EXHIBIT 7
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FORM OF
SHAREHOLDERS AGREEMENT
OF
WESTERN PCS CORPORATION
BY AND BETWEEN
WESTERN WIRELESS CORPORATION,
a Washington corporation,
XXXXXXXXX TELECOMMUNICATIONS PCS (USA) LIMITED,
a British Virgin Islands corporation,
AND
WESTERN PCS CORPORATION,
a Delaware corporation
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TABLE OF CONTENTS
Page
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1. EFFECTIVE DATE OF AGREEMENT.............................................. 1
2. DEFINITIONS.............................................................. 1
3. BOARD COMPOSITION; ELECTION OF REPRESENTATIVES TO
THE BOARD; COMPENSATION COMMITTEE........................................ 10
4. CERTAIN AFFILIATE TRANSACTIONS........................................... 11
5. TRANSFER................................................................. 11
6. RIGHTS OF FIRST OFFER AND FIRST REFUSAL.................................. 12
7. DRAG ALONG RIGHT......................................................... 17
8. TAG ALONG RIGHT. ....................................................... 20
9. ISSUANCE OF COMPANY SECURITIES........................................... 21
10. DISPOSITION TRANSACTIONS................................................. 24
11. REGISTRATION RIGHTS...................................................... 28
12. CERTAIN COVENANTS OF THE COMPANY AND WWC................................. 41
13. MISCELLANEOUS............................................................ 45
14. TERMINATION OF RIGHTS AND OBLIGATIONS.................................... 51
15. INVESTOR 50% TRANSFEREE AND WWC 50% TRANSFEREE;
OTHER TRANSFEREES........................................................ 53
SHAREHOLDERS AGREEMENT
This SHAREHOLDERS AGREEMENT OF WESTERN PCS CORPORATION (this "Agreement")
is made as of [__________], 199[_], by and between Western Wireless Corporation,
a Washington corporation ("WWC"), Xxxxxxxxx Telecommunications PCS (USA)
Limited, a British Virgin Islands corporation (the "Investor"; WWC and the
Investor being referred to herein as the "Shareholders"), and Western PCS
Corporation, a Delaware corporation (the "Company").
WHEREAS, the Shareholders, Xxxxxxxxx Telecommunications Limited, a Hong
Kong corporation ("HTL"), the owner of 100% of the issued and outstanding share
capital of the Investor, and the Company have entered into a Purchase Agreement
dated as of October 14, 1997 (the "Purchase Agreement"), pursuant to which the
Investor has agreed to purchase from the Company, and the Company has agreed to
issue and sell to the Investor, 2,484 shares of the Company's Common Stock,
$0.001 par value ("Common Stock"), representing 19.9% of the Company's
outstanding shares of Common Stock after giving effect to such issuance and
sale, all on the terms and subject to the conditions set forth in the Purchase
Agreement. WWC is the owner of 10,000 shares of Common Stock, which will
represent 80.1% of the outstanding shares of Common Stock after giving effect to
the issuance and sale of the foregoing shares of Common Stock to the Investor.
WHEREAS, the Shareholders and the Company wish to set forth certain
agreements concerning the management and control of the Company, the ownership
and transfer of shares of Common Stock, and certain other matters as provided
herein.
NOW, THEREFORE, in consideration of the mutual and dependent promises set
forth herein, each Shareholder hereby agrees with each other Shareholder and
with the Company, and the Company hereby agrees with each of the Shareholders,
as follows:
1. EFFECTIVE DATE OF AGREEMENT.
This Agreement shall become effective upon the Closing, pursuant to and as
defined in the Purchase Agreement.
2. DEFINITIONS.
(a) Unless the context requires otherwise, capitalized terms used but not
defined in this Agreement have the meanings given in the Purchase Agreement.
(b) As used in this Agreement, the following terms have the respective
meanings set forth below (applicable to both the singular and plural forms of
such terms):
"$" means United States dollars.
"Affiliate Change of Ownership" has the meaning given in Section
10(b)(ii).
"Agreement" means this Shareholders Agreement of Western PCS Corporation,
as amended, modified, supplemented or restated from time to time in accordance
with the terms hereof.
"Appraisal Procedure" means a procedure whereby two independent
appraisers, one chosen by WWC and one by the Investor, shall mutually agree upon
the determination of the Private Market Value. Each party shall deliver a notice
to the other appointing its appraiser within ten Business Days after the
Appraisal Procedure is invoked. If, within 30 days after appointment of the two
appraisers, they are unable to agree upon the Private Market Value, then (i) if
the difference between the two appraisers' respective determinations is an
amount that is not greater than 20% of the average of such determinations, such
average shall be binding and conclusive on the Company and the Shareholders or
(ii) if the difference between the two appraisers' respective determinations is
an amount that is greater than 20% of such average, then a third independent
appraiser shall be chosen within five Business Days thereafter by the mutual
agreement of such first two appraisers or, if such first two appraisers fail to
agree upon the appointment of a third appraiser, such appointment shall be made
by the then-President of the American Arbitration Association within five
Business Days of request. The decision of the third appraiser so appointed and
chosen shall be given within 30 days after the selection of such third
appraiser. The decisions of the appraisers with the two closest determinations
shall be averaged and such average shall be binding and conclusive on the
Company and the Shareholders. Each appraiser selected shall have expertise in
mergers and acquisitions, valuation analysis and the Company's then-current
business activities and in arriving at its determination shall take into account
the terms of this Agreement and the amount a willing buyer would pay a willing
seller for 100% of the outstanding capital stock of the Company on the basis set
forth in the definition of "Private Market Value". In the case of any Appraisal
Procedure carried out pursuant to Section 10(a) or 10(c) or pursuant to an
exercise of the Demand Event Drag Along Right, the costs of all such appraisers
shall be borne by WWC; provided, that WWC shall not be required to pay any
amounts to the appraiser selected by the Investor in excess of the amounts paid
by WWC to the appraiser selected by WWC (or, if greater, an arm's length fee
payable to a comparable independent appraiser). In the case of any Appraisal
Procedure carried out pursuant to Section 10(b) or an exercise of the Demand
Event Tag Along Right, (i) the cost of the appraiser selected by WWC shall be
borne by WWC, (ii) the cost of the appraiser selected by the Investor shall be
borne by the Investor, and (iii) the cost of a third appraiser, if any, shall be
borne by the Company.
"Arbitrators" has the meaning set forth in Section 13(k) hereof.
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"Assignable Investor Rights" has the meaning given in Section 15(a)(i).
"Bid" has the meaning given in Section 6(c)(ii).
"Bid Closing Period" has the meaning given in Section 6(c)(iv).
"Blackout Period" has the meaning given in Section 11(e)(ii).
"Board" means the board of directors of the Company.
"Class A Stock" has the meaning given in Section 10(f)(i).
"Commission" means the United States Securities and Exchange Commission.
"Common Stock" means the Company's Common Stock, par value $0.001, and
shall include any new, substituted and additional securities issued at any time
in replacement of the Common Stock or issued or delivered with respect to the
Common Stock.
"Company" means Western PCS Corporation, a Delaware corporation, and its
successors and assigns.
"Company Debt" has the meaning given in Section 12(g).
"Company Group" means the Company, its Subsidiaries and Xxxx Inlet Western
Wireless PV/SS PCS L.P.
"Consideration Securities" has the meaning given in Section 7(c)(ii).
"Controlling WWC Shareholders" means Xxxx X. Xxxxxxx, Xxxxxxx Xxxxxxxxx,
Xxxxxxx & Friedman, Goldman, Sachs & Co. and Providence Ventures, Inc.
"Demand Event" means the acquisition in a single transaction or series of
related transactions by a third party or group of related third parties (other
than the Controlling WWC Shareholders or Affiliates of the Controlling WWC
Shareholders) of capital stock of WWC representing more than 50% of the total
number of issued and outstanding shares of Class A and Class B Common Stock of
WWC (after giving effect to such acquisition transaction), including pursuant to
an amalgamation, exchange offer, business combination, consolidation or
corporate reorganization.
"Demand Event Consideration" has the meaning given in Section 10(g)(ii).
"Demand Event Drag Along Right" has the meaning given in Section 10(g)(i).
"Demand Event Tag Along Right" has the meaning given in Section 10(g)(i).
"Demand Event Transaction" has the meaning given in Section 10(g)(i).
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"Disposition Event" means the occurrence before a Terminating Reduction of
any of the following without the prior approval of at least one of the directors
on the Board designated by the Investor (it being understood that following a
Terminating Reduction there shall be no further Disposition Events or rights
with respect thereto):
(a) Any incurrence (including in a refinancing or pursuant to a guarantee
or like undertaking of liability) of indebtedness for borrowed money (including
the issuance of non-voting, non-convertible preferred stock) in excess of
$10,000,000 in a single instance or $25,000,000 in the aggregate in a fiscal
year, other than pursuant to any loan or financing agreement of the Company or
any of its Subsidiaries in existence on the date hereof (it being understood
that as described in Section 9(a), the Company will first seek capital when
needed in the form of loans from, or debt offerings to, third parties);
provided, that there shall be no Disposition Event in respect of individual
borrowings (regardless of amount) under a loan or financing facility if such
loan or financing facility has been approved by at least one of the Investor's
designated directors.
(b) Adoption of any annual Operating Plan and Budget or any material
amendment or modification to a previously adopted annual Operating Plan and
Budget; provided that if at least one of the directors of the Board designated
by the Investor (i) does not approve an annual Operating Plan and Budget, the
prior year's Operating Plan and Budget shall be the Operating Plan and Budget
for the Company for the next year, in which case there shall be no Disposition
Event (unless the Board, without the approval of at least one of the Investor's
designated directors, adopts and implements a new Operating Plan and Budget) and
(ii) does not approve any material amendment or modification to an Operating
Plan and Budget, then the Operating Plan and Budget prior to such material
amendment or modification shall continue, in which case there shall be no
Disposition Event (unless the Board, without the approval of at least one of the
Investor's designated directors, adopts and implements the material amendment or
modification).
(c) Any acquisition (by means of a purchase of stock or assets, or a
merger, consolidation or otherwise, other than a transaction in which the Drag
Along Right is exercised) of a PCS system or wireless telecommunications
business (or interest therein) in a single transaction or series of related
transactions involving an aggregate acquisition cost in excess of $100,000,000,
provided, that there shall be no Disposition Event in respect of any individual
bid (regardless of amount) in an FCC auction or reauction of spectrum allocated
to wireless telecommunications so long as the maximum aggregate bids with
respect to such auction or reauction has been approved by at least one of the
Investor's designated directors.
(d) Any disposition by the Company (by means of a sale of stock or assets,
or a merger, consolidation or otherwise, but other than a transaction in which
the Drag Along Right is exercised) of a PCS system or wireless
telecommunications business (or interest therein) in a single transaction or
series of related transactions involving an aggregate sale price in excess of
$50,000,000.
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(e) Adoption of any annual capital expenditures budget, or (i) any
material variation with respect to any capital expenditure project or group of
related capital expenditure projects, which project or group of related projects
is material, or (ii) any amendment or modification to an approved annual capital
expenditures budget which amendment or modification is material to the annual
capital expenditures budget, taken as a whole; provided, that if at least one of
the directors of the Board designated by the Investor (i) does not approve an
annual capital expenditures budget, the prior year's capital expenditures budget
shall be the capital expenditures budget for the Company for the next year, in
which case there shall be no Disposition Event (unless the Board, without the
approval of at least one of the Investor's designated directors, adopts and
implements a new annual capital expenditure budget) or (ii) does not approve any
such material variation, amendment or modification, the capital expenditures
budget prior to such variation, amendment or modification shall be the capital
expenditures budget, in which case there shall be no Disposition Event (unless
the Board, without the approval of at least one of the Investor's designated
directors, adopts and implements such material variation, amendment or
modification).
"Disposition Transaction" has the meaning given in Section 10 of this
Agreement.
"Dispute" has the meaning given in Section 13(k).
"Drag Along Notice" has the meaning given in Section 7(d).
"Drag Along Right" has the meaning given in Section 7(a).
"Employment Agreement" has the meaning given in the Services Agreement.
"Excepted Transfer" means a Transfer of Common Stock which occurs in (a) a
Public Sale, (b) a transaction in which the Drag Along Right or Demand Event
Drag Along Right is exercised, (c) a transaction in which the Tag Along Right or
Demand Event Tag Along Right is exercised, (d) a merger or acquisition in which
the Company is not the surviving entity, or (e) in the case of WWC, Transfers in
an aggregate amount up to 10% of the outstanding shares of Common Stock to
transferees which are entities with substantial assets and business operations
in the telecommunications industry.
"Exercise Period" has the meaning given in Section 6(d)(iii).
"HTL" means Xxxxxxxxx Telecommunications Limited, a corporation organized
under the laws of Hong Kong.
"Investor" means Xxxxxxxxx Telecommunications PCS (USA) Limited, a British
Virgin Islands corporation, and, unless otherwise specified herein or unless the
context requires otherwise, includes its successors and all Permitted Affiliate
Transferees of the Investor which hold shares of Common Stock and any Investor
50% Transferee to the extent such transferee becomes entitled to the rights, and
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subject to the obligations, of the Investor hereunder in accordance with the
express provisions of Section 15.
"Investor 50% Block" means a number of shares of Common Stock representing
a Percentage Ownership of 9.95% or more of the outstanding shares of Common
Stock.
"Investor 50% Transfer" means the Transfer by the Investor of an Investor
50% Block to a third party or group of related third parties, other than in an
Excepted Transfer.
"Investor 50% Transferee" means a third party (or, collectively, a group
of related third parties) which is the transferee in an Investor 50% Transfer.
"Investor Change of Ownership" has the meaning given in Section 10(b)(i).
"Investor Deemed Class A Shares" has the meaning given in Section
10(g)(ii).
"Mandatory WWC Rights" has the meaning given in Section 15(a)(ii)
"NASD" has the meaning given in Section 11(a)(iii).
"New Issue Securities" has the meaning given in Section 9(c)(i).
"Offer" has the meaning given in Section 6(c)(ii).
"Offeree-Shareholder" has the meaning given in Section 6(d)(ii).
"Offeror-Shareholder" has the meaning given in Section 6(d)(ii).
"Operating Plan and Budget" has the meaning given in the Services
Agreement.
"Order Period" has the meaning given in Section 6(c)(ii).
"Other Holder" has the meaning given in Section 12(e).
"Other Shareholders" has the meaning given in Section 11(b)(iii)(A).
"PCS" means broadband personal communications services operating in the
1850-1910 MHz and 1930-1990 MHz bands.
"Percentage Ownership" means, as to any Shareholder, the percentage of the
outstanding shares of Common Stock owned by such Shareholder, including for this
purpose, shares owned by such Shareholder's Permitted Affiliate Transferees.
"Permitted Affiliate Transferee" means:
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(a) in the case of the Investor, (i) HTL, (ii) any Subsidiary of
HTL, (iii) any other entity acceptable to WWC in which HTL owns, directly or
indirectly, more than 40% of the outstanding voting power, and (iv) in the case
of any Person referred to in clause (i), (ii) or (iii), the Investor;
(b) in the case of WWC, (i) any Subsidiary of WWC other than the
Company and its Subsidiaries and (ii) in the case of any Person referred to in
clause (i), WWC.
"Person" means an individual, partnership, joint-stock company,
corporation, trust or unincorporated organization, limited liability company, or
a government or agency or political subdivision thereof or any other entity.
"Private Market Value" means the fair private market value of the Company
as of the date of the event triggering the right to make or require a
Disposition Transaction under Section 10, as determined in accordance with the
Appraisal Procedure. The appraised Private Market Value shall be calculated as
the price an arm's length buyer would pay for 100% of the Company, without
application of any discount for the fact that the Company is or may be a
Subsidiary of any other Person or for the fact that any relevant Shareholder may
hold a minority interest in the Company. The Private Market Value of the Company
will include the value of the Company's accumulated tax attributes, including
from net operating losses, on a basis consistent with the Tax Sharing Agreement.
"Proposed Transfer" has the meaning given in Section 7(a).
"Proposed Transferee" has the meaning given in Section 7(a).
"public float" means the portion of the outstanding equity securities
(other than non-voting, non-convertible preferred stock) of a relevant issuer or
class which were obtained by the holders thereof (other than the Company, the
issuer thereof, WWC, the Investor, or any Affiliate or member of senior
management of any of the foregoing) in Public Sales of such securities.
"Public Sale" means a public offer and sale or other public distribution
of securities, including (i) pursuant to an effective registration statement
under the Securities Act, (ii) pursuant to Regulation S under the Securities Act
and any applicable securities or stock exchange regulations in any non-United
States market or stock exchange in which the Common Stock is publicly traded, or
(iii) pursuant to an exemption from registration under Rule 144 under the
Securities Act, or (iv) in the case of WWC, a Spin-Off Distribution.
"Qualifying IPO" means a Public Sale of the Common Stock (whether of newly
issued shares or in secondary Transfers) which results in a listing of the
Common Stock on a national securities exchange or quotation of the Common Stock
on the NASDAQ National Market System and an aggregate public float of the
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Common Stock of at least 15% of the Common Stock outstanding after giving effect
to such Public Sale.
"Registrable Securities" has the meaning given in Section 11(a)(ii).
"Registration Expenses" has the meaning given in Section 11(a)(iii).
"Representative" has the meaning given in Section 11(b)(iv).
"Repurchase" has the meaning given in Section 10(f)(i).
"Sale" has the meaning given in Section 6(c)(i).
"Sale Shares" has the meaning given in Section 6(a)(i).
"Sales Notice" has the meaning given in Section 6(c)(i).
"Sales Price" has the meaning given in Section 6(c)(i).
"Seller" has the meaning given in Section 6(c)(i).
"Selling Expenses" has the meaning given in Section 11(a)(iv).
"Senior Officers" has the meaning given in the Services Agreement.
"Shareholder" means, initially, the Investor and WWC, and shall include
any other shareholder of the Company who becomes entitled to the rights and
subject to the obligations of the Investor or WWC hereunder in accordance with
the express provisions of Section 15 hereof. Unless otherwise specified herein
or unless the context requires otherwise, references to any "Shareholder" shall
be deemed to include all Permitted Affiliate Transferees of such Shareholder
holding any shares of Common Stock.
"Shareholder Closing Period" has the meaning given in Section 6(d)(iv).
"Spin-Off Distribution" means a distribution by WWC to its shareholders on
a pro rata basis of the shares of Common Stock owned by WWC.
"Subsidiary" means, as to any Person, another Person which is an entity as
to which such Person owns more than 50% of the outstanding voting power.
"Tag Along Rights" shall mean the rights described in Section 8.
"Terminating Reduction" shall mean the earliest to occur of the following:
(A) the Investor's Percentage Ownership shall have fallen below 15% as a result
of the Transfer of shares of Common Stock to Persons other than its Permitted
Affiliate Transferees; (B) the Investor's Percentage Ownership shall have fallen
below 12% as
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a result of dilution due to new issuances of Common Stock by the Company or a
combination of dilution due to new issuances of Common Stock and Transfers of
Common Stock by the Investor to Persons other than its Permitted Affiliate
Transferees; (C) the Common Stock shall have become a registered class of equity
securities under Section 12 of the Exchange Act (or the Company shall have
become a reporting company under the Exchange Act by reason of Section 15(d) of
the Exchange Act), the Common Stock shall have become listed on a national
securities exchange or quoted on the NASDAQ National Market System and there
shall exist a public float of the Common Stock representing not less than 15% of
the issued and outstanding Common Stock, or (D) the Investor shall have made an
Investor 50% Transfer.
"third party" means a Person who is not a party to this Agreement or an
Affiliate (including a Permitted Affiliate Transferee) of any party to this
Agreement.
"Third-Party Closing Period" has the meaning given in Section 6(c)(iii).
"Third-Party Offer" has the meaning given in Section 6(c)(iii).
"Third-Party Offer Period" has the meaning given in Section 6(c)(iii).
"Transfer" means any sale, assignment, pledge, hypothecation, or other
transfer, disposition or encumbrance of any interest (and includes an exchange
of shares in a merger, consolidation or similar transaction).
"WWC" means Western Wireless Corporation, a Washington corporation, and,
unless the context requires otherwise, includes its successors and all Permitted
Affiliate Transferees of WWC which hold shares of Common Stock and any WWC 50%
Transferee to the extent such transferee may become entitled to the rights, and
subject to the obligations, of WWC hereunder in accordance with the express
provisions of Section 15 hereof.
"WWC Non-Company Group" means WWC and its Subsidiaries, other than the
Company Group.
"WWC 50% Block" means a number of shares of Common Stock representing a
Percentage Ownership of more than 50% of the outstanding shares of Common Stock.
"WWC 50% Transfer" means the Transfer by WWC of a WWC 50% Block to a third
party or group of related third parties, other than in an Excepted Transfer.
"WWC 50% Transferee" means a third party (or, collectively, a group of
related third parties) which is the transferee in a WWC 50% Transfer.
"Unsolicited Bid" has the meaning given in Section 6(a)(ii).
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"Unsolicited Bid Notice" has the meaning given in Section 6(d)(i).
"Unsolicited Bidder Closing Period" has the meaning given in Section
6(d)(vi).
"U.S. GAAP" has the meaning given in Section 12(a).
"WWC Debt" has the meaning given in Section 12(g).
When a reference is made in this Agreement to a Section, such reference
shall be to a Section of this Agreement unless otherwise indicated. Whenever the
words "include," "includes" or "including" are used in this Agreement, they
shall be deemed to be followed by the words "without limitation". The use of a
gender herein shall be deemed to include the neuter, masculine and feminine
genders whenever necessary or appropriate. Whenever the word "herein,"
"hereunder" or "hereof" is used in this Agreement, it shall be deemed to refer
to this Agreement and not to a particular Section of this Agreement unless
expressly stated otherwise.
3. BOARD COMPOSITION; ELECTION OF REPRESENTATIVES TO THE BOARD; COMPENSATION
COMMITTEE.
(a) Pursuant to the Company's by-laws, the Board shall be constituted of
ten (10) directors, subject to increase as provided in this Section 3. The
Investor shall initially have the right to designate to the Board two directors
(its initial designees being Xx. Xxxxxxx Xxx and Xx. Xxxx Xxxxx), which
directors will be appointed or elected to the Board effective as of the Closing.
Thereafter, the number of directors whom the Investor is entitled to designate
to the Board shall be adjusted in proportion with the aggregate Percentage
Ownership of the Investor. For purposes of this adjustment, the Investor shall
be entitled to retain the right to designate two directors until its aggregate
Percentage Ownership is less than 15% and the right to designate a single
director until its aggregate Percentage Ownership is less than 9.95%. The
Investor shall gain the right to designate an additional director (and the Board
shall in each case be expanded by one member to accommodate such new designee)
when the Investor's aggregate Percentage Ownership exceeds 27.25%, 33.33%,
38.5%, 42.9%, 46.67%, and 50%. Each Shareholder shall vote all of the Common
Stock over which such Shareholder has voting control (and shall take all other
necessary or desirable actions within such Shareholder's control, whether in the
capacity of a stockholder, director or member of a board committee of the
Company or otherwise, and including attendance at meetings in person or by proxy
for purposes of obtaining a quorum and execution of written consents in lieu of
meetings) for the election, removal and replacement of the Board designees named
by the Investor or WWC, as the case may be, all as directed by the Investor or
WWC, as the case may be, from time to time in accordance with this Section 3.
The rights and obligations of WWC and the Investor under this Section 3 shall
terminate when the Investor's Percentage Ownership exceeds 50% or otherwise as
set forth in Section 14 or 15.
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(b) Prior to the occurrence of a Terminating Reduction, the Company shall
maintain a compensation committee of the Board, a majority of the members of
which shall be directors who are not Senior Officers or senior executive
officers of the Company.
4. CERTAIN AFFILIATE TRANSACTIONS.
Prior to the occurrence of a Terminating Reduction, the Company shall not,
without the prior approval of at least one of the Investor's designated
directors, enter into:
(a) Any transaction or series of related transactions (other than those in
accordance with the terms of the Intercompany Agreements) involving the Company
or any of its Subsidiaries, on the one hand, and WWC or any of its Affiliates
(other than the Company and Subsidiaries of the Company), on the other hand,
that (i) is not provided for in the approved annual Operating Plan and Budget
then in effect and involves an amount in excess of $500,000, or (ii) is not on
terms at least as favorable to the Company as would be obtained in an arm's
length transaction with an independent third party.
(b) Any employment agreement with any Senior Officer who at the time has
an Employment Agreement.
5. TRANSFER.
The Common Stock may not be Transferred by any Shareholder except as
provided in this Section 5.
(a) Each Shareholder (and each Permitted Affiliate Transferee of such
Shareholder) shall have the unrestricted right to Transfer its Common Stock to
any Permitted Affiliate Transferee of such Shareholder, provided, that each such
transferee shall become bound by and entitled to all the rights and obligations
hereunder applicable to such Shareholder.
(b) The Investor and its Permitted Affiliate Transferees shall have the
right to Transfer shares of Common Stock to Persons other than Permitted
Affiliate Transferees of the Investor in a transaction other than an Excepted
Transfer, provided, that (i) such Transfer shall be subject to the rights of
first offer or, if applicable, first refusal under Section 6 hereof in favor of
WWC or its designees and (ii) the transferee shall be subject to the approval of
WWC (which approval will not be unreasonably withheld or delayed).
(c) WWC and its Permitted Affiliate Transferees shall have the right to
Transfer shares of Common Stock to Persons other than Permitted Affiliate
Transferees of WWC in transactions other than Excepted Transfers, subject to the
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rights of first offer or, if applicable, first refusal under Section 6 hereof in
favor of the Investor.
(d) No Shareholder shall effect any pledge, mortgage, assignment by way of
security, or other lien or encumbrance of any nature ("Lien") (other than such
as may be deemed to arise pursuant to this Agreement) on or with respect to any
shares of Common Stock owned by it, provided, that WWC shall be permitted, when
required under instruments governing its indebtedness for borrowed money, to
place Liens on shares of Common Stock owned by it to secure such indebtedness if
such Liens and all rights of the secured party thereunder with respect to the
Common Stock are subject to the rights and obligations of the Shareholders under
this Agreement, and provided further, that in connection with any foreclosure or
enforcement of remedies by such secured lender upon the shares subject to such
Lien, the Tag Along Right and the Drag Along Right (but not the other rights and
obligations of the parties hereunder) shall terminate. In connection with any
such Transfer by WWC to a secured lender by way of the granting of a Lien (but
not any action by such secured lender to foreclose or enforce remedies on, or
subsequently Transfer, the shares of Common Stock subject to its Lien), no
rights of first offer, first refusal, Tag Along Rights or other rights of any
other Shareholder hereunder shall be applicable.
(e) Notwithstanding anything to the contrary in this Section 5, but
subject, in the case of WWC, to Sections 12(h) and 12(j), each Shareholder shall
have the right to Transfer shares of Common Stock at any time in an Excepted
Transfer.
(f) The Shareholders and the Company each agree to cooperate in all
reasonable respects (without any obligation to incur any liability or expense)
in connection with any Transfer by a Shareholder permitted by this Section 5, so
as to enable such Transfer to be effected on an optimal basis for tax and other
applicable regulatory purposes.
6. RIGHTS OF FIRST OFFER AND FIRST REFUSAL.
(a) Investor.
(i) If the Investor proposes to Transfer shares of Common Stock (the
shares which are the subject of a proposed Transfer being hereinafter referred
to as "Sale Shares"), other than to a Permitted Affiliate Transferee and other
than by means of an Excepted Transfer, then the Investor shall first offer to
Transfer such Sale Shares to WWC or its designees in accordance with the
procedures for rights of first offer set forth in Section 6(c) hereof.
(ii) In the event such proposed Transfer by the Investor shall arise
as a result of the Investor's receipt of an unsolicited written offer from a
third party or group of related third parties to purchase shares of Common Stock
in a bona fide Transfer that would not be an Excepted Transfer (an "Unsolicited
Bid"), which the Investor intends to accept, the Investor shall first offer to
Transfer such Sale Shares to
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WWC (or its designees) in accordance with the procedures for rights of first
refusal set forth in Section 6(d) hereof.
(b) WWC.
(i) If WWC proposes to make a Transfer of Sale Shares (other than to
a Permitted Affiliate Transferee or by means of an Excepted Transfer (subject to
Sections 12(i) and 12(k) hereof)) WWC shall first offer to Transfer such Sale
Shares to the Investor in accordance with the procedures for rights of first
offer set forth in Section 6(c) hereof.
(ii) In the event such proposed Transfer by WWC shall arise as a
result of an Unsolicited Bid to WWC which WWC intends to accept, WWC shall first
offer to Transfer such Sale Shares to the Investor in accordance with the
procedures for rights of first refusal set forth in Section 6(d) hereof.
(c) Procedures for Rights of First Offer.
(i) Any Shareholder (the "Seller") desiring to Transfer any Sale
Shares held by such Seller in a transaction subject to rights of first offer
pursuant to Section 6(a)(i) or 6(b)(i) above shall give written notice (a "Sales
Notice") to the other Shareholders that the Seller desires to effect such a
Transfer (a "Sale") and setting forth the number of Sale Shares proposed to be
Transferred by the Seller in such Sale and the purchase price per share in cash
it desires for such Sale Shares (the "Sales Price").
(ii) The receipt of the Sales Notice by each other Shareholder shall
constitute an offer revocable only as provided below in this Section 6(c) (the
"Offer") by the Seller to sell to such Shareholder for cash the relevant Sale
Shares at the Sales Price. Each Shareholder, or any group of one or more
Shareholders, receiving an Offer shall have a 30-day period (the "Order Period")
in which to give a written notice (a "Bid") to the Seller, which written notice
shall state the number of Sale Shares that such Shareholder or group of
Shareholders proposes to purchase at the Sales Price; provided, however, that
all Bids must in the aggregate be for all of the Sale Shares the Seller proposes
to Transfer as stated in the Sales Notice, unless the Seller, in its sole
discretion, elects to accept Bids for less than all of the Sale Shares proposed
to be sold.
(iii) Upon the receipt of any Bids, which Bids in the aggregate are
for the purchase of not less than all the Sale Shares, the Seller shall have the
right to solicit offers for the Sale Shares from any third party (a "Third-Party
Offer") for a period of 90 days from the date the Order Period expires (the
"Third-Party Offer Period"). To the extent the Seller receives a Third-Party
Offer and such Third-Party Offer contains a proposed sales price in excess of
the Sales Price, then the Seller shall have the right to sell the Sale Shares to
the third party pursuant to its Third-Party Offer. If no Bids are delivered
during the Order Period, or if the Bids received are not in the aggregate for
all the Sale Shares, then the Seller shall be entitled to accept, in its
13
sole discretion, any Third-Party Offer it so chooses within the Third-Party
Offer Period at a sales price and on terms and conditions no less favorable to
the Seller than those set forth in the Sales Notice. If such sale pursuant to a
Third-Party Offer is not consummated within 60 days from the end of the
Third-Party Offer Period (the "Third Party Closing Period") (or such longer
period as may be provided pursuant to clause (v) below), then no such sale shall
be consummated without once again following the procedures under this Section 6.
(iv) The Shareholder or group of Shareholders providing a Bid which
is accepted by the Seller shall be under a binding obligation to purchase and
pay for all the Sale Shares accepted pursuant to their Bid within a 60-day
period (or such longer period as may be provided pursuant to clause (v) below)
from the date on which the purchasing Shareholder (or group of Shareholders)
receives written notice of the Seller's acceptance of their Bid (the "Bid
Closing Period"), which notice shall be given promptly after the expiration of
the Third-Party Offer Period if no qualifying Third-Party Offers have been
received or, if earlier, the Seller's determination to accept the Bid. At the
closing of any purchase of the Sale Shares by any purchasing Shareholders, the
Seller shall deliver to the purchasing Shareholders, against receipt of the
purchase price therefor by cash or certified or bank cashier's check, the
certificate or certificates representing the Sale Shares each such purchasing
Shareholder has elected to purchase, properly endorsed for transfer, with all
necessary transfer and documentary stamps affixed, and in a form such that upon
presentation to the Company, the Sale Shares represented thereby may be
registered in the names of the respective purchasers.
(v) If the purchase and sale of the Sale Shares pursuant to a
Third-Party Offer or any Bid, as the case may be, is subject to any prior
regulatory approval, consent, waiver, notice or like requirement, then, provided
that the third party or the purchasing Shareholder(s), as the case may be, shall
promptly make any necessary filings or applications for, and diligently pursue,
the satisfaction of such regulatory requirements, the time period during which
such purchase and sale must be consummated shall be extended until the earlier
of (i) five Business Days after all such regulatory requirements have been
satisfied and (ii) 90 days after the expiration of the Third-Party Closing
Period or the Bid Closing Period, as the case may be, provided, that such 90-day
period shall be extended by an additional 90 days upon written request of the
Seller or the third party or the purchasing Shareholder(s), as the case may be,
unless the Seller shall deliver to such third party or Shareholder(s), as the
case may be, an opinion of counsel experienced in the relevant area of law or
regulation that such regulatory requirements cannot be satisfied by such third
party or Shareholder(s), as the case may be.
(vi) If the aggregate number of shares offered to be purchased in
all Bids received by the Seller exceeds the number of Sale Shares, and if such
Bids are accepted, the Sale Shares shall be allocated among such Bids pro rata
based on the number of Sale Shares offered to be purchased in each Bid. Each Bid
shall be irrevocable, regardless of whether the number of Sale Shares to be
delivered upon acceptance of such Bid shall be reduced in accordance with the
foregoing, and shall be
14
deemed to constitute a Bid to purchase such lesser number of Sale Shares as
shall be determined on such pro rata basis. Any Shareholder which fails to
deliver a Bid before the expiration of the Order Period shall be deemed to have
elected not to purchase any of the Sale Shares pursuant to the Sales Notice.
(d) Procedure for Rights of First Refusal.
(i) If at any time a Shareholder receives an Unsolicited Bid to
which Section 6(a)(ii) or 6(b)(ii) applies, and which such Shareholder intends
to accept, such Shareholder shall, prior to making any Transfer of Sale Shares
pursuant to such Unsolicited Bid, give written notice (the "Unsolicited Bid
Notice") to the other Shareholders, accompanied by a copy of such Unsolicited
Bid.
(ii) An Unsolicited Bid Notice shall constitute an irrevocable offer
of the Shareholder giving such notice to sell the Sale Shares to the other
Shareholders, on the terms and conditions and at the price specified in such
notice (including the exact form and type of consideration offered in the
Unsolicited Bid). A Shareholder making an offer to sell pursuant to an
Unsolicited Bid Notice is hereinafter referred to as an "Offeror-Shareholder",
and a Shareholder receiving such offer pursuant to an Unsolicited Bid Notice is
hereinafter referred to as an "Offeree-Shareholder".
(iii) Within 30 days after delivery of the Unsolicited Bid Notice to
the Offeree-Shareholders (the "Exercise Period"), each Offeree-Shareholder shall
have the right, subject to the pro rata allocation of purchase rights set forth
in clause (iv) below, to accept the offer pursuant to an Unsolicited Bid Notice
as to all or any portion of the Sale Shares, by notice to the
Offeror-Shareholder, with copies to each other Offeree- Shareholder and the
Company. Each Offeree-Shareholder shall specify in such notice any maximum
number of Sale Shares such Offeree-Shareholder is willing to purchase.
(iv) Each election to purchase Sale Shares pursuant to this Section
6(d) shall be irrevocable, regardless of whether the number of Sale Shares
deliverable upon the exercise of such election shall be reduced in accordance
with the provisions of this clause (iv), and shall be deemed to constitute an
election to purchase such lesser number of Sale Shares as shall be determined in
accordance with this clause (iv). If an Offeree-Shareholder shall fail to
deliver notice of its election to purchase Sale Shares before the expiration of
the Exercise Period, it shall be deemed to have elected not to purchase any Sale
Shares pursuant to the relevant Unsolicited Bid Notice. If elections to purchase
more than 100% of the Sale Shares are made by the Offeree Shareholders, the
right to purchase Sale Shares shall be allocated among the
Offeree-Shareholder(s) electing to purchase Sale Shares pro rata based on the
number of Sale Shares each has elected to purchase. The Offeree-Shareholders
electing to purchase Sale Shares shall be under a binding obligation to purchase
and pay for all the Sale Shares accepted pursuant to their elections within 60
days after the expiration of the Exercise Period (the "Shareholder Closing
Period") (or such longer period as may be provided pursuant to clause (vii)
below).
15
(v) All timely elections by Offeree-Shareholders to purchase Sale
Shares shall be binding on the Offeror-Shareholder, provided, that such
elections shall not be binding on the Offeror-Shareholder if the
Offeree-Shareholders do not in the aggregate elect to purchase all of the Sale
Shares on the terms and conditions of the Unsolicited Bid Notice, including the
exact form and type of consideration. In such event, no sales pursuant to such
elections need be made by the Offeror-Shareholder, and the Offeror-Shareholder
shall be entitled to sell such Sale Shares to the Person(s) named in the
Unsolicited Bid Notice in accordance with clause (vi) (and, if applicable,
clause (vii)) below at a sales price and on terms and conditions (including the
form of consideration) no less favorable to the Offeror-Shareholder than those
in the Unsolicited Bid Notice. Notwithstanding the foregoing, the
Offeror-Shareholder may, by written notice to the Offeree-Shareholders within 10
days after the Offeree-Shareholders give notice of their elections to purchase
Sale Shares, waive its right not to sell that part of the Sale Shares for which
elections have been made, and accept and confirm all such elections so made, in
which case the time period set forth in clause (iv) above shall run from the
date such notice is delivered by the Offeror-Shareholder rather than the
expiration of the Exercise Period (or for such longer period as may be
applicable in accordance with clause (vii) below). If the form of consideration
to be paid by the Person(s) making the Unsolicited Bid shall differ from that
described in the Unsolicited Bid Notice in respect of any non-cash component
specified in the Unsolicited Bid Notice, and if the Offeree-Shareholders were
unable to deliver the exact form and type of non-cash consideration provided for
in such notice, but would be able to provide the new form of consideration, the
Sale Shares shall be required to be reoffered to the Offeree-Shareholders in
accordance with this Section 6(d).
(vi) Any Transfer of Sale Shares to the prospective transferee named
in the Unsolicited Bid Notice shall be consummated within a period of 60 days
after the expiration of the Exercise Period (the "Unsolicited Bidder Closing
Period") (or such longer period as may be provided pursuant to clause (vii)
below).
(vii) If the purchase and sale of such Sale Shares pursuant to an
Unsolicited Bid or any election by an Offeree-Shareholder, as the case may be,
is subject to any prior regulatory approval, consent, waiver, notice or like
requirement, then, provided that the third party making such Unsolicited Bid or
such Offeree-Shareholder, as the case may be, shall promptly make any necessary
filings or applications for, and diligently pursue, the satisfaction of such
regulatory requirements, the time period during which such purchase and sale
must be consummated shall be extended until the earlier of (i) five Business
Days after all such regulatory requirements have been satisfied and (ii) 90 days
after the expiration of the Unsolicited Bidder Closing Period or Shareholder
Closing Period, as the case may be, provided, that such 90-day period shall be
extended by an additional 90 days upon written request of the
Offeror-Shareholder, the third party or the purchasing Offeree-Shareholder(s),
as the case may be, unless the Offeror-Shareholder shall deliver to such third
party or Offeree-Shareholder(s), as the case may be, an opinion of counsel
experienced in the relevant area of law or regulation that such regulatory
requirements cannot be satisfied by such third party or Offeree-Shareholder(s),
as the case may be.
16
(viii) At the closing of any purchase of the Sale Shares by any
Offeree-Shareholders, the Offeror-Shareholder shall deliver to the
Offeree-Shareholders, against receipt of the purchase price therefor by cash or
certified or bank cashier's check, in respect of the cash portion of such
purchase price and such other relevant instruments or securities as are required
to comprise the consideration offered in the Unsolicited Bid, the certificate or
certificates representing the Sale Shares each such Offeree-Shareholder has
elected to purchase, properly endorsed for transfer, with all necessary transfer
and documentary stamps affixed, and in a form such that upon presentation to the
Company the Sale Shares represented thereby may be registered in the names of
the respective purchasers.
(f) Exclusions. The provisions of this Section 6 shall not apply to:
(i) a Transfer permitted by the provisions of Section 5(a), 5(d) or
5(e) hereof;
(ii) a Transfer of shares of Common Stock between WWC and the
Investor;
(iii) a Transfer by WWC if the Investor is unable to purchase or own
all of the Sale Shares as a result of its inability to satisfy any applicable
legal or regulatory requirements for such purchase or ownership within the time
period specified in Sections 6(c)(v) or 6(d)(vii), as the case may be.
(g) Tag Along Rights Unaffected. The Tag Along Rights of the Investor
shall not be deemed waived, limited or otherwise adversely affected by any
determination by the Investor not to exercise an applicable right of first offer
or first refusal under this Section 6 or any inability of the Investor to
deliver any required non-cash consideration in the exact form and type offered
in an Unsolicited Bid to WWC.
7. DRAG ALONG RIGHT.
(a) If at any time WWC proposes to make a bona fide Transfer (the
"Proposed Transfer") of all the shares of Common Stock owned by it and all other
shareholders of the Company which are subject to drag along rights in favor of
WWC to a third party or group of related third parties (the "Proposed
Transferee") WWC shall have the right (the "Drag Along Right"), subject to the
further requirements of this Section 7, to require all (but not less than all)
of the other Shareholders (which term includes, for purposes of this Section 7,
all other shareholders of the Company which are subject to drag along rights in
favor of WWC) to sell in the Proposed Transfer all (but not less than all) of
the shares of Common Stock then owned by such other Shareholders on the same
terms and conditions per share as are obtained by WWC. Each Shareholder agrees
to take all reasonable steps necessary to enable such Shareholder to comply with
the provisions of this Section 7, including executing and performing a purchase
and sale, merger or other applicable acquisition agreement on
17
the same terms as WWC. WWC and the Investor each agree to make full disclosure
to the other concerning the details of any relationship and dealings it may have
with the other party or parties to the Proposed Transfer. WWC shall keep each
other Shareholder advised in writing of, and consult on a timely basis with each
other Shareholder concerning, any Transfer with respect to which it has
exercised the Drag Along Right.
(b) The Investor, WWC and Xxxx X. Xxxxxxx each hereby agree that for a
period of one year after the closing of any transaction in which the Drag Along
Right is exercised and all the Common Stock of the Company subject to drag along
rights in favor of WWC is Transferred solely for cash, such Person shall not
acquire or hold, directly or indirectly, any equity interest in any entity
which, directly or indirectly, acquired in the transaction which gave rise to
the Drag Along Right the continuing business of the Company, other than in
nominal amounts of publicly traded securities.
(c) This Section 7 shall only apply to the Investor if the consideration
to be received by the shareholders of the Company in the Proposed Transfer:
(i) comprises solely cash and the gross amount to be received by the
Investor is sufficient to provide it with a return of its invested capital on
the shares of Common Stock sold by it, together with an internal rate of return
thereon of at least 23%; or
(ii) comprises solely equity securities of the surviving entity in
such transaction ("Consideration Securities"), representing 50% or less of the
total outstanding voting power of such entity after giving effect to the
transaction, and (A) the value of such Consideration Securities to be received
by the Investor is sufficient to provide it with an implied return of its
invested capital on the shares of Common Stock sold by it, together with an
internal rate of return thereon of at least 15% (the value of the Consideration
Securities being measured for this purpose as of the date immediately preceding
the announcement of the Proposed Transfer transaction, (x) if there is a public
trading market for such Consideration Securities, as an amount equal to the
average of the mean of the high and low sales prices of such Consideration
Securities on the principal market on which such securities are traded on each
of the 30 consecutive trading days immediately preceding the announcement of the
transaction or (y) if there is no such public trading market, as mutually agreed
by WWC and the Investor within 14 days after the definitive terms of the
transaction have been announced or, if not mutually agreed within such period,
as determined pursuant to a private market value appraisal in the same manner as
the Appraisal Procedure (with the expense of such appraisal to be borne by WWC))
and (B) the Investor is provided with demand registration rights with respect to
the Consideration Securities received by it containing terms and conditions
substantially the same as those in Section 11, which rights shall be exercisable
twice in any 12-month period until all of the Consideration Securities received
by the Investor have been Transferred to transferees who would not be entitled
to the benefit of such registration rights under Section 15(a) or can be
Transferred in Public Sales to U.S. persons in the
18
United States without registration under the Securities Act and without
imposition of volume limitations under Rule 144 under the Securities Act; or
(iii) comprises solely Consideration Securities representing more
than 50% of the total outstanding voting power of the surviving entity after
giving effect to the transaction, and either (A) if such Consideration
Securities are not a class of equity securities which, after giving effect to
the transaction, has a public float representing at least 15% of the outstanding
equity securities of such class, the rights and obligations of the Investor
hereunder shall continue in effect and there is substantial management
continuity from the Company to such surviving entity, or (B) if the
Consideration Securities are a class of equity securities which, after giving
effect to the transaction, has a public float representing at least 15% of the
outstanding securities of such class, the only rights and obligations of the
Investor hereunder which continue in effect shall be those which survive after a
Qualifying IPO as provided in Section 14 hereof; or
(iv) comprises a combination of cash and Consideration Securities,
in which case, (A) if the Consideration Securities to be received by the
shareholders of the Company represent 50% or less of the total outstanding
voting power of the surviving entity after giving effect to the transaction,
then (1) the value of such consideration to be received by the Investor is
sufficient to provide it with an implied return of its invested capital on the
shares of Common Stock sold by it, together with an internal rate of return
thereon of at least the sum of (x) 15% and (y) 8% multiplied by the percentage
of the total consideration that is represented by cash, and (2) demand
registration rights are provided to the Investor with respect to such
Consideration Securities as provided in clause (ii) above, or (B) if the
Consideration Securities to be received by the shareholders of the Company
represent more than 50% of the total outstanding voting power of the surviving
entity after giving effect to the transaction, the provisions of (iii) above
shall apply to the Investor and no return of invested capital or internal rate
of return requirement shall apply.
(d) To exercise the Drag Along Right, WWC shall give each other
Shareholder and the Company a written notice (a "Drag Along Notice") containing
(i) confirmation that the Proposed Transferee proposes to acquire or make an
exchange for all the then outstanding shares of Common Stock owned by WWC and
the Investor (and all other shareholders of the Company which are subject to
drag along rights in favor of WWC), (ii) the name and address of the Proposed
Transferee and (iii) the proposed purchase price, terms of payment and other
material terms and conditions of the Proposed Transferee's offer. Each
Shareholder shall thereafter be obligated, subject, in the case of the Investor,
to Section 7(c) and the other requirements for the exercise of the Drag Along
Right under this Section 7, to sell all (but not less than all) of its shares of
Common Stock as provided in such Drag Along Notice, provided, that the
transaction is consummated within 180 days of delivery of the Drag Along Notice
(or such longer period as may reasonably be required for any applicable FCC
approval or waiver to be obtained and become final). If the sale is not
consummated within such 180-day (or longer) period, then each Shareholder shall
no longer be obligated to sell such Shareholder's shares of Common Stock
pursuant to
19
that specific Drag Along Notice but shall remain subject to the provisions of
this Section 7 with respect to any subsequent Transfer to which the Drag Along
Right would apply.
(e) The Drag Along Right and the obligations of the Investor with respect
thereto, shall terminate when there shall be one or more shareholders of the
Company holding in the aggregate a Percentage Ownership of more than 10% of the
outstanding Common Stock, which shareholders are not subject to the Drag Along
Right.
8. TAG ALONG RIGHT.
(a) If at any time after the date of this Agreement WWC wishes to
Transfer, in one transaction or a series of related transactions, a majority of
the then issued and outstanding Common Stock to any third party or group of
related third parties (other than pursuant to (i) a Spin-Off Distribution or
(ii) a transaction to which the Drag Along Right is exercised), WWC shall notify
the Investor and the Company, in writing, of such Transfer and its terms and
conditions. Within 20 days after the date that such notice is delivered to the
Investor, the Investor shall notify WWC if it elects to participate in such
Transfer (which notice shall be irrevocable). The Investor, if it so notifies
WWC, shall have the right to sell up to all of the shares of Common Stock owned
by the Investor, as the Investor may elect in its notice to WWC. WWC shall cause
the transferee to purchase at the same time as the purchase from WWC all the
shares of Common Stock elected to be Transferred by the Investor in accordance
with the foregoing on the same terms and conditions per share as are obtained by
WWC and as were specified in WWC's notice to the Investor pursuant to this
Section 8(a).
(b) If at any time or from time to time after the date of this Agreement
WWC wishes to Transfer, in one transaction or a series of related transactions,
a number of shares of Common Stock representing more than 10% and up to 50% of
the then issued and outstanding Common Stock to any third party or group of
related third parties (other than pursuant to a Spin-Off Distribution), WWC
shall notify the Investor and the Company in writing of such Transfer and its
terms and conditions. Within 20 days of the date that such notice is delivered
to the Investor, the Investor shall notify WWC if it elects to participate in
such Transfer (which notice shall be irrevocable). The Investor, if it so
notifies WWC, shall have the right to Transfer up to the same percentage of the
shares of Common Stock owned by it as are being Transferred by WWC. WWC shall
cause the transferee to purchase at the same time as the purchase from WWC all
the shares of Common Stock elected to be Transferred by the Investor in
accordance with the foregoing on the same terms and conditions per share as are
obtained by WWC and as were specified in WWC's notice to the Investor pursuant
to this Section 8(b).
(c) WWC and the Investor each agree to make full disclosure to the other
concerning the details of any relationship and dealings it may have with the
proposed transferee in any transaction to which this Section 8 applies. WWC
shall keep the
20
Investor advised in writing of, and consult on a timely basis with the Investor
concerning, any transfer it may propose to make with respect to which the tag
along rights under this Section 8 may apply.
9. ISSUANCE OF COMPANY SECURITIES.
(a) At such times as the Company requires additional funding, the Company
will be responsive to the then existing conditions in the capital markets in
determining how to raise such funding. As a general rule, the Company will first
seek such capital in the form of loans from, or debt offerings in the capital
markets to, third parties (it being understood that WWC and the Company
recognize the rights of the Investor as a result of the events described in
clause (a) of the definition of "Disposition Event"). The Company's second
source of funding shall be debt in the form of loans from its shareholders,
participation in which shall be offered to the Shareholders pro rata based on
their respective Percentage Ownerships in the same manner as under the
preemptive rights for equity offerings provided below in this Section 9. If
additional funding is still required, the Company's third source of funding
shall be equity offerings to the Shareholders pursuant to the preemptive rights
provided below in this Section 9. In no event will the Investor or WWC be
obligated to provide any further funding without their express prior written
consent. It is understood that, notwithstanding the foregoing priorities, the
Board will determine the appropriate timing of any public offerings of the
Company's equity securities, subject to Section 12(j) hereof.
(b) For purposes of this Section 9, the term "equity securities" shall
include any warrants, options or other rights to acquire equity securities or
debt securities convertible into equity securities, but shall not include
non-voting, non-convertible preferred stock or nominal equity features included
in the terms of a debt financing. This Section 9 shall not apply with respect to
issuances of the Company's equity securities in connection with (i) a Public
Sale by the Company, (ii) a conversion or exchange of any outstanding
securities, (iii) a stock dividend, (iv) a merger, amalgamation, acquisition,
reclassification or other reorganization in which the then-current shareholders
of the Company would continue to be the only shareholders of the Company or
which is effected to carry out an acquisition transaction or (v) the grant or
exercise of stock options or other grants or purchases of equity securities of
the Company pursuant to any stock option, stock purchase or other employee
benefit plan now or hereafter adopted for employees, directors or consultants of
the Company.
(c) If at any time after the date hereof, the Company proposes to issue
equity securities of any kind (except as provided in Section 9(b)), then, as to
each Shareholder who holds Common Stock at such time, the Company shall:
(i) give written notice setting forth in reasonable detail (A) the
designation and all of the terms and provisions of the equity securities
proposed to be issued (the "New Issue Securities"), including, where applicable,
the voting powers,
21
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 to issue to each such Shareholder a portion of the New
Issue Securities equal to such Shareholder's Percentage Ownership on the terms
and conditions stated in such notice.
(d) Each such Shareholder that wishes to exercise its purchase rights
hereunder must deliver a written notice to that effect to the Company within 15
days after the date the notice specified in Section 9(c) was delivered by the
Company. If all of the New Issue Securities offered to such Shareholders are not
fully subscribed by such Shareholders, the remaining New Issue Securities (other
than any which WWC or its Permitted Affiliate Transferees may have declined to
purchase as provided in Section 9(f)) will be reoffered (A) first to the
Investor, (whereupon the Investor shall have five days from the date notice of
such reoffer is delivered to the Investor to exercise its purchase right), and
(B) if not fully taken up by the Investor, to the other Shareholders purchasing
their full allotment upon the terms set forth in this Section 9 (whereupon such
Shareholders shall have five days from the date notice of such reoffer is
delivered to such Shareholders to exercise their purchase rights), until all
such New Issue Securities are fully subscribed for or until the Investor and all
such Shareholders have subscribed for all such New Issue Securities which they
desire to purchase. To the extent that the Company offers two or more securities
in units, Shareholders must purchase such units as a whole and will not be given
the opportunity to purchase only one of the securities making up such units.
Such Shareholders must complete the purchase of such New Issue Securities at the
same time in a single closing within five Business Days after the expiration of
the 15-day period referred to in the first sentence of this Section 9(d) (or, if
applicable, the expiration of the five-day period referred to in the second
sentence of this Section 9(d)). If the purchase and sale of such New Issue
Securities by a subscribing Shareholder is subject to any prior regulatory
approval, consent, waiver, notice or like requirement, then provided that such
Shareholder shall promptly make any necessary filings or applications for, and
diligently pursue, the satisfaction of such regulatory requirements, the time
period during which such purchase and sale must be consummated shall be extended
until the earlier of (i) five Business Days after all such regulatory
requirements have been satisfied and (ii) 90 days after the expiration of the
applicable period set forth above for the completion of a purchase by the
Investor or any other subscribing Shareholders, as the case may be, provided,
that such 90-day period shall be extended by an additional 90 days upon written
request of the Investor or such subscribing Shareholder, as the case may be,
unless the Company shall deliver to the Investor or such subscribing
Shareholder, as the case may be, an opinion of counsel experienced in the
relevant area of law or regulation that such regulatory requirements cannot be
satisfied by the Investor or such Shareholder, as the case may be. The closing
of all purchases of the New Issue Securities by
22
Shareholders shall occur simultaneously, at which time the Company shall deliver
to the purchasing Shareholders, against receipt of the purchase price therefor
by cash or certified or bank cashier's check, duly issued certificate or
certificates representing the New Issue Securities that each such Shareholder
has elected to purchase.
(e) Upon the expiration of the offering periods described in the first two
sentences of Section 9(d), or upon any failure of any Shareholders to complete
the purchase of New Issue Securities in the time required under Section 9(d),
the Company will be free to sell such New Issue Securities that the Shareholders
have not elected to purchase (or have failed to purchase within the required
time) during the 90 days (or applicable longer period under Section 9(d))
following such expiration (or failure) on terms and conditions per share no more
favorable to the purchasers thereof than those offered to the Shareholders. Any
New Issue Securities offered or proposed to be sold by the Company after such
90-day period (or applicable longer period under Section 9(d)) or on more
favorable terms and conditions per share to the purchaser must be reoffered to
the Shareholders pursuant to this Section 9. The election by a Shareholder not
to exercise its purchase rights under this Section 9 in any one instance shall
not affect its rights (other than in respect of a reduction in its Percentage
Ownership) as to any subsequent proposed issuance. Any sale of such securities
by the Company without first giving the Shareholders the rights described in
this Section 9 shall be void and of no force and effect and the Company shall
cause any required correction to the registration and transfer books of the
Company to be effected.
(f) The right of the Investor and any other Shareholder to purchase New
Issue Securities which have not been subscribed for by other Shareholders under
Section 9(d) shall not apply to New Issue Securities which are not subscribed
for by WWC and which constitute (or represent the right to acquire) an aggregate
of up to 10% of the Company's outstanding Common Stock (after giving effect to
the sale of the New Issue Securities, including pursuant to the exercise of
preemptive rights), provided, that each purchaser of such New Issue Securities
is an entity having substantial assets or business operations in the
telecommunications industry. If WWC shall so agree at the time, such New Issue
Securities may at any time and from time to time be offered and sold by the
Company to purchasers pursuant to the preceding sentence without being required
to be offered first to other Shareholders pursuant to this Section 9. The
provisions of this Section 9 shall not apply to the issuance of equity
securities by the Company if the Investor is unable to subscribe for or own its
portion of the New Issue Securities as a result of its inability to satisfy any
applicable legal or regulatory requirements for such subscription or ownership
within the time period specified in Section 9(d).
(g) The Company hereby agrees that it shall cause each of its wholly-owned
Subsidiaries to comply with the terms of this Section 9 with respect to the
issuance of any equity securities by such Subsidiary (except for issuances of
stock dividends or in connection with a merger, amalgamation, reclassification
or other reorganization resulting in no reduction in the Company's direct or
indirect equity interest in such Subsidiary).
23
10. DISPOSITION TRANSACTIONS.
In the circumstances specified in this Section 10, WWC or the Company, as
applicable, shall have the right, or be subject to the obligation, as the case
may be, to effect in the manner provided in this Section 10 a Repurchase (as
defined below) or, if applicable, a Public Sale (such Repurchase or Public Sale
being referred to as a "Disposition Transaction") of all (or such portion as may
be specified in this Section 10) of the shares of Common Stock held by the
Investor.
(a) Upon delivery of notice by the Investor of any exercise of the
Investor's demand registration rights under Section 11(b)(i), the Company shall
proceed to register under the Securities Act, in accordance with Section 11(b),
the amount of Registrable Securities owned by the Investor specified in such
notice delivered by the Investor. WWC (or, if WWC so elects, the Company) will
have the right, exercisable by delivery of written notice to the Investor within
30 days from the Investor's delivery of its notice pursuant to Section 11(b)(i),
to require, concurrently with all actions necessary to effect the registration
of the specified amount of Registrable Securities, the determination of the
Private Market Value pursuant to the Appraisal Procedure. Upon determination of
the Private Market Value, the Company shall complete the registration of such
amount of Registrable Securities (which shall be pursuant to Section 11 and not
this Section 10, which shall not be applicable) unless WWC elects, in its sole
discretion, instead, to effect (or, if WWC so elects, to cause the Company to
effect) a Repurchase of said securities at the Private Market Value per share so
determined; provided, that any such Repurchase shall be completed within six
months of the Investor's delivery of the demand registration notice pursuant to
Section 11(b)(i).
(b) (i) If at any time Xxxxxxxxx Whampoa Limited ("HWL"), currently the
100% indirect owner of HTL, shall not, directly or indirectly, (A) hold at least
40% of the outstanding voting power of HTL and the Investor, and (B) be the
single largest shareholder of HTL and the Investor, (the failure to maintain
either of (A) or (B) above being hereinafter referred to as an "Investor Change
of Ownership"), WWC (or, if WWC so elects, the Company) will have the right,
exercisable by delivery of written notice to the Investor within 90 days after
receipt of notice of the Investor Change of Ownership, to effect a Disposition
Transaction covering all (and not less than all) of the shares of Common Stock
owned by the Investor and its Subsidiaries. Such Disposition Transaction shall
be completed within six months of the delivery to the Investor of WWC's or the
Company's, as the case may be, notice of exercise of its right to effect such
Disposition Transaction under this Section 10(b)(i).
(ii) Subject to Section 10(d) hereof, if at any time HTL shall not,
directly or indirectly, (A) hold at least 40% of the outstanding voting power of
any Permitted Affiliate Transferee referred to in clause (a)(iii) of the
definition of "Permitted Affiliate Transferee", or (B) be the single largest
shareholder of such Permitted Affiliate Transferee (the failure to maintain
either of (A) or (B) above being hereinafter referred to as an "Affiliate Change
of Ownership"), WWC (or, if WWC so elects, the Company) will have the right,
exercisable by delivery of written notice to such Permitted Affiliate Transferee
within 90 days after receipt of notice of such
24
Affiliate Change of Ownership, to effect a Disposition Transaction covering all
(and not less than all) of the shares of Common Stock owned by such Permitted
Affiliate Transferee and its Subsidiaries. Such Disposition Transaction shall be
completed within six months of the delivery to the Permitted Affiliate
Transferee of WWC's or the Company's notice of exercise of its right to effect
such Disposition Transaction under this Section 10(b)(ii).
(iii) The Investor will give prompt written notice to WWC and the
Company of any Investor Change of Ownership or Affiliate Change of Ownership.
(c) Within 90 days after a Disposition Event, the Investor shall have the
right to deliver written notice to WWC demanding that WWC (or, at WWC's
election, the Company) effect a Repurchase. Upon receipt of such notice WWC (or,
at WWC's election; the Company) shall effect a Repurchase of all the shares of
Common Stock owned by the Investor within six months after the delivery to WWC
of such notice. It is understood that if no written notice is delivered within
said 90 day period, neither WWC nor the Company shall have any obligation to
effect a Repurchase with respect to such Disposition Event, nor shall the
Investor have any other rights solely as a result of such Disposition Event.
(d) In the event that WWC (or, at WWC's election, the Company) has given
notice that it is electing to effect a Disposition Transaction as a result of an
Affiliate Change of Ownership, and if no Investor Change of Ownership has
occurred with respect to HTL, then HTL shall have the prior right, within 30
days after delivery by WWC (or, at WWC's election, the Company) of notice to the
Permitted Affiliate Transferee of such election, to purchase all the shares of
Common Stock owned by the Permitted Affiliate Transferee (and its Subsidiaries)
that are the subject of such Affiliate Change of Ownership, such purchase to be
completed within 90 days after delivery of such notice by WWC (or, if WWC so
elects, the Company).
(e) (i) If WWC (or, at WWC's election, the Company) has delivered written
notice pursuant to Section 10(b)(i) or 10(b)(ii) hereof of its election to
effect a Disposition Transaction as a result of an Investor Change of Ownership
or an Affiliate Change of Ownership, then the Company shall cause to be made a
Public Sale, using the procedures under Section 11(b) hereof, of all the shares
of Common Stock owned by the Investor and its Subsidiaries, or (subject to
Section 10(d) hereof) by the Permitted Affiliate Transferee and its
Subsidiaries, as the case may be. WWC (or, if WWC so elects, the Company) will
have the right, exercisable by delivery of written notice to the Investor or the
Permitted Affiliate Transferee, as applicable, concurrently with the notice of
WWC's (or at WWC's election, the Company's) election to effect such Disposition
Transaction, to require, concurrently with all actions necessary to effect the
Public Sale of such shares of Common Stock, the determination of the Private
Market Value pursuant to the Appraisal Procedure. Upon determination of the
Private Market Value, the Company shall complete the Public Sale of such shares
of Common Stock unless WWC, in its sole discretion, elects, instead, to effect
(or, if WWC so elects, to cause the Company to effect) a Repurchase of such
Common Stock at the Private Market Value per share so determined; provided, that
any such
25
Repurchase or Public Sale shall be completed within six months of WWC's (or, at
WWC's election, the Company's) notice of election to effect the Disposition
Transaction.
(ii) If the Investor has delivered to WWC written notice demanding
that WWC effect a Repurchase of the Investor's shares of Common Stock pursuant
to Section 10(c), then upon delivery of such notice an appraisal of the Private
Market Value shall be completed as soon as practicable pursuant to the Appraisal
Procedure. The closing of the Repurchase shall be effected promptly after the
determination of the Private Market Value, and in any event within six months
after the written demand for a Repurchase was delivered by the Investor pursuant
to Section 10(c). The Repurchase shall result in the repurchase of all the
relevant shares required to be repurchased at a purchase price per share of
Common Stock equal to the Private Market Value divided by the number of shares
of Common Stock outstanding (on a fully diluted basis) prior to giving effect to
the Repurchase.
(f) The Disposition Transaction shall be effected by one of the following
methods, as WWC (or at WWC's election, the Company) may elect:
(i) Repurchase. WWC (or, at WWC's election, the Company) may
repurchase all the relevant shares of Common Stock to be disposed of in
accordance with this Section 10 at a per share price equal to the Private Market
Value per share determined by dividing the Private Market Value by the number of
shares of Common Stock outstanding, on a fully diluted basis, prior to giving
effect to such transaction (a "Repurchase"). Such repurchase shall be made for
cash or, if WWC (or, at WWC's election, the Company) so elects by written notice
to the Investor for shares of WWC's Class A Common Stock ("Class A Stock"), the
value of which shall be measured as an amount equal to the average of the mean
of the high and low sales prices of the Class A Stock on the NASDAQ National
Market on each of the 30 consecutive Trading Days immediately preceding the
event which gave rise to the Company's right so to effect the Disposition
Transaction or the Disposition Event, as the case may be. At the closing of the
Disposition Transaction, any shares of Class A Stock to be delivered to the
Investor shall be delivered pursuant to an effective resale registration
statement on Form S-3 or other form under the Securities Act appropriate for a
delayed or continuous offering of such shares.
(ii) Public Sale. Except in the case of a Disposition Transaction
pursuant to Section 10(a) (with respect to which the Public Sale shall be
consummated pursuant to Section 11, without regard to this Section 10 unless WWC
(or, at WWC's election, the Company) has elected to make a Repurchase) or 10(c)
(with respect to which only the provisions relating to Repurchase are
applicable), the Company may effect a Disposition Transaction by means of a
Public Sale of the relevant shares of Common Stock using the procedures set
forth in Section 11(b).
(g) (i) The Investor shall have the right (the "Demand Event Tag Along
Right"), by delivery of written notice to WWC and the Company within 30 days
after the announcement of a transaction which would give rise to a Demand
26
Event (a "Demand Event Transaction"), which notice shall be revocable only if
such transaction is not completed, to require that the Investor be permitted to
participate in such transaction through the Transfer (including through an
exchange of shares in a merger) of all of the shares of Common Stock owned by
the Investor as provided in this Section 10(g). Notwithstanding the foregoing,
WWC shall have the right (the "Demand Event Drag Along Right"), by delivery of
written notice to the Investor within 30 days after the announcement of the
Demand Event Transaction (which notice shall be revocable only if such
transaction is not completed), to require the Investor to Transfer all the
shares of Common Stock owned by it in accordance with the following provisions
of this Section 10(g). The Investor agrees that if WWC shall so exercise the
Demand Event Drag Along Right, the Investor will so Transfer all the shares of
Common Stock owned by the Investor.
(ii) Upon delivery of the Investor's notice of exercise of the
Demand Event Tag Along Right (or WWC's notice of exercise of the Demand Event
Drag Along Right, as the case may be), an appraisal of the Private Market Value
shall be completed as soon as practicable pursuant to the Appraisal Procedure.
For purposes hereof, the Investor shall be treated as if there had been issued
to it the number of shares of Class A Stock that would have been issued to the
Investor pursuant to Section 10(f)(i) in a Repurchase at such Private Market
Value per share of all the Investor's shares of Common Stock in which WWC
elected to deliver shares of Class A Stock in lieu of cash (the "Investor Deemed
Class A Shares"). WWC shall cause the acquiror in the Demand Event Transaction
to deliver to the Investor, for each Investor Deemed Class A Share, the same
consideration per Investor Deemed Class A Share (including the exact form and
type of consideration) as is delivered to the shareholders of WWC for each share
of Class A Stock in the Demand Event Transaction (the "Demand Event
Consideration"), all on the same per share terms and conditions (other than any
delay in such delivery required for the determination of the Private Market
Value or for the satisfaction of any regulatory requirements applicable to the
Investor and the delivery of the Demand Event Consideration to it) as are
applicable to the outstanding shares of Class A Stock in the Demand Event
Transaction.
(iii) The delivery of the Demand Event Consideration shall be made
upon the closing of the Demand Event Transaction or, if later, as soon as
practicable after the Private Market Value has been determined pursuant to the
Appraisal Procedure and any regulatory requirements applicable to the Investor
and the delivery of the Demand Event Consideration to it have been satisfied.
Such delivery of the Demand Event Consideration shall be made against delivery
of all the Investor's shares of Common Stock to the Company, WWC or the acquiror
in the Demand Event Transaction, as such acquiror may specify.
11. REGISTRATION RIGHTS.
27
The Investor shall have the right to have its Registrable Securities (as
hereinafter defined) registered under the Securities Act and applicable United
States state securities laws in accordance with the express terms of the
following provisions.
(a) Definitions. As used in this Section 11:
(i) the terms "register," "registered" and "registration" refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act (and any post-effective amendments filed or
required to be filed) and the declaration or ordering of effectiveness of such
registration statement;
(ii) the term "Registrable Securities" shall mean (A) Common Stock
issued to the Investor, (B) any additional Common Stock acquired by the Investor
from the Company or another Shareholder other than in a Public Sale, and (C) any
Common Stock issued as a dividend or other distribution with respect to, or in
exchange for or in replacement of, the Common Stock referred to in clauses (A)
and (B) above;
(iii) "Registration Expenses" shall mean all expenses incident to
the Company's performance of or compliance with its obligations under this
Section 11, including, without limitation, all Commission, National Association
of Securities Dealers ("NASD") and stock exchange or NASDAQ registration,
listing and filing fees and expenses, fees and expenses of compliance with
applicable state securities or "blue sky" laws (including, without limitation,
reasonable fees and disbursements of counsel for the underwriters in connection
with "blue sky" qualifications of Registrable Securities), printing expenses,
messenger and delivery expenses, fees and disbursements of counsel for the
Company and all independent certified public accountants (including the expenses
of any annual audit and "cold comfort" letters required by or incident to such
performance and compliance), the fees and disbursements of underwriters
customarily paid in connection with secondary registered Public Sales of
securities (including the fees and expenses of any "qualified independent
underwriter" required by the NASD), the reasonable fees of one U.S. counsel
plus, if reasonably required by the Investor, one local counsel retained by the
Investor in connection with each such registration pursuant to this Section 11
for purposes of obtaining advice concerning applicable securities laws and
securities exchange regulations, review of the registration statement and
prospectus and limited due diligence concerning the Company, the reasonable fees
and expenses of any special experts retained by the Company 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.
28
(i) Upon the earlier of (A) the third anniversary of the Closing
Date and (B) the occurrence of a Demand Event (but only if a Demand Event Tag
Along Right or Demand Event Drag Along Right has not been exercised), the
Investor shall have the right, upon delivery of written notice to the Company
(not more than twice in any 12-month period and subject, in each case, to
Section 10(a) hereof) to require the Company to register under the Securities
Act such amount of Registrable Securities owned by the Investor as may be
specified in such notice in accordance with the procedures set forth in this
Section 11(b), provided, that any such registration demanded by the Investor
under this Section 11(b)(i) must be for an amount of Common Stock having an
aggregate anticipated sales price of at least $25,000,000. The rights of the
Investor to demand the registration of its Registrable Securities shall continue
until (x) all the Registrable Securities owned by it shall have been Transferred
to transferees who are not entitled to the registration rights of the Investor
hereunder in accordance with Section 15 hereof or, if earlier, (y) all its
remaining Registrable Securities are already included in an effective resale
registration statement on Form S-3 or other appropriate form for continuous or
delayed offerings or are eligible to be Transferred in Public Sales to U.S.
persons in the United States without registration under the Securities Act and
without being subject to volume limitations under Rule 144 under the Securities
Act, provided, in the case of (y), that there is a public float of the Common
Stock equal to at least 15% of the total outstanding shares of Common Stock.
(ii) If, by the fifth anniversary of the Closing Date, the Company
has not completed one or more Public Sales which have resulted in a public float
of the Common Stock equal to at least 15% of the total outstanding shares of
Common Stock, then the Investor shall have the right to require the Company to
register and effect a Public Sale of a sufficient number of shares of newly
issued Common Stock which, together with shares of Common Stock being resold by
WWC or any Other Shareholders (as defined below) and shares of Common Stock
previously sold in Public Sales, will result in a public float of at least 15%
of the total outstanding shares of Common Stock, all in accordance with the
procedures set forth in this Section 11(b) for the registration of Registrable
Securities.
(iii) If the Investor shall have demanded a registration of
Registrable Securities (which term will include for this purpose newly issued
shares of Common Stock referred to in Section 11(b)(ii) hereof) then the Company
will:
(A) promptly give written notice of the proposed registration to all
other shareholders entitled to piggyback registration rights under Section
11(c) hereof or any other contractual agreement of the Company (the "Other
Shareholders") and
(B) as soon as practicable, use its best efforts to prepare and file
with the Commission and cause to become effective such registration
statement as would permit or facilitate the sale and distribution of all
the Registrable Securities required to be covered thereby pursuant to the
notice delivered by the Investor, together (subject to Section 11(b)(iv)
below) with all
29
or such portion of the securities of any Other Shareholders joining in
such registration as are specified in written requests received by the
Company within ten Business Days after written notice from the Company is
delivered under Section 11(b)(iii)(A) above.
(iv) The Investor, at its election, shall have the Registrable
Securities covered by its request distributed by means of an underwritten public
offering with a single or managing underwriter selected by the Company and
reasonably acceptable to the Investor. If any Other Shareholders so request, the
securities of such Other Shareholders shall be included in the registration and
underwriting being effected pursuant to this Section 11(b), subject to this
Section 11(b)(iv). The Investor and the Company shall (together with all Other
Shareholders proposing to distribute their securities through such underwriting)
enter into an underwriting agreement in customary form with the representative
of the underwriter or underwriters selected for such underwriting by the Company
and reasonably acceptable to the Investor (the "Representative").
Notwithstanding any other provision of this Section 11(b), if the Representative
advises the Investor and the Company in writing that (x) marketing factors
require a limitation on the number of shares to be underwritten or (y) the
inclusion of shares held by officers and directors of the Company in the
offering could, in the Representative's best judgment, materially reduce the
offering price per share, then, in the case of the preceding clause (x), the
Common Stock held by Other Shareholders shall be excluded from such underwriting
to the extent so required by such limitations and, in the case of the preceding
clause (y), the Common Stock held by officers and directors of the Company shall
be excluded from such underwriting to the extent advised by the Representative.
If, after the exclusion of such shares, further reductions are required to meet
the limitation on the number of shares to be underwritten as advised by the
Representative, then the Investor may elect, in its sole discretion, to reduce
the number of shares that will be included in the underwriting by it by such
number of shares as is necessary to comply with such limitation, but in no event
to an amount which is below the minimum amount for a demand registration as
provided in Section 11(b)(i). If the Investor does not so elect, then the
registration of its shares under Section 11(b)(i) will not proceed and will be
terminated without liability to any other Person. If the Representative has not
limited the number of Registrable Securities or other securities to be
underwritten, the Company may include its securities for its own account in such
registration if the Representative so agrees and if the number of Registrable
Securities which would otherwise have been included in such registration and
underwriting will not thereby be limited.
(v) Notwithstanding the foregoing, if the Company shall furnish to
the Investor and the Other Shareholders a certificate signed by the President or
Chief Executive Officer of the Company stating that, in the good faith judgment
of the Board, it would be materially detrimental to the Company and its
shareholders for such registration statement to be filed and that it is
therefore essential to defer the filing of such registration statement, then the
Company shall have the right to defer such filing for a period of not more than
90 days after the delivery of such certificate, provided that the Investor shall
not be required to accept such a deferral more than twice in any 12-month
period.
30
(c) Piggyback Registration.
(i) If the Company shall determine to register any of its Common
Stock either for its own account or for the account of any holder or holders of
Common Stock (other than a registration on Form S-8 (or similar or successor
form) relating solely to stock option, stock purchase or other employee benefit
plans, or a registration on Form S-4 (or similar or successor form), or a
registration on any registration form which does not permit secondary sales or
does not include substantially the same information as would be required to be
included in a registration statement covering the sale of Registrable
Securities), the Company will:
(A) promptly give to the Investor a written notice thereof (which
shall include a list of the jurisdictions in which the Company intends to
attempt to qualify such securities under the applicable blue sky or other
state securities laws); and
(B) subject to Section 11(c)(ii) below, include in such registration
(and any related qualification under blue sky laws or other compliance),
and in any underwriting involved therein, all the Registrable Securities
specified in a written request or requests made by the Investor within
fifteen (15) days after the date written notice as described in Section
11(c)(i)(A) above is delivered by the Company. Such written request may
specify all or a part of the Registrable Securities.
(ii) If the registration of which the Company gives notice is for a
Public Sale consisting of an underwritten public offering (in which event the
underwriter shall be selected by the Company, in its sole discretion), the
Company shall so advise the Investor as a part of the written notice given
pursuant to Section 11(c)(i)(A). In such event, the right of the Investor to
registration pursuant to this Section 11(c) shall be conditioned upon the
Investor's participation in such underwriting and the inclusion of the
Investor's Registrable Securities in the underwriting to the extent provided
herein. The Investor, if its shares are to be included in such registration,
shall (together with the Company and the Other Shareholders distributing their
Common Stock through such underwriting) enter into an underwriting agreement in
customary form with the Representative. Notwithstanding any other provision of
this Section 11(c), if the Representative advises the Investor or the Company in
writing that (x) the inclusion of shares held by the officers and directors of
the Company in the offering could, in the Representative's best judgment,
materially reduce the offering price per share, or (y) that marketing factors
require a limitation on the number of shares to be underwritten, then, in the
case of the preceding clause (x), the Common Stock held by officers and
directors of the Company shall be excluded from such underwriting to the extent
so advised by the Representative and, in the case of the preceding clause (y),
the number of shares that may be included in the underwriting by the Investor
and Other Shareholders requesting inclusion in such registration (but not the
Company or WWC) shall be reduced, on a pro rata basis (based on the number of
shares requested by the Investor and such Other Shareholders to be included in
such registration), by such minimum
31
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
11(c) to register any of the Registrable Securities in connection with such
registration.
(iii) Number and Duration. The Investor shall be entitled to have
its shares included in an unlimited number of registrations pursuant to this
Section 11(c). The rights of the Investor to registration of its Registrable
Securities under this Section 11(c) shall continue until (x) all the Registrable
Securities owned by it shall have been Transferred to transferees who are not
entitled to the registration rights of the Investor hereunder in accordance with
Section 15 hereof or, if earlier, (y) all its remaining Registrable Securities
are already included in an effective resale registration statement on Form S-3
or other appropriate form for continuous or delayed offerings or are eligible to
be Transferred in Public Sales to U.S. persons in the United States without
registration under the Securities Act and without being subject to volume
limitations under Rule 144 under the Securities Act, provided, in the case of
(y), that there is a public float of the Common Stock equal to at least 15% of
the total outstanding shares of Common Stock.
(d) Expenses of Registration. Upon the exercise of registration rights set
forth in this Section 11, the Company shall pay all Registration Expenses
incurred in connection with any registration, qualification or compliance
pursuant to this Section 11, provided, that such expenses shall not include
Selling Expenses, which shall be borne by the Investor pro rata on the basis of
the number of its shares so registered.
(e) Registration Procedures. In the case of each registration effected by
the Company pursuant to this Section 11, the Company will keep the Investor
advised in writing as to the initiation of each registration and as to the
completion thereof. In connection with any offering of Registrable Securities
registered pursuant to clause (b) or (c) of this Section 11, at its expense, the
Company shall:
(i) prepare and file with the Commission, as promptly as practical
after receipt of a request for registration pursuant to this Section 11, a
registration statement on any form for which the Company then qualifies, and
which form shall be available for the sale of the Registrable Securities in
accordance with the intended methods of distribution thereof, and use its best
efforts to cause such registration statement to become and remain effective as
provided herein; provided, that before filing with the Commission a registration
statement or prospectus or any amendments or supplements thereto, the Company
will (A) furnish to the Investor copies of all such documents proposed to be
filed for review and comment and (B) notify the
32
Investor of any stop order issued or threatened by the Commission and take all
reasonable actions required to prevent the entry of such stop order or to remove
it if entered;
(ii) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration effective (A) during the
ten Business Day period immediately following the date on which such
registration statement shall be declared effective, and (B) subject to any
obligation of the Investor to refrain from selling or offering to sell any
Registrable Securities during a Blackout Period (as defined below), for 120 days
after the date of effectiveness or (C) if earlier, until the Investor has
completed the distribution described in the registration statement relating
thereto (but not before the expiration of the time periods referred to in
Section 4(3) of the Securities Act and Rule 174 promulgated thereunder, or any
successor provisions, if applicable). The Company shall be entitled to elect
that a registration statement not be usable, for a reasonable period of time,
but not in excess of one hundred twenty (120) consecutive days (a "Blackout
Period"), if the Company determines in good faith that the use of such
registration statement or the related prospectus would interfere with any
pending financing, acquisition, corporate reorganization or any other material
corporate development involving the Company, WWC or any of their Subsidiaries or
would require premature disclosure thereof, and the Company promptly gives the
Investor written notice of such determination, containing a general statement of
the reasons for such postponement or restriction on use and an approximation of
the anticipated delay; provided, however, that (x) the Company shall not be
entitled to initiate a Blackout Period unless it shall concurrently forbid
purchases or sales in the open market by directors, senior executives and other
Affiliates of the Company, (y) the aggregate number of days included in all
Blackout Periods during any consecutive twelve (12) month period shall not
exceed two hundred forty (240) days, and (z) the period that the Company shall
be required to maintain the effectiveness of the registration statement shall be
increased by the aggregate number of days in the Blackout Periods. The Company
shall give written notice to each shareholder of record included in the
registration statement of the commencement and the termination of any Blackout
Period;
(iii) furnish to each underwriter, if any, and the Investor such
number of copies of such registration statement, each amendment and supplement
thereto (in each case including all exhibits thereto), and the prospectus
included in such registration statement (including each preliminary prospectus)
in conformity with the requirements of the Securities Act, and such other
documents incident thereto as the Investor may reasonably request from time to
time in order to facilitate the disposition of the Registrable Securities owned
by the Investor;
(iv) use its best efforts to register or qualify such Registrable
Securities under the state securities or "blue sky" laws of such states as the
Investor or the Representative reasonably request and do any and all other acts
and things that may be reasonably necessary or advisable to enable the Investor
and the underwriters to consummate the disposition in such jurisdictions of the
Registrable Securities
33
owned by the Investor; provided, that the Company will not be required as a
result thereof to (A) qualify generally to do business in any jurisdiction where
it would not otherwise be required to qualify but for this clause (iv), (B)
subject itself to taxation or regulation of its business in any such
jurisdiction in which it would not otherwise be so subject or (C) consent to
general service of process in any jurisdiction in which it would not otherwise
be subject to general service of process;
(v) use its best efforts to cause the Registrable Securities covered
by such registration statement to be registered with or approved by such other
governmental agencies or authorities as may be necessary by virtue of the
business and operations of the Company to enable the Investor to consummate the
disposition of such Registrable Securities;
(vi) immediately notify the Investor at any time when a prospectus
relating thereto is required to be delivered under the Securities Act of the
happening of any event that comes to the Company's attention, if as a result of
such event the prospectus included in such registration statement contains an
untrue statement of a material fact or omits to state any material fact required
to be stated therein or necessary to make the statements therein not misleading;
and subject to the Blackout Period provisions in clause (ii) above, the Company
will promptly prepare and furnish to the Investor a supplement or amendment to
such prospectus so that, as thereafter delivered to the purchasers of such
Registrable Securities, such prospectus will not contain an untrue statement of
a material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading;
(vii) use its best efforts to cause all such Registrable Securities
to be listed on a national securities exchange in the United States or quoted on
the NASDAQ National Market System and listed or quoted on each securities
exchange or automated quotation system on which similar securities issued by the
Company may then be listed or quoted, and enter into such customary agreements
including a listing application and indemnification agreement in customary form,
and, subject to applicable law, to provide a transfer agent and registrar for
such Registrable Securities covered by such registration statement no later than
the effective date of such registration statement;
(viii) enter into such customary agreements (including an
underwriting agreement or qualified independent underwriting agreement, in each
case, in customary form) and take all such other actions as the Investor
requesting registration of the Registrable Securities being covered by such
registration statement or the underwriter reasonably requests in order to
expedite or facilitate the disposition of such Registrable Securities, including
customary representations, warranties, indemnities and agreements;
(ix) make available (after reasonable notice and execution of
customary confidentiality agreements satisfactory to the Company) for
inspection, during business hours of the Company, by the Investor or its
representatives (if it has
34
requested registration of Registrable Securities) and any underwriter
participating in any disposition pursuant to such registration statement (to the
extent provided in the applicable underwriting agreement), (collectively, the
"Inspectors"), all financial and other records, pertinent corporate documents
and properties of the Company and its Subsidiaries (collectively, "Records"), if
any, as shall be reasonably necessary to enable them to exercise their due
diligence responsibility, and cause the Company's officers, directors and
employees, and those of the Company's Affiliates, to supply all information and
respond to all inquiries reasonably requested by any such Inspector in
connection with such registration statement;
(x) use its best efforts to obtain a "cold comfort" letter from the
Company's appointed auditors in customary form and covering such matters of the
type customarily covered by "cold comfort" letters as the Representative
reasonably requests; and
(xi) otherwise use its best efforts to comply with all applicable
rules and regulations of the Commission and all conditions imposed by relevant
governmental authorities or under applicable law and make available to the
Investor, as soon as reasonably practicable, an earnings statement covering a
period of at least twelve months beginning after the effective date of the
registration statement (as the term "effective date" is defined in Rule 158(c)
under the Securities Act), which earnings statement shall satisfy the provisions
of Section 11(a) of the Securities Act and Rule 158 thereunder.
It shall be a condition precedent to the obligation of the Company to take
any action with respect to any Registrable Securities that the Investor shall
furnish to the Company such information regarding the Registrable Securities and
any other securities of the Company held by the Investor and the intended method
of disposition of the Registrable Securities held by the Investor and such other
information regarding the Investor as the Company shall reasonably request and
as shall be required in connection with the action taken by the Company.
The Investor agrees that, upon receipt of any notice from the Company of
the happening of any event of the kind described in Section 11(e)(vi) hereof,
the Investor will forthwith discontinue disposition of Registrable Securities
pursuant to any prospectus or registration statement until the Investor's
receipt of the copies of the supplemented or amended prospectus contemplated by
Section 11(e)(vi) hereof, and, if so directed by the Company (at the Company's
expense), the Investor will deliver to the Company all copies (including,
without limitation, any and all drafts), other than permanent file copies, then
in the Investor's possession, of the prospectus covering such Registrable
Securities current at the time of receipt of such notice.
35
(f) Indemnification.
(i) In the event of any registration of any shares of Common Stock
under the Securities Act pursuant to this Agreement, the Company will indemnify
and hold harmless the Investor, its directors and officers, each Person who
participates as an underwriter in the offering or sale of such securities and
each other Person, if any, who controls the Investor or any such underwriter
within the meaning of the Securities Act against any and all losses, claims,
damages and liabilities (or actions in respect thereof), joint or several, and
expenses (including any amounts paid in any settlement effected with the
Company's consent, which consent will not be unreasonably withheld) to which the
Investor, any such director or officer or any such underwriter or controlling
Person may become subject under the Securities Act, the Exchange Act, United
States state securities or "blue sky" laws, common law or otherwise, insofar as
such losses, claims, damages or liabilities (or actions or proceedings in
respect thereof) or expenses arise out of or are based upon (A) any untrue
statement (or alleged untrue statement) of any material fact contained in any
registration statement under which such securities were registered under the
Securities Act, any preliminary, final or summary prospectus contained therein,
or any amendment or supplement thereto, (B) any omission (or alleged omission)
to state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, or (C) any violation (or alleged
violation) by the Company of any United States federal, state or common law rule
or regulation applicable to the Company and relating to action required of or
inaction by the Company in connection with any such registration, qualification
or compliance. The Company will reimburse the Investor and each such director,
officer, underwriter and controlling Person for any legal and any other expenses
reasonably incurred in connection with investigating or defending such claim,
loss, damage, liability or action, as such expenses are incurred; provided,
however, that the Company shall not be liable in any such case to the extent
that any such claim, loss, damage, liability (or action or proceeding in respect
thereof) or expense arises out of or is based on any untrue statement (or
alleged untrue statement) or omission (or alleged omission) made in such
registration statement or amendment or supplement thereto or in any such
preliminary, final or summary prospectus in reliance upon and in conformity with
written information furnished to the Company by the Investor or any such
director, officer, underwriter or controlling Person specifically stating that
it is for use therein; provided further, however, that the Company shall not be
liable to any of the foregoing indemnitees pursuant to this Section 11(f) with
respect to any untrue statement or omission or alleged untrue statement or
omission made in any preliminary prospectus or the final prospectus or the final
prospectus as amended or supplemented, as the case may be, to the extent that
any such loss, claim, damage or liability of such indemnitee results from the
fact that the Investor or underwriter sold Registrable Securities (x) to a
Person to whom there was not sent or given, at or prior to the written
confirmation of such sale, a copy of the final prospectus or of the final
prospectus as then amended or supplemented, whichever is most recent, if the
Company has previously furnished copies thereof to the Investor or underwriter
and such final prospectus, as then amended or supplemented, had corrected any
such misstatement or omission or (y) during a Blackout Period or after receipt
of a notice
36
pursuant to Section 11(e)(vi) hereof (prior to the amendment or supplement
thereunder having been furnished).
The indemnity provided for herein shall remain in full force and effect
regardless of any investigation made by or on behalf of the Investor or any such
director, officer, underwriter or controlling Person and shall survive the
transfer of such securities by the Investor or such underwriter.
(ii) The Investor will, if Registrable Securities held by it are
included in any registration statement filed in accordance with the provisions
hereof, (x) indemnify the Company, its directors, officers and controlling
Persons, all other prospective sellers, each person who participates as an
underwriter, and their respective directors, officers and controlling Persons
against all claims, losses, damages and liabilities (or actions in respect
thereof) and expenses to which any such Person may become subject under the
Securities Act, the Exchange Act, United States state securities or "blue sky"
laws, common law or otherwise, insofar as such losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) or expenses arise out
of or are based upon (A) any untrue statement (or alleged untrue statement) of a
material fact with respect to the Investor contained in any such registration
statement, preliminary, final or summary prospectus contained therein, or any
amendment or supplement thereto, in reliance on and in conformity with written
information furnished to the Company by the Investor specifically for use
therein, or (B) any omission (or alleged omission) to state therein a material
fact with respect to the Investor required to be stated therein or necessary to
make the statements made by the Investor therein not misleading and (y)
reimburse the Company and its directors, officers, controlling Persons and all
other prospective sellers, each person who participates as an underwriter, and
their respective directors, officers, and controlling Persons for any legal or
any other expenses reasonably incurred in connection with investigating or
defending any such claim, loss, damage, liability or action, in the case of both
clause (x) and clause (y), to the extent, and only to the extent, that such
untrue statement (or alleged untrue statement) or omission (or alleged omission)
is made in such registration statement, preliminary, final or summary prospectus
contained therein, or any amendment or supplement thereto in reliance upon and
in conformity with written information furnished to the Company by the Investor
with respect to the Investor specifically for use therein; provided, however,
that the obligations of the Investor hereunder shall be limited to an amount
equal to the proceeds to be received by the Investor from securities sold by the
Investor pursuant to such registration statement or prospectus.
The indemnity provided for herein shall remain in full force and effect
regardless of any investigation made by or on behalf of the Company or the
Investor, the underwriters or any of their respective directors, officers, or
controlling Persons and shall survive the transfer of such securities by the
Investor and such underwriters.
(iii) Each party entitled to indemnification under this Section
11(f) (an "Indemnified Party") shall give notice to the party required to
provide indemnification (the "Indemnifying Party") promptly after such
Indemnified Party has actual
37
knowledge of any claim as to which indemnity may be sought, and shall permit the
Indemnifying Party to assume the defense of any such claim or any litigation
resulting therefrom (it being understood that the Indemnifying Party shall not
be responsible for more than one counsel for all Indemnified Parties in any
single action or claim (or group of related actions or claims), unless the
Investor shall have reasonably concluded that it may have a conflict of interest
with one or more other Indemnified Parties with respect to any actions or
claims). Counsel for the Indemnifying Party, who shall conduct the defense of
such claim or any litigation resulting therefrom, shall be approved by the
Indemnified Party (whose approval shall not unreasonably be withheld or
delayed). The Indemnified Party may participate in such defense at the
Indemnified Party's expense (unless the Indemnified Party shall have reasonably
concluded that there may be a conflict of interest between the Indemnifying
Party and the Indemnified Party in such action, in which case the reasonable
fees and expenses of the Indemnified Party's counsel shall be at the expense of
the Indemnifying Party and shall be reimbursed as they are incurred). The
failure of any Indemnified Party to give notice as provided herein shall not
relieve the Indemnifying Party of its obligations under this Section 11 except
to the extent the Indemnifying Party is actually materially prejudiced thereby.
No Indemnifying Party, in the defense of any such claim or litigation, shall,
except with the consent of each Indemnified Party, consent to entry of any
judgment or enter into any settlement which does not include as a term thereof
the giving by the claimant or plaintiff to such Indemnified Party of an
unconditional release from all liability with respect to such claim or
litigation. Each Indemnified Party shall promptly furnish such information
regarding itself or the claim in question as an Indemnifying Party may
reasonably request in writing and as shall be reasonably required in connection
with the defense of such claim and litigation resulting therefrom.
(iv) In order to provide for just and equitable contribution in
circumstances in which the foregoing indemnities provided for in this Section
11(f) are for any reason held to be unenforceable although applicable in
accordance with their terms, the Company and the Investor shall contribute to
the aggregate losses, liabilities, claims, damages and expenses of the nature
contemplated by such indemnities in such proportion as shall be appropriate to
reflect (A) the relative benefits received by the Company, on the one hand, and
the Investor, on the other hand, from the offering of the Registrable Securities
and any other securities included in such offering, and (B) the relative fault
of the Company, on the one hand, and the Investor, on the other hand, with
respect to the statements or omissions that resulted in such loss, liability,
claim, damage or expense, or action in respect thereof, as well as any other
relevant equitable considerations; provided, however, that no Person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to a contribution from any Person who was not
guilty of such fraudulent misrepresentation. The relative fault shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or omission or alleged omission to state a
material fact relates to information supplied by the Company or the Investor,
the intent of the parties and their relative knowledge, access to information
and opportunity to correct or prevent such statement or omission. The Company
and the Investor agree that it would not be just and equitable
38
if a contribution pursuant to this Section 11(f) were to be determined by pro
rata allocation or by any other method of allocation that does not take into
account the equitable considerations referred to herein. Notwithstanding
anything to the contrary contained herein, the Company and the Investor agree
that any contribution required to be made by the Investor pursuant to this
Section 11(f) shall not exceed the net proceeds from the offering of Registrable
Securities (before deducting expenses) received by the Investor with respect to
such offering. For purposes of this Section 11(f), each Person, if any, who
controls the Investor within the meaning of Section 15 of the Securities Act
shall have the same rights to contribution as the Investor, and each director of
the Company, each officer of the Company who signed the registration statement,
and each Person, if any, who controls the Company within the meaning of Section
15 of the Securities Act shall have the same rights to contribution as the
Company.
(v) The foregoing indemnities of the Company and the Investor are
subject to the condition that, insofar as they relate to any untrue statement
(or alleged untrue statement) of a material fact contained in a preliminary
prospectus, or any omission (or alleged omission) to state therein a material
fact required to be stated therein or necessary to make the statements contained
therein not misleading, which was eliminated or remedied in the amended
prospectus on file with the Commission at the time the registration statement in
question became effective or the amended prospectus filed with the Commission
pursuant to Rule 424(b) under the Securities Act (the "Final Prospectus"), such
indemnities shall not inure to the benefit of any underwriter if a copy of the
Final Prospectus was furnished to the underwriter and was not furnished to the
Person asserting the loss, liability, claim or damage at or prior to the time
such action is required by the Securities Act.
(g) Information by the Investor. The Investor shall furnish to the Company
such information regarding the Investor and the distribution proposed by the
Investor as the Company may reasonably request in writing in connection with any
registration of Registrable Securities of the Investor and as shall be
reasonably required in connection with any registration, qualification or
compliance referred to in this Section 11.
(h) Rule 144 Reporting. With a view to making available the benefits of
certain rules and regulations of the Commission which may permit the sale of the
restricted securities to the public without registration, the Company agrees to:
(A) make and keep public information available as those terms are
understood and defined in Rule 144 under the Securities Act, at all times
from and after the effective date of the first registration statement
under the Securities Act filed by the Company for an offering of its
securities to the general public;
(B) use its best efforts to file with the Commission in a timely
manner all reports and other documents required of the Company under the
Securities Act and the Exchange Act at any time after it has become
subject to such reporting requirements; and
39
(C) so long as the Investor owns any Registrable Securities, furnish
to the Investor upon request a written statement by the Company as to its
compliance with the current information requirements of Rule 144 under the
Securities Act (at any time from and after the effective date of the first
registration statement filed by the Company for an offering of its
securities to the general public), a copy of the most recent annual or
quarterly report of the Company, and such other reports and documents
filed with the Commission pursuant to the reporting requirements of the
Exchange Act as the Investor may reasonably request in availing itself of
any rule or regulation of the Commission allowing the Investor to sell any
such securities without registration.
(i) "Market Stand-off" Agreement. (i) If any registration of Common
Stock (or other securities) of the Company shall be in connection with an
underwritten public offering, the Investor agrees not to effect any sale or
distribution of any Registrable Securities, including any private placement or
any sale pursuant to Rule 144A under the Securities Act (or any successor
provision) or otherwise or any sale pursuant to Rule 144 under the Securities
Act (or any successor provision), other than by pro-rata distribution to its
shareholders, partners or other beneficial holders, and not to effect any such
sale or distribution of any other equity security of the Company or of any
security convertible into or exchangeable or exercisable for any equity security
of the Company (in each case, other than as part of such underwritten public
offering) during the anticipated ten calendar days prior to, and during the 180
calendar day period (or such other period as may be agreed upon between the
Investor and the Representative) that begins on the effective date of such
registration statement, without the consent of the Representative; provided,
however, that written notice of such registration has been delivered to the
Investor at least two Business Days prior to the anticipated beginning of the
ten calendar day period referred to above.
(ii) If requested by the Representative the Investor shall execute a
separate agreement to the foregoing effect. The Company may impose stop-transfer
instructions with respect to the shares (or securities) subject to the foregoing
restriction until the end of said 180-day or other period. The provisions of
this Section 11(i) shall be binding upon any transferee who acquires Registrable
Securities, including, without limitation, any Permitted Affiliate Transferee of
the Investor, the Investor's shareholders, partners or other beneficial holders,
if such transferee is entitled to the registration rights provided hereunder.
The Company agrees that any agreement entered into after the date hereof
pursuant to which the Company issues or agrees to issue any privately placed
equity securities shall contain a provision under which the holders of such
securities agree not to effect any sale or distribution of any such securities
during the period and in the manner referred to in this Section 11(i)(ii).
(iii) If any registration of Registrable Securities shall be in
connection with an underwritten public offering, the Company agrees (A) not to
effect any Public Sale of any of its equity securities or of any security
convertible into or exchangeable or exercisable for any equity security of the
Company (other than any
40
such sale or distribution of such securities as part of such public offering, in
connection with any amalgamation, merger or consolidation by the Company or any
Subsidiary of the Company, the acquisition by the Company or a Subsidiary of the
Company of the shares or any assets of any other Person, or in connection with a
stock option, stock purchase or other employee benefit plan) during the ten days
prior to, and during the 180-day period (or such other period as may be agreed
upon between the Company and the Representative) which begins on the effective
date of such registration statement without the consent of the Representative.
(j) WWC agrees that it will cooperate in all reasonable respects in any
due diligence investigation contemplated under Section 11(e)(ix) hereof that is
required in connection with a registration and public offering pursuant to this
Section 11 and provide reasonable access to books, records and personnel of WWC
which are material to a customary due diligence investigation of the Company and
its business, assets and operations in connection with a registered public
offering.
12. CERTAIN COVENANTS OF THE COMPANY AND WWC.
(a) Auditors. The Company shall maintain a system of accounting
established and administered in accordance with United States generally accepted
accounting principles ("U.S. GAAP") and shall set aside on its books all such
proper reserves as shall be required by U.S. GAAP. The Company shall retain a
firm of independent certified public accountants of recognized standing (which
may be the auditors of WWC) to audit and report on the Company's annual
consolidated balance sheets and statements of operations, shareholders' equity
and cash flows and to report to the Board. All major accounting policies and
principles shall be determined by the Board in accordance with U.S. GAAP.
(b) Financial and Other Information.
(i) The Company shall prepare annual consolidated balance sheets and
statements of operations, shareholders' equity and cash flows of the Company and
its Subsidiaries, which shall be prepared in accordance with U.S. GAAP, set
forth in each case in comparative form the figures for the previous year, and be
audited by the auditors referred to in Section 12(a) hereof. The Company shall
also prepare quarterly unaudited consolidated balance sheets and statements of
operations, shareholders' equity and cash flows of the Company and its
Subsidiaries, certified by the Chief Financial Officer or the Chief Executive
Officer of the Company and prepared in accordance with U.S. GAAP and setting
forth in each case in comparative form the same figures for the comparable
period of the previous year and, in addition, year-to-date figures. The Company
will furnish to the Investor the following information within the time
specified: (i) as soon as practicable after the end of each fiscal quarter and,
in any event within 50 days thereafter, all of the quarterly financial
information referred
41
to herein, (ii) as soon as practicable after the end of each fiscal year, and in
any event within 120 days thereafter, all of the annual financial information
referred to herein, and (iii) on a timely basis, such other monthly management
operational and financial reports and information as the Investor may reasonably
request.
(ii) As part of the annual audit of WWC, WWC's independent public
accountants shall provide to the Investor a certificate as to the compliance by
WWC and the Company with the allocation of credits, fees, charges and expenses
in accordance with the terms of the Intercompany Agreements.
(c) Inspection and Audit Rights.
(i) From and after the date hereof, the Company will permit the
Investor, or its representatives, to visit and inspect any of the properties of
the Company, to examine all its books of account, records, reports and other
papers which are not contractually required of the Company to be kept
confidential or secret, to discuss its affairs, finances and accounts with its
officers, directors, key employees and independent public accountants or any of
them (and by this provision the Company authorizes such accountants to discuss
with the Investor and its representatives the finances and affairs of the
Company and its Subsidiaries), and WWC will permit the Investor to discuss the
affairs of WWC, if material to the Company, with the Senior Officers all at such
reasonable times and as often as may be reasonably requested.
(ii) The Investor shall have the right to carry out an audit (by its
independent auditor) once each year to determine compliance by WWC and the
Company with the allocation of credits, fees, charges and expenses in accordance
with the terms of the Intercompany Agreements. Each such audit shall be at the
Investor's sole cost and expense unless it is determined that the allocations
made with respect to the Company differed from the allocations which should have
been made in accordance with the Intercompany Agreements by more than 10%, in
which event the cost of such audit shall be borne by WWC.
(d) PCS and Future Spectrum Allocations.
(i) WWC shall develop and conduct the United States domestic PCS
business (which shall include for this purpose any expansion spectrum allocated
by the FCC to broadband personal communications services), only through the
Company Group. WWC will transfer, or cause to be transferred, to the Company
Group any licenses (or interests therein) for United States domestic PCS systems
acquired by the WWC Non-Company Group promptly after such assets are acquired,
at WWC's cost therefor. For this purpose, to the extent WWC shall have issued
shares of its Class A Common Stock as all or any portion of the consideration
paid to acquire such assets, the cost of such assets to be paid to WWC by the
Company shall be measured based on the market price of such WWC securities
immediately before the announcement of such acquisition, measured as provided in
Section 7(c)(ii).
(ii) The Company and the Investor agree that WWC shall continue to
conduct cellular businesses (which shall mean for this purpose
42
wireless telecommunications businesses using frequencies in the range of 800-900
MHz and include any expansion spectrum allocated by the FCC to cellular
services) through the WWC Non-Company Group. The Company will transfer, or cause
to be transferred, to the WWC Non-Company Group any licenses (or interests
therein) for cellular systems acquired by the Company Group promptly after such
assets are acquired, at the Company's cost therefor.
(iii) If additional frequencies are allocated to wireless
telecommunications which are not expansion spectrum for PCS or cellular
services, then the WWC Non-Company Group and the Company Group shall divide as
between them any business and acquisition opportunities for the provision of
services using such additional spectrum in accordance with the geographical
areas in which each then operates or has specific plans to begin operating
within 12 months under licenses then held. Subject to clause (iv) below, in the
case of overlapping geographic areas or areas in which neither WWC nor the
Company has operations, WWC and the Company shall mutually agree as to the
allocation of such opportunities, and if they are unable to agree, such
opportunities shall be shared equally by them pursuant to a joint venture or
arrangement which is mutually agreed (it being understood that the Company and
WWC recognize the rights of the Investor as a result of the events described in
clause (c) of the definition of "Disposition Event").
(iv) If either the Company or WWC determines not to pursue any
opportunity with respect to the application for or purchase of existing or newly
allocated spectrum, including either PCS spectrum or cellular spectrum (which
determination, in the case of the Company, shall be made by majority vote of the
Board with, prior to a Terminating Reduction, at least one of the Investor's
designees to the Board voting in the majority) and so confirms to the other
party, then the other party may make such application for or purchase such
existing or new spectrum for its own use free of any rights of the declining
party.
(e) Rights and Obligations of Other Holders. If the Company shall enter
into any agreement with a holder of equity securities of the Company (other than
WWC or the Investor) (an "Other Holder") which contains terms and conditions
with respect to corporate governance (including rights to designate directors to
the Board), liquidity (including transfer rights and restrictions, rights of
first offer or first refusal, and tag along and drag along rights), preemptive
rights, or other rights and obligations of such Other Holder as a shareholder of
the Company, the Company shall notify the Investor of such terms and conditions
in writing, which notice shall constitute an offer to the Investor to grant it
such terms and conditions in lieu of the terms and conditions of this Agreement.
The Investor shall have the right, by delivery of written notice to the Company
within 30 days after delivery of such notice from the Company, to accept such
terms and conditions in lieu of this Agreement, in which case the Company and
the Investor will enter into an agreement satisfactory to them in form and
substance to implement such complete substitution of terms and conditions.
(f) Dividends. Subject to compliance with the Company's and its
Subsidiaries' loan agreements, indentures and other financing agreements and
43
subject to the retention by the Company of adequate working capital and reserves
for the needs of its and its Subsidiaries businesses (including reserves for
anticipated capital expenditures provided for in the Company's approved annual
Operating Plan and Budget and/or capital expenditures budget and reserves for
acquisitions), the Shareholders agree that the Company shall, commencing as soon
as practicable and in any event with the year beginning on January 1, 2000, pay
dividends pari passu to all its shareholders as and in such amounts as are
legally available for distribution.
(g) Liability for Indebtedness. After the Closing, unless the Investor
shall otherwise consent in writing, no member of the Company Group shall have
any liability under or in respect of any indebtedness of any member of the WWC
Non-Company Group ("WWC Debt"), and the assets of the Company Group shall not be
subject to any Lien under or in respect of any WWC Debt. After the Closing,
unless WWC shall otherwise consent in writing, no member of the WWC Non-Company
Group shall have any liability under or in respect of any indebtedness of any
member of the Company Group ("Company Debt"), and the assets of the WWC
Non-Company Group shall not be subject to any Lien under or in respect of any
Company Debt.
(h) Spin-Off Distribution. WWC agrees that it shall not effect any
Spin-Off Distribution unless, after giving effect thereto:
(i) there shall be a public float of the Common Stock of at least
15% of the outstanding Common Stock;
(ii) the Common Stock is listed on a national securities exchange or
quoted on the NASDAQ National Market System;
(iii) the Roaming Agreement remains in full force and effect; and
(iv) if the Investor then retains the right hereunder to designate
one or more directors to the Board, the Company implements either (A) measures
reasonably satisfactory to the Investor (which may include voting agreements, or
the issuance of a separate class of voting securities to the Investor), or (B)
cumulative voting, in either case effective at or before the Spin-Off
Distribution to assure the Investor of the election to the Board of its
designee(s) in accordance with Section 3 hereof.
(i) Performance of Intercompany Agreements. WWC and the Company agree that
they will duly and timely perform their respective obligations under the
Intercompany Agreements in accordance with their respective terms (subject to
any amendments, modifications or waivers with respect thereto in accordance with
the terms of the Intercompany Agreements), except in respects which are not
material and which would not, in accordance with the terms thereof, give rise to
the right to claim a breach or default thereunder. The Company agrees with the
Investor that it will use all reasonable and prudent efforts to cause WWC so to
perform the Intercompany Agreements.
44
(j) IPO. Until the date that is 18 months after the Closing Date, the
Company and WWC will not effect any initial Public Sale of the Company's equity
securities (whether a primary offering of newly issued shares or a secondary
offering of shares owned by WWC) without the prior approval of at least one of
the Investor's designees to the Board; provided, that such approval will not be
required under this Section 12(j) for (1) any Public Sale of non-voting,
non-convertible preferred stock for which approval is obtained as referred to in
clause (a) of the definition of "Disposition Event", (2) any Spin-Off
Distribution by WWC which meets the requirements set forth in Section 12(h)
hereof, (3) subject to the rights of the Investor under Section 10(c) in respect
of clauses (c) and (d) of the definition of "Disposition Event", any merger,
acquisition or consolidation involving a Public Sale of the Company's or the
surviving entity's equity securities, or (4) any transaction giving rise to the
Drag Along Right under Section 7.
13. MISCELLANEOUS.
(a) Legends. In addition to any other legends required by applicable law,
the Company's By-laws or any other agreement restricting the Transfer of the
Common Stock, each certificate evidencing the Common Stock acquired by the
Shareholders will bear a legend reflecting the restrictions on the transfer of
such shares contained in this Agreement and in the Purchase Agreement.
(b) Waiver; Amendments. Except as expressly provided otherwise herein,
neither this Agreement nor any provision hereof may be changed, waived,
discharged or terminated orally, but only by an instrument in writing signed by
the Company and each of the Investor and WWC; provided, that if, at the time of
such proposed change, waiver, discharge or termination, any other Shareholder is
party to this Agreement, no change, waiver, discharge or termination that would
adversely affect the rights or alter the obligations of such other Shareholder
will be effective without the written approval of such Shareholder.
(c) Recapitalization, Exchanges, Etc. The provisions of this Agreement
shall apply to the full extent set forth herein with respect to shares or other
securities of the Company that may be issued to any Shareholder in respect of,
in exchange for, or in substitution of the Common Stock.
(d) Specific Performance. Each of the parties hereto acknowledges and
agrees that, in the event of any breach of this Agreement, the non-breaching
parties would be irreparably harmed and could not be made whole by monetary
damages. Accordingly, each of the parties hereto agrees that the other parties,
in addition to any other remedy to which they may be entitled at law or in
equity, shall be entitled to compel specific performance of this Agreement
pursuant to Section 13(k)(x).
(e) Notices. All notices, requests, demands and other communications
hereunder shall be in writing and, except to the extent otherwise expressly
provided in this Agreement, shall be deemed to have been duly given if delivered
by same day or
45
next day courier (guaranteed delivery) or mailed, registered mail, return
receipt requested, or transmitted by telegram, telex or facsimile (i) if to a
Shareholder, at such Shareholder's address appearing below or at any other
address such Shareholder may have provided in writing to the Company and the
other Shareholders then party to this Agreement and (ii) if to the Company, at
0000 XX Xxxxxxxxx Xxxx, Xx. 000, Xxxxxxxx, XX 00000, U.S.A., Tel: (425)
000-0000, Fax: (000) 000-0000; Attention: Xxxx X. Xxxxxx, Esq., or such other
address as the Company may have furnished to the Shareholders in writing, with a
copy (which shall not constitute notice) to Xxxxx Xxxx Xxxxx Constant &
Xxxxxxxx, 00 Xxxxxxxxxxx Xxxxx, Xxx Xxxx, XX 00000, XXX, Tel: (000) 000-0000,
Fax: (000) 000-0000; Attention: Xxxxx X. Xxxxxxx. If a notice hereunder is
transmitted by confirmed fax so as to arrive during normal business hours during
a Business Day at the place of receipt, then such notice shall be deemed to have
been given on such Business Day at the place of receipt or, if so transmitted to
arrive after normal business hours during a Business Day at the place of
receipt, then such notice shall be deemed to have been given on the following
Business Day at the place of receipt. If such notice is sent by next-day courier
it shall be deemed to have been given on the third Business Day at the place of
receipt following sending and, if by registered air mail, on the tenth Business
Day at the place of receipt following sending, provided, that the date of
sending shall be deemed to be the date at the place of receipt at the time such
notice is posted.
46
The Investor:
Xxxxxxxxx Telecommunications PCS (USA) Limited
c/o Offshore Incorporations Limited
P.O. Box 957
Offshore Incorporations Centre
Road Town, Tortola
British Virgin Islands
Tel: (000) 000-0000
Fax: (000) 000-0000
and
Xxxxxxxxx Telecommunications PCS (USA) Limited
22nd Floor, Xxxxxxxxx Xxxxx
00 Xxxxxxxx Xxxx
Xxxx Xxxx
Xxxxxxxxx: Xxxxx Xxxx
Tel: (000) 0000-0000
Fax: (000) 0000-0000
With a copy (which shall not constitute notice) to:
Xxxxx Xxxxxxxxxx LLP
Suite 3907, Asia Pacific Finance Xxxxx
Xxxxxxxx Xxxxx
0 Xxxxxx Xxxx
Xxxxxxx, Xxxx Xxxx
Attention: Xxxx X. Xxxxxx
Tel: (000) 0000-0000
Fax: (000) 0000-0000
WWC:
0000 XX Xxxxxxxxx Xxxx, Xx. 000
Xxxxxxxx, XX 00000
X.X.X.
Attention: Xxxx X. Xxxxxx, Esq.
Tel: (000) 000-0000
Fax: (000) 000-0000
With a copy (which shall not constitute notice) to:
47
Xxxxx Xxxx Xxxxx Constant & Xxxxxxxx
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, XX 00000
XXX
Attention: Xxxxx X. Xxxxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
(f) Successors and Assigns. Except as otherwise provided herein, this
Agreement shall inure to the benefit of, and be binding upon, the successors and
assigns of each of the parties; provided, however, that this Agreement may not
be assigned by any party hereto other than in compliance with the terms hereof,
including the restrictions on transfers of Common Stock as set forth in Section
5 and the transfer of the rights and obligations hereunder as set forth in
Section 15.
(g) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original and all of which
together shall be considered one and the same agreement.
(h) Entire Agreement. This Agreement constitutes the entire understanding
of the parties hereto with respect to the subject matter hereof and supersedes
all prior understandings among such parties with respect to such subject matter.
(i) Applicable Law. The validity of this Agreement, its construction,
interpretation and enforcement, and the rights of the parties hereunder, shall
be determined under, governed by and construed in accordance with the internal
laws of the State of New York applicable to contracts formed in such State. Each
party hereto agrees that, subject to Section 13(k) hereof, any suit, action or
other proceeding arising out of this Agreement shall be brought and litigated in
the courts of the State of New York or the United States District Court for the
Southern District of New York and each party hereto hereby irrevocably consents
to personal jurisdiction and venue in any such court and hereby waives any claim
it may have that such court is an inconvenient forum for the purposes of any
such suit, action or other proceeding.
(j) Section Headings. The headings of the sections and subsections of this
Agreement are inserted for convenience only and shall not be deemed to
constitute a part thereof.
(k) Arbitration. Any and all disputes, controversies or claims (each a
"Dispute") between the Shareholders relating to the interpretation or
enforcement or performance of this Agreement shall be resolved by binding
arbitration by the Arbitration Institute of the Stockholm Chamber of Commerce in
accordance with its rules, subject to the following provisions:
48
(i) There shall be three arbitrators (the "Arbitrators"). Each party
shall appoint one arbitrator within 30 days after giving or receiving notice of
the submission of a Dispute to arbitration. The two arbitrators appointed by the
parties shall appoint the third arbitrator. If a party does not appoint an
arbitrator within such designated period, or if the two appointed arbitrators
fail to appoint a third arbitrator within 30 days after their appointment, the
relevant appointment shall be made by the Arbitration Institute of the Stockholm
Chamber of Commerce.
(ii) The expenses of the arbitration shall be borne equally by WWC,
on the one hand, and the Investor, on the other hand, and each party shall bear
its own legal fees and expenses; provided, however, that the Arbitrators shall
have discretion to require that one party pay all or a portion of the expenses
of arbitration or the other party's legal fees and expenses in connection with
any particular arbitration.
(iii) The Arbitrators shall determine whether and to what extent any
party shall be entitled to damages or equitable relief. No party shall be
entitled to punitive damages or consequential damages or shall be required to
post a bond in connection with equitable relief.
(iv) The Arbitrators shall not have the power to add to nor modify
any of the terms or conditions of this Agreement. The Arbitrators' decision
shall not go beyond what is necessary for the interpretation and application of
the provisions of this Agreement in respect of the issue before the Arbitrators.
The Arbitrators' decision and award or permitted remedy, if any, shall be based
upon the issue as drafted and submitted by the respective parties and the
relevant and competent evidence adduced at the hearing(s).
(v) The Arbitrators shall have the authority to award any remedy or
relief provided for in this Agreement, in addition to any other remedy or relief
(including provisional remedies and relief) that a court of competent
jurisdiction could order or grant (but subject to the remedial limitations
elsewhere set forth in this Agreement, including, but without limitation, the
aforesaid prohibition against punitive and consequential damages). The
Arbitrators written decision shall be rendered within sixty (60) days of the
hearing. The decision reached by the Arbitrators shall be final and binding upon
the parties as to the matter in dispute. To the extent that the relief or remedy
granted by the Arbitrators is relief or remedy on which a court could enter
judgement, a judgement upon the award rendered by the Arbitrators may be entered
in any court having jurisdiction thereof (unless in the case of an award of
damages, the full amount of the award is paid within ten (10) days of its
determination by the Arbitrators). Otherwise, the award shall be binding on the
parties in connection with their continuing performance of this Agreement and in
any subsequent arbitral or judicial proceeding between the parties.
(vi) The arbitration shall take place in Stockholm, Sweden, unless
otherwise agreed by the parties, and shall be conducted in the English language.
49
(vii) The arbitration proceeding and all filing, testimony,
documents and information relating to or presented during the arbitration
proceeding shall be disclosed exclusively for the purpose of facilitating the
arbitration process and for no other purpose.
(viii) The parties shall continue performing their respective
obligations under this Agreement notwithstanding the existence of a Dispute
while the Dispute is being resolved unless and until such obligations are
terminated, expire or are suspended in accordance with the provisions hereof.
(ix) The Arbitrators may, in their sole discretion, order a
pre-hearing exchange of information including production of documents, exchange
of summaries of testimony or exchange of statements of position, and shall
schedule promptly all discovery and other procedural steps and otherwise assume
case management initiative and control to effect an efficient and expeditious
resolution of the Dispute. At any oral hearing of evidence in connection with an
arbitration proceeding, each party and its counsel shall have the right to
examine its witnesses and to cross-examine the witnesses of the other party. No
testimony of any witness shall be presented in written form unless the opposing
party or parties shall have the opportunity to cross-examine such witness,
except as the parties otherwise agree in writing.
(x) Notwithstanding the dispute resolution procedures contained in
this Section 13(k), either party may apply to any court having jurisdiction (a)
to enforce this Agreement to arbitrate, (b) to seek provisional injunctive
relief so as to maintain the status quo until the arbitration award is rendered
or the Dispute is otherwise resolved, or (c) to challenge or vacate any final
judgment, award or decision of the Arbitrators that does not comport with the
express provisions of this Section 13(k).
(l) Failure to Pursue Remedies. The failure of any party to seek redress
for violation of, or to insist upon the strict performance of, any provision of
this Agreement shall not prevent a subsequent act, which would have originally
constituted a violation, from having the effect of an original violation.
(m) Cumulative Remedies. The rights and remedies provided by this
Agreement are cumulative and the use of any one right or remedy by any party
shall not preclude or waive its right to use any or all other remedies except as
otherwise expressly provided in this Agreement. Such rights and remedies are
given in addition to any other rights the parties may have by law, statute,
ordinance or otherwise.
(n) Severability. The invalidity or unenforceability of any particular
provision of this Agreement shall not affect the other provisions hereof, and
this Agreement shall be construed in all respects as if such invalid or
unenforceable provision were omitted.
50
(o) HTL. In the event the Investor shall elect to purchase Sale Shares
pursuant to its rights of first offer or, if applicable, first refusal under
Section 6 or to exercise its preemptive rights under Section 9, HTL agrees to
cause the Investor to perform its obligations under such Sections in accordance
with their respective terms in connection with any such purchases (including
causing or enabling the Investor to make payment).
14. TERMINATION OF RIGHTS AND OBLIGATIONS.
(a) Investor and WWC. Except as provided in Sections 14(b) and 14(c), and
except for any earlier termination in accordance with the express terms of any
provisions hereof with respect to any right or obligation of the Investor or WWC
under this Agreement, all rights and obligations of the Investor, WWC or any
other Shareholder hereunder shall terminate upon the earlier of (i) the
completion of a Qualifying IPO, the completion of a Spin-Off Distribution, the
completion of a transaction in which the Drag Along Right is exercised or a
merger or consolidation of the Company with another entity in which the Company
is not the surviving entity, (ii) in the case of the Investor, an Investor 50%
Transfer or any Transfer as a result of which the Investor's Percentage
Ownership falls to below 9.95%, and (iii) subject to the surviving rights of any
WWC 50% Transferee in the case of WWC, any Transfer (including a Spin-Off
Distribution) as a result of which WWC ceases to own any Common Stock.
(b) Investor's Surviving Rights.
(i) Qualifying IPO; Spin-Off Distribution; and Drag Along Right
Event. After a Qualifying IPO, the completion of a Spin-Off Distribution, the
completion of a transaction in which the Drag Along Right is exercised (except
as provided in Section 7(c)) or in connection with a merger or consolidation of
the Company with another entity in which the Company is not the surviving
entity, the following rights of the Investor shall survive (and all other rights
of the Investor hereunder shall terminate): (i) the right to designate directors
to the Board under Section 3, which shall survive until terminated in accordance
with Section 3; (ii) the Investor's preemptive right under Section 9, which
shall survive until the termination in its entirety of the Investor's right to
designate directors to the Board under Section 3 or, if earlier, the completion
of an Investor 50% Transfer; and (iii) the demand and piggyback registration
rights of the Investor under Section 11, which shall survive until terminated in
accordance with Section 11.
(ii) Investor 50% Transfer.
(A) After an Investor 50% Transfer, the following rights of the
Investor shall survive and the benefit thereof (subject to any diminution
or termination of such rights in accordance with their terms after giving
effect to such Transfer) shall be allocated between the Investor and the
Investor 50% Transferee in accordance with Section 15 (and all other
rights of the Investor or the Investor 50% Transferee
51
hereunder shall terminate): (i) the right to designate directors to the
Board under Section 3, which shall survive until terminated in accordance
with Section 3; (ii) the Tag Along Right under Section 8 and Demand Event
Tag Along Right under Section 10(g), which shall survive until the
Investor's right to designate directors to the Board under Section 3 shall
terminate or, if earlier, the termination of the Tag Along Right and
Demand Event Tag Along Right pursuant to the provisions of Section
14(b)(i); and (iii) the demand and piggyback registration rights under
Section 11, which shall survive until terminated in accordance with
Section 11.
(B) After an Investor 50% Transfer, WWC shall retain all of its
rights under this Agreement, including the Drag Along Right under Section
7 hereof and the Demand Event Drag Along Right under Section 10(g) hereof,
however, such Drag Along Right shall be modified so that regardless of
whether the consideration to be received by all Shareholders is cash,
Consideration Securities or a combination thereof, the Investor and any
Investor 50% Transferee shall receive the same per share consideration as
WWC and there shall be no return of invested capital or internal rate of
return requirement.
(iii) Percentage Ownership Below 9.95%. After any Transfer which
results in the Investor's Percentage Ownership falling below 9.95%, the
Investor's demand and piggyback registration rights under Section 11 shall
survive until terminated in accordance with Section 11 (and all other rights of
the Investor shall terminate).
(iv) Further Assurances. The Investor agrees that it shall enter
into such further instruments in form and substance satisfactory to WWC, the
Company and any transferee of WWC which, pursuant to Section 15, becomes subject
to the rights and obligations of the Investor hereunder, as shall reasonably be
required or advisable to effectuate or evidence the termination of the rights of
the Investor (and the associated obligations of WWC, the Company and such
transferee) as provided in this Section 14.
(c) WWC's Surviving Rights.
(i) Qualifying IPO; Spin-Off Distribution; and Drag Along Right
Event. After a Qualifying IPO, the completion of a Spin-Off Distribution, the
completion of a transaction in which the Drag Along Right is exercised or in
connection with a merger or consolidation of the Company with another entity in
which the Company is not the surviving entity, the following rights of WWC shall
survive (and all other rights of WWC hereunder shall terminate): (A) the right
to require the Investor to vote in favor of WWC's designees to the Board under
Section 3, which shall survive until the Investor's right to designate directors
is terminated in accordance with Section 3; (B) WWC's preemptive rights under
Section 9, which shall survive until the termination of each other Shareholder's
preemptive rights under Section 9; (C) the right (but not the obligation) to
effect a Repurchase under Section 10(a), which shall survive until the demand
registration rights of the Investor are
52
terminated in accordance with Section 11; and (D) the right to effect a
Disposition Transaction under Section 10(b), which shall survive until the
termination of the Investor's right to designate directors under Section 3.
(ii) WWC 50% Transfer. After a WWC 50% Transfer, all the rights of
WWC hereunder shall survive and the benefit thereof (subject to any termination
or diminution thereof in accordance with their terms after giving effect to such
Transfer) shall be allocated between WWC and the WWC 50% Transferee in
accordance with Section 15.
(iii) Further Assurances. WWC agrees that it shall enter into such
further instruments in form and substance satisfactory to the Company, the
Investor and any transferee of the Investor which, pursuant to Section 15,
becomes subject to the rights of WWC, as shall reasonably be required or
advisable to effectuate or evidence the termination of the rights of WWC (and
the associated obligations of the Investor, the Company and such transferee) as
provided in this Section 14.
(d) Pledged Shares. In connection with any foreclosure or exercise of
remedies upon any shares of Common Stock subjected to a Lien for the benefit of
a lender (including pursuant to Section 5(d)), the Tag Along Right and the Drag
Along Right shall terminate automatically without further action of any party.
15. INVESTOR 50% TRANSFEREE AND WWC 50% TRANSFEREE; OTHER TRANSFEREES.
(a) Investor.
(i) Investor 50% Transfer. If the Investor shall have made an
Investor 50% Transfer, and unless the Investor shall have agreed otherwise with
the Investor 50% Transferee, both the Investor and the Investor 50% Transferee
(including, for this purpose, such transferee's Permitted Affiliate Transferees)
shall remain entitled, as to the shares of Common Stock owned respectively by
each of them, to the rights which survive such Transfer as provided in Section
14(b)(ii) (the "Assignable Investor Rights") (and all other rights under this
Agreement of the Investor and any Investor 50% Transferee shall terminate). The
benefits of the Assignable Investor Rights shall be subject to any termination
or diminution thereof in accordance with their terms after giving effect to such
Transfer. Both the Investor and such transferee shall be deemed to be the
"Investor" and a "Shareholder" for purposes of the provisions of this Agreement
governing the rights so shared by them and shall remain subject to all the
rights of WWC hereunder. The Investor shall be permitted to Transfer the benefit
of the Assignable Investor Rights to an Investor 50% Transferee on one occasion
only.
(ii) Other Transfers. If the Investor shall make a Transfer of
shares of Common Stock representing less than a 50% Investor Block to a Person
or Persons other than its Permitted Affiliate Transferees, or if the Investor
shall have made an
53
Investor 50% Transfer, but shall have agreed with the Investor 50% Transferee
not to share the Assignable Investor Rights, then (A) the Investor shall remain
entitled to all its rights, and subject to all its obligations, hereunder,
subject to any termination or diminution thereof in accordance with their
respective terms after giving effect to such Transfer, (B) no such transferee
shall receive any of the rights of the Investor hereunder or be deemed to become
the "Investor" or a "Shareholder" hereunder for purposes of any entitlement to
the rights of the Investor hereunder and (C) each such transferee shall be
required to become subject to (and the Investor shall remain subject to) the
obligations of the "Investor" and a "Shareholder" with respect to, (1) the
obligation to vote in favor of the designees of WWC to the Board under Section
3, (2) the approval rights of WWC under Section 5 as to transferees of such
transferees, (3) the first offer and first refusal rights of WWC under Section
6, (4) the Drag Along Right of WWC under Section 7 (except that with respect to
the transferee, the Drag Along Right provisions of Section 14(b)(ii)(B) shall be
applicable), (5) the preemptive rights of WWC under Section 9, and (6) the
Demand Event Drag Along Right under Section 10(g)(the "Mandatory WWC Rights").
(iii) Excepted Transfers. If the Investor shall make a Transfer of
Common Stock in an Excepted Transfer, no transferee in such Transfer shall
become entitled to the rights or subject to the obligations of the Investor
hereunder unless mutually agreed by the Investor and WWC.
(iv) Permitted Affiliate Transferees. If the Investor shall make a
Transfer of Common Stock to a Permitted Affiliate Transferee, such Permitted
Affiliate Transferee shall become entitled to all the rights of the Investor
hereunder (without any diminution of the Percentage Ownership deemed held by the
Investor hereunder), and subject to all the obligations of the Investor
hereunder, provided, that the Investor and its Permitted Affiliate Transferees
shall be treated, unless the context requires otherwise, as a single collective
party under this Agreement, and no Transfer to a Permitted Affiliate Transferee
shall relieve the Investor of any liability for its obligations hereunder.
(b) WWC.
(i) WWC 50% Transfer. If WWC shall have made a WWC 50% Transfer, and
unless WWC shall have agreed with the WWC 50% Transferee not to Transfer to such
transferee the benefit of the rights of WWC hereunder (but rather to retain all
or a portion of such rights), the WWC 50% Transferee and WWC shall be permitted
to share only (A) the right to require the Investor to vote in favor of WWC's
designees to the Board under Section 3, which right of WWC shall survive until
the Investor's right to designate directors is terminated in accordance with
Section 3, and (B) WWC's preemptive rights under Section 9, which shall survive
until no other Shareholder has preemptive rights under Section 9. In each case,
the rights of WWC and such transferee shall be subject to any termination or
diminution thereof after giving effect to such Transfer, in accordance with the
terms of this Agreement. All other rights may be either retained by WWC or
transferred by WWC to a WWC 50% Transferee, with WWC or such transferee, as the
case may be; being the sole party
54
entitled to the benefit of such rights thereafter. Except where the context
requires otherwise, such transferee shall be deemed to be "WWC" and a
"Shareholder" for purposes of the provisions of this Agreement governing the
rights held exclusively by it, and both WWC and such transferee shall be deemed
to be "WWC" and a "Shareholder" for purposes of the provisions hereof governing
rights shared by them.
(ii) If WWC shall make a Transfer of shares of Common Stock
representing less than a 50% WWC Block to a Person or Persons other than its
Permitted Affiliate Transferees, or if WWC shall have made a Transfer of a 50%
Investor Block to a 50% WWC Transferee, but shall have elected not to Transfer
its rights to such transferee, then (A) WWC shall remain entitled to all its
rights, and subject to all its obligations, hereunder, subject to any
termination or diminution thereof in accordance with their respective terms
after giving effect to such Transfer, and (B) such transferee shall not be
entitled to any of the rights, or subject to any of the obligations of WWC
hereunder. other than the obligation to vote for the Investor's designees to the
Board under Section 3.
(iii) Excepted Transfers. If WWC shall make an Excepted Transfer, no
transferee in such Transfer shall become entitled to the rights, or subject to
the obligations, of the Investor hereunder unless mutually agreed by the
Investor and WWC.
(iv) Permitted Affiliate Transferees. If WWC shall make a Transfer
of Common Stock to a Permitted Affiliate Transferee, such Permitted Affiliate
Transferee shall become entitled to all the rights of WWC hereunder (without
diminution of the Percentage Ownership deemed held by WWC hereunder), and
subject to all the obligations of WWC hereunder, provided, that WWC and its
Permitted Affiliate Transferees shall be treated, unless the context requires
otherwise, as a single collective party under this Agreement, and no Transfer to
a Permitted Affiliate Transferee shall relieve WWC of liability for its
obligations hereunder.
(c) Further Assurances.
(i) The Investor agrees that each transferee of the Investor
(including any Permitted Affiliate Transferee), other than in an Excepted
Transfer, shall be required to enter into such further instruments in form and
substance satisfactory to WWC and the Company as shall reasonably be required or
advisable to effectuate or evidence any transfer or assumption of the rights and
obligations of the Investor to or by such transferee in accordance with this
Section 15 or Section 14.
(ii) WWC agrees that each transferee of WWC (including any Permitted
Affiliate Transferee), other than in an Excepted Transfer, shall be required to
enter into such further instruments in form and substance satisfactory to the
Investor and the Company as shall reasonably be required or advisable to
effectuate or evidence the transfer or assumption of the rights and obligations
of WWC to or by such transferee in accordance with this Section 15 or Section
14; provided, that upon a Transfer to any Person in a transaction which gave
rise to a right of first offer or right
55
of first refusal in favor of the Investor and in which the Investor did not
exercise any such rights, the transferee shall not be subject to any obligations
or rights hereunder except to the extent agreed to between the transferee and
WWC.
IN WITNESS WHEREOF, the parties hereto have executed this Shareholders Agreement
of Western PCS Corporation as of the date first above written.
WESTERN WIRELESS CORPORATION
-------------------------------
Name:
Title:
XXXXXXXXX TELECOMMUNICATIONS
PCS (USA) LIMITED
-------------------------------
Name:
Title:
WESTERN PCS CORPORATION
-------------------------------
Name:
Title:
56
The undersigned joins as a party to this Agreement in his individual
capacity solely for the purpose of acknowledging and becoming bound by the
provisions of Section 7(b) hereof but only to the extent such provision relates
to the undersigned. The undersigned shall have no further rights or obligations
in his individual capacity under this Agreement.
-------------------------------
XXXX X. XXXXXXX
The undersigned joins as a party to this Agreement solely for the
purpose of acknowledging and becoming bound by the provisions of Section 13(o)
hereof. The undersigned shall have no further rights or obligations under this
Agreement (other than as a Permitted Affiliate Transferee of the Investor upon
any Transfer of shares of Common Stock to the undersigned by the Investor).
-------------------------------
XXXXXXXXX TELECOMMUNICATIONS
LIMITED
-------------------------------
Name:
Title:
57
