Exhibit 99.12
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STOCKHOLDERS AGREEMENT
dated as of _________, 1996
by and among
LORAL CORPORATION,
and
LORAL SPACE & COMMUNICATIONS CORPORATION
STOCKHOLDERS AGREEMENT
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STOCKHOLDERS AGREEMENT, dated as of ________, 1996 (the "Agreement"),
by and among Loral Corporation, a New York corporation ("Loral"), and Loral
Space & Communications Corporation, a __________ corporation (the "Company").
Loral and those of its Affiliates who are transferees with respect to any of the
Equity Securities (as defined below), are sometimes collectively referred to
herein as the "Stockholders".
RECITALS:
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WHEREAS, the Company, Lockheed Xxxxxx Corporation, a Maryland
corporation ("LMC"), Loral and certain subsidiaries of Loral entered into a
Restructuring, Financing and Distribution Agreement, dated as of January 7, 1996
(the "Restructuring Agreement"; all capitalized terms used in this Agreement but
not otherwise defined herein, shall have the respective meanings assigned to
such terms in the Restructuring Agreement), pursuant to which, after giving
effect to the Restructuring and the Distribution, Loral acquired _______ shares
of Series A Non-Voting Convertible Preferred Stock, par value $0.01 per share,
of the Company (the "Preferred Stock"); and
WHEREAS, the Company and Loral desire to establish in this Agreement
certain conditions with respect to the relationship between the Stockholders and
the Company;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements contained herein and in the Restructuring Agreement, the parties
hereto agree as follows:
ARTICLE I
STANDSTILL AND VOTING PROVISIONS
Section 1.1. Restrictions on Certain Actions by the Stockholders.
(a) During the Term (as defined in Article V below), each Stockholder will not,
and will cause each of its Affiliates (such term, as used in this Agreement, as
defined in Rule 12b-2 of the General Rules and Regulations under the Exchange
Act) not to, singly or as part of a partnership, limited partnership, syndicate
or other group (as those terms are used in Section 13(d)(3) of the Exchange
Act), directly or indirectly:
(i) acquire, offer to acquire, or agree to acquire, by purchase,
gift or otherwise, any Equity Securities (as defined below in Section
1.1(c)), except pursuant to a stock split, stock dividend, rights offering,
recapitalization, reclassification, merger, consolidation, corporate
reorganization or similar transaction; provided that at any time in which
the Stockholders hold, in the aggregate, less than twenty percent (20%) of
the Total Voting Power, then the Stockholders may acquire Equity Securities
so that the Stockholders hold, in the aggregate, up to twenty percent (20%)
of the Total Voting Power;
(ii) make, or in any way actively participate in, any
"solicitation" of "proxies" to vote (as such terms are defined in Rule 14a-
1 under the Exchange Act), solicit any consent or communicate with or seek
to advise or influence any third party with respect to the voting of any
Equity Securities or become a "participant" in any "election contest" (as
such terms are defined or used in Rule 14a-11 under the Exchange Act), in
each case with respect to the Company;
(iii) form, join or encourage the formation of, any "person"
within the meaning of Section 13(d)(3) of the Exchange Act with respect to
any Equity Securities; provided that this Section 1.1(a)(iii) shall not
prohibit any such arrangement solely among the Stockholders and any of
their respective Affiliates;
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(iv) deposit any Equity Securities into a voting trust or
subject any such Equity Securities to any arrangement or agreement with
respect to the voting thereof; provided that this Section 1.1(a)(iv) shall
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not prohibit any such arrangement solely among the Stockholders and any of
their respective Affiliates;
(v) initiate, propose or otherwise solicit stockholders for the
approval of one or more stockholder proposals with respect to the Company
as described in Rule 14a-8 under the Exchange Act, or induce or attempt to
induce any other third party to initiate any stockholder proposal;
(vi) except as otherwise contemplated or permitted by this
Agreement (including, without limitation, pursuant to Section 1.2 hereof),
seek to place a representative on the Board of Directors of the Company or
seek the removal of any member of the Board of Directors of the Company,
except with the approval of the Board of Directors or management of the
Company;
(vii) except with the approval of the Board of Directors or
management of the Company, call or seek to have called any meeting of the
stockholders of the Company;
(viii) except through its representatives on the Board of
Directors (or any committee thereof) of the Company (if any) and except as
otherwise contemplated by this Agreement or the Restructuring Agreement
(including the agreements and other documents referred to therein,
including, without limitation, the Tax Sharing Agreement), otherwise act to
seek to control the management or policies of the Company, except with the
approval of the Board of Directors or management of the Company;
(ix) sell or otherwise transfer in any manner any Equity
Securities to any "person" (within the meaning of Section 13(d)(3) of the
Exchange Act) who, immediately following such sale or transfer, would, to
the best of the Stockholder's knowledge, own more than four percent (4%) of
any class of Equity Securities or who, without the approval of
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the Board of Directors of the Company, (A) has publicly proposed a business
combination or similar transaction with, or a change of control of, the
Company or who has publicly proposed a tender offer for Equity Securities
or (B) who has discussed with Loral or any of its respective Affiliates the
possibility of proposing a business combination or similar transaction
with, or a change in control of, the Company;
(x) sell or otherwise transfer in any manner to any person (as
defined in clause (ix) above) in any single transaction or series of
related transactions more than 2% of the outstanding Equity Securities;
(xi) solicit, seek to effect, negotiate with or provide any
information to any other party with respect to, or make any statement or
proposal, whether written or oral, to the Board of Directors of the Company
or any director or officer of the Company or otherwise make any public
announcement or proposal whatsoever with respect to, any form of business
combination transaction involving the Company, including, without
limitation, a merger, exchange offer or liquidation of the Company's
assets, or any corporate reorganization or similar transaction with respect
to the Company, except in each case with the approval of the Board of
Directors or management of the Company; or
(xii) instigate or encourage any third party to do any of the
foregoing.
Notwithstanding clauses (ix) and (x) above, the Stockholders may
effect any transaction contemplated by Article III hereof.
(b) Notwithstanding the provisions of this Section 1.1, nothing
herein shall apply with respect to any Equity Securities acquired from any
person other than a Stockholder (x) held by any pension, retirement or other
benefit plan managed by any Stockholder or any of its subsidiaries or other
Affiliates or (y) held in any account managed for the benefit of another person,
by any subsidiary or other Affiliate of any of the Stockholders which is engaged
in the financial services business. In
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addition, notwithstanding the provisions of this Section 1.1, nothing herein
shall prohibit or restrict any transfer of Equity Securities to or among any of
the subsidiaries or other Affiliates of any of the Stockholders (provided that
such subsidiary or Affiliate agrees to be bound to the provisions of this
Agreement, upon which such subsidiary or Affiliate shall be entitled to all
rights and benefits, and shall be subject to all obligations, of a Stockholder
under this Agreement).
(c) For the purposes of this Agreement, (i) the term "Equity
Securities" shall mean the Preferred Stock and any securities entitled to vote
generally in the election of directors of the Company, or any direct or indirect
rights or options to acquire any such securities or any securities convertible
or exercisable into or exchangeable for such securities (provided that, in the
event that the Guaranty Warrants (as defined below) become warrants to acquire
Equity Securities, such Guaranty Warrants and any securities issued pursuant to
the exercise of such Guaranty Warrants, shall not (so long, in each case, as
they are held by the Stockholder) constitute Equity Securities for purposes of
determining the appropriate number of shares of Common Equity Securities which
Loral is entitled to acquire hereunder, including in connection with the
determination of the Target Percentage pursuant to Section 1.4(a) hereof), (ii)
the term "Voting Power" shall mean the voting power in the general election of
directors of the Company, (iii) the term "Total Voting Power" shall mean the
total combined Voting Power of all the Equity Securities then outstanding,
including, without limitation, the Preferred Stock, and, insofar as the
Preferred Stock is concerned, it is deemed to have Voting Power equal to that of
the Common Stock into which it is convertible, (iv) the term "Change of Control"
shall mean the occurrence of any of the following events: (A) any "person" or
"group" (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act)
is or becomes the beneficial owner of Equity Securities which represent at least
forty percent (40%) of the Total Voting Power, or (B) during any one-year
period, individuals who at the beginning of such period constituted the Board of
Directors of the Company (together with any new directors whose election by such
Board of Directors or whose nomination for election by the shareholders of the
Company was approved by a vote of a majority of the directors of the Company
then still in office who were
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either directors at the beginning of such period or whose election or nomination
for election was previously so approved) cease for any reason to constitute a
majority of the Board of Directors of the Company then in office, (v) the term
"beneficial owner", and terms having similar import, shall mean any direct or
indirect "beneficial owner", as such term is defined in Rules 13d-3 and 13d-5
under the Exchange Act, and (vi) the term "Guaranty Warrants" shall mean those
warrants which accrue to the benefit of the Company in connection with the
Globalstar Bank Guarantee, as described in the Globalstar Warrant Memorandum.
Section 1.2. HSR Clearance.
(a) At any time after the date hereof (but subject to the provisions
of Section 1.2(b) below), following a written request by Loral to the Company
(such request, the "HSR Notice"), the Company and the Stockholders will (i) take
promptly all actions necessary to make the filings required of the Stockholders,
the Company or any of their respective Affiliates under the HSR Act (as defined
in the Merger Agreement) with respect to the right to convert Preferred Stock
and continue to own the securities so received, the ownership and voting of
Equity Securities by the Stockholders, any of the transactions contemplated by
this Agreement or any other similar matters (all such exercise, ownership,
voting, transaction and other similar matters, the "Filing Matters"), (ii)
comply at the earliest practicable date with any request for additional
information or documentary material received by the Company or the Stockholders
or any of their Affiliates from any of the Federal Trade Commission, the
Antitrust Division of the Department of Justice, state attorneys general, the
Commission, or other governmental or regulatory authorities (all such
authorities, the "Antitrust Authorities"), and (iii) cooperate with each other
in connection with any of the filings referred to in clause (i) above and in
connection with resolving any investigation or other inquiry commenced by any of
the Antitrust Authorities. To the extent reasonably requested by Loral, the
Company shall use all reasonable efforts to resolve such objections, if any, as
may be asserted with respect to the Filing Matters. If any administrative,
judicial or legislative action or proceeding is instituted (or threatened to be
instituted)
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challenging any aspect of the Filing Matters as violative of any Antitrust Law,
each of the Stockholders and the Company shall cooperate with each other to
contest and resist any such action or proceeding, and to have vacated, lifted,
reversed or overturned any decree, judgment, injunction or other order (whether
temporary, preliminary or permanent) that is in effect and that restricts,
prevents or prohibits the exercise by the Stockholders of the right to convert
Preferred Stock and continue to own the securities so received, or the exercise
by Loral of its rights with respect to the ownership and voting of Equity
Securities or any of the transactions contemplated by this Agreement (any such
decree, judgment, injunction or other order is hereafter referred to as an
"Order"), including, without limitation, by pursuing all reasonable avenues of
administrative and judicial appeal, provided that nothing contained in this
Section 1.2(a) shall be construed to require any party hereto to hold separate
or divest any of their respective assets or businesses or agree to any
substantive restriction thereon or on the conduct thereof. Each of the Company
and Loral shall promptly inform the other party of any material communication
received by such party from any Antitrust Authority regarding any of the Filing
Matters or any of the other transactions contemplated hereby. For the purposes
of this Agreement, the term "HSR Clearance Date" shall mean the first date on
which (x) any applicable waiting period under the HSR Act with respect to the
Filing Matters shall have expired or been terminated, (y) there shall not be
pending any Action commenced by any Antitrust Authority relating to any of the
Filing Matters or any of the other transactions contemplated hereby, and (z)
there shall not be in effect any Order.
(b) Notwithstanding the provisions of Section 1.2(a) above, in the
event that Loral delivers the HSR Notice to the Company, the Company shall be
entitled to postpone for a reasonable period of time (but in no event later than
45 days), any filing referred to in Section 1.2(a)(i) above if the Company
determines in its reasonable judgment and in good faith that such filing would
delay the obtaining of any approval from an Antitrust Authority with respect to
any announced or imminent material acquisition or disposition which would
require a filing by the Company under the HSR Act. In the event of such
postponement, Loral shall have the right to withdraw
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its HSR Notice and may deliver any such HSR Notice at any time thereafter.
Section 1.3. Voting.
(a) General Voting Provisions. Subject to the provisions of Section
1.3(b) below, prior to the HSR Clearance Date, no Stockholder shall have the
right to convert Preferred Stock into common stock or the right to vote any
Equity Securities with respect to the election of directors of the Company or on
any other matters submitted to a vote of the stockholders of the Company (other
than those matters set forth in Section 1.3(b) below). Following the HSR
Clearance Date, each Stockholder shall have the right to vote its Equity
Securities to the extent permitted by the terms thereof on any matters submitted
to a vote of the stockholders of the Company (including, without limitation,
those matters set forth in Section 1.3(b) below); provided that following the
HSR Clearance Date any Stockholder shall have the right to vote any Equity
Securities to the extent permitted by the terms thereof with respect to the
election of directors of the Company only (i) as recommended by the Board of
Directors or management of the Company or (ii) in the same proportions as the
holders of Equity Securities (other than Stockholders) vote their Securities.
On each matter with respect to which a Stockholder is entitled to vote pursuant
to this Section 1.3, each such Stockholder shall be present, in person or
represented by proxy, at all such stockholder meetings of the Company so that
all Equity Securities beneficially owned by it shall be counted for the purpose
of determining the presence of a quorum at such meetings. For purposes of this
Section 1.3, all references to the term "vote" shall include the execution and
delivery of any written consent with respect to the taking of any stockholder
action in lieu of a meeting of stockholders.
(b) Exceptions to General Voting Provisions. Notwithstanding anything
to the contrary contained in this Agreement, each Stockholder shall have the
right to vote freely, in any manner in which they determine, with respect to any
of the following matters:
(i) any amendment to or modification or repeal of any provision
of the Company's Certificate of Incorporation including any of the
provisions of
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any certificate of designation or By-laws (or similar organizational
documents);
(ii) any merger, consolidation, corporate reorganization or
similar transaction involving the Company;
(iii) any sale, lease, exchange, transfer or other disposition,
directly or indirectly, in a single transaction or series of related
transactions, of all or substantially all of the assets of the Company or
any of its Affiliates;
(iv) any plan or proposal for the liquidation or dissolution of
the Company or any assignment by the Company for the benefit of creditors,
or any filing by the Company of a petition in bankruptcy; or
(v) any restructuring, extension, modification, substitution,
refinancing or amendment of any indebtedness of the Company.
(c) Company Call. If, within one year following the date hereof, the
Stockholders vote against any Call Event Triggering Transaction (as defined
below), the Company shall have the right, for 10 days following the date on
which such vote is held, to purchase, and the Stockholders shall be required to
sell to the Company, all, but not less than all, of the Equity Securities held
by the Stockholders at a per share cash price equal to the Call Event Trigger
Price (as defined below). The Company may exercise such right by delivering to
each Stockholder, within such 10-day period, a written notice stating that the
Company has irrevocably agreed to purchase in cash all (but not less than all)
of the Equity Securities held by the Stockholders at the Call Event Trigger
Price upon the terms and conditions set forth in this Section 1.3(c). The
closing with respect to the purchase of Equity Securities by the Company
pursuant to this Section 1.3(c) shall be on a mutually determined closing date
which shall not be more than 15 days after the date on which the Company's
written notice referred to above is delivered to the Stockholders. The closing
shall be held at 10:00 A.M., local time, at the principal office of the Company,
or at such other time or place as the parties mutually agree. On such closing
date, each
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Stockholder shall deliver (i) certificates representing the shares of Equity
Securities being sold, free and clear of any lien, claim or encumbrance, and
(ii) such instruments of transfer and evidence of ownership and authority as the
Company may reasonably request. The purchase price shall be paid by the Company
to each Stockholder by wire transfer of immediately available funds no later
than 2:00 P.M. on the closing date to the account(s) designated by the
Stockholders prior to such closing date. For purposes of this Section 1.3(c),
(i) the term "Call Event Triggering Transaction" shall mean any transaction
described in Sections 1.3(b)(ii) and 1.3(b)(iii) between the Company, on the one
hand, and any Spinco Company (or any other Subsidiary of either the Company or a
Spinco Company), on the other; provided that the term "Call Event Triggering
Transaction" shall not include any transaction involving any party which is not
a Spinco Company (or any other Subsidiary of either the Company or a Spinco
Company), (ii) the term "Call Event Trigger Price" shall mean the sum of (x)
$344,000,000.00, plus (y) all amounts expended by the Stockholders following the
date hereof in connection with the acquisition of Equity Securities other than
acquisitions from another Stockholder following the date hereof, minus (z) any
net sales proceeds received by the Stockholders following the date hereof in
connection with the sale of Equity Securities (other than sales to another
Stockholder) following the date hereof.
Section 1.4. Loral Option.
(a) General Provisions Relating to Loral Option. If, within one year
following the date hereof, any Option Event Triggering Transaction (as defined
below) occurs, Loral shall have the right, within 90 days after the consummation
of the Option Event Triggering Transaction, to purchase, and the Company (for
purposes of this Section 1.4, all references to the "Company" shall be deemed to
include the Surviving Corporation (as defined below), shall be required to sell
to Loral, a number of shares of Preferred Stock which would cause Loral to own
Equity Securities with Voting Power equal to the Target Percentage (as defined
below) of the Total Voting Power immediately after giving effect to the
consummation of the Option Event Triggering Transaction, at a per share cash
price equal to the Option Event Trigger Price (as defined below). Loral may
exercise such right by deliv-
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ering to the Company, within such 90-day period, a written notice stating that
Loral (or any Subsidiary of Loral designated by Loral; for purposes of this
Section 1.4, all references to "Loral" shall be deemed to include such
designated Subsidiary) has irrevocably agreed to purchase in cash the number of
shares of Preferred Stock specified in the preceding sentence, at the Option
Event Trigger Price, upon the terms and conditions set forth in this Section
1.4. The closing with respect to the purchase of Preferred Stock by the Company
pursuant to this Section 1.4 shall be on a mutually determined closing date
which shall not be more than 15 days after the date on which Loral's written
notice referred to above is delivered to the Company. The closing shall be held
at 10:00 A.M., local time, at the principal office of the Company, or at such
other time or place as the parties mutually agree. On such closing date, the
Company shall issue to Loral certificates representing the shares of Preferred
Stock being sold, which shall be validly issued, fully paid and non-assessable
and free and clear of any lien, claim or encumbrance. The purchase price shall
be paid by Loral to the Company by wire transfer of immediately available funds
no later than 2:00 P.M. on the closing date to the account designated in writing
by the Company prior to such closing date. For purposes of this Section 1.4,
(i) the term "Option Event Triggering Transaction" shall mean any transaction
described in clauses (ii), (iii) or (iv) of Section 1.3(b) hereof, involving as
parties, among others, the Company or any of its Affiliates (other than GTL and
Globalstar), on the one hand, and either GTL or Globalstar or any of their
respective Subsidiaries, on the other, (ii) the term "Option Event Trigger
Price" shall mean a $6.00 per share cash purchase price, subject to adjustment
pursuant to the provisions of Section 1.4(b) hereof, (iii) the term "Surviving
Corporation" shall mean any successor to the rights and obligations of the
Company as a result of or in connection with any Option Event Triggering
Transaction, and (v) the term "Target Percentage" shall mean a percentage amount
equal to the percentage of the Total Voting Power represented by the Equity
Securities held by the Stockholders immediately prior to the closing of the
Option Event Triggering Transaction; provided, however, that if there has
occurred within the five days preceding such closing an event that diluted the
Voting Power of the Equity Securities held by the Stockholders, the Target
Percentage
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shall be determined as of the date five days prior to the closing of such Option
Event Triggering Transaction.
(b) Adjustment of Loral Option Event Trigger Price. The Option Event
Trigger Price shall be equitably adjusted from time to time after the date
hereof to take into account of any of the following events: (i) if the Company
shall pay a dividend or make any other distribution with respect to any Equity
Securities which is payable in the form of Equity Securities or in the form of
any other Asset (other than normal, periodic cash dividends of the Company),
(ii) if the Company shall subdivide its outstanding common stock, (iii) if the
Company shall combine its outstanding common stock into a smaller number of
shares, (iv) if the Company shall issue any shares of its capital stock in a
reclassification of the Common Stock (including any such reclassification in
connection with a merger, consolidation or other business combination involving
the Company), or (v) in any other similar transaction affecting the Company or
the number or value of the outstanding Equity Securities. The parties
acknowledge and agree that each such equitable adjustment shall preserve for
Loral the economic benefits of the Loral option set forth in Section 1.4(a)
above.
Section 1.5. Globalstar Warrant Put Option. In the event of any of
the following transactions (each such transaction, a "Warrant Trigger Event"):
(i) any merger, consolidation, corporate reorganization or similar
transaction involving Globalstar or GTL;
(ii) any sale, lease, exchange, transfer or other disposition,
directly or indirectly, of all or substantially all of the assets of
Globalstar or GTL; or
(iii) any liquidation or dissolution of Globalstar or GTL;
in which it is proposed that the Globalstar Warrants be converted into cash or
the right to receive cash, or any other interest (or the right to receive any
other interest) in Globalstar other than common stock thereof the Stockholders
shall have the right (the "Limited Warrant Put") to require the Company to
purchase the Globalstar
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Warrants for a price equal to their Option Privilege Value (as defined below).
The Stockholders may exercise the Limited Warrant Put by delivering to the
Company, at least 10 days prior to the scheduled closing of the Warrant Trigger
Event, a notice to such effect accompanied by appropriate documentation or
certificates evidencing the Globalstar Warrants. The Option Privilege Price
shall be payable by the Company 10 days after the determination thereof. As
used herein, the term "Option Privilege Price" means the greater of (x) the
consideration payable in respect of the Globalstar Warrants in the Warrant
Trigger Event and (y) the hypothetical fair market value that would be assigned
to the Globalstar Warrants at the date of the Warrant Trigger Event assuming (1)
that no Warrant Trigger Event were to occur then or at any time prior to the
expiration of the Globalstar Warrants, (2) that the Globalstar Warrants would
remain outstanding until such expiration in accordance with their terms,
exercisable for shares of or interests in the issuer thereof, and (3) that such
issuer would remain a public company during such period. The Option Privilege
Price shall be determined by an investment banking firm of national standing
selected by agreement of the Company and the Stockholders or, failing such
agreement, by agreement of Bear Xxxxxxx Co. Inc. and Xxxxxx Brothers. Such
investment banking firm shall, in determining the Option Privilege Price, give
full effect to (i) the spread between the exercise price and the fair market
value of the securities into which the Globalstar Warrants are exercisable and
(ii) the value of the "option privilege" in the Globalstar Warrants (that is,
the value of the right, without risking any capital, to speculate on and benefit
from appreciation in the underlying securities).
ARTICLE II
TRANSFER RESTRICTIONS
2.1. Certain Transactions. Notwithstanding anything contained in this
Agreement to the contrary, a Stockholder may without restriction:
(i) assign, pledge, mortgage, hypothecate, or otherwise encumber
or transfer all or any of its
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Equity Securities in connection with any bona fide financing arrangement entered
into by such person or otherwise in connection with any indebtedness owed by
such Stockholder; provided that in the event that the Stockholder in question
defaults, the creditor's rights and obligations with respect to the voting and
transfer of such Equity Securities and the registration thereof shall be the
same as the Stockholder in question had under the provisions of this Agreement
and the creditor in question shall be deemed to be a Stockholder under this
Agreement for such purposes;
(ii) transfer any Equity Securities to another Stockholder or
any subsidiary or other Affiliate thereof (provided that such subsidiary or
Affiliate agrees to be bound to the provisions of this Agreement, upon which
such subsidiary or Affiliate shall be entitled to all rights and benefits, and
shall be subject to all obligations, of a Stockholder under this Agreement);
(iii) transfer any Equity Securities pursuant to any registered
public offering in connection with the provisions of Article III hereof or
pursuant to the provisions of Rule 144 (or any similar provision then in force)
under the Securities Act provided that such transfer under Rule 144 or any
similar provision meets the volume restrictions set forth in Rule 144 as in
effect on the date hereof; or
(iv) transfer any Equity Securities pursuant to any merger,
consolidation, corporate reorganization, restructuring or any other similar
transaction affecting the Company or pursuant to any involuntary transfer.
Section 2.2. Rights Pursuant to a Tender Offer. Each Stockholder
(any such Stockholder shall, for purposes of this Section 2.2, be referred to as
a "Tendering Stockholder") shall have the right to sell or exchange all its
Equity Securities pursuant to a tender or exchange offer for the Equity
Securities (an "Offer"). However, during the Term, prior to such sale or
exchange, the Tendering Stockholder shall give the Company the opportunity to
purchase such Equity Securities in the following manner:
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(i) The Tendering Stockholder shall give notice (the "Tender Notice")
to the Company in writing of its intention to sell or exchange Equity
Securities in response to an Offer no later than three calendar days prior
to the latest time (including any extensions) by which Equity Securities
must be tendered in order to be accepted pursuant to such Offer, specifying
the amount of Equity Securities proposed to be tendered by the Tendering
Stockholder (the "Tendered Shares") and the purchase price per share
specified in the Offer at the time of the Tender Notice.
(ii) If the Tender Notice is given, the Company shall have the right
to purchase all, but not less than all, of the Tendered Shares exercisable
by giving written notice (an "Exercise Notice") to the Tendering
Stockholder at least two calendar days prior to the latest time after
delivery of the Tender Notice by which Equity Securities must be tendered
in order to be accepted pursuant to the Offer (including any extensions
thereof) and depositing in any escrow or similar arrangement reasonably
acceptable to the Tendering Stockholder, a sum in cash sufficient to
purchase all Tendered Shares at the price then being offered in the Offer,
without regard to any provision thereof with respect to proration or
conditions to the offeror's obligation to purchase. The delivery by the
Company of an Exercise Notice and deposit of funds as provided above will,
except as provided below, constitute an irrevocable agreement by the
Company to purchase, and the Tendering Stockholder to sell, the Tendered
Shares in accordance with the terms of this Section 2.2, whether or not the
Offer or any other tender or exchange offer (a "Competing Tender Offer")
for Equity Securities that was outstanding during the Offer is consummated.
(iii) The purchase price to be paid by the Company for any Equity
Securities purchased by it pursuant to this Section 2.2 shall be the
highest price offered or paid in the Offer or in any Competing Tender
Offer. For purposes hereof, the price offered or paid in a tender or
exchange offer for Voting Shares shall be deemed to be the price offered or
paid pursuant thereto, without regard to
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any provisions thereof with respect to proration or conditions to the
offeror's obligation to purchase. If the purchase price per share
specified in the Offer includes any property other than cash (the "Offer
Noncash Property"), the purchase price per share at which the Company shall
be entitled to purchase all, but not less than all, of the Equity
Securities specified in the Tender Notice shall be (y) the amount of cash
per share, if any, specified in such Offer (the "Cash Portion"), plus (z)
an amount of cash per share equal to the value of the Offer Noncash
Property per share (the "Cash Value of Offer Noncash Property"), as
determined in good faith by the mutual agreement of the parties hereto, or
if the parties cannot agree, by an independent, nationally recognized
investment banking firm selected by the Tendering Stockholders and
reasonably acceptable to the Company. If the Company exercises its right
of first refusal by giving an Exercise Notice, the closing of the purchase
of the Equity Securities with respect to such right (the "Closing") shall
take place at 3:00 p.m., local time (or, if earlier, two hours before the
latest time by which Equity Securities must be tendered in order to be
accepted pursuant to the Offer), on the last day on which Equity Securities
must be tendered in order to be accepted pursuant to the Offer (including
any extensions thereof) (the "Last Tender Date"), and the Company shall pay
the purchase price for the Equity Securities specified above. The
Tendering Stockholder shall be entitled to rescind its Tender Notice at any
time prior to the Last Tender Date by notice in writing to the Company;
provided that if on or before the Last Tender Date, the Company publicly
announces that the Company has approved, proposed or entered into an
agreement with respect to (either individually or together with any other
persons) a recapitalization, reorganization or business combination with
respect to the Company or all or substantially all of its assets, or a
self-tender offer, the Tendering Stockholder shall be entitled to rescind
its Tender Notice by notice in writing to the Company at any time prior to
the Closing on the Last Tender Date. If the Tendering Stockholder rescinds
its Tender Notice pursuant to the immediately preceding sentence, the
Company's Exercise Notice with respect to such Offer shall be
16
deemed to be immediately rescinded and the Tendering Stockholder's
disposition of its Equity Securities in response to the Offer with respect
to which the Tender Notice is rescinded or any other Offer shall again be
subject to all of the provisions of this Section 2.2.
(iv) If the Company does not exercise its right of first refusal set
forth in this Section 2.2 within the time specified for such exercise by
giving an Exercise Notice, then the Tendering Stockholder shall be free to
accept, for all its Equity Securities, the Offer with respect to which the
Tender Notice was given or any Competing Tender Offer (including any
increases and extensions thereof).
ARTICLE III
REGISTRATION RIGHTS
Section 3.1. Registration Upon Request.
(a) At any time commencing on the date hereof and continuing
thereafter, each Stockholder (any such Stockholder, whether registering
securities pursuant to this Section 3.1 or Section 3.2, shall be referred to as
a "Registering Stockholder") shall have the right to make written demand upon
the Company, on not more than five separate occasions (subject to the provisions
of this Section 3.1), to register under the Securities Act, any common stock or
other securities of the Company held by it (the securities subject to such
demand hereunder or subject to the provisions of Section 3.2 being referred to
in each case as the "Subject Securities"), and the Company shall use its best
efforts to cause such securities to be registered under the Securities Act as
soon as reasonably practicable so as to permit the sale thereof promptly;
provided that each such demand shall cover at least ________ shares of Common
Stock (subject to adjustment for stock splits, reverse stock splits, stock
dividends and similar events after the date hereof). In connection therewith,
the Company shall prepare, and as soon as reasonably practicable but in no event
later than 90 days of the receipt of the request, file, on Form S-3 if permitted
or otherwise on the appropriate form, a
17
registration statement under the Securities Act to effect such registration.
Such registration shall be effected in accordance with the intended method or
methods of disposition specified by the Registering Stockholders (including, but
not limited to, an offering on a delayed or continuous basis pursuant to Rule
415 (or any successor rule to similar effect) promulgated under the Securities
Act). Each Registering Stockholder agrees to provide all such information and
materials and to take all such action as may be reasonably required in order to
permit the Company to comply with all applicable requirements of the Securities
Act and the SEC and to obtain any desired acceleration of the effective date of
such registration statement. If the offering to be registered is to be
underwritten, the managing underwriter shall be selected by the Registering
Stockholders and shall be reasonably satisfactory to the Company.
Notwithstanding the foregoing, the Company (i) shall not be obligated to prepare
or file more than one registration statement other than for purposes of a stock
option or other employee benefit or similar plan during any twelve-month period,
(ii) shall be entitled to postpone for a reasonable period of time (but in no
event later than 60 days), the filing of any registration statement otherwise
required to be prepared and filed by the Company if (A) the Company is, at such
time, conducting or about to conduct an underwritten public offering of
securities and is advised by its managing underwriter or underwriters in writing
(with a copy to the Registering Stockholders), that such offering would, in its
or their opinion, be materially adversely affected by the registration so
requested, or (B) the Company determines in its reasonable judgment and in good
faith that the registration and distribution of the Subject Securities would
interfere with any announced or imminent material financing, acquisition,
disposition, corporate reorganization or other material transaction of a similar
type involving the Company. In the event of such postponement, the Registering
Stockholders shall have the right to withdraw the request for registration by
giving written notice to the Company within 20 days after receipt of the notice
of postponement (and, in the event of such withdrawal, such request shall not be
counted for purposes of determining the number of registrations to which the
Registering Stockholders are entitled pursuant to this Section 3.1).
18
(b) The Company shall not grant to any other holder of its
securities, whether currently outstanding or issued in the future, any
incidental or piggyback registration rights with respect to any registration
statement filed pursuant to a demand registration under this Section 3.1 and
without the prior consent of the Registering Stockholders, the Company will not
itself, and will not permit any other holder of its securities to, participate
in any offering made pursuant to a demand registration under this Section 3.1.
The Company may grant to other holders of its securities incidental or piggyback
registration rights on a primary offering by the Company which are no more
favorable to such holders than the provisions set forth in Section 3.2 are to
the Stockholders. If the Registering Stockholders consents to the inclusion of
offers and sales of any other securities in a registration pursuant to this
Section 3.1 and the underwriter(s) retained in connection with such registration
subsequently advise the Registering Stockholders that such offering would be
adversely affected by the inclusion of such other securities, the Registering
Stockholders may in their sole discretion exclude all or some of such securities
from such registration.
(c) Any registration requested by any Registering Stockholder
pursuant to this Section 3.1 shall not be deemed to have been effected (and,
therefore, not requested for purposes of this Section 3.1), (i) unless it has
become effective, (ii) if after it has become effective such registration is
interfered with by any stop order, injunction or other order or requirement of
the SEC or other governmental agency or court for any reason other than a
misrepresentation or an omission by the Registering Stockholders and, as a
result thereof, the Subject Securities requested to be registered cannot be
completely distributed in accordance with the plan of distribution set forth in
the related registration statement or (iii) if the closing pursuant to the
purchase agreement or underwriting agreement entered into in connection with
such registration does not occur. Any registration effected pursuant to Section
3.2 shall not be deemed to have been requested by a Registering Stockholder for
purposes of this Section 3.1.
Section 3.2. Incidental Registration Rights. If the Company proposes
to register any of its Equity Securities under the Securities Act for its own
account
19
(other than (i) pursuant to Section 3.1 hereof, (ii) securities to be issued
pursuant to a stock option or other employee benefit or similar plan, and (iii)
securities proposed to be issued in exchange for securities or assets of, or in
connection with a merger or consolidation with, another corporation), the
Company shall, as promptly as practicable, give written notice to the
Registering Stockholders of the Company's intention to effect such registration.
If, within 15 days after receipt of such notice, a Registering Stockholder
submits a written request to the Company specifying the amount of Equity
Securities that it proposes to sell or otherwise dispose of in accordance with
this Section 3.2, the Company shall use its best efforts to include the
securities specified in the Registering Stockholder's request in such
registration. If the offering pursuant to such registration statement is to be
made by or through underwriters, the managing underwriters shall be chosen by
the Company and shall be reasonably satisfactory to the Registering Stockholders
and the Company, and the Registering Stockholders and such underwriter shall
execute an underwriting agreement in customary form. If the managing
underwriter reasonably determines in good faith and advises the Registering
Stockholders in writing that the inclusion in the registration statement of all
the Equity Securities proposed to be included would interfere with the
successful marketing of the securities proposed to be registered, then the
Company and the Registering Stockholders shall negotiate in good faith to agree
upon an equitable adjustment in the number or amount of securities of each to be
included in such underwriting (provided that in the event that the Company and
the Registering Stockholders are unable to agree upon an equitable adjustment in
the number or amount of securities of each to be included in such underwriting,
then the number of securities which the Company and the Registering Stockholders
propose to register shall be reduced pro rata (based upon the respective market
values of each party's respective share of the total number of securities
proposed to be registered). No registration effected under this Section 3.2
shall relieve the Company of its obligation to effect any registration upon
request under Section 3.1. If the Registering Stockholders are permitted to
participate in a proposed offering pursuant to this Section 3.2, the Company
thereafter may determine either not to file a registration statement relating
thereto, or to withdraw such registration statement, or otherwise not
20
to consummate such offering, without any liability hereunder. Any underwriters
participating in a distribution of the Subject Securities pursuant to Sections
3.1 and 3.2 hereof shall use all reasonable efforts to effect as wide a
distribution as is reasonably practicable, and in no event shall any sale of
Subject Securities be made knowingly to any person (including its Affiliates and
any group in which that person or its Affiliates shall be a member, or the
Registering Stockholders or the underwriters know of the existence of such a
group or Affiliate) that, immediately prior to giving effect to any such sale,
beneficially owned Equity Securities representing five percent (5%) or more of
the Total Voting Power. The Registering Stockholders and the Company shall use
all reasonable efforts to secure the agreement of the underwriters, in
connection with any underwritten offering of its Equity Securities, to comply
with the foregoing.
Section 3.3. Registration Mechanics. (a) In connection with any
offering of Subject Securities registered pursuant to Section 3.1 or 3.2 herein,
the Company shall (i) furnish to the Registering Stockholders such number of
copies of any prospectus (including preliminary and summary prospectuses) and
conformed copies of the registration statement (including amendments or
supplements thereto and, in each case, all exhibits) and such other documents as
any Registering Stockholder may reasonably request; (ii)(A) use its best efforts
to register or qualify the Subject Securities covered by such registration
statement under such blue sky or other state securities laws for offer and sale
as the Registering Stockholders shall reasonably request and (B) keep such
registration or qualification in effect for so long as the registration
statement remains in effect; provided that the Company shall not be obligated to
qualify to do business as a foreign corporation under the laws of any
jurisdiction in which it shall not then be qualified or to file any general
consent to service of process in any jurisdiction in which such a consent has
not been previously filed or subject itself to taxation in any jurisdiction
wherein it would not otherwise be subject to tax but for the requirements of
this Section 3.3; (iii) use its best efforts to cause all Subject Securities
covered by such registration statement to be registered with or approved by such
other federal or state government agencies or authorities as may be necessary,
in the opinion of counsel to the Registering Stockholders, to enable the
21
Registering Stockholders to consummate the disposition of such Subject
Securities; (iv) notify the Registering Stockholders any time when a prospectus
relating thereto is required to be delivered under the Securities Act upon
discovery that, or upon the happening of any event as a result of which, the
prospectus included in such registration statement, as then in effect, includes
an untrue statement of a material fact or omits to state any material fact
required to be stated therein or necessary to make the statements therein not
misleading, in the light of the circumstances under which they were made, and
(subject to the good faith determination of the Company's Board of Directors as
to whether to permit sales under such registration statement), at the request of
any Registering Stockholder promptly prepare and furnish to it a reasonable
number of copies of a supplement to or an amendment of such prospectus as may be
necessary so that, as thereafter delivered to the purchasers of such securities,
such prospectus shall not include an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make the
statements therein not misleading, in light of the circumstances under which
they were made; (v) otherwise use its best efforts to comply with all applicable
rules and regulations of the SEC; (vi) use its best efforts to list the Subject
Securities covered by such registration statement on the New York Stock Exchange
or on any other Exchange on which the Subject Securities are then listed, if
required by the rules of any such Exchange; (vii) use its best efforts to obtain
a "cold comfort" letter from the independent public accountants for the Company
in customary form and covering matters of the type customarily covered by such
letters as may be reasonably requested by the Registering Stockholders, in the
event of a registration effected pursuant to Section 3.1 hereof; (viii) execute
and deliver all instruments and documents (including in an underwritten offering
an underwriting agreement in customary form) and take such other actions and
obtain such certificates and opinions as the Registering Stockholders reasonably
request in order to effect an underwritten public offering; and (ix) before
filing any registration statement or any amendment or supplement thereto, and as
far in advance as is reasonably practicable, furnish to each Registering
Stockholder and its counsel copies of such documents. In connection with any
offering of Subject Securities registered pursuant to Section 3.1 or 3.2, the
Company shall (x) furnish to the
22
underwriter, if any, unlegended certificates representing ownership of the
Subject Securities being sold in such denominations as requested and (y)
instruct any transfer agent and registrar of the Subject Securities to release
any stop transfer orders with respect to such Subject Securities. Upon any
registration becoming effective pursuant to Section 3.1, the Company shall use
its best efforts to keep such registration statement current for a period of 60
days (or 90 days, if the Company is eligible to use a Form S-3, or successor
form) or such shorter period as shall be necessary to effect the distribution of
the Subject Securities.
(b) Before filing with the SEC any registration statement referred to
herein or any amendments or supplements thereto, the Company shall furnish to
the Registering Stockholders or their respective counsel copies of all such
documents proposed to be filed, in order to give the Registering Stockholders or
their respective counsel sufficient time to review such documents, and such
documents may thereafter be filed subject to any timely and reasonable comments
of the Registering Stockholders or their respective counsel. The Company shall
(i) deliver promptly to the Registering Stockholders or their respective counsel
copies of all written communications between the Company and the SEC relating to
the registration statement, and (ii) advise the Registering Stockholders or
their respective counsel promptly of, and provide the Registering Stockholders
or their respective counsel with the opportunity to participate in (to the
extent reasonably practicable), all telephonic and other non-written
communications between the Company and the SEC relating to such registration
statement. The Company shall respond promptly to any comments from the SEC with
respect thereto, after consultation with the Registering Stockholders or their
respective counsel, and shall take such other actions as shall be reasonably
required in order to have each such registration statement declared effective
under the Securities Act as soon as reasonably practicable following the date
hereof.
(c) Each Registering Stockholder agrees that upon receipt of any
notice from the Company of the happening of any event of the kind described in
subdivision (iv) of this Section 3.3, it will forthwith discontinue its
disposition of Subject Securities pursuant to the registration statement
relating to such Subject Securi-
23
ties until its receipt of the copies of the supplemented or amended prospectus
contemplated by subdivision (iv) of this Section 3.3 and, if so directed by the
Company, will deliver to the Company all copies (other than permanent file
copies) then in its possession of the prospectus relating to such Subject
Securities current at the time of receipt of such notice. If any Registering
Stockholder's disposition of Subject Securities is discontinued pursuant to the
foregoing sentence unless the Company thereafter extends the effectiveness of
the registration statement to permit dispositions of Subject Securities by the
Registering Stockholder for an aggregate of 60 days (or 90 days, if the Company
is eligible to use a Form S-3, or successor form), whether or not consecutive,
the registration statement shall not be counted for purposes of determining the
number of registrations to which the Registering Stockholders are entitled
pursuant to Section 3.1.
Section 3.4. Expenses. The Registering Stockholders shall pay all
agent fees and commissions and underwriting discounts and commissions related to
Subject Securities being sold by the Registering Stockholders and the fees and
disbursements of its counsel and accountants and the Company shall pay all fees
and disbursements of its counsel and accountants in connection with any
registration pursuant to this Article III. All other fees and expenses in
connection with any registration statement (including, without limitation, all
registration and filing fees, all printing costs, all fees and expenses of
complying with securities or blue sky laws) shall (i) in the case of a
registration pursuant to Section 3.1, be borne equally by the Registering
Stockholders and the Company and (ii) in the case of a registration pursuant to
Section 3.2, be shared pro rata based upon the respective market values of the
securities to be sold by theCompany, the Registering Stockholders and any other
holders participating in such offering; provided that the Registering
Stockholders shall not be obligated to pay any expenses relating to work that
would otherwise be incurred by the Company including, but to limited to, the
preparation and filing of periodic reports with the SEC.
Section 3.5. Indemnification and Contribution. (a) In the case of
any offering registered pursuant to this Article III, the Company agrees to
indemnify and hold each Registering Stockholder, each underwriter, if
24
any, of the Subject Securities under such registration and each person who
controls any of the foregoing within the meaning of Section 15 of the Securities
Act, and any officer, employee or partner of the foregoing, harmless against any
and all losses, claims, damages, or liabilities (including reasonable legal fees
and other reasonable expenses incurred in the investigation and defense thereof)
to which they or any of them may become subject under the Securities Act or
otherwise (collectively "Losses"), insofar as any such Losses shall arise out of
or shall be based upon (i) any untrue statement or alleged untrue statement of a
material fact contained in the registration statement relating to the sale of
such Subject Securities (as amended if the Company shall have filed with the SEC
any amendment thereof), or the 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 (ii) any untrue statement or alleged untrue statement
of a material fact contained in the prospectus relating to the sale of such
Subject Securities (as amended or supplemented if the Company shall have filed
with the SEC any amendment thereof or supplement thereto), or the omission or
alleged omission to state therein a material fact necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading; provided that the indemnification contained in this Section 3.5
shall not apply to such Losses which shall arise primarily out of or shall be
based primarily upon any such untrue statement or alleged untrue statement, or
any such omission or alleged omission, which shall have been made in reliance
upon and in conformity with information furnished in writing to the Company by
the Registering Stockholders or any such underwriter, as the case may be,
specifically for use in connection with the preparation of the registration
statement or prospectus contained in the registration statement or any such
amendment thereof or supplement therein.
(b) In the case of each offering registered pursuant to this Article
III, the Registering Stockholders and each underwriter, if any, participating
therein shall agree, substantially in the same manner and to the same extent as
set forth in the preceding paragraph, severally to indemnify and hold harmless
the Company and each person, if any, who controls the Company within the meaning
of Section 15 of the Securities Act, and the
25
directors and executive officers of the Company, with respect to any statement
in or omission from such registration statement or prospectus contained in such
registration statement (as amended or as supplemented, if amended or
supplemented as aforesaid) if such statement or omission shall have been made in
reliance upon and in conformity with information furnished in writing to the
Company by the Registering Stockholders or such underwriter, as the case may be,
specifically for use in connection with the preparation of such registration
statement or prospectus contained in such registration statement or any such
amendment thereof or supplement thereto.
(c) Each party indemnified under this Section 3.5 shall, promptly
after receipt of notice of the commencement of any claim ("Claim") against such
indemnified party in respect of which indemnity may be sought hereunder, notify
the indemnifying party in writing of the commencement thereof. The failure of
any indemnified party to so notify an indemnifying party shall not relieve the
indemnifying party from any liability in respect of such Claim which it may have
to such indemnified party on account of the indemnity contained in this Section
3.5, unless (and only in the event) the indemnifying party was materially
prejudiced by such failure, and in no event shall such failure relieve the
indemnifying party from any other liability which it may have to such
indemnified party. In case any Claim in respect of which indemnification may be
sought hereunder shall be brought against any indemnified party and it shall
notify an indemnifying party of the commencement thereof, the indemnifying party
shall be entitled to participate therein and, to the extent that it may desire,
jointly with any other indemnifying party similarly notified, to assume the
defense thereof through counsel reasonably satisfactory to the indemnified party
by notifying the indemnified party in writing of such election within 10 days
after receipt of the indemnified party's initial notice of the Claim, and after
such notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party shall not be
liable to such indemnified party under this Section 3.5 for any legal or other
expenses subsequently incurred by such indemnified party in connection with the
defense thereof, other than reasonable costs of investigation (unless such
indemnified party reasonably objects to such assumption on the
26
grounds that there may be defenses available to it which are different from or
in addition to those available to such indemnifying party in which event the
indemnified party shall be reimbursed by the indemnifying party for the
reasonable expenses incurred in connection with retaining separate legal
counsel). If the indemnifying party undertakes to defend against such Claim
within such 10-day period, the indemnifying party shall control the
investigation, defense and settlement thereof; provided that (i) the
indemnifying party shall use its reasonable efforts to defend and protect the
interests of the indemnified party with respect to such Claim, (ii) the
indemnified party, prior to or during the period in which the indemnifying party
assumes control of such matter, may take such reasonable actions as the
indemnified party deems necessary to preserve any and all rights with respect to
such matter, without such actions being construed as a waiver of the indemnified
party's rights to defense and indemnification pursuant to this Agreement, and
(iii) the indemnifying party shall not, without the prior written consent of the
indemnified party, consent to any settlement which (A) imposes any Liabilities
on the indemnified party (other than those Liabilities which the indemnifying
party agrees to promptly pay or discharge), and (B) with respect to any non-
monetary provision of such settlement, would be likely, in the indemnified
party's reasonable judgment, to have an adverse effect on the business
operations, assets, properties or prospects of any Stockholder (in the event
that a Registering Stockholder or any of its Affiliates is the indemnified
party), or the Company (in the event that the Company is an indemnified party),
or such indemnified party. If the indemnifying party does not undertake within
such 10-day period to defend against such Claim, then the indemnifying party
shall have the right to participate in any such defense at its sole cost and
expense, but the indemnified party shall control the investigation, defense and
settlement thereof (provided that the indemnified party may not settle any such
Claim without obtaining the prior written consent of the indemnifying party
(which consent shall not be unreasonably withheld by the indemnifying party;
provided that in the event that the indemnifying party is in material breach at
such time of the provisions of this Section 3.5, then the indemnified party
shall not be obligated to obtain such prior written consent of the indemnifying
party) at the reasonable cost and expense of the indemnifying party
27
(which shall be paid by the indemnifying party promptly upon presentation by the
indemnified party of invoices or other documentation evidencing the amounts to
be indemnified). In addition to the foregoing, no indemnifying party shall,
without the prior written consent of the indemnified party, effect any
settlement of any pending or threatened proceeding in respect of which the
indemnified party could have been a party and indemnity could have been sought
hereunder by such indemnified party, unless such settlement includes an
unconditional release of such indemnified party from all liability arising out
of such claim or proceeding.
(d) If the indemnification provided for in this Section 3.5 is
unavailable to an indemnified party or is insufficient to hold such indemnified
party harmless from any Losses in respect of which this Section 3.5 would
otherwise apply by its terms (other than by reason of exceptions provided
herein), then each applicable indemnifying party, in lieu of indemnifying such
indemnified party, shall have a joint and several obligation to contribute to
the amount paid or payable by such indemnified party as a result of such Losses,
in such proportion as is appropriate to reflect the relative benefits received
by and fault of the indemnifying party, on the one hand, and such indemnified
party, on the other hand, in connection with the offering to which such
contribution relates as well as any other relevant equitable considerations.
The relative benefit shall be determined by reference to, among other things,
the amount of proceeds received by each party from the offering to which such
contribution relates. The relative fault shall be determined by reference to,
among other things, each party's relative knowledge and access to information
concerning the matter with respect to which the claim was asserted, and the
opportunity to correct and prevent any statement or omission. The amount paid
or payable by a party as a result of any Losses shall be deemed to include any
legal or other fees or expenses incurred by such party in connection with any
investigation or proceeding, to the extent such party would have been
indemnified for such expenses if the indemnification provided for in this
Section 3.5 was available to such party.
(e) The parties hereto agree that it would not be just and equitable
if contribution pursuant to this Section 3.5 were determined by pro rata
allocation or by
28
any other method of allocation that does not take account of the equitable
considerations referred to in the immediately preceding paragraph. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation.
Section 3.6. Rule 144. The Company covenants that it will file
the reports required to be filed by it under the Securities Act and the Exchange
Act and the rules and regulations adopted by the Commission thereunder (or, if
the Company is not required to file such reports, it will, upon the request of
any Stockholder, make publicly available other information), and it will take
such further action as any Stockholder may reasonably request, all to the extent
required from time to time to enable such Stockholder to sell Subject Securities
without registration under the Securities Act within the limitation of the
exemptions provided by (i) Rule 144 under the Securities Act, as such Rule may
be amended from time to time, or (ii) any similar rule or regulation hereafter
adopted by the Commission. Upon the request of any Stockholder, the Company
will deliver to such Stockholder a written statement as to whether it has
complied with such requirements.
SECTION 3.7. Holdback Agreement. The Company agrees that it and its
Affiliates will not effect any sale, offer for sale, or grant any option to
purchase any shares of common stock (or securities convertible into or
exchangeable or exercisable for common stock) (collectively, "Sales") during the
10-day period prior to, and the 90-day period (or such longer period, not to
exceed 120 days, as the managing underwriter(s) therefor determines) beginning
on the effective date of a registration statement filed pursuant to Section 3.1
without the consent of such managing underwriter(s). The Stockholders agree not
to effect any Sales during the 10-day period prior to, and the 90-day period (or
such longer period, not to exceed 120 days, as the managing underwriter(s)
therefor determines) beginning on the effective date of a registration statement
relating to a primary offering (other than one described in clauses (i), (ii) or
(iii) of the first sentence of Section 3.2 hereof) without the consent of such
managing underwriter(s); provided that this sentence shall be of no force and
29
effect if the Company effects a Sale or files any registration statement for the
benefit of any other party during such 120-day period.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.1. Representations and Warranties of the Company. The Company
hereby represents and warrants to each of the Stockholders as follows:
(a) The execution, delivery and performance by the Company of this
Agreement and the consummation by the Company of the transactions
contemplated by this Agreement are within its corporate powers and have
been duly authorized by all necessary corporate action on its part. This
Agreement constitutes a legal, valid and binding agreement of the Company,
enforceable against the Company in accordance with its terms, (i) except as
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws now or hereafter in effect relating to or affecting
creditors' rights generally, including the effect of statutory and other
laws regarding fraudulent conveyances and preferential transfers, and (ii)
subject to the limitations imposed by general equitable principles
(regardless of whether such enforceability is considered in a proceeding at
law or in equity).
(b) The execution, delivery and performance of this Agreement by the
Company does not and will not contravene or conflict with or constitute a
default under the Company's Certificate of Incorporation or By-laws or any
of its material Contracts.
(c) Immediately after giving effect to both the Restructuring and the
Distribution (including, without limitation, after giving effect to the
distribution of shares of Spinco Common Stock to the holders of common
stock of Loral and the holders of options with respect to common stock of
Loral, who or which may be entitled to receive shares of Spinco Common
Stock pursuant to or in connection with the Distribution Agreement, the
Merger Agreement or
30
otherwise), (i) the Company's authorized capital stock shall consist of
________ shares of Spinco Common Stock and ________ shares of Preferred
Stock, of which ________ shares of Spinco Common Stock and ________ shares
of Preferred Stock shall be issued and outstanding, (ii) Loral will be the
record and beneficial owner of _______ shares of Preferred Stock, all of
which will be validly issued and fully paid and nonassessable and all of
which will be free of all Liens, (iii) except for the shares of Spinco
Common Stock and the shares of Preferred Stock specified in clause (i)
above, there will be no other Equity Securities, and (iv) the Wing
Stockholders will hold, in the aggregate, at least twenty percent (20%) of
the Total Voting Power.
ARTICLE V
TERM
Section 5.1. Term. The term (the "Term") of this Agreement shall
commence on the date hereof and shall continue until the earlier of (x) the date
on which the Voting Power of the Equity Securities, on a fully diluted basis,
beneficially owned by Loral and its Affiliates shall represent less than five
percent (5%) of the Total Voting Power, (y) the seventh anniversary of the date
hereof, or (z) a Change of Control (as defined in Section 1.1(c) above). Upon
expiration of the Term, the provisions of this Agreement shall terminate, and be
of no further force or effect, automatically without any further action on the
part of any parties hereto; provided that the provisions of Articles III and VI
shall continue without regard to the term limitation set forth in this sentence;
provided further that no such termination shall relieve any party of any
liability to the other parties hereto, to the extent such liability is incurred
prior to the expiration of the Term.
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ARTICLE VI
MISCELLANEOUS
Section 6.1. Certain Restrictions. The Company shall not take or
recommend to its stockholders any action, including any amendment of its
Certificate of Incorporation, By-laws or stockholder rights plan, if any, which
would impose restrictions applicable to Loral and not to other securityholders
generally based upon the size of Loral' security holdings, the business in which
it is engaged or other considerations applicable to it and not to
securityholders generally. In addition, the Company shall not take or recommend
to its stockholders any action, including any amendment of its Certificate of
Incorporation, By-laws or stockholder rights plan, if any, which would likely
adversely affect in any material respect, either directly or indirectly, any of
the rights or obligations of the Stockholders under the provisions of this
Agreement.
The Stockholders agree that the Company may adopt a stockholders
rights plan similar to the stockholders rights plan adopted by Loral except that
Loral (and its Affiliates and associates) shall not be deemed to be an
"Acquiring Person" unless Loral and its Affiliates become the beneficial owner
of 25% or more of the outstanding shares of common stock of the Company.
Section 6.2. Entire Agreement. This Agreement and the Restructuring
Agreement (including the schedules and exhibits and the agreements and other
documents referred to therein, including, without limitation, the Tax Sharing
Agreement and the Transition Services Agreements) constitutes the entire
agreement among the parties with respect to the subject matter hereof and
supersedes all other prior negotiations, commitments, agreements and
understandings, both written and oral, between the parties or any of them with
respect to the subject matter hereof.
Section 6.3. Fees and Expenses. Except as otherwise provided in this
Agreement, all costs and expenses incurred by the Stockholders and the Company
in connection with consummating such party's obligations
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hereunder or otherwise shall be paid by the party incurring such cost or
expense.
Section 6.4. Access to Information. During the Term, the Company
shall provide to each Stockholder reasonable access to the books and records of
the Company and its subsidiaries during the regular business hours of the
Company and such subsidiaries, following the Company's receipt of a written
notice from such Stockholder requesting such access; provided that the Company
shall not be required to provide any confidential information if the Company
reasonably determines that the providing of such information would result in (x)
a violation of applicable antitrust laws or (y) create a substantial likelihood
of a significant adverse effect on the Company; provided, further, that the
Stockholder shall keep confidential any confidential information disclosed to it
except as required by law, service of process, interrogatories, or similar legal
process, and except for any such information which becomes publicly available
through no fault of the Stockholder.
Section 6.5. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
INTERPRETED AND ENFORCED IN ACCORDANCE WITH THE SUBSTANTIVE LAWS OF THE STATE OF
NEW YORK WITHOUT GIVING EFFECT TO THE CHOICE OF LAW PRINCIPLES THEREOF (EXCEPT
IN THOSE CIRCUMSTANCES WHERE THE CORPORATE LAW OF THE COMPANY'S JURISDICTION OF
ORGANIZATION REQUIRES THE APPLICATION OF THE LAW OF THE COMPANY'S JURISDICTION
OF ORGANIZATION WITH RESPECT TO A PARTICULAR MATTER).
Section 6.6. Notices. All notices and other communications hereunder
shall be in writing and shall be deemed given upon (a) transmitter's
confirmation of a receipt of a facsimile transmission, (b) confirmed delivery by
a standard overnight carrier or when delivered by hand or (c) the expiration of
five Business Days after the day when mailed by certified or registered mail,
postage prepaid, addressed at the following addresses (or at such other address
for a party as shall be specified by like notice):
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(a) If to any of the Stockholders, to:
Loral Corporation
c/o Lockheed Xxxxxx Corporation
0000 Xxxxxxxxx Xxxxx
Xxxxxxxx, XX 00000
Telephone: (000) 000-0000
Telecopy No.: (000) 000-0000
Attention: General Counsel
and to:
Skadden, Arps, Slate, Xxxxxxx
& Xxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Telecopy No.: (000) 000-0000
Attention: Xxxxx Xxxxx Xxxxxx, Esq.
Xxx X. Xxxxx, Esq.
and to:
O'Melveny & Xxxxx
000 X. 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Telecopy No.: (000) 000-0000
Attention: C. Xxxxxxx Xxxxxxxxxx, Esq.
Xxxxxxx X. Xxxxx, Esq.
(b) If to the Company, to:
Loral Space & Communications Corporation
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx
Telephone: (000) 000-0000
Telecopy No.: (000) 000-0000
Attention: General Counsel
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with a copy to:
Xxxxxxx Xxxx & Xxxxxxxxx
000 X. 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Telecopy No.: (000) 000-0000
Attention: Xxxxxx X. Xxxxx, Esq.
Xxxxx X. Xxxxx, Esq.
In addition to providing any notice required to be given by the
Company pursuant to its Certificate of Incorporation in the manner specified
therein, the Company shall send to each Stockholder by telecopy in accordance
with this Section 6.6 a copy of each such notice.
Section 6.7. Successors and Assigns; Reclassifications; No Third
Party Beneficiaries. This Agreement and all of the provisions hereof shall be
binding upon and inure to the benefit of the parties and their respective
successors and permitted assigns, but neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by any party hereto
(whether by operation of law or otherwise) without the prior written consent of
the other parties hereto (which consent may not be unreasonably withheld),
except that any party shall have the right, without the consent of any other
party hereto, to assign all or a portion of its rights, interests and
obligations hereunder to one or more direct or indirect subsidiaries, but no
such assignment of obligation shall relieve the assigning party from its
responsibility therefor. In the event of any recapitalization or
reclassification of any Equity Securities, or any merger, consolidation or other
transaction with like effect, the securities issued in replacement or exchange
for such Equity Securities shall be deemed Equity Securities hereunder. This
Agreement shall be binding upon and inure solely to the benefit of each party
hereto, and nothing in this Agreement, express or implied, is intended to or
shall confer upon any other person any rights, benefits or remedies of any
nature whatsoever under or by reason of this Agreement; provided that the
indemnified parties referred to in Section 3.5 hereof are intended to be third
party beneficiaries of the provisions of Section 3.5 hereof, and shall have the
right to enforce such provisions as if they were parties hereto.
35
Section 6.8. Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
Section 6.9. Further Assurances. Each party hereto or person subject
hereto shall do and perform or cause to be done and performed all such further
acts and things and shall execute and deliver all such other agreements,
certificates, instruments and documents as any other party hereto or person
subject hereto may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
Section 6.10. Interpretation. The descriptive headings herein are
inserted for convenience of reference only and are not intended to be part of or
to affect the meaning or interpretation of this Agreement. Unless otherwise
specified in this Agreement, all references in this Agreement to "days" shall be
deemed to be references to calendar days.
Section 6.11. Legal Enforceability. Any provision of this Agreement
which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without affecting the validity or enforceability of the
remaining provisions hereof. Any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction. If any provision of this Agreement is so broad as to be
unenforceable, the provision shall be interpreted to be only so broad as is
enforceable.
Section 6.12. Consent to Jurisdiction. Each of the parties hereto
irrevocably and unconditionally (a) agrees that all suits, actions or other
legal proceedings arising out of this Agreement or any of the transactions
contemplated hereby (a "Suit") shall be brought and adjudicated solely in the
United States District Court for the District of Delaware, or, if such court
will not accept jurisdiction, in the Delaware Chancery Court or any court of
competent civil jurisdiction sitting in New Castle County, Delaware, (b) submits
to the non-exclusive jurisdiction of any such court for the purpose of any
36
such Suit and (c) waives and agrees not to assert by way of motion, as a defense
or otherwise in any such Suit, any claims that it is not subject to the
jurisdiction of the above courts, that such Suit is brought in an inconvenient
forum or that the venue of such Suit is improper. Each of the parties hereto
also irrevocably and unconditionally consents to the service of any process,
summons, pleadings, notices or other papers in a manner permitted by the notice
provisions of Section 6.6 hereof and agrees that any such form of service shall
be effective in connection with any such Suit; provided that nothing contained
in this Section 6.12 shall affect the right of any party to serve process,
pleadings, notices or other papers in any other manner permitted by applicable
Law.
Section 6.13. Specific Performance. Each of the parties hereto
acknowledges and agrees that in the event of any breach of this Agreement, each
non-breaching party would be irreparably and immediately harmed and could not be
made whole by monetary damages. It is accordingly agreed that the parties
hereto (a) will waive, in any action for specific performance, the defense of
adequacy of a remedy at law and (b) shall be entitled, in addition to any other
remedy to which they may be entitled at law or in equity, to compel specific
performance of this Agreement in any action instituted in any court referred to
in Section 6.12 hereof.
37
IN WITNESS WHEREOF, each of the parties has caused this Agreement to
be executed on its behalf by its officers thereunto duly authorized, all as of
the day and year first above written.
LORAL CORPORATION
By:______________________________
Name:
Title:
LORAL SPACE & COMMUNICATIONS
CORPORATION
By:______________________________
Name:
Title:
38
