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EXHIBIT 10.12
SECURITIES PURCHASE AGREEMENT
dated as of February 8, 1999
by and among
XXXXXXXX COMMUNICATIONS GROUP, INC.
(the "Company"),
THE XXXXXXXX COMPANIES, INC.
and
SBC COMMUNICATIONS INC.
(the "Investor")
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TABLE OF CONTENTS
Page
ARTICLE I
DEFINED TERMS..................................................................1
ARTICLE II
PURCHASE AND SALE TERMS; CLOSING...............................................8
2.1 Purchase and Sale................................................8
2.2 Payment..........................................................8
2.3 Closing..........................................................8
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY; DUE DILIGENCE...................9
3.1 Delivery of Revised Underwriting Agreement ......................9
3.2 Delivery of Articles.............................................9
3.3 Underwriting Agreement Representations and Warranties............9
3.4 Investor Due Diligence...........................................9
3.5 Additional Representations and Warranties.......................10
3.6 Disclosure to the Investor......................................10
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE INVESTOR................................10
4.1 Existence.......................................................10
4.2 Power and Authority.............................................10
4.3 Purchase for Investment.........................................10
4.4 Non-Contravention...............................................11
4.5 Financial Matters...............................................11
4.6 Restricted Securities...........................................11
4.7 Further Limitations on Disposition..............................12
ARTICLE V
COVENANTS OF THE COMPANY AND THE INVESTOR.....................................12
5.1 Covenants of the Company Only...................................12
5.2 Further Assurances..............................................13
5.3 Filings and Consents............................................14
5.4 Accounting Treatment............................................14
5.5 Regulatory Risk.................................................14
5.6 Covenant to Satisfy Conditions..................................14
5.7 Notification of Change in Control Event.........................14
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ARTICLE VI
CLOSING CONDITIONS............................................................15
6.1 Conditions of Investor's Obligations at Closing.................15
6.2 Conditions of the Company's Obligations at Closing..............15
6.3 Conditions to Each Party's Obligation...........................16
ARTICLE VII
TRANSFER RESTRICTIONS.........................................................16
7.1 Restrictions on Transfer; the 33 Act............................16
ARTICLE VIII
ANTI-DILUTION ADJUSTMENTS; PREEMPTIVE RIGHTS; VOTING RIGHTS;
BOARD REPRESENTATION.....................................................18
8.1 Anti-dilution Adjustments.......................................18
8.2 Preemptive Rights...............................................19
8.3 Offer Mechanics.................................................19
8.4 Exceptions to Preemptive Rights.................................20
8.5 Termination or Reduction of Preemptive Rights...................21
8.6 Voting Rights...................................................22
8.7 Board Representation............................................22
ARTICLE IX
CALL OPTION...................................................................23
9.1 Call Option.....................................................23
ARTICLE X
TERMINATION...................................................................24
10.1 Termination.....................................................24
10.2 Effect of Termination...........................................25
ARTICLE XI
INDEMNIFICATION...............................................................25
11.1 Indemnification.................................................25
11.2 Terms of Indemnification........................................26
ARTICLE XII
REGISTRATION RIGHTS...........................................................27
12.1 Registration Rights.............................................27
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ARTICLE XIII
RIGHTS OF FIRST OFFER.........................................................32
13.1 Rights of First Offer Generally.................................32
13.2 Transfer Mechanics..............................................33
13.3 Transfers to Third Parties after TWC or the Company
Declines Rights of First Offer...............................34
13.4 Exceptions to Rights of First Offer.............................34
ARTICLE XIV
STANDSTILL....................................................................34
14.1 Standstill Provision............................................34
ARTICLE XV
MISCELLANEOUS.................................................................36
15.1 Governing Law...................................................36
15.2 Remedies Cumulative.............................................36
15.3 Brokerage.......................................................36
15.4 Severability....................................................36
15.5 Notices.........................................................36
15.6 No Waiver.......................................................36
15.7 Amendments and Waivers..........................................36
15.8 Rights of the Investor..........................................36
15.9 Survival........................................................37
15.10 Entire Understanding............................................37
15.11 Expenses........................................................37
15.12 Counterparts....................................................37
15.13 Assignment; No Third-Party Beneficiaries........................37
15.14 Press Releases and Announcements................................38
15.15 Titles and Subtitles............................................38
15.16 Aggregation of Stock............................................38
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EXHIBITS
Exhibit 1.1 Xxxxxx Brothers Standard Form of Underwriting Agreement
Exhibit 15.5 Notices
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SECURITIES PURCHASE AGREEMENT dated as of February 8, 1999, among
Xxxxxxxx Communications Group, Inc., a Delaware corporation (the "Company"), The
Xxxxxxxx Companies, Inc., a Delaware corporation ("TWC"), and SBC Communications
Inc., a Delaware corporation ("SBC" and together with any assignee thereof
pursuant to Section 15.13 hereof, the "Investor").
PREAMBLE
The Company wishes to obtain equity financing. The Investor is willing,
on the terms contained in this Agreement, to purchase Class A common stock, par
value $0.01 per share (the "Class A Common Stock"), of the Company having the
characteristics set forth in the Restated Articles of Incorporation of the
Company (the "Articles"). The Company and SBC or certain of their Affiliates (as
defined below) are entering into agreements, which include that certain
Transport Services Agreement between the Company and the Investor dated February
8, 1999 (the "Transport Services Agreement"), and that certain Master Alliance
Agreement between the Company and the Investor dated February 8, 1999 (the
"Alliance Agreement"), under which the parties have set forth their agreement to
work together to enhance their respective abilities to meet competitive
opportunities for network services. Certain capitalized terms are defined in the
first Article. Exhibits are incorporated by reference into this Agreement as
though such exhibits were set forth at the point of such reference.
ARTICLE I
DEFINED TERMS
The following terms, when used in this Agreement, have the following
meanings, unless the context otherwise indicates:
"10% Limit" shall mean 10% of the total number of issued and
outstanding shares of Common Stock of the Company calculated on a Fully-Diluted
Basis after giving effect to any concurrent transaction and the issuance of
shares of Common Stock to the Investor.
"33 Act" means the Securities Act of 1933, as amended, or any similar
federal law then in force.
"34 Act" means the Securities Exchange Act of 1934, as amended, or any
similar federal law then in force.
"Adverse Effect" shall have the meaning set forth in Section 5.5 to
this Agreement.
"Affiliate" has the meaning ascribed to it in Rule 12b-2 under the 34
Act.
"Alliance Agreement" shall have the meaning set forth in the preamble
to this Agreement.
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"Articles" shall have the meaning set forth in the preamble to this
Agreement.
"Articles Delivery Date" shall have the meaning set forth in Section
3.2 of this Agree ment.
"Beneficially Own" means having the right to vote or dispose of, or
"beneficially own" as determined pursuant to Rule 13d-3 under the 34 Act as in
effect on the date of this Agreement, including pursuant to any agreement,
arrangement or understanding.
"Bona Fide Offer" means any cash offer by a Third Party in writing,
setting forth a specific cash purchase price and a closing date of no more than
thirty days therefrom, which is fully financed and not subject to any material
conditions.
"Board of Directors" means the Board of Directors of the Company.
"Business Day" means a day other than a Saturday or Sunday or a day on
which banking institutions are authorized or required by law or executive order
to remain closed in New York, New York, Tulsa, Oklahoma or San Antonio, Texas.
"Call Option" shall have the meaning set forth in Section 9.1(a) to
this Agreement.
"Change in Control Event" shall be deemed to have occurred with respect
to the Investor or the Company if (i) there shall be consummated (x) any
consolidation or merger of the Investor or the Company, as the case may be, in
which the Investor or the Company, as the case may be, is not the continuing or
surviving corporation or pursuant to which shares of the common stock of the
Investor or the Company, as the case may be, would be converted into cash,
securities or other property (provided, that a merger of the Investor or the
Company, as the case may be, in which the holders of such common stock
immediately prior to the merger hold at least 70% of the common stock of the
surviving corporation immediately after the merger shall not constitute a Change
in Control Event), or (y) any sale, lease, exchange or other transfer (in one
transaction or a series of related transactions) of all, or substantially all,
of the assets of the Investor or the Company, as the case may be, or (ii) the
stockholders of the Investor or the Company, as the case may be, approved any
plan or proposal for the liquidation or dissolution of the Investor or the
Company, as the case may be, or (iii) any Person (other than TWC or any
Subsidiary of TWC in the case of the Company) shall Beneficially Own 30% or more
of the outstanding common stock of the Company or the Investor, as the case may
be (or, in the case of the Company, 50% of the outstanding Common Stock if and
so long as TWC Beneficially Owns 30% of more of the outstanding Common Stock of
the Company), or (iv) during any period of two consecutive years, individuals
who at the beginning of such period constitute the entire Board of Directors of
the Investor or the Company, as the case may be, shall cease for any reason to
constitute a majority
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thereof unless the election, or the nomination for election by such company's
stockholders, of each new director was approved by a vote of at least two-thirds
of the directors then still in office who were directors at the beginning of the
period.
"Claims" shall have the meaning set forth in Section 11.1(a) to this
Agreement.
"Class A Common Stock" shall mean the Class A common stock, par value
$0.01 per share, of the Company and any common stock of the Company received in
exchange for the Class A common stock.
"Class B Common Stock" shall mean the Class B common stock, par value
$0.01 per share, of the Company.
"Closing" and "Closing Date" mean the consummation of the Company's
sale and the Investor's purchase of Class A Common Stock pursuant to this
Agreement, and the date or dates on which the same occurs or occurred,
respectively.
"Code" means the Internal Revenue Code of 1986, as amended, or any
similar federal law then in force.
"Common Stock" shall mean the Class A Common Stock and the Class B
Common Stock and any other series of common stock of the Company hereafter
issued. The term "Common Stock" shall include, except as otherwise provided
herein, any and all shares of common stock or other securities of the Company or
any successor or assign of the Company (whether by merger, consolidation, sale
of assets or otherwise), which may be issued in respect of, in exchange for, or
in substitution for any shares of Common Stock, by reason of any stock dividend,
split, reverse split, combination, recapitalization, reclassification, merger,
consolidation, partial or complete liquidation, sale of assets, spin-off,
distribution to stockholders or combination of the shares of Common Stock or any
other change in the Company's capital structure, in order to preserve fairly and
equitably as far as practicable, the original rights and obligations of the
parties hereto under this Agreement.
"Company Control Person" shall have the meaning set forth in Section
12.1(g)(ii) to this Agreement.
"Control Person" shall have the meaning set forth in Section 12.1(g)(i)
to this Agreement.
"Determination Period" shall have the meaning set forth in Section
9.1(c) to this Agreement.
"Dilution Offer" shall have the meaning set forth in Section 8.1(c) to
this Agreement.
"Duly Endorsed" means (i) duly endorsed in blank by the person or
persons in whose name a stock certificate or certificate representing a debt
security is registered or (ii) accompanied
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by a duly executed stock or security assignment separate from the certificate,
in each case with the signature(s) thereon guaranteed by a commercial bank or
trust company or a member of a national securities exchange or of the National
Association of Securities Dealers, Inc.
"Employee Benefit Plan" means any plan regulated under ERISA.
"ERISA" means the Employee Retirement Income Security Act of 1974 (or
any successor legislation thereto), as amended from time to time.
"Fully-Diluted Basis" means, with respect to any calculation of the
outstanding amount of common equity of the Company, an amount equal to the total
outstanding number of shares of Common Stock, calculated without duplication and
assuming the conversion of all outstanding shares of convertible capital stock
and securities of the Company and the exercise of all warrants, options and
other rights (including, without limitation, employee stock options pursuant to
any stock option plan of the Company (except that, with respect to such options
and warrants, if any such options are finally determined to be less than 100%
vested or if any such warrants are finally determined to be less than 100%
exercisable, only those shares of Common Stock which may be exercised following
such final determination shall be included in such calculation)) to purchase
shares of Common Stock.
"Governmental Authority" means any nation or government, any state or
other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government (including, without limitation, the Federal Communications
Commission (or any successor thereto) and each applicable public utilities
commission).
"Holder" shall have the meaning set forth in Section 12.1(a) to this
Agreement.
"HSR Act" shall have the meaning set forth in Section 5.3(a) to this
Agreement.
"Investor Limit" shall have the meaning set forth in Section 8.5(c) to
this Agreement.
"IPO" means the initial public offering of the Company pursuant to a
registration statement to be filed by the Company under the 33 Act.
"IPO Price" means the per share offering price for Class A Common Stock
stated on the face of the final prospectus relating to the IPO.
"Net IPO Price" means the IPO Price less any discounts or commissions
per share from the IPO Price to the underwriter or underwriters.
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"Outstanding Equity" shall mean the total number of issued and
outstanding shares of Common Stock of the Company immediately following the IPO
calculated on a Fully-Diluted Basis.
"Plan" means an employee benefit plan, as defined in Section 3(3) of
ERISA, which the Company maintains, contributes to or has an obligation to
contribute to on behalf of participants who are or were employed by the Company.
"Permitted Transfer Date" shall have the meaning set forth in Section
7.1(a) to this Agreement.
"Person" means any individual, corporation, partnership, limited
liability company or partnership, joint venture, association, governmental
entity, or any other entity.
"Pooling Treatment" means the accounting for a specific transaction
under the "pooling of interests" method under the requirements of Opinion No. 16
(Business Combinations) of the Accounting Principles Board of the American
Institute of Certified Public Accountants, the Financial Accounting Standards
Board, and the rules and regulations of the SEC.
"Potential Change in Control Event" means any one of the following
events: (a) the commencement of a tender offer or exchange offer (as such terms
are defined in the rules and regulations under the 34 Act) by any Person that
would, if consummated, constitute a Change in Control Event involving the
Company; (b) the solicitation of proxies by any Person for the purpose of
effecting a Change in Control Event involving the Company; (c) the disclosure by
the Company of any material non-public information to any Person for the purpose
of assisting such Person in evaluating whether to effect a Change in Control
Event involving the Company; (d) the commencement of substantive discussions or
negotiations (involving more than the Company responding to inquiries) between
the Company and any Person contemplating a Change in Control Event involving the
Company; or (e) the agreement by the Company, whether or not in writing, to
facilitate a Change in Control Event involving the Company. For purposes of the
above, in no event shall the term "Person" include the Investor or any of its
Affiliates.
"Preemptive Rights Notice" shall have the meaning set forth in Section
8.3(a) to this Agreement.
"Preemptive Rights Offer" shall have the meaning set forth in Section
8.3(a) to this Agreement.
"Purchase Agreement Addendum" shall have the meaning set forth in
Section 3.4 to this Agreement.
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"Purchase Agreement Addendum Delivery Date" shall have the meaning set
forth in Section 3.4 to this Agreement.
"Purchase Price" shall have the meaning set forth in Section 2.1(c) to
this Agreement.
"Registration Request" shall have the meaning set forth in Section
12.1(a) to this Agreement.
"Registration Statement" shall have the meaning set forth in Section
12.1(a) to this Agreement.
"Representative" shall have the meaning set forth in Section 14.1 to
this Agreement.
"Restricted Security" shall have the meaning set forth in Section
7.1(b) to this Agree ment.
"Revised Underwriting Agreement Delivery Date" shall have the meaning
set forth in Section 3.1 to this Agreement.
"Right of First Offer Notice" shall have the meaning set forth in
Section 13.1(a) to this Agreement.
"SBC Nominee" shall have the meaning set forth in Section 8.7(a) to
this Agreement.
"SEC" means the Securities and Exchange Commission.
"Selling Stockholders" shall have the meaning set forth in Section
12.1(a) to this Agreement.
"Subsidiary" or "Subsidiaries" of any Person means any corporation or
other entity of which securities or other ownership interests having ordinary
voting power to elect a majority of the board of directors or other Persons
performing similar functions are at the time directly or indirectly owned or
controlled by such Person or one or more Subsidiaries of such Person.
"Super Voting Rights" shall have the meaning set forth in Section 8.6
to this Agreement.
"Termination" shall have the meaning set forth in Section 9.1 to this
Agreement.
"Third Party" means, with respect to the Company or the Investor, any
Person other than the Company's or the Investor's Affiliates, respectively;
provided further, that the Transfer to any such Person is in compliance with all
applicable federal, state and foreign securities laws.
"Trading Day" means a day on which the New York Stock Exchange is open
for the transaction of business.
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"Transfer" means any direct or indirect sale, assignment, mortgage,
transfer, pledge, gift, hypothecation or other disposition of or transfer of
Common Stock.
"Transfer Offer" shall have the meaning set forth in Section 13.1(a) to
this Agreement.
"Transfer Stock" shall have the meaning set forth in Section 13.1(a) to
this Agreement.
"Transport Services Agreement" shall have the meaning set forth in the
preamble to this Agreement.
"TWC" means The Xxxxxxxx Companies, Inc., a Delaware corporation.
"Underwriting Agreement" means the underwriting agreement among the
Company and Xxxxxx Brothers Inc., Xxxxxxx Xxxxx Barney and certain other
underwriters to be named therein, in connection with the IPO, with such changes
as shall be reflected in a draft to be delivered to the Investor pursuant to
Section 3.1. The Xxxxxx Brothers standard form of underwriting agreement is
attached as Exhibit 1.1 for references purposes only.
"Volume-Weighted Average Trading Price" shall mean, for any Trading
Day, an amount equal to (a) the cumulative sum, for each trade of Class A Common
Stock (or other class or series of capital stock) during such Trading Day on the
New York Stock Exchange (or, if such security is not listed on the New York
Stock Exchange, such other principal exchange or over-the-counter market on
which such security is listed), of the product of: (i) the sale price times (ii)
the number of shares of Class A Common Stock (or such other class or series of
capital stock) sold at such price, divided by (b) the total number of shares of
Class A Common Stock (or such other class or series of capital stock) so traded
during the Trading Day.
Additional defined terms are found in the body of the following text.
The masculine form of words includes the feminine and the neuter and
vice versa, and, unless the context otherwise requires, the singular form of
words includes the plural and vice versa. The words "herein," "hereof,"
"hereunder," and other words of similar import when used in this Agreement refer
to this Agreement as a whole, and not to any particular section or subsection.
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ARTICLE II
PURCHASE AND SALE TERMS; CLOSING
2.1 Purchase and Sale.
(a) The Board of Directors of the Company has authorized the
sale and issuance to the Investor pursuant to this Agreement of up to 10% of its
shares of its Common Stock, having the rights, privileges and restrictions set
forth in the Articles of the Company. Before the Closing Date, the Company will
have adopted and filed the Articles with the Delaware Secretary of State.
(b) Subject to the terms and conditions of this Agreement, at
the Closing, the Company shall issue and sell to the Investor, and the Investor
shall purchase from the Company, the number of shares of Class A Common Stock
equal to the lesser of (i) $500,000,000 divided by the IPO Price or (ii) 10% of
the Outstanding Equity immediately following the consummation of the IPO and
after giving effect to the issuance of the Class A Common Stock to the Investor,
subject to adjustment as set forth in Article VIII below. Upon the exercise and
closing by the Underwriters of the over-allotment option as contemplated in the
Underwriting Agreement, the Investor shall purchase such additional shares of
Class A Common Stock from the Company (at a price equal to the number of shares
of Class A Common Stock to be acquired by the Investor multiplied by the lesser
of (x) the Net IPO Price or (y) the price paid by the Underwriters pursuant to
the over-allotment option) as such Investor would have been required to purchase
in accordance with the foregoing sentence if the closing of the over-allotment
option had occurred simultaneously with the Closing; provided that the
additional shares so purchased by the Investor shall not be part of the
over-allotment option but shall be other newly issued shares of the Company.
(c) The aggregate purchase price (the "Purchase Price") for
the shares of Class A Common Stock to be purchased by the Investor shall be an
amount equal to the product of the number of shares of Class A Common Stock to
be acquired by the Investor, as determined by Section 2.1(b) above, multiplied
by the Net IPO Price; provided, however that the Purchase Price to be paid in
connection with the exercise of any over-allotment option shall be determined
pursuant to Section 2.1(b).
2.2 Payment. At the Closing, the Company shall deliver to Investor a
certificate (registered in the name of the Investor) representing the
appropriate number of shares of Class A Common Stock which the Investor is
purchasing against delivery to the Company by the Investor by wire transfer in
immediately available funds in U.S. dollars in the amount of the Purchase Price
therefor payable to the Company's order.
2.3 Closing. The purchase and sale of the Class A Common Stock to take
place at the Closing shall be held at the offices of Xxxxx Xxxx & Xxxxxxxx, New
York, New York or such other place as the parties may agree. The Closing shall
occur on the date of and simultaneously with the consummation of the
transactions contemplated by the Underwriting Agreement relating to the IPO (the
"Closing Date"). The Closing shall occur simultaneously with and shall be
conditioned upon the closing of the transactions contemplated by the
Underwriting Agreement relating to the IPO.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY;
DUE DILIGENCE
3.1 Delivery of Revised Underwriting Agreement. The Company shall
deliver to the Investor a revised and substantially completed draft Underwriting
Agreement on or before March 15, 1999, or such later time as the Company and the
Investor shall agree in writing (the "Revised Underwriting Agreement Delivery
Date"). Notwithstanding the foregoing, the Revised Underwriting Agreement
Delivery Date shall not be before March 8, 1999.
3.2 Delivery of Articles. The Company shall deliver to the Investor the
Articles on or before February 15, 1999, or such later time as the Company and
the Investor shall agree in writing (the "Articles Delivery Date"). The Investor
shall comment on the Articles within five Business Days following the Articles
Delivery Date and the Investor and the Company shall thereafter negotiate in
good faith to resolve any issues relating to the Articles.
3.3 Underwriting Agreement Representations and Warranties. In
connection with the sale of the Class A Common Stock to the Investor, the
Company will hereby be deemed to make each of the representations and warranties
to, and agreements with, the Investor that are made for the benefit of the
Underwriters as set forth in the Underwriting Agreement.
3.4 Investor Due Diligence. From the date hereof until the Closing
Date, the Company will grant the Investor and its representatives reasonable
access to all the premises, books, records, inventory and physical plant
relating to the Company. The Company shall cause its representatives and
independent auditors to furnish to the Investor such financial and other data
and information with respect to the Company as the Investor and/or its
independent accountants and counsel shall reasonably request, to the extent
permitted by law, in the opinion of the General Counsel of the Company, and in
compliance with applicable laws and regulations and with contractual obligations
to third parties including, without limitation, confidentiality and
non-disclosure restrictions. With respect to data requested by the Investor
which is subject to contractual restrictions on disclosure, the Company agrees
to exercise reasonable efforts in order to obtain the necessary permissions
which would allow the disclosure of such data or information to the Investor.
The Investor recognizes that certain data may be redacted to prevent the
disclosure of information that the Company is not legally or contractually
authorized to disclose.
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3.5 Additional Representations and Warranties. Unless waived by the
Investor in writing, the Company shall, by addendum ("Purchase Agreement
Addendum") to this Agreement delivered and dated not more than 15 days after the
Revised Underwriting Agreement Delivery Date, make such additional
representations and warranties, and provide for such terms and conditions
concerning such representations and warranties, as the Investor shall reasonably
request in writing five days after the Revised Underwriting Agreement Delivery
Date, and as the Company and the Investor shall agree upon (the date of delivery
by the Company and acceptance by the Investor of such addendum, or the date of
any waiver, being referred to as the "Purchase Agreement Addendum Delivery
Date").
3.6 Disclosure to the Investor. If during the course of the Investor's
due diligence as described in Section 3.4, the Investor discovers a fact or set
of facts which would cause or has caused a breach of one of the representations
and warranties of this Agreement or the Underwriting Agreement or which fact or
set of facts is viewed as significant by the Investor to require an additional
representation or warranty as described in Section 3.5, the Investor shall use
reasonable efforts to notify the Company as promptly as practicable concerning
such fact or set of facts.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE INVESTOR
The Investor represents and warrants to the Company, as of the date
hereof and as of the date of the Closing that:
4.1 Existence. The Investor is a company duly organized, validly
existing and current in payment of all taxes properly payable pursuant to the
laws of the jurisdiction of its organization. The Investor has the requisite
corporate power and authority to own and operate its properties and assets and
to carry on its business as presently conducted.
4.2 Power and Authority. The Investor has the requisite corporate power
and authority and has taken all required action necessary to authorize the
execution and delivery by it of this Agreement and all other documents or
instruments required by this Agreement, and to carry out the terms of this
Agreement and of all such other documents or instruments. This Agreement has
been duly executed and delivered by the Investor and (assuming the due
authorization, execution and delivery hereof by the Company and the other
parties thereto other than the Investor) constitutes the valid and binding
obligation of the Investor, enforceable against the Investor in accordance with
its terms.
4.3 Purchase for Investment. The Investor is purchasing its shares of
Class A Common Stock for investment, for its own account (not as a nominee or
agent) and not for the account of any Employee Benefit Plan (or if are being
acquired for the account of any such Plan, such acquisition does not involve a
nonexempt prohibited transaction within the meaning of
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Section 406 of ERISA or Section 4975 of the Code) and not with a view to the
resale or distribution of any part thereof, except for transfers permitted
hereunder, and the Investor has no present intention of selling, granting any
participation in or otherwise distributing the same. By executing this
Agreement, the Investor further represents that it does not have any contract,
undertaking, agreement or arrangement with any Person to sell, Transfer or grant
participation to such Person or to any third person with respect to the Class A
Common Stock.
4.4 Non-Contravention. The execution, delivery and performance of this
Agreement by the Investor and the consummation of any of the transactions
contemplated hereby by the Investor will not (a) conflict with or result in a
breach of any of the terms and provisions of, or constitute a default (or an
event which with notice or lapse of time, or both, would constitute a default)
under, or result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Investor pursuant to any
agreement, instrument, franchise, license or permit to which the Investor is a
party or by which any of its properties or assets may be bound or (b) violate or
conflict with any judgment, decree, order, statute, rule or regulation of any
court or any public, governmental or regulatory agency or body applicable to the
Investor or any of its properties or assets, other than such breaches, defaults
or violations that are not reasonably expected to impair the ability of the
Investor to consummate the transactions contemplated by this Agreement. The
execution, delivery and performance of this Agreement by the Investor and the
consummation of the transactions contemplated hereby by the Investor do not and
will not violate or conflict with any provision of the organizational documents
of the Investor, as currently in effect. Except for filings under the HSR Act,
no consent, approval, authorization, order, registration, filing, qualification,
license or permit of or with any court or any government agency or body
applicable to the Investor is required for the execution, delivery and
performance of this Agreement or the consummation of the transactions
contemplated hereby.
4.5 Financial Matters. The Investor, either alone or with its financial
advisor, has such knowledge and experience in financial and business matters
that it is capable of evaluating the merits and risks of the investment to be
made by it hereunder. The Investor represents that it is an "accredited
investor" as that term is defined in Regulation D promulgated under the 33 Act.
4.6 Restricted Securities. The Investor understands that its shares of
Class A Common Stock must be held indefinitely unless they are registered under
the 33 Act or an exemption from such registration becomes available, and that
its shares of Class A Common Stock may only be Transferred as provided in
Article VII of this Agreement. The Investor acknowledges and agrees to abide by
the restrictions on transfer set forth in Article VII of this Agreement. The
Investor understands that the shares of Class A Common Stock it is purchasing
are characterized as "restricted securities" under the federal securities laws
inasmuch as they are being acquired from the Company in a transaction not
involving a public offering and that under such laws and applicable regulations
such securities may be resold without registration under the
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33 Act, only in certain limited circumstances. In this connection, Investor
represents that it is familiar with Rule 144 under the 33 Act, as presently in
effect, and understands the resale limitations imposed thereby and by the 33
Act.
4.7 Further Limitations on Disposition. Without in any way limiting the
representations set forth above, Investor further agrees not to make any
disposition of all or any portion of the Class A Common Stock unless and until
the transferee has agreed in writing for the benefit of the Company to be bound
by this Article IV and Article VII and:
(a) There is then in effect a registration statement under the
33 Act covering such proposed disposition and such disposition is made in
accordance with such registration statement; or
(b) (i) The Investor shall have notified the Company of the
proposed disposition and shall have furnished the Company with a detailed
statement of the circumstances surrounding the proposed disposition and (ii) if
reasonably requested by the Company, the Investor shall have furnished the
Company with an opinion of counsel reasonably satisfactory to the Company, that
such disposition will not require registration of such shares under the 33 Act.
It is agreed that the Company will not require opinions of counsel for
transactions made pursuant to Rule 144 except in unusual circumstances.
ARTICLE V
COVENANTS OF THE COMPANY AND THE INVESTOR
5.1 Covenants of the Company Only.
(a) The Company will hereby be deemed to covenant and agree
with the Investor and to its benefit to comply with all agreements made for the
benefit of the Underwriters as set forth in the Underwriting Agreement and shall
make such additional covenants as shall be agreed to by the Company and the
Investor in the Purchase Agreement Addendum.
(b) The Company is currently engaged in discussions with
underwriters regarding the IPO and agrees that it will act in good faith to
effect the IPO and to undertake such steps as it shall deem necessary to
consummate the IPO. If the Company does not effect an IPO, the Company hereby
agrees that it will enter into discussions with SBC regarding SBC's possible
investment in the Company.
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(c) The Company shall promptly notify SBC of any material
developments in connection with the IPO, and provide copies of any and all
filings, notices and other communications with the SEC relating thereto,
including copies of the registration statement filed with the SEC, and with any
Governmental Authority relating to the filings under the HSR Act as described in
Section 5.3(a) below. The Company shall also provide to SBC any such filings,
notices and other communications to SBC sufficiently for in advance of their
being filed or provided to the SEC or such Governmental Authorities as described
above so as to permit SBC sufficient opportunity to review and comment on such
drafts.
(d) The Company shall provide to SBC copies of any notices,
correspondence or other written communication from the SEC relating to the IPO
or from any Governmental Authority relating to the filings under the HSR Act as
described in Section 5.3(a) below promptly following receipt thereof.
5.2 Further Assurances. Subject to the terms and conditions provided
herein, each of the parties agrees to use all reasonable efforts to take, or
cause to be taken, all actions, and to do, or cause to be done as promptly as
practicable, all things necessary, proper or advisable under applicable laws and
regulations or otherwise to consummate and make effective the transactions
contemplated by this Agreement. The Company, at its expense, will promptly
execute and deliver to the Investor, and the Investor will, at its expense,
promptly execute and deliver to the Company, upon the other's reasonable
request, all such other and further documents, agreements and instruments in
compliance with or pursuant to its covenants and agreements herein, and will
make any recordings, file any notices, and obtain any consents as may be
necessary or appropriate in connection therewith, including without limitation,
applications under the HSR Act.
5.3 Filings and Consents.
(a) As soon as practicable after execution and delivery of
this Agreement, the Investor and the Company shall make all filings required
under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the
"HSR Act"), relating to the transactions contemplated hereby. In addition, the
Investor and the Company will each promptly furnish all information as may be
required by the Federal Trade Commission and the Department of Justice under the
HSR Act in order for the requisite approvals for the purchase and sale of the
Class A Common Stock, and the transactions contemplated hereby, to be obtained
or any applicable waiting periods to expire. Each of the parties hereto will
cooperate with each other with respect to obtaining, as promptly as practicable,
all necessary consents, approvals, authorizations and agreements of, and the
giving of all notices and making of all other filings with, any third parties,
including Governmental Authorities, necessary to authorize, approve or permit
the consummation of the transactions contemplated hereby.
(b) The Investor and the Company will provide such information
and communications to the Persons requiring such approvals, authorizations and
consents as reasonably required by such Person.
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5.4 Accounting Treatment.
(a) Except as permitted by Section 5.4(b), the Investor shall
not take any action and shall not fail to take any action which action or
failure to act would prevent, or would be reasonably likely to prevent, any
transaction of the Company from qualifying for Pooling Treatment.
(b) The Investor agrees that it will not, without the prior
written consent of the Company, Transfer any shares of Common Stock or any
securities convertible into or exercisable for shares of Common Stock owned by
it or with respect to which it has the power of disposition, whether directly or
indirectly, at any time, if in the reasonable judgment of the Company, such
restriction is deemed necessary in order to permit or preserve Pooling
Treatment; provided, however, that notwithstanding the foregoing, the Investor
shall not be prohibited from Transferring any shares of Common Stock, as a
result of the Company's need to permit or preserve Pooling Treatment, for more
than 120 days in any calendar year.
5.5 Regulatory Risk. Subject to Article XIII, if any regulatory issues,
whether by means of an order or request of a Governmental Authority or
otherwise, arise as a result of the Investor's ownership of the Class A Common
Stock, that causes or reasonably would be expected to cause the Company to be
subject to additional legal limitations or governmental regulation that have an
Adverse Effect, the Investor shall, from the date the Investor becomes aware
that a regulatory issue or issues would cause or reasonably would be expected to
cause such circumstances to exist, as promptly as reasonably practicable
Transfer (notwithstanding the restriction on Transfer prior to the Permitted
Transfer Date in Article VII) such number of shares of Class A Common Stock as
may be necessary to resolve such issues, or take such other action that the
Investor deems appropriate to resolve such issues; provided, however, that the
Investor shall only be liable to the Company for any losses or other expenses
associated with such additional legal limitations or governmental regulations if
due to the Investor's negligence or failure to act diligently in Transferring
such shares in accordance with the above. For purposes of this Section 5.5,
"Adverse Effect" means the imposition on the Company of actual out-of-pocket
costs in excess of $60 million or the required inclusion of a contingent
liability in excess of $60 million in the Company's financial statements
prepared consistent with generally accepted accounting principles.
5.6 Covenant to Satisfy Conditions. Each party agrees to use all
reasonable efforts to insure that the conditions to the other party's
obligations hereunder set forth in Article VI, insofar as such matters are
within the control of such party, are satisfied.
5.7 Notification of Change in Control Event. Each party shall promptly
notify the other party of any Change in Control Event affecting the Company or
the Investor, as the case may be, and the Company shall promptly notify the
Investor of a Potential Change in Control Event of which it becomes actually
aware.
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ARTICLE VI
CLOSING CONDITIONS
6.1 Conditions of Investor's Obligations at Closing.
(a) Underwriting Agreement. The Investor's obligation to
purchase and pay for the Class A Common Stock to be purchased by it hereunder is
subject to (i) the Investor's determination that there has not been any material
revision to the Underwriting Agreement that is adverse to the Investor as it has
been executed by the Underwriters and the Company since the draft delivered to
the Investor pursuant to Section 3.1 hereof, and (ii) the receipt by the
Investor of all letters, opinions, and certificates that the Underwriters are
entitled to receive from the Company in connection with the closing of the IPO.
(b) Receipt of Purchase Agreement Addendum. The Investor shall
have received from the Company the Purchase Agreement Addendum pursuant to
Section 3.5 hereof in form and substance reasonably satisfactory to the
Investor.
(c) Receipt of Articles. The Investor shall have received from
the Company the Articles pursuant to Section 3.2 in form and substance
reasonably satisfactory to the Investor.
6.2 Conditions of the Company's Obligations at Closing. The obligations
of the Company to the Investor under this Agreement are subject to the
fulfillment on or before the Closing of each of the following conditions by the
Investor:
(a) Representations and Warranties. The representations and
warranties of the Investor contained in Article IV shall be true on and as of
the Closing with the same effect as though such representations and warranties
had been made on and as of the Closing.
(b) Payment of Purchase Price. The Investor shall have
delivered the Purchase Price.
(c) Performance of Obligations. The Investor shall have
performed in all material respects all obligations required to be performed by
it under this Agreement at or prior to the Closing.
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(d) Legal Matters. The Company shall have received from the
Investor such legal opinions as shall be reasonably agreed upon by the Company
and the Investor and such other letters, opinions and certificates as the
Company shall reasonably request.
6.3 Conditions to Each Party's Obligation. The respective obligation of
each party to consummate the transactions contemplated hereby shall be subject
to the satisfaction at or prior to the Closing of each of the following
conditions:
(a) HSR Approval. The applicable waiting period (and any
extension thereof) under the HSR Act relating to the transactions contemplated
by this Agreement shall have been terminated or shall have expired.
(b) No Injunctions or Restraints. No temporary restraining
order, preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition preventing
consummation of the transactions contemplated hereby shall be in effect.
(c) Transport Services Agreement. The Transport Services
Agreement shall have been executed and remain in full force and effect.
(d) Consummation of IPO. The closing of the IPO as
contemplated by the Underwriting Agreement shall be consummated simultaneously
with the Closing.
ARTICLE VII
TRANSFER RESTRICTIONS
7.1 Restrictions on Transfer; the 33 Act.
(a) Restrictions on Transfer; Restrictive Legends. The Class A
Common Stock owned by the Investor shall not be transferable except upon the
conditions specified in this Article VII, which conditions are intended to
insure compliance with the provisions of the 33 Act in respect of the Transfer
of any such Class A Common Stock.
The Investor (including each assignee) hereby acknowledges and
agrees that it is acquiring the shares of Class A Common Stock in a transaction
exempt from registration under the 33 Act and that no shares of Class A Common
Stock may be Transferred in the absence of registration under the 33 Act or an
applicable exemption therefrom. The Investor also hereby agrees that it will, if
requested by an underwriter in connection with a public offering of securities
(including the IPO), enter into a standard lock-up agreement preventing it from
offering, selling or granting any option for the sale of or disposing of any of
its shares of Common Stock for the same time period that the Company or TWC
would be subject to under the underwriting agreement in connection with such
public offering, which period the Company shall use reasonable efforts to limit
to a period of not more than 90 days (except in the case of the IPO) and
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which shall in no event be in excess of 180 days. The Investor also hereby
acknowledges and agrees that it shall not Transfer (other than to an Affiliate)
such shares of Class A Common Stock for a period of three years and six months
from the Closing Date (which date shall also be the closing of the IPO) (the
"Permitted Transfer Date"). Each certificate representing the Investor's shares
of Class A Common Stock shall (unless otherwise permitted by the provisions of
this Article VII) be stamped or otherwise imprinted with a legend in
substantially the following form:
"THE SHARES OF COMMON STOCK OF THE ISSUER REPRESENTED BY THIS CERTIFICATE HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR UNDER ANY APPLICABLE
STATE LAW. THEY MAY NOT BE OFFERED FOR SALE, SOLD, OR TRANSFERRED WITHOUT (1)
REGISTRATION UNDER THE SECURITIES ACT OF 1933 AND ANY APPLICABLE STATE LAW OR
(2) AN OPINION OF COUNSEL SATISFACTORY TO XXXXXXXX COMMUNICATIONS GROUP, INC.
THAT SUCH REGISTRATION IS NOT REQUIRED BECAUSE OF AN EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OF 1933 AND ANY APPLICABLE STATE
LAW. THE SHARES REPRESENTED BY THIS CERTIFICATE ARE ALSO SUBJECT TO ADDITIONAL
RESTRICTIONS ON TRANSFER AS SET FORTH IN THE SECURITIES PURCHASE AGREEMENT DATED
AS OF FEBRUARY __, 1999, AS AMENDED FROM TIME TO TIME, WHICH PROVIDES THAT SUCH
SHARES MAY NOT BE TRANSFERRED UNTIL AUGUST __, 2002 (WHICH DATE IS THREE YEARS
AND SIX MONTHS FROM THE DATE HEREOF). COPIES OF THE SECURITIES PURCHASE
AGREEMENT MAY BE OBTAINED UPON REQUEST FROM XXXXXXXX COMMUNICATIONS GROUP, INC.
AND ANY SUCCESSOR THERETO."
(b) Non-Applicability of Transfer Restrictions; Removal of
Legends. The restrictions imposed by Section 7.1 above upon the transferability
of any shares of Class A Common Stock represented by a certificate bearing the
restrictive legends set forth in such Section 7.1 (a "Restricted Security")
shall cease and terminate when such Restricted Security has been sold pursuant
to an effective registration statement under the 33 Act or transferred pursuant
to Rule 144 (or any similar or successor rule thereto) promulgated under the 33
Act unless the holder thereof is an affiliate of the Company. Upon a Change in
Control Event of the Company, the restriction on the Investor prohibiting the
Transfer of shares of Class A Common Stock prior to the Permitted Transfer Date
shall cease and terminate. The holder of any Restricted Security as to which
such restrictions shall have terminated shall be entitled to receive from the
Company, without expense, a new security of the same type but not bearing the
restrictive legend set forth above and not containing any other reference to the
restrictions imposed by Section 7.1 above, provided that a holder's right to
receive, and the Company's obligation to issue, a new Security not bearing such
restrictive legends and not containing any other reference to the restrictions
imposed by Section 7.1 above shall be subject, in the Company's discretion, to
the delivery to the Company of an opinion of counsel of the transferor (which
may include in-house counsel to the Investor) that subsequent transfers of such
Restricted Security by the proposed transferee will not require registration
under the 33 Act.
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ARTICLE VIII
ANTI-DILUTION ADJUSTMENTS; PREEMPTIVE RIGHTS;
VOTING RIGHTS; BOARD REPRESENTATION
8.1 Anti-dilution Adjustments.
(a) If immediately following the IPO the Investor owns Class A
Common Stock which is less than the 10% Limit and the Company plans to issue
common equity securities in a public offering solely for the purpose of raising
additional capital, the Company will then grant to the Investor a right of first
refusal to purchase, with respect to the issuance by the Company of new or
additional common equity securities for cash, that portion of such new or
additional equity securities as may be necessary in order to permit the Investor
to attain the 10% Limit. This right of first refusal shall be offered in
accordance with the offer mechanics set forth in (c) below. The Company shall
offer the Investor the right to purchase such equity securities at the price
offered to the public in connection with such issuance less any discounts or
commissions per share from the price offered to the public to the underwriters.
Upon the exercise and closing by the Underwriters of the over-allotment option
as contemplated in the Underwriting Agreement, the Company shall grant the
Investor a right of first refusal to purchase such additional shares of Class A
Common Stock as such Investor would have had the right to purchase in order to
attain the 10% Limit if the closing of the over-allotment option had occurred
simultaneously with the Closing.
(b) The right granted to the Investor in Section 8.1(a) above
shall terminate when the Investor first reaches the 10% Limit and shall be
subject to Section 8.5. Once the 10% Limit is reached, the Investor will only
have such additional preemptive rights as set forth in Section 8.2.
(c) Offer Mechanics. The Company shall provide a written
notice to the Investor of its intention to issue common equity securities in a
public offering in accordance with, and at such price set forth in, Section
8.1(a) above (the "Dilution Offer"). The Investor will then have the right,
within ten Business Days after the date the Dilution Offer is received by the
Investor, to accept irrevocably such offer in the aggregate, as to all, but not
less than all (unless necessary in order not to exceed the 10% Limit), such
common equity securities. If the Investor desires to exercise its right to
purchase, it shall provide the Company with written notice (specifying the
amount of common equity securities as to which it is accepting the Dilution
Offer) within such 10 Business Day period; provided, however, that such
securities will then not be offered as part of such public offering but shall be
offered and sold to the Investor in a private transaction. If the Investor
declines the right to purchase, the Company shall continue with a public
offering as set forth in (e) below; provided, however, that in no event shall
the Investor purchase more than 50% of the common equity securities issued by
the Company at any one time,
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and provided, further, that the securities purchased by the Investor, if any,
will not be offered as part of such public offering but shall be offered and
sold to the Investor in a private transaction.
(d) The closing of the purchase of the common equity
securities by the Investor shall take place at the principal executive offices
of the Company as soon as practicable, but in no event later than thirty
Business Days after the expiration of the 10 Business Day period after the
giving of the Dilution Offer (or such other date as may be mutually agreed to by
the parties to such transaction). At such closing, the Investor shall deliver to
the Company the appropriate per share cash consideration pursuant to a bank,
cashier's or certified check or by wire transfer of immediately available funds
(unless otherwise specified in the Dilution Offer provided to the Investor),
against delivery of certificates representing the common equity securities so
purchased Duly Endorsed.
(e) Transfers to Public after the Investor Declines Dilution
Offer. If at the end of the 10 Business Day period following the giving of the
Dilution Offer, the Investor shall not have accepted the Dilution Offer as to
all shares of common equity securities covered thereby (unless less than all is
necessary in order not to exceed the 10% Limit), the Company shall have 90 days
in which to sell the common equity securities to the public, at a price to the
underwriters that is no less than 95% of the price contained in the Dilution
Offer and on terms and conditions not more favorable to the public than were
contained in the Dilution Offer. Promptly after any sale pursuant to this
subsection (e), the Company shall notify the Investor of the consummation
thereof and shall furnish such evidence of the completion (including time of
completion) of such sale and of the terms and conditions thereof as the Investor
may reasonably request. If, at the end of such 90 day period, the Company has
not completed the sale of such common equity securities, it shall no longer be
permitted to sell such shares pursuant to this Section 8.1(e) without again
fully complying with the provisions of this Section 8.1.
8.2 Preemptive Rights. Subject to Section 8.5, the Company hereby
grants to the Investor a right of first refusal to purchase, with respect to the
issuance by the Company to any person of any new or additional common equity
securities for cash, that portion of such new or additional common equity
securities as may be necessary in order to permit the Investor to attain and
maintain the 10% Limit. The Company shall offer the Investor the right to
purchase such equity securities at the same price as offered to such person.
8.3 Offer Mechanics.
(a) The rights of first refusal granted in Section 8.1 and 8.2
shall be offered to the Investor (such offer, the "Preemptive Rights Offer")
pursuant to a written notice from the Company offering the Investor such
securities on the same terms and conditions as offered to the other offeree(s)
(such written notice, the "Preemptive Rights Notice"). The Investor shall have
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15 days from the date of the Company's delivery of the Preemptive Rights Notice
to notify the Company in writing of its binding acceptance of such Preemptive
Rights Offer with respect to all (but not less than all unless less than all is
necessary to reach the 10% Limit) equity securities which are offered to the
Investor pursuant to such Preemptive Rights Offer; provided, however, that if
the Company is issuing additional common equity securities in connection with a
public offering, the Company may shorten such time period to a period reasonably
necessary in order to ensure that information regarding the Investor will be
properly disclosed in any registration statement covering such securities.
(b) If the Investor accepts the Preemptive Rights Offer in
accordance with the provisions of the preceding sentence, the Company shall have
30 days in which to consummate such binding agreement. In the event that the
Investor does not accept the Preemptive Rights Offer within such 15-day period
in accordance with the provisions of the preceding sentence or fails to
consummate any such purchase within such 30-day period, the Company would have
the right, but not the obligation, to issue such securities on terms and
conditions in the aggregate no more favorable to the other offeree(s) than those
set forth in the Preemptive Rights Notice, pursuant to a definitive agreement to
be entered into no later than 120 days after such date.
8.4 Exceptions to Preemptive Rights. Notwithstanding anything to the
contrary contained herein, no rights of first refusal pursuant to Section 8.1(a)
or 8.2 above would apply in the event of (i) any issuances or grants of equity
securities to the officers, directors or employees of the Company or any of its
Subsidiaries, either in connection with a benefit plan or otherwise, (ii) the
exercise of any employee or director options or the exercise or conversion of
any options, warrants or convertible securities in existence as of the date of
the Closing, or the issuance of any securities to the employees or directors of
the Company or its Subsidiaries pursuant to any restricted stock or other
incentive plan of the Company or any of its Subsidiaries or the issuance upon
the conversion or exercise of convertible securities or warrants the issuance of
which was subject to this Article VIII, (iii) the issuance of equity securities,
either directly or indirectly, in connection with the Company's acquisition of,
business combination with or investment in any party which is not prior to such
transaction an Affiliate of the Company (whether by merger, consolidation, stock
swap, sale of assets or securities, or otherwise), (iv) the issuance of
securities (including any convertible securities or options and the conversion
or exercise thereof) to any third party which is at such time a creditor of the
Company, in connection with the refinancing or restructuring of the indebtedness
owed to such third party, (v) an issuance of Class A Common Stock by the Company
in connection with the IPO, (vi) the distribution by the Company of its
securities to all of its stockholders on a pro rata basis or in exchange for
outstanding TWC equity securities, (vii) a spin-off or split-off of the equity
securities of the Company to its shareholders, or (viii) if the granting of such
rights would prevent, or would be reasonably likely to prevent, the Company from
receiving Pooling Treatment.
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8.5 Termination or Reduction of Preemptive Rights.
(a) The right of first refusal and pre-emptive rights granted
to the Investor in Sections 8.1 and 8.2 to allow the Investor to maintain the
10% Limit shall terminate:
(i) upon a Transfer of a number of shares of Class A
Common Stock by the Investor such that after the Transfer the Investor
Beneficially Owns less than 3% of the issued and outstanding shares of
Common Stock; or
(ii) if the Transport Services Agreement is no longer
in effect.
(b) The Investor may fail to exercise its rights pursuant to
Section 8.1 or 8.2 on one occasion without any effect whatsoever on the
Investor's rights hereunder except as provided in Section 8.5(c).
(c) If, after failing to exercise its rights under Section 8.1
or 8.2 on one occasion as permitted in Section 8.5(b), the Investor should again
fail on one or more occasions to exercise its rights under Section 8.1 or 8.2,
the Investor's right to purchase common equity securities under Section 8.1 and
8.2 shall be limited and reduced so as to permit the Investor to purchase only
such new or additional common equity securities as may be necessary in order to
permit the Investor to maintain only that percentage of the total number of
issued and outstanding shares of Common Stock of the Company calculated on a
Fully-Diluted Basis that the Investor Beneficially Owned immediately following
the particular event that gave rise to the right of first refusal or preemptive
right under Section 8.1 or 8.2 that the Investor failed to exercise (the
"Investor Limit"); provided however, that if the Investor shall have purchased
additional securities other than from the Company, such shares of Class A Common
Stock shall not be counted for calculating the Investor Limit but only such
shares of Class A Common Stock that the Investor shall have purchased directly
from the Company shall be counted in calculating the Investor Limit. In such
event and for such purposes, all references in Section 8.1 and 8.2 to "10%
Limit" shall mean the "Investor Limit." The Investor Limit shall be further
reduced on each and every occasion (following the first occasion as provided in
Section 8.5(b)) that the Investor fails to exercise its rights under Section 8.1
or 8.2.
(d) If and on each occasion that the Investor Transfers any
shares of Class A Common Stock it Beneficially Owns to anyone other than an
Affiliate, the Investor's right to purchase common equity securities under
Section 8.1 and 8.2 shall be limited and reduced to permit the Investor to
maintain only that percentage of the total number of issued and outstanding
shares of Common Stock of the Company calculated on a Fully-Diluted Basis that
the Investor Beneficially Owned immediately following the consummation of such
Transfer (the "Transfer Limit"). In such event and for such purposes, all
references in Section 8.1 and 8.2 to "10% Limit" (or, to the extent superseded
by Section 8.5(c), the "Investor Limit") shall mean the "Transfer Limit."
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(e) The Investor's right to purchase equity securities under
Section 8.1 and 8.2 shall be further limited and reduced upon the occurrence of
each event described in Section 8.5(c) and 8.5(d) and shall not be thereafter
increased.
8.6 Voting Rights. If at any time after the date hereof the Company
issues to any Person other than the Company or any Affiliate of the Company in a
private or public sale of Common Stock with voting rights ("Super Voting
Rights") that are greater in any material respect than those the Investor has in
its Class A Common Stock, other than in connection with one or more employee or
director related plans or arrangements or in connection with a spin-off by the
Company of the Common Stock to its shareholders, the Investor will have the
right at its option to convert its shares of Class A Common Stock to new shares
of Common Stock with such Super Voting Rights. If such conversion occurs, all
references in this Agreement to Class A Common Stock shall be deemed to refer to
the Common Stock with Super Voting Rights.
8.7 Board Representation.
(a) Upon written request of SBC, following the completion of
the IPO and as long as SBC Beneficially Owns more than 5% of the issued and
outstanding shares of Common Stock, the Company shall recommend to its Board of
Directors that the Board take such action as may be necessary to elect a
director to be named by SBC (the "SBC Nominee") to the Company's Board of
Directors; provided that such SBC Nominee shall be a person acceptable to the
Board of Directors in its reasonable discretion prior to such person's initial
appointment which right of approval shall not be unreasonably withheld.
Thereafter, so long as SBC continues to Beneficially Own more than 5% of the
issued and outstanding shares of Common Stock and TWC Beneficially Owns more
than 50% of the issued and outstanding Class B Common Stock, the Company shall
recommend to its Board of Directors that the Board recommend to its stockholders
the reelection to the Company's Board of Directors of the SBC Nominee, or such
other SBC Nominee as SBC shall designate to the Company in writing at least five
Business Days prior to the meeting of the Board of Directors at which the
directors consider nominations for election to the Board of Directors. The SBC
Nominee shall not receive any compensation, including any shares of Common
Stock, for his services as a member of the Board of Directors.
(b) The rights existing in Section 8.7(a) above shall only
inure to the benefit of SBC if SBC has obtained relief in any state from Section
271 of the Telecommunications Act of 1996, as amended from time to time, and
such relief continues to be in effect.
(c) SBC agrees to cause the SBC Nominee to sign any customary
agreement of the Company concerning the SBC Nominee's obligations as is signed
by other directors of the Company.
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(d) SBC agrees that the SBC Nominee shall not be entitled to
participate in and shall be required to excuse himself from any Board, committee
or other internal discussions and related vote if at any time the general
counsel of the Company or the senior vice president of law of the Company
decides that the participation of the SBC Nominee presents a conflict of
interest or a potential conflict of interest, whether the conflict arises out of
SBC's business, the Company's business or any other matter.
(e) The right of SBC to appoint the SBC Nominee shall be
terminated upon the following events:
(i) a termination by SBC of the Alliance Agreement
pursuant to Section 12.1.1.3 thereof;
(ii) a termination by the Company of the Alliance
Agreement pursuant to Section 12.1.2.2 thereof;
(iii) a termination by the Company of the Alliance
Agreement pursuant to Section 12.1.2.1 thereof;
(iv) a termination of the Alliance Agreement pursuant
to Section 12.1.1.5 thereof; or
(v) if the Investor owns less than 5% of the total
number of issued and outstanding shares of Common Stock of the Company
calculated on a Fully-Diluted Basis.
ARTICLE IX
CALL OPTION
9.1 Call Option.
(a) In the event that the Transport Services Agreement
terminates other than because of a breach of a representation, warranty,
covenant or other obligation by the Company (the "Termination"), the Company
shall have the right to purchase (the "Call Option") from the Investor all, but
not less than all, of the shares of Common Stock the Investor acquired pursuant
to this Agreement and still owns at the time of the Termination. The Company
shall be able to assign its rights under this Section 9.1 to TWC.
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(b) The Call Option shall continue to be exercisable by the
Company until the earlier of (i) the Transfer of shares of Common Stock to a
Third Party that the Investor acquired pursuant to this Agreement; provided,
however, that the Call Option shall only terminate with respect to such shares
of Common Stock that have been Transferred, and (ii) a period of 120 Business
Days commencing on the first Business Day following the public announcement of
the Termination and shall expire if not exercised by written notice by the
Company to the Investor at the conclusion of such 120-day period.
(c) The purchase price per share for the shares of Class A
Common Stock purchased by the Company pursuant to the Call Option shall be equal
to the Volume-Weighted Average Trading Price of a share of Class A Common Stock
over a period of twenty consecutive Trading Days commencing on the first Trading
Day following the public announcement of the Termination (the "Determination
Period") less the difference between the IPO Price and the Net IPO Price or, for
shares acquired by the Investor pursuant to Section 8.1(a), the price offered to
the public in connection with the issuance of equity securities less any
discounts or commissions off such price to the underwriters. The Investor hereby
agrees that it will not sell, enter into any agreement to sell, purchase or
enter into any agreement to purchase any shares of Class A Common Stock during
the Determination Period.
(d) The purchase price for the shares of Class A Common Stock
to be purchased pursuant to the Call Option shall be paid by the Company to the
Investor in cash by wire transfer within ten Business Days of receipt by the
Investor of the notice by the Company of its election to exercise the Call
Option.
(e) The Investor shall, within three Business Days of receipt
of the full purchase price for exercise of the Call Option, return to the
Company the certificate or certificates for all of the shares of Class A Common
Stock which had been purchased pursuant to the Call Option.
ARTICLE X
TERMINATION
10.1 Termination. This Agreement may be terminated at any time prior to
the Closing:
(a) by mutual consent of the Investor and the Company;
(b) by either the Company or the Investor if the Closing shall
not have occurred by December 31, 1999, and this Agreement has not previously
been terminated, provided, however, that the failure to consummate the Closing
by such date is not a result of either the failure by the party so electing to
terminate this Agreement to perform any of its obligations hereunder or the
breach by the party so electing of its representations and warranties;
(c) if either the Investor or the Company terminates the
Transport Services Agreement;
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(d) by either the Company or the Investor in the event any
court or governmental agency of competent jurisdiction shall have issued an
order, decree or ruling or taken any other action restricting, enjoining or
otherwise prohibiting the transactions contemplated hereby and such order,
decree, ruling or other action shall have become final and unappealable;
(e) at any time on or prior to five Business Days after the
Purchase Agreement Addendum Delivery Date, by the Investor in writing, if the
Investor determines in its sole good faith judgment that the financial
condition, business or prospects of the Company (as such condition, business or
prospects may affect the market price of the Common Stock) are materially
adversely different from what was reasonably expected by the Investor at the
execution of this Agreement; provided, that this Section 10.1(e) shall not limit
in any way the due diligence investigation of the Company which the Investor may
perform or otherwise affect any other rights which the Investor has after the
date hereof and after the Purchase Agreement Addendum Delivery Date, under the
terms of this Agreement; or
(f) on or before five Business Days after the Purchase
Agreement Addendum Delivery Date, by the Investor if the Company has not, if
requested to by the Investor, delivered a Purchase Agreement Addendum pursuant
to Section 3.4 that is, in the Investor's sole and absolute discretion,
satisfactory to the Investor.
10.2 Effect of Termination. In the event that this Agreement shall be
terminated pursuant to this Article X, all further obligations of the parties
under this Agreement other than the obligations set forth in this Section 10.2
and Section 15.14 shall terminate and there shall be no liability of any party
to another party except for a party's breach of any of its obligations,
representations or warranties under this Agreement prior to such termination.
ARTICLE XI
INDEMNIFICATION
11.1 Indemnification.
(a) The Company hereby agrees to indemnify, defend and hold
harmless the Investor and each of its directors, officers and each Person, if
any, who controls (within the meaning of Section 15 of the 33 Act and Section 20
of the 34 Act) the Investor from and against all actual demands, claims, actions
or causes of action, assessments, losses, damages, liabilities, costs and
expenses (collectively, "Claims"), including without limitation interest,
penalties and
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reasonable attorneys' fees and expenses, asserted against, resulting to, or
imposed upon or incurred by the Investor, directly or indirectly, by reason of
or resulting from a breach of any covenant, representation, warranty or
agreement of the Company contained in or made pursuant to this Agreement or
otherwise in connection with the transactions contemplated hereby, including,
without limitation, any claims relating to the Company or any properties (former
or current) owned, leased or managed by any of the foregoing.
(b) The Investor hereby agrees to indemnify, defend and hold
harmless the Company and each Company Control Person from and against all
Claims), including without limitation interest, penalties and reasonable
attorneys' fees and expenses, asserted against, resulting to, or imposed upon or
incurred by the Company and each Company Control Person, directly or indirectly,
by reason of or resulting from a breach of any covenant, representation,
warranty or agreement of the Investor contained in or made pursuant to this
Agreement or otherwise in connection with the transactions contemplated hereby.
11.2 Terms of Indemnification. The obligations and liabilities of the
parties with respect to Claims by third parties will be subject to the following
terms and conditions:
(a) the indemnified party will give the indemnifying party
prompt notice of any Claims asserted against, resulting to, imposed upon or
incurred by the indemnified party, directly or indirectly, and the indemnifying
party will undertake the defense thereof by representatives of their own
choosing which are reasonably satisfactory to the indemnified party; provided
that the failure of the indemnified party to give notice as provided in this
Section 11.2 shall not relieve the indemnifying party of its obligations under
this Article XI, except to the extent that such failure has materially and
adversely affected the rights of the indemnifying party;
(b) if within a reasonable time after notice of any Claim, the
indemnifying party fails to defend such Claim, the indemnified party will have
the right to undertake the defense, compromise or settlement of such Claim on
behalf of and for the account and at the risk of the indemnifying party, subject
to the right of the indemnifying party to assume the defense of such Claim at
any time prior to settlement, compromise or final determination thereof;
(c) if there is a reasonable probability that a Claim may
materially and adversely affect the indemnified party other than as a result of
money damages or other money payments, the indemnified party will have the right
at its own expense to defend (provided that the indemnifying party shall
continue to control the defense and the indemnified party shall have the right
to participate in such defense), or co-defend, such Claim;
(d) the indemnifying party on one hand and the indemnified
party on the other will not, without the prior written consent of the other,
settle or compromise any Claim or consent to entry of any judgment relating to
any such Claim;
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(e) with respect to any Claims asserted against the
indemnified party, the indemnified party will have the right to employ one
counsel of its choice in each applicable jurisdiction (if more than one
jurisdiction is involved) to represent the indemnified party if, in the
indemnified party's reasonable judgment, a conflict of interest between the
indemnified party and the indemnifying party exists in respect of such Claims,
and in that event the fees and expenses of such separate counsel shall be paid
by such indemnifying party; and
(f) the indemnifying party will provide the indemnified party
reasonable access to all records and documents of the indemnifying party
relating to any Claim.
ARTICLE XII
REGISTRATION RIGHTS
12.1 Registration Rights.
(a) After the Permitted Transfer Date, SBC and any party to
which any rights under this Agreement have been transferred (SBC and each
transferee, a "Holder") holding, in the aggregate, at least 3% of the shares of
Class A Common Stock then outstanding shall have the right, on one occasion
only, by written request (a "Registration Request") of one or more Holders (the
"Selling Stockholders") to the Company, to require the Company to prepare a
registration statement (the "Registration Statement") on the appropriate form
under the 33 Act with respect to shares of Class A Common Stock then owned by
such Selling Stockholders for use in connection with an underwritten public
distribution of all or part of such shares of Class A Common Stock.
(b) If at any time after the Permitted Transfer Date, the
Company shall propose to prepare on its own behalf or on behalf of any of its
holders of any of its Common Stock a registration statement in connection with
an underwritten public offering of any such shares of Common Stock, the Company
shall give each Holder written notice at least twenty or, in case of a
registration statement proposed to be filed pursuant to Rule 415 of the 33 Act,
ten Business Days before the anticipated filing date of such registration
statement. Should any Holder desire to have any shares of Class A Common Stock
included in such registration statement, such Holder shall so notify the Company
in writing (which notice, and the notice of all other Holders with respect to
such registration statement, shall be deemed to be a Registration Request) no
later than ten or, in the case of a registration statement proposed to be filed
pursuant to Rule 415 of the 33 Act, five Business Days after the Company's
notice is given, setting forth the number of shares of Class A Common Stock
which such Holder requests to be included in the registration statement. Any
such registration statement that includes shares of Class A Common Stock owned
by any Holder is hereinafter included in the term "Registration Statement" and
each Holder who owns shares of Class A Common Stock included in a Registration
Statement shall be a Selling Stockholder with respect to such Registration
Statement.
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(c) The Company may refuse to include in any such registration
statement Class A Common Stock owned by such Holder if in the Company's
reasonable judgment, based on advice of its investment bankers, inclusion of
such shares of Class A Common Stock would have an adverse effect on the ability
of the Company to complete such underwritten public offering. If in accordance
with a Registration Request pursuant to Section 12.1(a), the Company reduces the
number of shares to be included in any such Registration Statement in accordance
with the foregoing, the Company will include in such registration, to the extent
of the number which the Company is so advised can be sold in such offering,
first, shares of Class A Common Stock requested to be included in such
registration by the Selling Stockholders and, second, securities the Company
proposes to sell and other securities of the Company included in such
registration by the holders thereof. If, as a result of this Section 12.1(c),
the Selling Shareholders are not able to register all of their shares of Class A
Common Stock requested to be registered pursuant to Section 12.1(a), such
Registration Request will not be deemed a Registration Request for purposes of
Section 12.1(a) and the Holders' rights will be restored.
(d) With respect to any Registration Statement under this
Section 12.1, the Company will:
(i) prepare and file with the SEC the Registration
Statement within 90 days after a Selling Stockholders' notice
requesting registration or inclusion in a proposed registration, and
use its reasonable efforts to cause the securities covered by such
Registration Statement to become registered and such Registration
Statement to be declared effective as expeditiously as possible under
the 33 Act or other applicable federal law and regulations (and cause
to be prepared and file any amendments or supplements thereto as may be
necessary to comply with applicable federal law and regulations);
provided, however, that the Company may be allowed to defer filing of
the Registration Statement: (A) if the general counsel or senior vice
president of law of the Company reasonably determines in good faith
that it is in the best interests of the Company not to disclose the
existence of or facts surrounding any proposed or pending material
developments; (B) if the underwriters have notified the Company that
market conditions are such as to recommend deferral; (C) pending the
completion of year-end financial statements or quarterly earnings
releases; or (D) if an offering by the Company of any securities is
pending; provided, however, that any deferral pursuant to clauses
(A)-(D) of this paragraph shall not in the aggregate be for more than
120 days.
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(ii) use its reasonable efforts to cause to be
registered or qualified the securities covered by such Registration
Statement under such securities or Blue Sky laws in such jurisdictions
within the United States as any Selling Stockholder may reasonably
request; provided, however, that the Company reserves the right, in its
sole discretion, not to cause to be registered or qualified such
securities in any jurisdiction where the Company would be required in
connection therewith to execute a general consent to service or to
qualify as a foreign corporation or to subject itself to taxation;
(iii) maintain the effectiveness of any Registration
Statement hereunder for 90 days or such longer period as may be
required by the 33 Act to enable any Selling Stockholder and the
underwriters, if any, to complete such offering;
(iv) promptly notify each Selling Stockholder of the
happening of any event as a result of which any preliminary prospectus
or prospectuses included in any Registration Statement hereunder
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 not misleading in light of the circumstances then existing;
(v) have the right to reasonably approve the choice
of lead underwriter for the offering, if an underwritten offering;
(vi) furnish, at the request of any Selling
Stockholder, an opinion, dated the date the Registration Statement
became effective, of counsel representing the Company (which may be
in-house counsel) for the purposes of such registration, addressed to
the underwriters, if any, and to such Selling Stockholder as to such
legal matters as such Selling Stockholder shall reasonably request; and
(vii) furnish, at the request of any Selling
Stockholder, a letter, dated the date the Registration Statement became
effective, of independent certified public accountants of the Company,
addressed to the underwriters, if any, and to such Selling Stockholder
as to such accounting matters as such Selling Stockholder shall
reasonably request.
(e) The obligations of the Company to cause a Registration
Statement to be prepared pursuant to the provisions of this Section 12.1 and
each Selling Stockholder's right to have shares of Class A Common Stock included
in any Registration Statement pursuant to the provisions of this Section 12.1
shall be subject to the following conditions:
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(i) Each Selling Stockholder shall furnish to the
Company in writing such information and documents as, in the opinion of
the Company's counsel, may be reasonably required to properly cause to
be prepared such Registration Statement in accordance with applicable
provisions of the 33 Act and the SEC's regulations thereunder or
federal or state securities or Blue Sky laws and regulations then in
effect; and
(ii) If a Selling Stockholder desires to sell and
distribute such shares of Class A Common Stock over a period of time,
or from time to time, pursuant to a Registration Statement prepared
pursuant to the provisions of this Section 12.1, then such Selling
Stockholder shall execute and deliver to the Company such written
undertakings as the Company and its counsel may reasonably require in
order to assure full compliance with the relevant provisions of the 33
Act and the SEC's regulations thereunder or other federal or state
securities or Blue Sky laws and regulations as then in effect.
(f) The Investor will pay or cause to be paid all fees and
expenses (including all Blue Sky, New York Stock Exchange and National
Association of Securities Dealers, Inc. filing and registration fees, accounting
fees and disbursements, printing costs, attorneys' fees and disbursements)
arising out of the preparation, filing, amending and supplementing of a
Registration Statement pursuant to Section 12.1(a) hereof and to the amount of
such fees and expenses that are reasonably allocable to the Selling Stockholder
for a Registration Statement used under Section 12.1(b) based on the number of
shares offered by the Selling Stockholders relative to the number of other
shares offered by the Company or on behalf of any of its other holders.
(g) Indemnity.
(i) The Company agrees to indemnify and hold harmless
each Selling Stockholder and each Person, if any, who controls (within
the meaning of Section 15 of the 33 Act and Section 20 of the 34 Act)
such Selling Stockholder (a "Control Person") against any losses,
claims, damages or liabilities, joint or several, to which such Selling
Stockholder or any such Control Person may become subject, insofar as
such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in any preliminary or
final Registration Statement or prospectus with respect thereto, or any
amendment or supplement thereto, or arise out of or are based upon 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; and the Company will reimburse each Selling Stockholder and
each Control Person for any legal or other expenses reasonably incurred
by such Selling Stockholder or such Control Person in connection with
investigating or defending any such loss, claim, damage, liability or
action;
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provided, however, that the Company will not be liable in any case to
the extent that any such loss, claim, damage or liability arises out of
or is based upon an untrue statement or alleged untrue statement or
omission or alleged omission from any of such documents in reliance
upon and in conformity with written information furnished by or on
behalf of such Selling Stockholder or any such Control Person
specifically for use in the preparation thereof.
(ii) Each Selling Stockholder will, severally and not
jointly, indemnify and hold harmless the Company and each of its
directors, officers and each Person, if any, who controls (within the
meaning of Section 15 of the 33 Act and Section 20 of the 34 Act) the
Company (a "Company Control Person") to the same extent as set forth in
the foregoing indemnity from the Company to each Selling Stockholder
but only with reference to written information included in any
preliminary or final Registration Statement or prospectus with respect
thereto, or amendment or supplement thereto, furnished by or on behalf
of such Selling Stockholder specifically for use in the preparation of
such documents; and will reimburse the Company or any such Company
Control Person for any legal or other expenses reasonably incurred by
them in connection with investigating or defending any loss, claim,
damage, liability or action for which such Selling Stockholder is
obligated to indemnify the Company or any Company Control Person.
(iii) Promptly after receipt by an indemnified party
under this Section 12.1(g) of notice of any claim or the commencement
of any action, such indemnified party will, if a claim in respect
thereof is to be made against an indemnifying party under Section
12.1(g)(i) or (ii) above, notify the indemnifying party of any claim or
the commencement thereof; but the omission so to notify the
indemnifying party will not relieve it from any liability which it may
have to any indemnified party otherwise than under Section 12.1(g)(i)
or (ii) above. In case any such action is brought against any
indemnified party and it notifies an indemnifying party of the
commencement thereof, the indemnifying party will be entitled to
participate therein and, to the extent that it may wish, jointly with
any other indemnifying party similarly notified, to assume the defense
thereof, with counsel reasonably satisfactory to such indemnified party
(who shall not, except with the consent of the indemnified party, be
counsel to the indemnifying party), and after notice from the
indemnifying party to such indemnified party of its election so to
assume the defense thereof, the indemnifying party will not be liable
to such indemnified party in connection with the defense thereof other
than reasonable costs of investigation. No indemnifying party shall,
without the prior written consent of the indemnified party, effect any
settlement of any pending or
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threatened action in respect of which any indemnified party is or 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 on any claims that
are the subject matter of such action.
(iv) If the indemnification provided for in
paragraphs (i) or (ii) of this Section 12.1(g) is unavailable or
insufficient in accordance with its terms in respect of any losses,
claims, damages or liabilities (or actions in respect thereof) referred
to therein, then each indemnifying party shall contribute to the amount
paid or payable by such indemnified party as a result of such losses,
claims, damages or liabilities (or actions in respect thereof) in such
proportion as is appropriate to reflect the relative benefits as well
as the relative fault of the Company on the one hand and the Selling
Stockholder on the other in connection with the statements or omissions
which resulted in such losses, claims, damages or liabilities (or
actions in respect thereof), as well as any other relevant equitable
consideration. The relative benefits received by the Company on the one
hand and the Selling Stockholder on the other shall be deemed to be in
the same proportion as (i) the total purchase price received by the
Company from SBC (based on the average purchase price paid by SBC times
the number of shares purchased) for the securities to be reoffered by
the Selling Stockholder in such offering bears to (ii) the total net
proceeds received by the Selling Stockholder in such offering. The
relative fault shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or
the omission or alleged omission to state a material fact relates to
information supplied by the Company on the one hand or the Selling
Stockholder on the other and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such
statement or omission.
ARTICLE XIII
RIGHTS OF FIRST OFFER
13.1 Rights of First Offer Generally.
(a) Subject to the restrictions of Section 13.1 hereof and the
limitations of Section 13.4 hereof, if, at any time after the Permitted Transfer
Date, the Investor would like to sell any of its shares of Class A Common Stock
then owned by the Investor to a Third Party other than pursuant to a
Registration Statement (the "Transfer Stock"), the Investor shall provide a
written notice (the "Right of First Offer Notice") stating the price at which it
would like to sell any of its shares of Class A Common Stock and the maximum
number of shares they intend to sell (the "Transfer Offer") to TWC (so long as
TWC owns 50% of the Class B Common Stock) and to the Company thereafter. The
Right of First Offer Notice shall also contain an offer to sell the Transfer
Stock to TWC (so long as TWC Beneficially Owns more than 50% of the issued and
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outstanding Class B Common Stock), or to the Company thereafter, or to any of
their designees (in the manner set forth below) at the same price and upon
substantially the same terms and conditions as the terms and conditions
contained in the Transfer Offer; provided, that, for purposes of this Article
XIII, the term the "Company" or "TWC" shall include any of their respective
designees.
(b) TWC (so long as TWC owns 50% of the Class B Common Stock)
and the Company thereafter shall have the right and option, within 10 Business
Days after the date the Right of First Offer Notice is received by TWC or the
Company, as the case may be, to accept irrevocably such offer in the aggregate,
as to all, but not less than all (unless otherwise consented to by the Investor)
shares of Transfer Stock. If TWC (so long as TWC Beneficially Owns 50% of the
Class B Common Stock) or the Company thereafter desires to exercise such option,
it shall provide the Investor with written notice (specifying the number of
shares of the Transfer Stock as to which it is accepting the offer) within such
10 Business Day period. Unless the Investor shall have otherwise consented to
the purchase of less than all of the shares of Transfer Stock, TWC (so long as
TWC owns 50% of the Class B Common Stock) or the Company thereafter shall not
have the right to acquire such shares of Transfer Stock unless all such shares
are being acquired by TWC or the Company, as the case may be, in the aggregate
pursuant to the provisions of this Article XIII.
(c) Notwithstanding anything to the contrary contained in this
Article XIII, there shall be no liability on the part of the Investor to either
the Company or TWC, as the case may be, in the event that the sale of Transfer
Stock contemplated pursuant to this Article XIII is not consummated for any
reason whatsoever. Whether a sale of Transfer Stock contemplated pursuant to
this Article XIII is effected by the Investor is in the sole and absolute
discretion of the Investor.
13.2 Transfer Mechanics. The closing of the purchase of the Transfer
Stock by TWC or the Company, as the case may be, shall take place at the
principal executive offices of the Company as soon as practicable, but in no
event later than thirty Business Days after the expiration of the 10 Business
Day period after the giving of the Right of First Offer Notice (or such other
date as may be mutually agreed to by the parties to such transaction). At such
closing, TWC or the Company, as the case may be, shall deliver to the Investor
the appropriate per share cash consideration pursuant to a bank, cashier's or
certified check or by wire transfer of immediately available funds (unless
otherwise specified in the Right of First Offer Notice provided to TWC or the
Company, as the case may be), against delivery of certificates representing the
Transfer Stock so purchased Duly Endorsed. Any Transfer (other than to a Third
Party) pursuant to this Article XIII shall be made without any representations,
warranties, covenants or indemnities; except, that, each transferor shall be
deemed to have represented that (i) the transfer has been duly authorized by it,
(ii) that it has the capacity, power and authority to Transfer such shares and
(iii) that the acquiror shall obtain good title to such
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shares, free and clear of any defects, encumbrances and adverse interests (other
than as provided for in this Agreement).
13.3 Transfers to Third Parties after TWC or the Company Declines
Rights of First Offer. Subject to the restrictions of Section 13.1, if at the
end of the 10 Business Day period following the giving of the Right of First
Offer Notice, TWC or the Company, as the case may be, shall not have accepted
the offer contained in such notice as to all shares of Transfer Stock covered
thereby, the Investor shall have 90 days in which to sell the Transfer Stock to
a Third Party, at a price that is no less than 95% of the price contained in the
Right of First Offer Notice and on terms and conditions not more favorable to
such Third Party than were contained in the Right of First Offer Notice.
Promptly after any sale pursuant to this Section 13.3, the Investor shall notify
TWC or the Company, as the case may be, of the consummation thereof and shall
furnish such evidence of the completion (including time of completion) of such
sale and of the terms and conditions thereof as TWC or the Company, as the case
may be, may reasonably request. If, at the end of such 90 day period, the
Investor has not completed the sale of the Transfer Stock, it shall no longer be
permitted to sell such shares pursuant to this Section 13.3 without again fully
complying with the provisions of this Article XIII and all the restrictions on
Transfer contained in this Agreement shall again be in effect with respect to
all such Person's shares of Class A Common Stock, including the Transfer Stock.
13.4 Exceptions to Rights of First Offer. The provisions of Sections
13.1 through 13.4 shall not be applicable to any Transfer of Class A Common
Stock from the Investor to its Affiliates, or from any Affiliate of the Investor
to the Investor.
ARTICLE XIV
STANDSTILL
14.1 Standstill Provision. Except as contemplated by the Alliance
Agreement (and the other related agreements contemplated by the Alliance
Agreement), the Investor agrees that until the later of (A) February 8, 2009 or
(B) sixty days following the resignation or termination of service for any
reason of the SBC Nominee from the Board of Directors, it shall not, and shall
cause each of its directors, officers, employees, agents, Affiliates or
representatives (any of the foregoing, a "Representative") not to, without the
prior written consent of the Board of Directors specifically expressed in a
resolution approved by a majority of the directors of the Company, directly or
indirectly, through one or more intermediaries or otherwise, (i) acquire, agree
to xx xxxxx or make any proposal to acquire any securities of the Company or any
of its Subsidiaries, any warrant or option to acquire any such securities, any
security convertible into or exchange able for any such securities or any other
right to acquire any such securities in excess of the 10%
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Limit; (ii) seek or propose any merger, consolidation, business combination,
tender or exchange offer, sale or purchase of assets or securities, dissolution,
liquidation, restructuring, recapitalization or similar transaction of or
involving the Company or any of its Subsidiaries; (iii) make, or in any way
participate in, any "solicitation" of proxies or consents (whether or not
relating to the election or removal of directors) within the meaning of Rule
14a-1 under the 34 Act with respect to any securities of the Company or any of
its Subsidiaries, or seek to advise or influence any person with respect to the
voting of any securities of the Company or any of its Subsidiaries or demand a
copy of the stock ledger, list of stockholders, or any other books and records
of the Company or any of its Subsidiaries; (iv) form, join or in any way
participate in a "group" (within the meaning of Section 13(d)(3) of the 34 Act),
with respect to any securities of the Company or any of its Subsidiaries; (v)
otherwise act, alone or in concert with others, to seek to control or influence,
in any manner, the management, Board of Directors or policies of the Company or
any of its Subsidiaries; (vi) deposit any Common Stock in any voting trust or
subject any Common Stock to any arrangement or agreement with respect to the
voting of such shares; (vii) call or seek to have called any meeting of the
stockholders of the Company or execute any written consent with respect to the
Company or the Common Stock; (viii) seek, alone or in concert with others,
representation on the Board of Directors (except as provided in Section 8.7 of
this Agreement), or seek the removal of any member of such Board or a change in
the composition or size of such Board; (ix) have any discussions or enter into
any arrangements, understandings or agreements (whether written or oral) with,
or advise, finance, assist or encourage, any other persons in connection with
any of the foregoing, or make any investment in any other person that engages,
or offers or proposes to engage, in any of the foregoing; or (x) make any
publicly disclosed proposal regarding any of the foregoing; provided that the
foregoing shall not prevent the SBC Nominee from exercising his fiduciary and
other duties in his capacity as a director (including by participating in any
Board deliberations or vote of the Board of Directors with respect to the
calling of any annual meeting of shareholders of the Company). The provisions in
this Article XIV shall not apply in the event of a Potential Change in Control
Event, unless the activities defined in (a) or (b) of the definition of
"Potential Change in Control Event" which gave rise to the Potential Change in
Control Event are discontinued and remain so for one year without the occurrence
of a Potential Change in Control Event. In such event, the provisions of this
Article XIV shall be reinstated and remain in full force and effect thereafter,
although the 10% Limit shall be deemed to include any such shares of Common
Stock the Investor had acquired during the period in which the standstill
provision was not in effect. The Investor also agrees during such period not to
make any proposal, statement or inquiry, or disclose any intention, plan or
arrangement to the public or a Third Party (whether written or oral)
inconsistent with the foregoing.
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ARTICLE XV
MISCELLANEOUS
15.1 Governing Law. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of New York (without giving effect to
conflicts of law principles thereof).
15.2 Remedies Cumulative. Except as herein provided, the remedies
provided herein shall be cumulative and shall not preclude assertion by any
party hereto of any other rights or the seeking of any other remedies against
the other party hereto.
15.3 Brokerage. Each party hereto will indemnify and hold harmless the
other against and in respect of any claim for brokerage or other commission
relative to this Agreement or to the transactions contemplated hereby, based in
any way on agreements, arrangements or understandings made or claimed to have
been made by such party with any third party.
15.4 Severability. Whenever possible, each provision of this Agreement
shall be interpreted in such a manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under applicable law, such provisions shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement.
15.5 Notices. Notices required under this Agreement shall be deemed to
have been adequately given if delivered in person or sent to the recipient at
its address (or facsimile number, as the case may be) set forth in Exhibit 15.5
(with copies to the persons specified in Exhibit 15.5 at the respective
addresses for such persons specified in such Exhibit 15.5) or such other address
as such party may from time to time designate in writing by certified mail
(return receipt requested), facsimile or overnight courier.
15.6 No Waiver. No failure to exercise and no delay in exercising any
right, power or privilege granted under this Agreement shall operate as a waiver
of such right, power or privilege. No single or partial exercise of any right,
power or privilege granted under this Agreement shall preclude any other or
further exercise thereof or the exercise of any other right, power or privilege.
15.7 Amendments and Waivers. This Agreement may be modified or amended
only by a writing signed by the Company and by the Investor. Any amendment or
waiver effected in accordance with this paragraph shall be binding upon each
holder of any shares of Class A Common Stock purchased under this Agreement at
the time outstanding, each future holder of all such shares, and the Company.
15.8 Rights of the Investor. Subject to the terms and conditions of
this Agreement, the Investor shall have the absolute right to exercise or
refrain from exercising any right or rights that such holder may have by reason
of this Agreement, including without limitation the right to consent to the
waiver of any obligation of the Company under this Agreement and to enter into
an
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agreement with the Company for the purpose of modifying this Agreement or any
agreement effecting any such modification, and such holder shall not incur any
liability to any other holder or holders of Class A Common Stock with respect to
exercising or refraining from exercising any such right or rights.
15.9 Survival. All representations and warranties made by the Company
and the Investor contained in this Agreement, and the obligation of the parties
to indemnify each other pursuant to Section 11.1 hereof, shall survive the
execution and delivery of this Agreement, any examination or due diligence
inquiry by a party and the Closing until the date which is one year after the
Closing Date. All covenants and agreements of the Company and the Investor
contained in this Agreement (which terms do not include representations and
warranties) shall, except as provided in such covenant or agreement, survive the
Closing and shall remain operative and in full force and effect regardless of
any investigation made by or on behalf of the Investor or any controlling Person
thereof or by or on behalf of the Company, any of its officers and directors or
any controlling Person thereof. The obligations to indemnify and hold harmless a
party hereto, pursuant to Article XI hereof, shall survive only until the
expiration of the applicable survival period for the representation and warranty
under which the claim for indemnification is being made; provided, however, that
such obligations to indemnify and hold harmless shall not terminate with respect
to any such item as to which the Person to be indemnified shall have, before
the expiration of the applicable period, previously made a claim by delivering a
notice (stating in reasonable detain the basis of such claim) to the party to be
providing the indemnification.
15.10 Entire Understanding. This Agreement and the agreements to be
executed in connection therewith on the Closing Date express the entire
understanding of the parties and supersede all prior and contemporaneous
agreements and undertakings of the parties with respect to the subject matter
hereof and thereof. Except as expressly provided herein, neither this Agreement
nor any term hereof may be amended, waived, discharged or terminated other than
by a written instrument signed by the party against whom enforcement of any such
amendment, waiver, discharge or termination is sought.
15.11 Expenses. Each party will pay all of its own expenses, including
attorney's fees incurred in connection with the negotiation of this Agreement,
the performance of its obligations hereunder and the consummation of
transactions contemplated by this Agreement.
15.12 Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed to be an original but which taken together shall
constitute one agreement.
15.13 Assignment; No Third-Party Beneficiaries.
(a) Except as otherwise expressly provided herein, this
Agreement and the rights hereunder shall not be assignable or transferable by
either party without the prior written consent of the other; provided that, if
such assignment or transfer is consented to, such assignee or transferee
expressly assumes in writing all of the such party's obligations hereunder.
Subject to the preceding sentence, this Agreement shall be binding upon, inure
to the benefit of and be enforceable by the parties hereto and their respective
successors and permitted assigns.
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(b) This Agreement is for the sole benefit of the parties
hereto and their respective successors and permitted assigns and nothing herein
expressed or implied shall give or be construed to give to any Person, other
than the parties hereto and such successors and permitted assigns, any legal or
equitable rights hereunder.
(c) SBC and the Investor shall be permitted, without the
consent of the Company, to assign all its rights and obligations under this
Agreement, including without limitation the right to purchase Class A Common
Stock and common equity securities under Article II and Article VIII, and
registration rights under Article XII, to any of its Affiliates; provided,
however, that such assignee expressly assumes in writing all of either SBC or
the Investor's obligations hereunder; and provided, further that in the event of
such assignment SBC or the Investor, as the case may be, shall notify the
Company in writing of such assignment, and for all purposes of this Agreement
all references to SBC or the Investor shall mean such Affiliate.
15.14 Press Releases and Announcements. All press releases and
announcements concerning the investment contemplated by this Agreement shall be
mutually agreed to by the Company and the Investor, except for any such
disclosure required by law which, in the case of such disclosure by the Company,
shall, to the extent practicable under the circumstances, be first discussed
with the Investor and, in the case of such disclosure by the Investor, shall, to
the extent practicable under the circumstances, be first discussed with the
Company. Without limiting the generality of the foregoing, the Company and the
Investor agree to issue jointly a press release announcing the execution of this
Agreement on the date hereof. The foregoing provisions of this Section 15.14
shall not prohibit or restrict in any way disclosure by a party with respect to
this Agreement in connection with any financing, strategic transaction,
acquisition or disposition involving such party or any of its Affiliates,
provided that such disclosure shall be first approved by the other party, which
approval shall not be unreasonably withheld or delayed.
15.15 Titles and Subtitles. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
15.16 Aggregation of Stock. All shares of the Class A Common Stock held
or acquired by Affiliates or Persons shall be aggregated together for the
purpose of determining the availability of any rights under this Agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
XXXXXXXX COMMUNICATIONS GROUP, INC.
By:
-------------------------------
THE XXXXXXXX COMPANIES, INC.
By:
-------------------------------
SBC COMMUNICATIONS INC.
By:
-------------------------------
45
EXHIBIT 15.5
The Xxxxxxxx Companies, Inc. (T) (000) 000-0000
One Xxxxxxxx Center (F) (000) 000-0000
Xxxxx, XX 00000
Attn: Xxxxxxx xxx Xxxxx, Esq.
Xxxxxxxx Communications Group, Inc. (T) (000) 000-0000
One Xxxxxxxx Center (F) (000) 000-0000
Xxxxx, XX 00000
Attn: Xxxxx Xxxxx, Esq.
with a copy (which shall not constitute notice) to:
Xxxxxxx X. Xxxx (T) (000) 000-0000
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP (F) (000) 000-0000
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
SBC Communications Inc. (T) (210) 351-5030
000 X. Xxxxxxx Xxxxxx (F) (000) 000-0000
Xxxxx 0000
Xxx Xxxxxxx, XX 00000
Attn.: Xx. Xxxxx Xxxxx
Senior Vice President
Corporate Development
with a copy (which shall not constitute notice) to:
Xxxxxxx X. Xxxxx (T) (000) 000-0000
General Attorney (F) (000) 000-0000
SBC Communications Inc.
000 X. Xxxxxxx Xxxxxx
Xxx Xxxxxxx, XX 00000