterested Directors shall
provide the Purchasers and the Company with written notice of their
determination with forty-five (45) days after receipt of the Request Notice.
If a Purchaser or the Company shall notify the Disinterested Directors'
determination of Fair Market Value that it objects to such determination of
Fair Market Value (the "Objection Notice"), the Disinterested Directors, the
Company and the Purchasers shall endeavor to agree on the Fair Market Value
of the Shares being repurchased. If the Disinterested Directors, the Company
and the Purchasers fail to agree on a determination of the Fair Market Value
within fifteen (15) days after receipt by the Disinterested Directors of the
Objection Notice, then the Company and the Purchasers shall endeavor to
select a nationally recognized investment banking firm, which has experience
valuing telecommunications companies (the "Appraiser"), to conduct an
appraisal of the relevant Shares being repurchased, such appraisal to be
conducted within sixty (60) days after such Person has been notified of its
selection as the Appraiser. If the
33
Purchasers and the Company cannot agree on a Person to be the Appraiser
within such fifteen (15) day period, the holders of sixty-six and two-thirds
percent (66 2/3%) of the Shares held by Purchasers exercising the Put Rights,
on the one hand, and the Company on the other, shall then have fifteen (15)
days to each select a Person satisfying the requirements of an Appraiser. If
either party fails to select such a Person within fifteen (15) day period,
the Person who is selected by a party within the fifteen (15) day period
shall be the Appraiser and shall conduct an appraisal of the relevant Shares
being repurchased within sixty (60) days of the expiration of such fifteen
day period. If the Company and the Purchasers each selected a Person within
such fifteen day period, then the two selected Persons shall, within ten (10)
days from the expiration of such fifteen day period, select another Person
satisfying the requirements of an Appraiser who shall then be the Appraiser
and who shall then conduct an appraisal of the relevant Shares being
repurchased within sixty (60) days of being selected. The appraisal being
conducted by the Appraiser shall determine the Fair Market Value of such
Common Shares being repurchased and which determination shall be final and
binding on the parties. The cost of the appraisal shall be borne equally by
the Company on the one hand and the Purchasers on the other.
9.3 FAILURE TO PURCHASE. Notwithstanding anything to the contrary set
forth in this SECTION 9, in the event that the Company fails to redeem all of
the shares requested to be redeemed by the Purchasers exercising the Put
Rights pursuant to SECTION 9.1 above by the later of (i) six months after the
date of the Request Notice or (ii) three months after the determination of
the Fair Market Value but in no event later than nine months after the date
of Request Notice (such latter date being referred to herein as the
"Mandatory Date"), then the Company shall issue to the Purchasers who have
exercised Put Rights that number of Common Shares as is then equal to 1% of
the outstanding Common Shares of the Company determined on a Fully Diluted
Basis, and on each third month anniversary of the Mandatory Date until the
Repurchase Price for all shares as to which Put Rights were exercised is paid
in full, the Company shall issue to the Purchasers who have exercised Put
Rights that number of Common Shares as is on the date of issuance thereof
equal to 1% of the outstanding Common Shares of the Company on a Fully
Diluted Basis. In the event that the Company fails to redeem all of the
Shares requested to be redeemed by the Purchasers exercising the Put Rights
pursuant to SECTION 9.1 above within two
34
years after the earlier of (x) the date of the determination of the Fair
Market Value or (y) the Mandatory Date, then such Purchasers shall have the
right to immediately designate a majority of the members of the Board until
such time as all of the Shares requested to be redeemed by such Purchasers
are redeemed. All of the parties to this Agreement covenant and agree to
take all action as shall be necessary or appropriate, including, without
limitation, voting all of their Common Shares in favor of any necessary
amendment to the Company's Certificate of Incorporation or otherwise to cause
the Company to issue the Shares required to be issued to the Purchasers
pursuant to this SECTION 9.3.
9.4 PAYMENT. Upon the surrender of the certificate or certificates
evidencing the Shares to be repurchased by the Company, the applicable
Repurchase Price in respect of such Shares shall be paid to the order of the
Person whose name appears on such certificate or certificates in cash by wire
transfer of immediately available funds. Each surrendered certificate
evidencing Shares shall be canceled and/or retired.
SECTION 10
CALL RIGHTS
10.1 RIGHT TO CALL. At any time from and after the seventh anniversary of
the date of this Agreement, the Company shall have the right to purchase all
of the outstanding Shares held by a Purchaser (the "Call") and upon the
exercise of such right ("Call Rights") the Purchaser shall have the
obligation to sell such Shares held by such Purchaser to the Company. The
Company may exercise the Call Rights by providing the Purchasers a written
notice (a "Call Notice") that the Company will repurchase such Shares. The
Company may only exercise the Call Rights as to all of the Shares held by all
of the Purchasers. The Company shall within sixty (60) days after the
determination of the Call Price (as defined in SECTION 10.2 below) redeem all
of the Shares held by such Purchasers by paying to such Purchasers an amount
for each Share held by such Purchaser an amount equal to the Call Price. The
closing of the repurchase of the Shares pursuant to SECTION 10.1 shall take
place at the office of the Purchaser to whom the Call Notice was sent.
35
10.2 CALL PRICE. The "Call Price" for each Share shall be the
applicable Repurchase Price determined in accordance with the method and
procedures set forth in SECTION 9.2 hereof.
10.3 PAYMENT. Upon the surrender of the certificate or certificates
evidencing the Shares to be repurchased by the Company pursuant to this
SECTION 10 the applicable Call Price in respect of such Shares shall be paid
to the order of the Person whose name appears on such certificate or
certificates in immediately available funds. Each surrendered certificate
evidencing the Shares being repurchased shall be canceled and/or retired.
10.4 TERMINATION. The provisions of this SECTION 10 shall terminate
upon the consummation of an initial Public Offering. The provisions of this
SECTION 10 shall cease to be applicable for any Shares transferred to any
Person pursuant to SECTION 6 or 7 hereof.
SECTION 11
MISCELLANEOUS
11.1 WAIVERS AND AMENDMENTS. The rights and obligations of the Company
and the rights and obligations of the Shareholders under this agreement may
not be waived (either generally or in a particular instance, either
retroactively or prospectively, and either for a specified period of time or
indefinitely) or amended without the written consent of the Company, the
Majority Purchasers and the holders of a majority of the outstanding Class A
Common Stock.
11.2 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware without giving effect to
any choice or conflict of law provisions or rule that would cause the
application of the domestic substantive laws of any other state.
11.3 SUCCESSORS AND ASSIGNS. The provisions hereof shall inure to the
benefit of, and be binding upon, the successors, assigns, heirs, executors
and administrators of the parties hereto.
36
11.4 ENTIRE AGREEMENT. This Agreement constitutes the full and entire
understanding and agreement between the parties with regard to the subject
matter hereof.
11.5 NOTICES. Unless otherwise specifically provided herein, any notice,
consent, waiver or other communication required or permitted to be given
hereunder shall be in writing addressed to the applicable party as set forth
below and may be personally served, telecopied or sent by nationally
recognized overnight courier service or United States certified mail, postage
prepaid and return receipt requested, and shall be deemed to have been given;
(i) if delivered in person, when delivered; (ii) if delivered by telecopy, on
the date of transmission if transmitted on a Business Day before 4:00 p.m.
(Oklahoma time) or, if not, on the next succeeding Business Day; (iii) if
delivered by overnight courier, two days after delivery of such courier,
properly addressed; or (iv) if by U.S. Mail, four (4) Business Days after
depositing in the United States mail. Notices shall be addressed as follows:
If to the Company:
Xxxxxx Communications Corporation
00000 X. Xxxxxxxx Xxxxxxxxx
Xxxxx 000
Xxxxxxxx Xxxx, XX 00000
Telecopy No.: (000) 000-0000
Telephone No.: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxx, President
If to the Majority Purchasers:
Fleet Equity Partners
000 Xxxxxxxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxx Xxxxxx 00000
Telecopy No.: (000) 000-0000
Telephone No.: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxxxx
11.6 SEVERABILITY. Wherever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this
37
Agreement shall be prohibited by or invalid under applicable law, such
provision shall be ineffective to the extent of such prohibition or
invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Agreement.
11.7 COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by the parties hereto on separate counterparts and each
counterpart, when so executed and delivered, shall be an original, and all
such counterparts shall together constitute one and the same instrument.
11.8 DESCRIPTIVE HEADINGS. The descriptive headings of this Agreement
are inserted for convenience only and do not constitute a part of this
Agreement.
11.9 CONSENT TO JURISDICTION. THE PARTIES HERETO HEREBY AGREE TO SUBMIT
TO THE NON-EXCLUSIVE JURISDICTION OF THE COURTS IN AND OF THE STATE OF
DELAWARE AND TO JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE
DISTRICT OF DELAWARE AND TO THE COURTS TO WHICH AN APPEAL OF THE DECISIONS OF
SUCH COURTS MAY BE TAKEN, AND CONSENTS THAT SERVE OF PROCESS WITH RESPECT TO
ALL COURTS IN AND OF THE STATE OF DELAWARE AND THE UNITED STATES DISTRICT
COURT FOR THE DISTRICT OF DELAWARE MAY BE MADE BY REGISTERED MAIL TO IT AT
SUCH PARTY'S ADDRESS SET FORTH IN SECTION 11.5.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
38
XXXXXX COMMUNICATIONS
CORPORATION,
By: /s/ Xxxxxxx X. Xxxxxx
--------------------------------
Xxxxxxx X. Xxxxxx, President
FLEET VENTURE RESOURCES, INC.
By: /s/ Xxxxxxx X. Xxxxxxxx
--------------------------------
Xxxxxxx X. Xxxxxxxx
Senior Vice President
FLEET EQUITY PARTNERS VI, L.P.
By: Fleet Growth Resources II, Inc.,
a General Partner
By: /s/ Xxxxxxx X. Xxxxxxxx
--------------------------------
Xxxxxxx X. Xxxxxxxx,
Senior Vice President
XXXXXXX PLAZA PARTNERS
By: /s/
--------------------------------
Name: Xxxxxx X. Van
Title: General Partner
XXXXXX XX LIMITED PARTNERSHIP
By: RLD, Inc., its General Partner
By: /s/ Xxxxxxx X. Xxxxxx
--------------------------------
Xxxxxxx X. Xxxxxx
President
/s/ Xxxxxxx X. Xxxxxx
--------------------------------
Xxxxxxx X. Xxxxxx
39
XXXXXX TELEPHONE COMPANY, INC.
By: /s/ Xxxxxxx X. Xxxxxx
--------------------------------
Xxxxxxx X. Xxxxxx
President
40
Schedule A
SHAREHOLDERS
FLEET VENTURE RESOURCES, INC.
FLEET EQUITY PARTNERS VI, X.X.
XXXXXXX PLAZA PARTNERS
XXXXXX XX LIMITED PARTNERSHIP
XXXXXX TELEPHONE COMPANY, INC.
XXXXXXX X. XXXXXX
41
