<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): JANUARY 23, 1998
----------------------------
INTERNATIONAL WIRELESS COMMUNICATIONS HOLDINGS, INC.
- ------------------------------------------------------------------------------
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
Delaware 0- 94-3248701
- ------------------------------------------------------------------------------
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
400 South El Camino Real, Suite 1275, San Mateo, California 94402
- ------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
Company's telephone number, including area code 650-548-0808
------------------------------
NOT APPLICABLE
- ------------------------------------------------------------------------------
(Former name or Former Address, if Changed Since Last Report.)
<PAGE>
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On January 23, 1998, pursuant to an Agreement and Plan of Merger, dated
November 22, 1997, as amended (the "Merger Agreement"), a wholly owned
subsidiary of the Registrant merged with and into Radio Movil Digital
Americas, Inc. ("RMD"), a Delaware corporation (the "RMD Acquisition"). RMD
provides specialized mobile radio services in major cities in central and
southern Brazil, Venezuela and Argentina, and holds licenses for
approximately 960 channels in Brazil, 480 channels in Venezuela and 180
channels in Argentina.
The aggregate consideration paid by the Registrant pursuant to the Merger
Agreement, after giving effect to various purchase price adjustments set
forth in the Merger Agreement, consisted of 5,381,046 shares of the
Registrant's Series I Preferred Stock with an aggregate liquidation
preference of $73,871,000, and $4.8 million in cash (collectively, the
"Consideration"). Of the shares of Registrant's Series I Preferred Stock
issued pursuant to the Merger Agreement, 4,652,608 shares were issued to the
former security holders of RMD, and the remaining 728,428 shares were
deposited in escrow, pending future release to the former security holders of
RMD or to the Registrant in accordance with the Merger Agreement.
The cash portion of the Consideration paid by the Registrant was financed
using funds borrowed pursuant to an Amended and Restated Senior Secured Note
and Warrant Purchase Agreement (the "RMD Loan Agreement"), dated January 23,
1998, among the Registrant, RMD and BT Foreign Investment Corporation ("BT"),
a subsidiary of Bankers Trust New York Corporation, a bank holding company.
The repayment of all amounts outstanding under the RMD Loan Agreement,
including interest accrued thereon, is secured by pledges to BT of (i) all of
the shares of RMD held by International Wireless Communications, Inc.
("IWC"), a wholly owned subsidiary of the Company, (ii) IWC's interest in any
loans and advances made to RMD, (iii) RMD's interest in the loans and
advances made to any subsidiary of the Registrant that is incorporated in, or
owns assets located in, Brazil and (iv) certain other collateral.
The determination of the amount of the Consideration paid by the
Registrant for RMD was based upon arm's-length negotiations between the
Company and RMD.
Additional information regarding the RMD Acquisition and the terms
thereof are set forth in the Merger Agreement and the RMD Loan Agreement and
the respective exhibits thereto, which qualify the foregoing description of
the acquisition of RMD in its entirety and are incorporated herein by
reference.
<PAGE>
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) FINANCIAL STATEMENTS OF THE BUSINESS ACQUIRED. The financial
statements of RMD required to be filed with this Current Report on Form 8-K
are currently being prepared and will be filed by amendment on or before
April 7, 1998.
(b) PRO FORMA FINANCIAL INFORMATION. The pro-forma financial
information required to be filed with Current Report on Form 8-K is currently
being prepared and will be filed by amendment on or before April 7, 1998.
(c) EXHIBITS. The following documents are filed as exhibits to this
Current Report on Form 8-K.
Exhibit
Number Description
- ------- -----------
2.11A Agreement and Plan of Merger between the Registrant and RMD, dated
November 22, 1997
2.11B Amendment No. 1 to Agreement and Plan of Merger between the
Registrant and RMD, dated January 15, 1998
2.11C Amendment No. 2 to Agreement and Plan of Merger among the Registrant,
RMD and IWC Acquisition Corporation, dated January 23, 1998
2.11D Escrow Agreement among George Billings, the Registrant and Toronto
Dominion Houston, Inc., dated January 23, 1998
2.11E Consulting Agreement between RMD and Robert Dupuis, dated November
22, 1997.
2.11F Non-Competition Agreement between the Registrant and Robert Dupuis,
dated November 22, 1997.
3.5 Amended and Restated Certificate of Incorporation of the Registrant,
dated January 23, 1998
4.1A First Supplemental Indenture between the Registrant and Marine
Midland Bank as Trustee, dated January 23, 1998
10.29 Seventh Amended and Restated Investor Rights Agreement among the
Registrant and the Investors named therein, dated December 13, 1997
10.30A Amended and Restated Senior Secured Note and Warrant Purchase
Agreement among the Registrant, RMD and BT, dated January 23, 1998
10.30B International Wireless Communications Holdings, Inc. Stock Purchase
Warrants, dated January 23, 1998
10.30C Amended and Restated Senior Secured Promissory Note between RMD and
BT, dated January 23, 1998
10.30D Pledge Agreement between International Wireless Communications, Inc.
and BT, dated January 23, 1998
10.30E Pledge Agreement between RMD and BT, dated January 23, 1998
10.30F Letter Agreement among the Registrant, BT and RMD, dated January 23,
1998
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
INTERNATIONAL WIRELESS
COMMUNICATIONS HOLDINGS, INC.
Date: February 6, 1998 By: /s/ John D. Lockton
-------------------------------
John D. Lockton
President and Chief Executive
Officer
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description
- ------- -----------
2.11A Agreement and Plan of Merger between the Registrant and Radio Movil
Digital Americas, Inc. ("RMD"), dated November 22, 1997
2.11B Amendment No. 1 to Agreement and Plan of Merger between the
Registrant and RMD, dated January 15, 1998
2.11C Amendment No. 2 to Agreement and Plan of Merger among the Registrant,
RMD and IWC Acquisition Corporation, dated January 23, 1998
2.11D Escrow Agreement among George Billings, the Registrant and Toronto
Dominion Houston, Inc., dated January 23, 1998
2.11E Consulting Agreement between RMD and Robert Dupuis, dated November 22,
1997.
2.11F Non-Competition Agreement between the Registrant and Robert Dupuis,
dated November 22, 1997.
3.5 Amended and Restated Certificate of Incorporation of the Registrant,
dated January 23, 1998
4.1A First Supplemental Indenture between the Registrant and Marine
Midland Bank as Trustee, dated January 23, 1998
10.29 Seventh Amended and Restated Investor Rights Agreement among the
Registrant and the Investors named therein, dated December 13, 1997
10.30A Amended and Restated Senior Secured Note and Warrant Purchase
Agreement among the Registrant, RMD and BT Foreign Investment
Corporation ("BT"), dated January 23, 1998
10.30B International Wireless Communications Holdings, Inc. Stock Purchase
Warrants, dated January 23, 1998
10.30C Amended and Restated Senior Secured Promissory Note between RMD and
BT, dated January 23, 1998
10.30D Pledge Agreement between International Wireless Communications, Inc.
and BT, dated January 23, 1998
10.30E Pledge Agreement between RMD and BT, dated January 23, 1998
10.30F Letter Agreement among the Registrant, BT and RMD, dated January 23,
1998
<PAGE>
Exhibit 2.11A
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of November 22, 1997, by and
among International Wireless Communications Holdings, Inc., a Delaware
corporation ("Parent") and Radio Movil Digital Americas, Inc., a Delaware
corporation (the "Company").
WHEREAS, the respective Boards of Directors of Parent and the Company
have approved, and deemed it advisable and in the best interests of their
respective stockholders to consummate, the merger of a direct or indirect
wholly owned subsidiary of Parent ("Sub") with and into the Company (the
"Merger"), upon the terms and subject to the conditions set forth herein;
WHEREAS, Parent presently intends promptly to file a registration
statement on Form S-1 relating to an initial public offering (the "IPO") of
Parent Common Shares (as defined in Section 4.02);
WHEREAS, the parties desire to make certain representations, warranties,
covenants and agreements in connection with the Merger and also to prescribe
various conditions to the Merger; and
WHEREAS, for federal income tax purposes, it is intended that the Merger
will qualify as a reorganization under the provisions of Section 368(a) of
the Internal Revenue Code of 1986, as amended (the "Code").
NOW, THEREFORE, in consideration of the mutual agreements, provisions
and covenants contained in this Agreement, the parties hereby agree as
follows:
ARTICLE I
THE MERGER
Section 1.01. THE MERGER. Upon the terms and subject to the
conditions set forth in this Agreement, and in accordance with the Delaware
General Corporation Law (the "DGCL"), Sub shall be merged with and into the
Company at the Effective Time (as defined in Section 1.03). Following the
Effective Time, the separate corporate existence of Sub shall cease and the
Company shall be the surviving corporation (the "Surviving Corporation").
Section 1.02. CLOSING. Upon the terms and subject to the
conditions of this Agreement, the closing of the Merger (the "Closing") will
take place at 10:00 a.m., New York time, on December 31, 1997 (PROVIDED,
HOWEVER, that if Parent has not obtained $30 million in funding specifically
allocated for purposes of consummating the transactions contemplated hereby
(the "Funding"), the amount set forth in Section 5.13 hereof shall be
increased by $100,000, and January 15, 1998 shall be substituted for December
31, 1997), unless another time or date is agreed to by the parties hereto, at
the offices of Dewey Ballantine, 1301 Avenue of the Americas, New York, New
York. The date the Closing occurs is referred to as the "Closing Date." At
the Closing, Parent shall,
<PAGE>
and the Company shall cause the Representative (as defined below) to execute
the Escrow Agreement (as defined below).
Section 1.03. EFFECTIVE TIME. Upon the terms and subject to the
conditions of this Agreement, on the Closing Date, the parties shall cause a
Certificate of Merger to be duly filed with the Secretary of State of
Delaware as provided in the DGCL. The Merger shall become effective upon such
filing, or such time as is agreed upon by the parties and specified in the
Certificate of Merger (the time the Merger becomes effective being
hereinafter referred to as the "Effective Time").
Section 1.04. EFFECTS OF THE MERGER. The Merger shall have the
effects set forth in the DGCL.
Section 1.05. CHARTER AND BY-LAWS. The Certificate of
Incorporation of the Company, as in effect immediately prior to the Effective
Time, shall be the initial Certificate of Incorporation of the Surviving
Corporation. The by-laws of the Company, as in effect immediately prior to
the Effective Time, shall be the initial by-laws of the Surviving
Corporation. Such Certificate and by-laws shall comply with the requirements
of Section 5.14 hereof.
Section 1.06. DIRECTORS AND OFFICERS. The directors of Sub at the
Effective Time shall be the initial directors of the Surviving Corporation.
The officers of Sub at the Effective Time shall be the initial officers of
the Surviving Corporation.
ARTICLE II
EFFECT OF THE MERGER ON THE STOCK OF THE
CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES
Section 2.01. EFFECT ON STOCK. As of the Effective Time, by virtue
of the Merger and without any action on the part of Sub, the Company or the
holders of any securities of the Company or Sub:
(a) CANCELLATION OF COMPANY-OWNED STOCK AND PARENT-OWNED STOCK.
Each share of the capital stock of the Company that is owned by the Company
or by Parent or any subsidiary of the Company or Parent shall be canceled and
retired and shall cease to exist, and no consideration shall be delivered in
exchange therefor.
(b) CONVERSION OF COMMON STOCK OF SUB. Each issued and outstanding
share of common stock of Sub shall be converted into one validly issued,
fully paid and nonassessable share of common stock of the Surviving
Corporation.
(c) CONVERSION OF COMPANY STOCK. Subject to the provisions of this
Section 2.01(c), the issued and outstanding shares of (x) common stock, par
value $.005 per share (the "Company Common Shares"), of the Company and (y)
preferred stock, par value $.01 per share (the "Company Preferred Shares"
and, together with the Company Common Shares, the "Company Shares"), of the
Company (other than Company Shares to be cancelled in accordance with Section
2.01(a) and Dissenting Shares, as defined below, if any) shall be converted
into the right to receive Series I Preferred Stock of
2
<PAGE>
Parent (the "Parent Preferred Shares") having the rights and preferences set
forth on EXHIBIT A hereto (the "Merger Consideration"), in the amounts and
allocated as set forth in EXHIBIT B.
Notwithstanding anything in this Agreement to the contrary (but
subject to the price adjustments explicitly set forth in this Article II),
Parent will not be obligated to issue more than the Conversion Number (as
defined below) of Parent Preferred Shares in respect of the capital stock of
the Company or any options, warrants, rights, convertible securities or other
instruments or obligations entitling the holders thereof to acquire capital
stock of the Company (the "Company Options"), provided that, if there are
Dissenting Shares, the amounts set forth in this paragraph shall be adjusted
by decreasing the Conversion Number by the number of Parent Preferred Shares
to which such Dissenting Shares would otherwise be entitled.
As used herein, "Conversion Number" shall mean $94,534,000 (the
"Stock Value") divided by (i) the price per share of Parent Common Shares
sold to the public in the IPO, if the IPO has closed by the Effective Time,
(ii) if the IPO has not closed by the Effective Time, the mid-point of the
pricing range, or the price, as the case may be, for the Parent Common Shares
indicated in Parent's latest registration statement (including the latest
amendment) relating to the IPO, as filed with the Securities and Exchange
Commission, if such filing includes a price or pricing range, or (iii) if no
filing range or price has been included in such registration statement or no
such registration statement has been filed by Parent prior to the Effective
Time, a price equal to $13.728. As used herein, the term "Offer Price" shall
mean the price specified in clause (i), (ii) or (iii) of the preceding
sentence, as the case may be, subject to adjustment as described below in
this Article II.
Parent shall have the right, in its sole discretion, to substitute
cash in lieu of some or all of the Parent Preferred Shares to be issued at
the Closing (valuing Parent Preferred Shares at the Offer Price) if (i) such
substitution would not prevent the Merger from qualifying as a reorganization
under the provisions of Section 368(a) of the Code or (ii) such amount of
cash is at least $40,000,000 and no more than $50,000,000. Parent may
exercise such rights by issuing a notice to the Company prior to the
Effective Time. Any cash substituted as described in this paragraph shall be
pro rata among the Stockholders (as defined below) and consistent with the
allocations set forth in EXHIBIT B. The parties shall execute such documents
as may be necessary to reflect the changes contemplated by this paragraph.
Any cash substituted shall also be considered "Merger Consideration" and
"Stock Value" for purposes of this Agreement.
Notwithstanding anything in this Agreement to the contrary, if the
IPO has closed prior the Effective Time, Parent Common Shares shall be issued
in the Merger in lieu of Parent Preferred Shares and all references herein to
Parent Preferred Shares shall be deemed references to Parent Common Shares,
unless the context indicates otherwise. In the event of any split,
combination or reclassification of any Parent Common Shares, extraordinary
dividend in respect of Parent Common Shares or any issuance or the
authorization of any issuance of any other securities in exchange or in
substitution for Parent Common Shares at any time during the period from the
date hereof to the
3
<PAGE>
Effective Time which is not otherwise reflected in the provisions hereof,
including EXHIBIT A hereto, the Merger Consideration shall, subject to
Section 5.16 below, be appropriately adjusted.
As of the Effective Time, all of the Company Shares shall no longer
be outstanding and shall automatically be canceled and retired and shall
cease to exist, and each holder of a certificate or certificates which
immediately prior to the Effective Time represented outstanding Company
Shares (the "Certificates") shall cease to have any rights with respect
thereto, except the right to receive (i) certificates representing the number
of whole Parent Preferred Shares into which such shares have been converted
("Parent Certificates"), (ii) certain dividends and other distributions in
accordance with Section 2.02(c) and (iii) cash in lieu of fractional Parent
Preferred Shares in accordance with Section 2.02(e), in each case without
interest.
Section 2.02. EXCHANGE OF CERTIFICATES. (a) EXCHANGE AGENT. As of
the Effective Time, Parent shall enter into an agreement with such bank or
trust company as may be designated by Parent and as shall be reasonably
satisfactory to the Company (the "Exchange Agent"), which shall provide that
Parent shall deposit with the Exchange Agent as of the Effective Time, for
the benefit of the holders of Company Shares, for exchange in accordance with
this Article II, through the Exchange Agent, Parent Certificates representing
the number of whole Parent Preferred Shares issuable pursuant to Section
2.01(c) (such Parent Preferred Shares, together with any dividends or
distributions with respect thereto with a record date after the Effective
Time and any cash payable in lieu of any fractional Parent Preferred Shares
being hereinafter referred to as the "Exchange Fund").
(b) EXCHANGE PROCEDURES. As soon as reasonably practicable after
the Effective Time, the Exchange Agent shall mail to each holder of record of
a Certificate whose shares were converted into the Merger Consideration
pursuant to Section 2.01, (i) a letter of transmittal (which shall specify
that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon delivery of the Certificates to the
Exchange Agent and shall be in such form and have such other provisions as
Parent may reasonably specify, which form shall include, among other things,
the provisions set forth in Exhibit 5.4 hereof) and (ii) instructions for use
in effecting the surrender of the Certificates in exchange for the Merger
Consideration. Upon surrender of a Certificate for cancellation to the
Exchange Agent, together with such letter of transmittal, duly executed, and
such other documents as may reasonably be required by the Exchange Agent, the
holder of such Certificate shall be entitled to receive in exchange therefor
a Parent Certificate representing that number of whole Parent Preferred
Shares which such holder has the right to receive pursuant to the provisions
of this Article II, certain dividends or other distributions in accordance
with Section 2.02(c) and cash in lieu of any fractional share in accordance
with Section 2.02(e), and the Certificate so surrendered shall forthwith be
canceled. In the event of a transfer of ownership of the Company Shares which
is not registered in the transfer records of the Company, a Parent
Certificate representing the proper number of Parent Preferred Shares may be
issued to a person other than the person in whose name the Certificate so
surrendered is registered if such Certificate shall be properly endorsed or
otherwise be in proper form for transfer and the
4
<PAGE>
person requesting such issuance shall pay any transfer or other nonincome
taxes required by reason of the issuance of Parent Preferred Shares to a
person other than the registered holder of such Certificate or establish to
the satisfactio of Parent that such tax has been paid or is not applicable.
No interest will be paid or will accrue on any cash payable to holders of
Certificates pursuant to the provisions of this Article II.
(c) DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED SHARES. No dividends
or other distributions with respect to Parent Preferred Shares with a record
date after the Effective Time shall be paid to the holder of any
unsurrendered Certificate with respect to Parent Preferred Shares represented
thereby, and no cash payment in lieu of fractional shares shall be paid to
any such holder pursuant to Section 2.02(e), and all such dividends, other
distributions and cash in lieu of fractional Parent Preferred Shares shall be
paid by Parent to the Exchange Agent and shall be included in the Exchange
Fund, in each case until the surrender of such Certificate in accordance with
this Article II. Subject to the effect of applicable escheat or similar laws,
following surrender of any such Certificate there shall be paid to the holder
of Parent Certificate representing whole Parent Preferred Shares issued in
exchange therefor, without interest, (i) at the time of such surrender, the
amount of dividends or other distributions with a record date after the
Effective Time theretofore paid with respect to such whole Parent Preferred
Shares and the amount of any cash payable in lieu of a fractional share of
Parent Preferred Shares to which such holder is entitled pursuant to Section
2.02(e) and (ii) at the appropriate payment date, the amount of dividends or
other distributions with a record date after the Effective Time but prior to
such surrender and with a payment date subsequent to such surrender payable
with respect to such whole Parent Preferred Shares. Parent shall make
available to the Exchange Agent cash for these purposes.
(d) NO FURTHER OWNERSHIP RIGHTS IN THE COMPANY SHARES. All Parent
Preferred Shares issued upon the surrender for exchange of Certificates in
accordance with the terms of this Article II (including any cash paid
pursuant to this Article II) shall be deemed to have been issued (and paid)
in full satisfaction of all rights pertaining to the Company Shares
theretofore represented by such Certificates, subject, however, to the
Surviving Corporation's obligation to pay any dividends or make any other
distributions with a record date prior to the Effective Time which may have
been authorized or made by the Company on such Company Shares which remain
unpaid at the Effective Time, and there shall be no further registration of
transfers on the stock transfer books of the Surviving Corporation of the
Company Shares which were outstanding immediately prior to the Effective
Time. If, after the Effective Time, Certificates are presented to the
Surviving Corporation or the Exchange Agent for any reason, they shall be
canceled and exchanged as provided in this Article II, except as otherwise
provided by law.
(e) NO FRACTIONAL SHARES. No Parent Certificates or scrip
representing fractional Parent Preferred Shares shall be issued upon the
surrender for exchange of Certificates, no dividend or distribution of Parent
shall relate to such fractional share interests and such fractional share
interests will not entitle the owner thereof to vote or to any rights of a
stockholder of Parent. In lieu thereof, each holder who would have
5
<PAGE>
otherwise received a fractional share shall be entitled to an amount of cash
equal to such fraction multiplied by the Offer Price.
(f) TERMINATION OF EXCHANGE FUND. Any portion of the Exchange Fund
which remains undistributed to the holders of the Certificates for six months
after the Effective Time shall be delivered to Parent, upon demand, and any
holders of the Certificates who have not theretofore complied with this
Article II shall thereafter look only to Parent for payment of their claim
for Merger Consideration, any cash in lieu of fractional Parent Preferred
Shares and any dividends or distributions with respect to Parent Preferred
Shares.
(g) NO LIABILITY. None of Parent, the Company, Sub or the Exchange
Agent shall be liable to any person in respect of any Parent Preferred Shares
(or dividends or distributions with respect thereto) or cash from the
Exchange Fund in each case delivered to a public official pursuant to any
applicable abandoned property, escheat or similar law. If any Certificate
shall not have been surrendered prior to seven years after the Effective Time
(or immediately prior to such earlier date on which any Merger Consideration,
any cash payable to the holder of such Certificate pursuant to this Article
II or any dividends or distributions payable to the holder of such
Certificate would otherwise escheat to or become the property of any
governmental body or authority) any such Merger Consideration or cash,
dividends or distributions in respect of such Certificate shall, to the
extent permitted by applicable law, become the property of the Surviving
Corporation, free and clear of all claims or interest of any person
previously entitled thereto.
(h) INVESTMENT OF EXCHANGE FUND. The Exchange Agent shall invest
any cash included in the Exchange Fund as directed by Parent on a daily
basis; PROVIDED, that such investment shall be held in the form of
obligations of the United States government or any agency or instrumentality
thereof, investment-grade obligations of United States corporations or
obligations of banks or trust companies whose capital and surplus exceeds
$100,000,000, in each case having remaining maturities of no greater than
three months. Any interest and other income resulting from such investments
shall be paid to Parent.
(i) LOST CERTIFICATES. If any Certificate shall have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the
person claiming such Certificate to be lost, stolen or destroyed and, if
required by the Surviving Corporation, the posting by such person of a bond
in such reasonable amount as the Surviving Corporation may direct as
indemnity against any claim that may be made against it with respect to such
Certificate, the Exchange Agent will issue in exchange for such lost, stolen
or destroyed Certificate the Merger Consideration and, if applicable, any
cash in lieu of fractional shares, and unpaid dividends and distributions on
Parent Preferred Shares deliverable in respect thereof, pursuant to this
Agreement.
(j) RESTRICTIONS ON SHARES. Notwithstanding anything in this
Agreement to the contrary, all Parent Preferred Shares or Parent Common
Shares, as the case may be, that are issued pursuant to this Agreement shall
be subject to the provisions
6
<PAGE>
of Exhibit 5.4 hereof, including the restrictions set forth in paragraphs 1,
3, 8, 9 and 10 of Exhibit 5.4. If Parent shall, in good faith and after
consultation with outside counsel, believe that the issuance of Parent Shares
to any holder of Company Shares or Company Options would not be in compliance
with applicable law, including federal or state securities laws, due to such
holder not meeting the criteria set forth under Rule 506(b)(2)(ii) under the
Securities Act of 1933 or due to such holder not being an accredited investor
(as defined in Rule 501 under the Securities Act) and the condition set forth
in Rule 506(b)(2)(i) not being satisfied, then Parent shall have the right to
take such steps as it, in good faith and after consultation with outside
counsel, believes is necessary to comply with such Rules, including by
issuing alternative consideration to such holder, so long as such steps would
not prevent the Merger from constituting a reorganization within the meaning
of Section 368(a) of the Code.
Section 2.03. DISSENTING SHARES. Notwithstanding anything in this
Agreement to the contrary, Company Shares that are outstanding immediately
prior to the Effective Time that are held by stockholders who comply with all
of the relevant provisions of Section 262 of the DGCL (the "Dissenting
Shares") shall not be converted into the Merger Consideration unless and
until such holders shall have failed to perfect or shall have effectively
withdrawn or lost their rights to appraisal under the DGCL, in which case
such holders Dissenting Shares shall thereupon be converted into the Merger
Consideration in accordance with this Article II, without any interest
thereon.
Section 2.04. PRE CLOSING ADJUSTMENT. (a) Not later than 14 days
prior to the Closing (the "Estimation Date"), the Company shall deliver to
Parent a schedule (the "Estimated Schedule"), containing the Company's
reasonable, good faith estimates of the amounts set forth below. If Parent
shall not dispute any item on the Estimated Schedule within 5 days of
delivery, the Estimated Schedule shall be final and binding for purposes of
this Section 2.04. If Parent shall dispute any item on the Estimated
Schedule, Parent and the Company will endeavor to resolve such dispute
promptly. If Parent and the Company do not resolve such dispute within 10
days of the delivery of the Estimated Schedule to Parent, and the aggregate
amount of the matters with respect to which Parent and the Company are in
dispute exceeds $1,000,000 (that is, that difference between Parent's and the
Company's position exceeds $1,000,000), the matters in dispute shall
thereupon be submitted to KPMG Peat Marwick LLP (the "Reviewing
Accountants"), and such accounting firm shall be instructed to resolve the
matters in dispute as promptly as practicable. In the event that the
aggregate amount of the matters with respect to which Parent and the Company
are in dispute is $1,000,000 or less and, as a result, such dispute is not
submitted to the Reviewing Accountant, such amount of $1,000,000 or less
shall not affect the Estimated Schedule delivered by the Company to Parent,
but shall be resolved in accordance with Section 2.05 upon the determination
of the Balance Sheet Schedule (as defined below). The decision of such
accounting firm shall be final and binding for purposes of the Estimated
Schedule. Parent, on the one hand, and the Company, on the other hand, shall
each pay one-half of the fees and expenses of such accounting firm (the
Company's portion of such fee being considered an "Expense," as defined in
Section 2.05(a) below) and shall cooperate, including by furnishing any
information reasonably requested, with each other and such accounting firm in
the resolution of any disputes. The Merger shall not be consummated until
such dispute is
7
<PAGE>
resolved. The Stock Value shall be adjusted as follows based on the
Estimated Schedule (as finally determined):
(1) decreased by the amount of any liability or obligation of the
Company or any of its subsidiaries for borrowed money which would be included
in a balance sheet of the Company and its subsidiaries on a consolidated
basis as of the end of the month preceding the Estimation Date as long-term
liabilities, including the current maturities of long-term debt, long-term
vendor debt and subordinated convertible debentures ("Debt"), estimated as of
the end of the month preceding the Estimation Date,
(2) increased by the excess, or decreased by the deficit, of Net
Quick Assets, estimated as of the end of the month preceding the Estimation
Date, compared to $2,701,000 (for purposes hereof "Net Quick Assets" shall
mean the net of (x) cash and cash equivalents, restricted cash, short-term
investments, accounts receivable net of allowance, inventories, prepaid
expenses and other current assets, and expenditures specifically approved by
Parent in writing less (y) short-term vendor debt, accounts payable, accrued
liabilities and customer deposits, in each case of the Company and its
subsidiaries on a consolidated basis),
(3) decreased by the amount of Excess Expenses (as defined below),
estimated as of Closing, and
(4) increased by the difference between the amount paid by Parent
pursuant to Section 5.13 hereof and $4.7 million (or $4.8 million if Parent
has not obtained the Funding on or prior to December 31, 1997), to the extent
that Parent is required to pay less than $4.7 million (or $4.8 million if
Parent has not obtained the Funding on or prior to December 31, 1997)
pursuant to Section 5.13 hereof.
In addition to the foregoing adjustments, the Stock Value shall be
decreased by the greater of (i) any decrease from October 31, 1997 in the
exchange rate (based on the bid price as quoted in The Wall Street Journal on
the date immediately preceding the date of determination) between the
Brazilian Real and the U.S. Dollar in excess of 10% at the rate of $851,318
per 1% decrease that is in excess of 10% (amounts not equaling whole
percentage points shall be prorated) and (ii) (A) if the average of the
closing prices of the Bovespa Stock Index (as reported in Bloomberg) on the
five consecutive trading days immediately preceding December 31, 1997 (the
"Average Closing Price") is 9,000 or less, $10 million, (B) if the Average
Closing Price is between 9,000 and 10,000, $10,000 for every point by which
the Average Closing Price is less than 10,000 and greater than 9,000 or (C)
if the Average Closing Price is 10,000 or greater, then $0 (the "Bovespa/Real
Adjustment").
If the Bovespa/Real Adjustment is less than $10 million, the
difference between $10 million and the Bovespa/Real Adjustment (the
"Bovespa/Real Escrow") shall be placed in escrow and paid to the Stockholders
10 days following the Closing, provided that, to the extent that the Escrow
Fund would be less than $10 million, the Bovespa/Real Escrow will be reduced
(but not below $0) until the Escrow Fund would be $10 million. The Stock
Value paid at Closing shall be decreased by the amount of the
8
<PAGE>
Bovespa/Real Escrow.
Notwithstanding anything in this Agreement to the contrary, the
Stock Value paid at Closing (not including any amounts delivered into escrow
as provided by Sections 2.04 and 2.06) shall not be less than $50 million
(the "$50 Million Requirement").
Section 2.05. POST CLOSING ADJUSTMENT. (a) Parent shall cause to
be prepared a schedule (the "Balance Sheet Schedule") of the following items
as of the Effective Time. The Balance Sheet Schedule shall be computed using
a balance sheet that has been prepared in accordance with U.S. generally
accepted accounting principles ("GAAP"), applied on a basis consistent with
the Company's June 30, 1997 audited balance sheet.
(1) Debt,
(2) Net Quick Assets,
(3) any expenses of the Company or its subsidiaries in connection
with this Agreement, including the negotiation of this Agreement, the
consummation of the transactions contemplated hereby and any monies owed to
the Representative (as defined below), which were unaccrued and unpaid by the
Company or any subsidiary of the Company, as of the Effective Time (it being
understood that no payables for expenses incurred by the Company and its
subsidiaries in connection with this Agreement and the transactions
contemplated hereby shall be accrued on any balance sheet of the Company or
any of its subsidiaries),
(4) any severance (or similar) obligations of the Company or any of
its subsidiaries unaccrued and unpaid as of the Effective Time owed to any
officer, director or employee of the Company or its subsidiaries as a result
of the consummation of the transactions contemplated by this Agreement,
including as contemplated by Schedule 3.19(a) hereof, plus any amounts paid
in connection with the execution or effectiveness of the Non-Competition
Agreement (such amount, plus the amount in (3), the "Expenses," and the
excess of Expenses over $4.7 million (or $4.8 million if Parent has not
obtained the Funding on or prior to December 31, 1997), the "Excess
Expenses").
(b) Within 90 days of the Closing, Parent shall submit the Balance
Sheet Schedule to George Billings (or if he declines or is unable to do so,
such person as designated by the Board of Directors of the Company, or,
subsequent to the Merger, a majority of the persons who comprise such Board
immediately prior to the Merger), as representative (the "Representative") of
the stockholders of the Company (the "Stockholders"). If the Representative
shall not dispute any item on the Balance Sheet Schedule within 15 days of
delivery, the Balance Sheet Schedule shall be final and binding. If within
such 15-day period, the Representative shall dispute any item on the Balance
Sheet Schedule, Parent and the Representative will endeavor to resolve such
dispute. If Parent and the Representative do not resolve any such dispute
within 15 days of the commencement of such dispute, the matter in dispute
shall thereupon be submitted
9
<PAGE>
to the Reviewing Accountants, and such accounting firm shall be instructed to
resolve the matters in dispute as promptly as practicable.
(c) Within 95 days of the Closing, Parent shall submit to the
Representative a schedule (the "Active Subscriber Schedule") showing the
number of Active Subscribers (as defined in Section 3.15 hereof) as of
Closing. If the Representative shall not dispute any item on the such
schedule within 15 days of delivery, such schedule shall be final and
binding. If within such 15-day period, the Representative shall dispute any
item on such schedule, Parent and the Representative will endeavor to resolve
such dispute. If Parent and the Representative do not resolve any such
dispute within 15 days of the commencement of such dispute, the matter in
dispute shall thereupon be submitted to the Reviewing Accountants, and such
accounting firm shall be instructed to resolve the matters in dispute as
promptly as practicable. The "Active Subscriber Adjustment" shall equal $600
multiplied by the decrease in the number of Active Subscribers from June 30,
1997 through the Effective Time if and solely to the extent such decrease is
greater than an average of 1.25% per month compared to the number of Active
Subscribers as of June 30, 1997.
(d) Parent shall cause to be prepared one or more "Channel
Schedules." Each Channel Schedule shall (A) set forth a list of (x) Channels
(as defined in Section 3.15(a) hereof) that are set forth on EXHIBIT D which
are not Good and Deliverable on or prior to the one-year anniversary of the
Effective Time (the "First Anniversary") as a result of acts or omissions by
the Company or any of its subsidiaries on or prior to the Effective Time (and
not resulting from acts or omissions by Parent or any other entity following
the Effective Time) and (y) any Channels that are not set forth on EXHIBIT D
which were not Good and Deliverable as of the Effective Time and the
diminution in value (the "Value") resulting from such Channel not being Good
and Deliverable and (B) specify in reasonable detail the basis for Parent's
determination that the Channels are not Good and Deliverable, why (in the
case of clause (A)(x) above) such failure to be Good and Deliverable is the
result of acts or omissions by the Company or any of its subsidiaries on or
prior to the Closing Date and the basis (in the case of clause (A)(y) above)
of the determination of the diminution in value with respect to any such
Channel; PROVIDED, HOWEVER, that nothing in this clause (B) shall act as an
estoppel on Parent's claim that any Channel is not Good and Deliverable or
the reasons therefor or prevent Parent from amending the Channel Schedule.
The term "Good and Deliverable" means that the Channel is capable of being
used in the manner intended in the original grant relating to the License
applicable to such Channel. At any time prior to 15 days prior to the First
Anniversary, Parent may submit a Channel Schedule to the Representative. If
the Representative shall not dispute any item on any Channel Schedule within
15 days of delivery, such Channel Schedules shall be final and binding
(subject to Parent's right to submit a revised Channel Schedule prior to the
First Anniversary; PROVIDED, that Parent may not revise the Value ascribed to
a particular Channel set forth on a Channel Schedule once such Channel
Schedule has become final and binding). If within such 15-day period, the
Representative shall dispute any item on any Channel Schedule, Parent and the
Representative will endeavor to resolve such dispute. If Parent and the
Representative do not resolve any such dispute within 15 days of the
commencement of such dispute, the matter in dispute shall thereupon be
submitted to the
10
<PAGE>
Reviewing Accountants, and such accounting firm shall be instructed to
resolve the matters in dispute as promptly as practicable.
(e) The decisions of the Reviewing Accountants shall be final and
binding. Parent, on the one hand, and the Representative, on behalf of the
Stockholders, on the other hand, shall each pay one-half of the fees and
expenses of such accounting firm and shall cooperate, including by furnishing
any information reasonably requested, with each other and such accounting
firm in the resolution of any disputes.
Section 2.06. ESCROW FUND. (a) Parent Preferred Shares having a
value of the lesser of (i) $10 million and (ii) the Stock Value minus $50
million (such Parent Preferred Shares being the "Escrow Fund") shall be
withheld from the amounts issued to the Company's stockholders and holders of
Company Options as of the Effective Time, in the amounts and allocated as set
forth on EXHIBIT B, and shall instead be delivered to an escrow agent
pursuant to an escrow agreement substantially in the form of EXHIBIT C hereto
(the "Escrow Agreement").
(b) Notwithstanding Section 2.06(a), Parent Preferred Shares
having a value equal to any amounts in respect of the Bovespa/Real Adjustment
and the estimated Balance Sheet Adjustment which would have been paid to
Parent but for the $50 Million Requirement will be delivered to Parent rather
than being placed in Escrow as part of the Escrow Fund.
(c) If Net Quick Assets on the Balance Sheet Schedule minus Net
Quick Assets on the Estimated Schedule is a negative number, Parent Preferred
Shares having an absolute value of such amount shall be released from the
Escrow Fund to Parent. If Net Quick Assets on the Balance Sheet Schedule
minus Net Quick Assets on the Estimated Schedule is a positive number, Parent
Preferred Shares having an absolute value of such amount shall be issued by
Parent and subject to the last sentence of the clause (c), shall be delivered
to the Representative. Such releases shall occur promptly following the final
determination of the Balance Sheet Schedule. Notwithstanding the foregoing,
shares of Parent Preferred Shares shall be delivered to the Representative
pursuant to this subparagraph only to the extent that Parent Preferred Shares
having a value of $10 million remain in the Escrow Fund.
(d) If Debt plus Excess Expenses on the Balance Sheet Schedule
minus Debt plus Excess Expenses on the Estimated Schedule is a positive
number, Parent Preferred Shares having a value of such amount shall be
released from the Escrow Fund to Parent. If Debt plus Excess Expenses on the
Balance Sheet Schedule minus Debt plus Excess Expenses on the Estimated
Schedule is a negative number, Parent Preferred Shares having an absolute
value of such amount shall be issued by Parent and, subject to the last
sentence of this clause (d), shall be delivered to the Representative. Such
release shall occur promptly following the final determination of the Balance
Sheet Schedule. Notwithstanding the foregoing, shares of Parent Preferred
Shares shall be delivered to the Representative pursuant to this subparagraph
only to the extent that Parent Preferred Shares having a value of $10 million
remain in the Escrow Fund.
11
<PAGE>
(e) Parent Preferred Shares having a value equal to the amount of the
Active Subscriber Adjustment shall be released from the Escrow Fund to Parent
promptly following the final determination of the Active Subscriber
Adjustment.
(f) To the extent (x) any Channel set forth in EXHIBIT D is determined
pursuant to a Channel Schedule not to be Good and Deliverable at any time
prior to the First Anniversary as a result of acts or omissions by the
Company or any of its subsidiaries on or prior to the Effective Time (and not
resulting from acts or omissions by Parent or any other entity following the
Effective Time), Parent Preferred Shares having a value equal to the value of
all such Channels, determined using the values set forth on EXHIBIT D, shall
be released from the Escrow Fund to Parent and (y) any other Channel set
forth in Section 3.15(a) of the Company Disclosure Schedule is determined
pursuant to the Channel Schedule not to be Good and Deliverable as of the
Effective Time, Parent Preferred Shares having a value of equal to the value
of all such Channels shall be released from the Escrow Fund to Parent. Such
release shall occur promptly following the final determination of a Channel
Schedule; PROVIDED, that any determination of a Good and Deliverable Channel
under this Section 2.06 and a release from the Escrow Fund in respect
therefor shall supersede any claim for indemnification with respect to such
Channel made for a breach of the representation contained in the second
sentence of Section 3.15(a) hereof or any similar claim regarding the
diminution in value of such Channel.
(g) The balance of the Escrow Fund will be held until the later of the
First Anniversary and the resolution of any claims (i) pending as of the
First Anniversary pursuant to Section 8.01 hereof or (ii) alleging an
adjustment in respect of the matters contemplated by this Section 2.06,
provided that any undisputed amounts shall be released to the Representative
on the First Anniversary.
(h) For purposes of this Section 2.06, Parent Preferred Shares shall be
valued at the Offer Price. To the extent other consideration has been
deposited in the Escrow Fund, references to Parent Preferred Shares shall
include references to such other consideration.
Section 2.07. COMPANY OPTIONS. Each Company Option shall, as of the
Effective Time, become the right solely to acquire Parent Preferred Shares or
cash, as set forth on EXHIBIT B, or shall be cancelled without consideration.
The Company shall use commercially reasonable efforts to take any actions
which are necessary so that, following the Effective Time, no Company Option
or other agreement or instrument shall entitle any person (other than Parent
and its affiliates) to acquire any securities of the Company or Parent.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth on the disclosure schedule delivered by the Company to
Parent prior to the execution hereof (items disclosed in one section of such
schedule shall apply to all other sections unless the context indicates
otherwise) (the "Company
12
<PAGE>
Disclosure Schedule") and except for the execution or performance of a
contract or agreement explicitly permitted under Section 5.01 hereof (which
shall not be deemed to be a breach of the representations and warranties
reasonably related to such action contained in Sections 3.12(c) or (d), 3.18
or 3.19 of this Article III, provided such action is taken in a reasonable
manner), the Company represents and warrants to Parent that, as of the date
hereof and as of the Effective Time (excluding those representations which
speak as of a specific date, which shall speak as of such specific date):
Section 3.01. ORGANIZATION. Each of the Company and its subsidiaries
is a corporation duly organized, validly existing and in good standing under
the laws of the jurisdiction of its organization and has all requisite
corporate power and authority and all necessary governmental approvals to
own, lease and operate its properties and to carry on its business as now
being conducted, except where the failure to be so organized, existing and in
good standing or to have such power, authority and governmental approvals
would not have a Material Adverse Effect on the Company. As used herein with
respect to an entity, "Material Adverse Effect" shall mean an event, change
or effect which has had, or is reasonably likely to have, a material adverse
effect on the financial condition, assets, results of operations or business
of that entity and its subsidiaries taken as a whole. The Company and each
of its subsidiaries is duly qualified or licensed to do business and in good
standing in each jurisdiction in which the property owned, leased or operated
by it or the nature of the business conducted by it makes such qualification
or licensing necessary, except where the failure to be so duly qualified or
licensed and in good standing would not, in the aggregate, have a Material
Adverse Effect on the Company. The Company has made available to Parent true
and complete copies of its and its subsidiaries certificate of incorporation,
and bylaws, or similar organizational documents.
Section 3.02. CAPITALIZATION. (a) The authorized capital stock of the
Company consists of 35,000,000 Company Common Shares, of which 2,836,941
shares are issued and outstanding as of the date of this Agreement, and
37,528,880 shares of Company Preferred Shares; 5,600,000 shares of which have
been designated "Series A Preferred," all of which are issued and outstanding
as of the date of this Agreement; 4,000,000 shares of which have been
designated "Series B Preferred," of which 3,436,663 are issued and
outstanding as of the date of this Agreement; 5,849,851 shares of which have
been designated "Series C Preferred," of which 5,369,438 are issued and
outstanding as of the date of this Agreement; 9,386,666 shares of which have
been designated Series D Preferred, of which 3,007,312 are issued and
outstanding as of the date of this Agreement; 6,666,666 shares of which have
been designated Series D-1 Preferred, none of which are issued and
outstanding as of the date of this Agreement, 2,772,642 shares of which have
been designated "Series E Preferred", none of which are issued and
outstanding as of the date of this Agreement, and 2,772,642 shares of which
have been designated "Series F Preferred", none of which are issued and
outstanding as of the date of this Agreement. The Company has reserved no
more than (a) 480,413 shares of Series C Preferred for issuance upon exercise
of outstanding warrants to purchase Series C Preferred (the "Series C
Warrants"), (b) 3,727,312 shares of Series D Preferred for issuance upon
exercise of outstanding warrants to purchase Series D Preferred (the "Series
D Warrants"), (c) 2,772,642 shares of Series E Preferred for issuance upon
conversion of convertible subordinated notes issued to BT Foreign
13
<PAGE>
Investment Corporation and entities affiliated with Dillon, Read & Co. Inc.,
(d) 2,772,642 shares of Series F Preferred for issuance upon conversion of
the Series E Preferred and (e) 1,750,000 Company Common Shares for issuance
to employees, consultants or directors pursuant to its 1994 Stock Option
Plan, of which options to purchase 1,112,500 Company Common Shares are
currently issued and unexercised. A true and correct list of all Stockholders
as well as a true and correct list of Company Options as of the date of this
Agreement, including the shares issuable pursuant thereto, the exercise or
conversion price and the holder, is set forth in Section 3.2(a) of the
Company Disclosure Schedule. All the outstanding shares of the Company's
capital stock are, and all Company Shares which may be issued pursuant to the
exercise of outstanding Company Options will be, when issued in accordance
with the respective terms thereof, duly authorized, validly issued, fully
paid and non-assessable. Except as set forth above, (i) there are no shares
of capital stock of the Company authorized, issued or outstanding as of the
date of the Agreement and (ii) there are no existing options, warrants,
calls, pre-emptive rights, subscriptions or other rights, agreements,
arrangements or commitments of any character, relating to the issued or
unissued capital stock of the Company or any of its subsidiaries, obligating
the Company or any of its subsidiaries to issue, transfer or sell or cause to
be issued, transferred or sold any shares of capital stock of, or other
equity interest in, the Company or any of its subsidiaries or securities
convertible into or exchangeable for such shares or equity interests, or
obligating the Company or any of its subsidiaries to grant, extend or enter
into any such option, warrant, call, pre-emptive right, subscription or other
right, agreement, arrangement or commitment and (iii) there are no
outstanding obligations of the Company or any of its subsidiaries to vote or
to repurchase, redeem or otherwise acquire any shares of capital stock of the
Company, or any subsidiary or affiliate of the Company or to provide funds to
make any investment (in the form of a loan, capital contribution or
otherwise) in any subsidiary or any other entity. Other than Company Shares,
no securities of the Company have the right to vote. The Company has
delivered to Parent true and complete copies of all instruments governing or
defining rights under the Company Shares and the Company Options. Following
the Effective Time, no Company Option or other agreement or instrument
granted by the Company or any subsidiary shall entitle any person (other than
Parent and its affiliates) to acquire any securities of the Company or
Parent, other than Parent Preferred Shares pursuant to the terms of this
Agreement.
(b) All of the outstanding shares of capital stock of each of the
Company's subsidiaries are beneficially owned by the Company, directly or
indirectly, and all such shares have been validly issued and are fully paid
and nonassessable and are owned by either the Company or one of its
subsidiaries free and clear of all liens, security interest, charges, claims
or encumbrances. Except as set forth in Section 3.2 of the Company
Disclosure Schedule, the Company does not, directly or indirectly, have any
equity or ownership interest in any business.
Section 3.03. AUTHORIZATION; VALIDITY OF AGREEMENT; COMPANY ACTION.
(a) The Company has full corporate power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery by the Company of this Agreement, and the
consummation by it of the transactions contemplated hereby, have been duly
and validly authorized by all requisite
14
<PAGE>
corporate action and, except for obtaining the approval of its stockholders,
no other corporate action on the part of the Company is necessary to
authorize the execution and delivery by the Company of this Agreement and the
consummation by it of the transactions contemplated hereby. This Agreement
has been duly executed and delivered by the Company and, assuming due and
valid authorization, execution and delivery hereof by Parent, is a valid and
binding obligation of the Company enforceable against the Company in
accordance with its terms. The affirmative vote of the holders of not less
than 75% of the outstanding Company Shares, voting together as a single
class, is the only vote of the holders of any class or series of the
Company's capital stock necessary to approve this Agreement and the
transactions contemplated hereby.
(b) The provisions of Section 203 of the DGCL will not apply to the
transactions contemplated by this Agreement. No other state takeover statute
or similar statute or regulation applies or purports to apply to the Offer,
the Merger or the other transactions contemplated hereby.
Section 3.04. CONSENTS AND APPROVALS; NO VIOLATIONS. (a) Except for the
filings set forth on Section 3.4 the Company Disclosure Schedule and the
filings, permits, authorizations, consents and approvals as may be required
under, and other applicable requirements of, the Securities Exchange Act of
1934 (the "Exchange Act"), the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended (the "HSR Act"), and the DGCL, neither the execution,
delivery or performance of this Agreement by the Company nor the consummation
by the Company of the transactions contemplated hereby nor compliance by the
Company with any of the provisions hereof will (i) conflict with or result in
any breach of any provision of the certificate of incorporation or the
by-laws (or similar organizational instrument) of the Company or of any of
its subsidiaries, (ii) as of the date of this Agreement require any filing
with, or permit, authorization, consent or approval of, any court, tribunal,
administrative agency or commission or other governmental or other regulatory
authority or agency (a "Governmental Entity") or any other person or entity,
(iii) as of the date of this Agreement result in a violation, conflict with
or breach of, or constitute (with or without due notice or lapse of time or
both) a default (or give rise to any right of termination, amendment,
cancellation or acceleration), result in the termination in or a right of
termination or cancellation of, accelerate the performance required by,
result in the triggering of any payment or other material obligation pursuant
to, result in the creation of any lien, security interest, charge, claim or
encumbrance upon any of the material properties of the Company or its
subsidiaries under, or result in being declared void, voidable or without
further binding effect any of the terms, conditions or provisions of any
note, bond, mortgage, indenture, lease, license, contract, permit, deed of
trust agreement or other instrument or commitment obligation to which the
Company or any of its subsidiaries is a party or by which any of them or any
of their properties or assets may be bound or affected or (iv) as of the date
of this Agreement violate any order, writ, injunction, decree, statute, rule
or regulation applicable to the Company, any of its subsidiaries or any of
their properties or assets, excluding from the foregoing clauses (ii), (iii)
and (iv) such violations, breaches or defaults which would not, in the
aggregate, have a Material Adverse Effect on the Company.
15
<PAGE>
(b) The Company has delivered to Parent true and complete copies of the
BT Note and the OPIC Note (as defined in Section 3.4(b) of the Company
Disclosure Schedule), including all amendments, waivers and other agreements
or understandings with respect thereto. Except as set forth in Section
3.4(b) of the Company Disclosure Schedule, no event has occurred which has or
would result in a breach of, or constitute (with or without due notice or
lapse of time or both) a default (or give rise to any right of termination,
amendment, cancellation or acceleration), result in the termination in or a
right of termination or cancellation of, accelerate the performance required
by, result in the triggering of any payment or other material obligation
pursuant to, result in the creation of any lien, security interest, charge,
claim or encumbrance upon any of the material properties of the Company or
its subsidiaries under, or result in being declared void, voidable or without
further binding effect any of the terms, conditions or provisions of, the BT
Note or the OPIC Note.
Section 3.05. FINANCIAL STATEMENTS. The Company has delivered to
Parent true and correct copies of its audited consolidated balance sheet as
of June 30, 1997 and related consolidated statements of operations,
stockholder's equity and cash flows for the period ending June 30, 1997 and
its unaudited consolidated balance sheet as of September 30, 1997 and related
consolidated statements of operations, stockholder's equity and cash flows
for the three month period ending September 30, 1997 (the "Company Financial
Statements"). The Company Financial Statements have been prepared from, and
are in accordance with, the books and records of the Company and its
consolidated subsidiaries, comply in all material respects with applicable
accounting requirements, have been prepared in accordance with GAAP applied
on a consistent basis during the periods involved (except as may be indicated
in the notes thereto) and fairly present the consolidated financial position
and the consolidated results of operations and cash flows (and changes in
financial position, if any) of the Company and its consolidated subsidiaries
as of the respective dates thereof, subject, in the case of unaudited
statements, to normal recurring year-end audit adjustments and the absence of
footnotes.
Section 3.06. ABSENCE OF CERTAIN CHANGES. Except as disclosed in
Section 3.6 of the Company Disclosure Schedule, since June 30, 1997, (i) as
of the date of this Agreement, the Company and its subsidiaries have
conducted their respective businesses only in the ordinary and usual course,
consistent with past practice, (ii) as of this date of the Agreement, neither
the Company nor any of its subsidiaries have taken any of the actions
contemplated by Section 5.01 hereof and (iii) as of the date of this
Agreement, there have not occurred any events, changes or effects which have
had or which are reasonably likely to have, in the aggregate, a Material
Adverse Effect on the Company.
Section 3.07. NO UNDISCLOSED LIABILITIES. Except (a) as disclosed in the
Company Financial Statements and (b) for liabilities and obligations (x)
incurred pursuant to the terms of this Agreement or (y) as set forth in Section
3.7 of the Company Disclosure Schedule, since June 30, 1997, neither the Company
nor any of its subsidiaries has through the date of this Agreement incurred any
liabilities or obligations of any nature, whether or not accrued, contingent or
otherwise, whether known or unknown that
16
<PAGE>
have a Material Adverse Effect on the Company, or would be required by GAAP
to be reflected on a consolidated balance sheet of the Company and its
subsidiaries (including the notes thereto).
Section 3.08. LITIGATION. Except as disclosed in Section 3.8 of the
Company Disclosure Schedule, (x) there is no suit, claim, action, proceeding
or investigation pending or, to the best knowledge of the Company and its
subsidiaries, threatened against the Company or any of its subsidiaries that
would have a Material Adverse Effect on the Company and (y) neither the
Company nor any of its subsidiaries is subject to any outstanding order,
writ, injunction, judgment or decree that would have a Material Adverse
Effect on the Company.
Section 3.09. NO DEFAULT; COMPLIANCE WITH APPLICABLE LAWS. Except as
disclosed in Section 3.9 of the Company Disclosure Schedule, the business of
the Company and each of its subsidiaries is not being conducted in default or
violation of any term, condition or provision of (i) its respective
certificate of incorporation or by-laws (or similar organizational
instrument), (ii) any note, bond, mortgage, indenture, lease, license,
contract, agreement or other instrument or obligation to which the Company or
any of its subsidiaries is a party or by which any of them or any of their
properties or assets may be bound or (iii) any federal, state, local or
foreign statute, law, ordinance, rule, regulation, judgment, decree, order,
concession, grant, franchise, permit or license or other governmental
authorization or approval applicable to the Company or any of its
subsidiaries, excluding from the foregoing clauses (ii) and (iii), defaults
or violations which would not, in the aggregate, have a Material Adverse
Effect on the Company.
Section 3.10. INTELLECTUAL PROPERTY. The Company and its subsidiaries
own, or are licensed or otherwise have the rights to use all patents,
trademarks, trade names, service marks, copyrights, technology, trade
secrets, licenses, know-how, processes and other intellectual property rights
(collectively, "Intellectual Property Rights") material to or necessary for
the conduct of their businesses as presently conducted. All such
Intellectual Property Rights are set forth in Section 3.10 of the Company
Disclosure Schedule, including all related licenses and registrations and
applications, as well as summary descriptions thereof. To the Company's and
its subsidiaries' best knowledge, the use by the Company or any of its
subsidiaries of all Intellectual Property Rights does not infringe on the
rights of any person. To the Company's and its subsidiaries' best knowledge,
no third person is infringing on the Intellectual Property Rights of the
Company or any of its subsidiaries.
Section 3.11. TAXES. (a) For purposes of this Agreement: "Taxes"
means all taxes, charges, fees, social contributions, levies or other
assessments, including, without limitation, income, gross receipts,
employment, excise, withholding, property, sales, use, transfer, license,
payroll and franchise taxes, and social security payments, together with any
interest and any penalties, additions to tax or additional amounts with
respect thereto, imposed by the United States, or any state, local or foreign
government or subdivision or agency thereof. "Taxable Period" means any
taxable year or any other period that is treated as a taxable year with
respect to such other period, (e.g., a quarter) with respect to which any Tax
may be imposed under any applicable statute, rule or
17
<PAGE>
regulation. "Tax Return" means any report, return, election, notice or other
information required to be supplied to a taxing authority in connection with
Taxes.
(b) Except as set forth in Section 3.11 of the Company Disclosure
Schedule, all Tax Returns required to be filed with respect to the Company
and each of its subsidiaries for all Taxable Periods ending on or before the
date hereof have been timely filed. All such Tax Returns (i) were prepared
in the manner required by applicable law, (ii) are true, correct and complete
in all material respects and (iii) reflect the liability for Taxes of the
Company and each of its subsidiaries. All Taxes shown to be payable on such
Tax Returns, and all assessments of Tax made against the Company and each of
its subsidiaries relating to any such Tax Return, have been paid when due.
No adjustment relating to any such Tax Return has been proposed or threatened
formally or informally by any taxing authority and no basis exists for any
such adjustment. The Company and each of its subsidiaries have made (or there
has been made on their behalf) all required current estimated Tax payments
sufficient to avoid any underpayment penalties. The Company and each of its
subsidiaries have (i) timely paid or caused to be paid all Taxes that are or
were due on or prior to the date hereof, whether or not shown (or required to
be shown) on a Tax Return, and (ii) provided a sufficient reserve for the
payment of all Taxes not yet due and payable, on the Company Financial
Statements for the period ended June 30, 1997. The Company and each of its
subsidiaries have complied (and until the Closing Date will comply) in all
material respects with the provisions of the Code relating to the withholding
and payment of Taxes, including, without limitation, the withholding and
reporting requirements under Code sections 1441 through 1464, 3401 through
3406, and 6041 through 6049, as well as similar provisions under any other
laws, and have, within the time and in the manner prescribed by law, withheld
from employee wages and paid over to the proper governmental authorities all
amounts required. No material claim has ever been made by any taxing
authority with espect to the Company or any of its subsidiaries in a
jurisdiction where the Company and/or any such subsidiary, as the case may
be, does not file Tax Returns that the Company or any of its subsidiaries is
or may be subject to taxation by that jurisdiction. Except for liens for
real and personal property Taxes that are not yet due and payable, there are
no liens for any Tax upon any asset of the Company or any of its
subsidiaries. Neither the Company nor any of its subsidiaries has agreed or
is required to include in income or make any material adjustment under either
Code section 481(a) or Code section 482 (or an analogous provision of state,
local or foreign law) by reason of a change in accounting or otherwise.
Except as disclosed in Section 3.11 of the Company Disclosure Schedule,
neither the Company nor any of its subsidiaries is a party to any agreement
(other than this Agreement) to share Taxes with respect to any Taxable
Period. There is no contract, agreement, plan or arrangement covering any
person that, individually or collectively, could give rise to the payment of
any amount that would not be deductible by the Company or any subsidiary
thereof by reason of Code section 280G. No indebtedness of the Company or
any of its subsidiaries constitutes "corporate acquisition indebtedness"
within the meaning of Code section 279.
18
<PAGE>
Section 3.12. EMPLOYEE BENEFIT PLANS.
(a) Section 3.12(a) of the Company Disclosure Schedule contains a true
and complete list of all employee profit-sharing, incentive, deferred
compensation, welfare, pension, retirement, group insurance, bonus,
severance, stock option, stock purchase, and other employee benefit plans,
programs or arrangements (oral or written), including, without limitation,
any such plan or arrangement that is an "employee benefit plan", as such term
is defined in section 3(3) of the Employee Retirement Income Security Act of
1974 (a "Company Plan"), as amended ("ERISA"), maintained or contributed to
by the Company or by any trade or business (an "ERISA Affiliate") that
together with the Company would be deemed a "single employer" within the
meaning of section 4001(a)(14) of ERISA. With respect to each Company Plan,
the Company has heretofore delivered to Parent true and complete copies of
(i) the Company Plan (including all amendments thereto), (ii) the annual
reports and actuarial reports for the last two years and (iii) any trust or
other funding agreement relating thereto (including all amendments to any
such document) and the latest financial statements thereof.
(b) No liability under Title IV of ERISA has been incurred by the
Company or any ERISA Affiliate and no condition exists that presents a
material risk of incurring any such liability. No prohibited transaction, as
described in section 406 of ERISA, has occurred with respect to any Company
Plan and no tax has been imposed pursuant to section 4975 or 4976 of the
Code. Full payment has been made of all amounts which the Company or any
ERISA Affiliate is required to pay each Company Plan and no Company Plan has
incurred any "accumulated funding deficiency" (as defined in section 412 of
the Code), whether or not waived. Each Company Plan has been operated and
administered in accordance with its terms and applicable law, there are no
pending, or to the knowledge of the Company and its subsidiaries, threatened
or anticipated claims with respect to any Company Plan (other than routine
claims for benefits) and no Company Plan is "qualified" under section 401(a)
of the Code. No Company Plan provides benefits with respect to current or
former employees of the Company or any ERISA Affiliate beyond their
retirement or other termination of service.
(c) Section 3.12(c) of the Company Disclosure Schedule contains an
accurate and complete list of all employment, compensation, consulting,
benefit and severance plans, agreements, arrangements or understandings
between the Company or any of its subsidiaries, on the one hand, and any
directors or officers of the Company or of any of its subsidiaries, on the
other hand.
(d) Except as disclosed in Section 3.12(d) of the Company Disclosure
Schedule, the consummation of the transactions contemplated by this Agreement
(either alone or together with any other event) will not (i) entitle any
current or former director, officer or employee of the Company or any ERISA
Affiliate to severance pay, unemployment compensation or any other payment,
(ii) accelerate the time of payment or vesting, or increase the amount of
compensation due any such director, officer or employee or (iii) increase the
benefits or other rights of any such director, officer or employee under any
Company Plan, or create a funding obligation under any Company Plan.
19
<PAGE>
(e) The Company and its subsidiaries do not have any obligation to
provide healthcare coverage to any of their employees following termination
of employment.
Section 3.13. ENVIRONMENTAL MATTERS. Except as would not, in the
aggregate, have a Material Adverse Effect on the Company, (i) the Company and
its subsidiaries comply, and the Company, its subsidiaries, and their
respective predecessors at all times during their existence have complied
with all applicable Environmental Laws; (ii) as of the date of this
Agreement, none of the Company, any of its subsidiaries, or any of their
respective predecessors has received any notice, demand, letter, claim or
request for information alleging that the Company, any of its subsidiaries,
or any of their respective predecessors may be in violation of or liable
under any Environmental Law, and none of the Company, any of its
subsidiaries, or any of their respective predecessors is subject to any
agreement, order or decree involving liability under any Environmental Law;
(iii) to the knowledge of the Company and its subsidiaries, there are no
Hazardous Substances located on the properties currently or formerly owned or
operated by the Company, any of its subsidiaries, or any of their respective
predecessors (including soil, groundwater and surface features and buildings
and structures thereon) (the "Company Properties") the existence of which
would give rise to liability under Environmental Law, and none of the Company
Properties contain, or has contained, any underground improvements,
including, but not limited to, treatment or storage tanks, pumps, gas or oil
wells, or associated piping; (iv) to the knowledge of the Company and its
subsidiaries, no Hazardous Substance has been disposed of or released at, to
or from any of the Company Properties; (v) to the knowledge of the Company
and its subsidiaries, neither the Company nor any of its subsidiaries is
subject to liability for off-site disposal of or contamination by any
Hazardous Substance; (vi) to the knowledge of the Company and its
subsidiaries, there are no circumstances or conditions involving the Company,
any of its subsidiaries, or any of their respective predecessors that would
reasonably be expected to result in any claims, liability, investigations,
costs or losses, or any restrictions on the ownership, use or transfer of any
Company Property pursuant to any Environmental Law.
As used herein, "Environmental Law" means and federal, state, local or
foreign law, regulation, order, decree, permit, authorization, opinion,
common law or agency requirement relating to pollution, contamination,
wastes, hazardous materials or the protection of the environment, human
health or safety; and "Hazardous Substance" means any substance that is
listed, classified under or regulated by any governmental authority pursuant
to any Environmental Law, including, without limitation, any petroleum
product or by product, asbestos-containing material, lead-containing paint or
plumbing, polychlorinated biphenyls, radioactive material or radon.
Section 3.14. TAX FREE REORGANIZATION. As of the date of this
Agreement, neither the Company nor any of its subsidiaries has taken any
action or failed to take any action, or has knowledge of any fact or
circumstance, which would prevent the Merger constituting as a reorganization
within the meaning of Section 368(a) of the Code.
Section 3.15. REGULATORY MATTERS; PERMITS AND LICENSES. (a) Set forth
in Section 3.15(a) of the Company Disclosure Schedule is a true and complete
list, as of the date of this Agreement, of all (i) Specialized Mobile Radio
and telecommunications
20
<PAGE>
licenses, permits, franchises and authorizations and all consents,
certificates of compliance and approvals applicable thereto ("Licenses")
assigned and reserved by the Company and its subsidiaries and (ii) authorized
Specialized Mobile Radio Channels ("Channels"). All Licenses and Channels
are as of the date hereof, and as of the Closing will be Good and Deliverable.
(b) Except as set forth in Section 3.15 of the Company Disclosure
Schedule, (i) the Company and its subsidiaries are in compliance with all
material requirements of all Governmental Entities concerning all Licenses,
including build-out and loading requirements, and (ii) none of the Licenses
is subject to any right of first refusal, option or other such right or
obligation with respect to the acquisition or disposition of such Licenses
(or interests therein), including, without limitation, entitlement to acquire
additional ownership interests, which may affect the ownership interests of
the Company or any of its subsidiaries other than immaterial liens arising by
operation of law.
(c) Set forth in Section 3.15(c) of the Company Disclosure Schedule is a
list, as of the date of this Agreement, of all Channels held directly or
indirectly by the Company or its subsidiaries and, with respect to each such
Channel (1) its location, (2) its number, (3) the dates of grant and
expiration of the relevant License, (4) any extension or renewal periods or
requests therefor for the relevant License, and the status thereof, (5) any
required loading dates, and the status thereof, and (6) the nature of any
frequency interference with the use of such Channel. Section 3.15(c) of the
Company Disclosure Schedule includes a list of the number of active
subscribers whose payments owed to the Company or its subsidiaries are not
more than ninety days past due (such subscribers, the "Active Subscribers"),
using Channels as of June 30, 1997 and as of the date of the close of the
most recent accounting cycle. Except as listed in Section 3.15(c) of the
Company Disclosure Schedule, the Company and its subsidiaries have no other
interests, direct or indirect, contingent or pending, in frequencies capable
of being used for SMR service.
(d) The Company and its subsidiaries have paid all material franchise,
license and other fees and charges imposed by any Governmental Entity which
have become due and payable in respect of the business of the Company and its
subsidiaries and has made appropriate provision in the Company Financial
Statements as is required by GAAP for any such fees and charges which were
accrued and unpaid on the date of such Company Financial Statements. Neither
the Company nor any of its subsidiaries is in arrears for any payments due
and owing to any Governmental Entities or other persons with respect to its
Licenses, whether payment is being made pursuant to an installment payment
plan or otherwise. There are no outstanding material orders issued by any
Governmental Entities with respect to any of the Company's or its
subsidiaries' Licenses.
(e) The Company and its subsidiaries have all required regulatory
approval for all current tariffs. None of the Company's or any of its
subsidiaries' current tariffs are subject to an accounting order or, to the
knowledge of the Company and its subsidiaries, subject to investigation by
any Governmental Entity. There are no complaints or proposed tariff
modifications regarding the Company's or its subsidiaries' current tariffs
pending at any Governmental Entity.
21
<PAGE>
(f) The consummation of the transactions contemplated hereby will not
require the consent of any Governmental Entity or to the knowledge of the
Company and its subsidiaries result in the loss or modification of, or the
imposition of any restriction on any License.
(g) The Company has taken all of the actions set forth in the column
entitled "RMD Proposed Action" of EXHIBIT D.
Section 3.16. TRANSACTIONS WITH AFFILIATES. Except as set forth in
Section 3.16 of the Company Disclosure Schedule, no present or former
officer, director, stockholder or other affiliate of the Company or any of
its subsidiaries has (i) any material interest in the assets, properties or
rights used in the business of the Company or its subsidiaries (other than
solely through the ownership of Company Shares or Company Options), (ii) any
material contract, arrangement, agreement or understanding with the Company
or its subsidiaries or (iii) engaged in any material transactions with the
Company since June 30, 1997.
Section 3.17. ASSETS NECESSARY TO THE BUSINESS. As of the date of this
Agreement, other than with respect to Channels, the assets, properties and
rights of the Company and its subsidiaries include all assets, properties and
rights used in, or necessary for, the business of the Company and its
subsidiaries, all such assets and properties are in good condition and
repair, ordinary wear and tear excepted, and, except as set forth in Section
3.17 of the Company Disclosure Schedule, are held by the Company or its
subsidiaries free and clear of any liens, security interests, charges claims
or encumbrances.
Section 3.18. MATERIAL CONTRACTS. Section 3.18 of the Company
Disclosure Schedule sets forth a list, as of the date of this Agreement, of
each contract, instrument or other agreement which is material to the Company
and its subsidiaries. All material contracts, instruments and agreements to
which the Company or any of its subsidiaries is a party are valid and binding
obligations of the parties thereto, enforceable in accordance with their
terms, the Company or its subsidiary is not in default thereunder and, to the
best knowledge of the Company, as of the date of this Agreement, the other
party or parties thereto are not in default thereunder. The Company has made
available to Parent true and complete copies of each such contract,
instrument or agreement.
Section 3.19. LABOR MATTERS. There are no material disputes, employee
grievances, disciplinary actions or legal actions pending or threatened between
the Company or any of its subsidiaries and any of their respective employees or
independent contractors and no claims under U.S. federal, state, local or any
foreign law. Each of the Company and its subsidiaries has complied in all
material respects with all provisions of all U.S. federal, state, local or any
foreign law relating to the employment of labor and have no liability for any
arrears of wages, social security payments or taxes or penalties for failure to
comply with any such laws, including but not limited to in connection with work
performed by independent contractors. To the Company's and its subsidiaries'
knowledge, there are no organizational efforts presently being made or
threatened by or
22
<PAGE>
on behalf of any labor union with respect to any of the employees of the
Company and its subsidiaries.
Except as specifically set forth in Section 3.19 of the Company
Disclosure Schedule, neither the Company nor any of its subsidiaries is a
party to any:
(a) management, employment or other contract providing for the
employment or rendition of executive services;
(b) employment contract that is not terminable without penalty by the
Company or any of its subsidiaries on 30 days notice;
(c) bonus, incentive, deferred compensation, severance pay, pension,
profit-sharing, retirement, stock purchase, stock option, employee
benefit or similar plan, agreement or arrangement;
(d) collective bargaining agreement or other agreement with any labor
union or other employee organization (and no such agreement is
currently being requested by, or is under discussion by management
with, any group of employees or others); or
(e) other employment contract or other compensation agreement or
arrangement, oral or written, affecting or relating to current or
former employees of the Company or any of its subsidiaries.
All such contracts and other agreements and arrangements set forth in
Section 3.19 of the Company Disclosure Schedule are valid and in full force
and effect, each of the Company and each of its subsidiaries has performed
all material obligations imposed upon it thereunder, and there are, under any
of such contracts, agreements or arrangements, no defaults or events of
default by the Company or any of its subsidiaries or, to the knowledge of the
Company and its subsidiaries, any other party thereto that would have a
Material Adverse Effect on the Company and its subsidiaries or would
materially and adversely affect the relationship of the Company or any
subsidiary of the Company with any employee of the Company or any subsidiary
of the Company.
Section 3.19(a) of the Company Disclosure Schedule lists all agreements,
arrangements and understandings relating to employment, severance,
termination pay or similar matters with any employee, officer, director,
consultant or agent of the Company or any subsidiary which would be affected,
including by the acceleration of payments, by the transactions contemplated
hereby.
Section 3.20. NO BROKERS. Neither the Company nor any of its
subsidiaries has entered into any contract, arrangement or understanding with
any person or firm which may result in the obligation of the Company or any
of its subsidiaries to pay any finder's fees, advisors, brokerage or agent's
commissions or other like payments in connection with the negotiations
leading to this Agreement or the consummation of the transactions
contemplated hereby, except that Company has retained Donaldson, Lufkin &
Jenrette Securities Corporation as its financial advisor, the arrangements
with which
23
<PAGE>
have been disclosed in writing to Parent prior to the date hereof. Other than
the foregoing arrangements, the Company is not aware of any claim for payment
of any finder's fees, brokerage or agent's commissions or other like payments
in connection with the negotiations leading to this Agreement or the
consummation of the transaction contemplated hereby.
Section 3.21. OPINION OF FINANCIAL ADVISOR. The Company has received
the written opinion of Donaldson, Lufkin & Jenrette Securities Corporation,
dated the date hereof, to the effect that, the Merger Consideration in the
aggregate is fair, from a financial point of view, to the Stockholders.
Section 3.22. REPRESENTATIONS. The representations and warranties of
the Company set forth herein are true and correct in all material respects
and do not contain any untrue statement of a material fact or omit to state a
material fact required to be stated herein or necessary to make the
representations and warranties set forth herein, in light of the
circumstances under which they are made, not misleading.
Section 3.23. INFORMATION DELIVERED TO STOCKHOLDERS. As of the date of
delivery, the information delivered to the Stockholders for purposes of
obtaining their approval of the Merger, this Agreement and the transactions
contemplated hereby, other than information supplied by Parent in writing for
inclusion therein, including a draft of Parent's registration statement on
Form S-1 relating to the IPO (the "Draft S-1"), does not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated herein or necessary to make the statements therein, in light of the
circumstances under which they are made, not misleading.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT
Except as set forth on the disclosure schedule delivered by Parent to
the Company prior to the execution hereof (items disclosed in one section of
such schedule shall apply to all other sections unless the context indicates
otherwise) (the "Parent Disclosure Schedule"), Parent represents and warrants
to the Company that, as of the date hereof and as of the Effective Time
(excluding those representations which speak as of a specific date, which
shall speak as of such specific date):
Section 4.01. ORGANIZATION. Parent is, and at the Effective Time Sub
will be, a corporation duly organized, validly existing and in good standing
under the laws of the jurisdiction of its organization and Parent has, and at
the Effective Time Sub will have, all requisite corporate power and authority
and all necessary governmental approvals to own, lease and operate its
properties and to carry on its business as now being conducted, except where
the failure to be so organized, existing and in good standing or to have such
power, authority and governmental approvals would not, have a Material
Adverse Effect on Parent. Parent is, and at the Effective Time Sub will be,
duly qualified or licensed to do business and in good standing in each
jurisdiction in which the
24
<PAGE>
property owned, leased or operated by it or the nature of the business
conducted by it makes such qualification or licensing necessary, except where
the failure to be so duly qualified or licensed and in good standing would
not, in the aggregate, have a Material Adverse Effect on Parent. Parent has
made available to the Company true and complete copies of its certificate of
incorporation and bylaws.
Section 4.02. CAPITALIZATION. (a) The authorized capital stock of the
Parent consists, or will prior to the Effective Time consist, of (i)
50,000,000 shares of Preferred Stock, par value $0.01 per share, 1,200,000 of
which shares have been designated Series A Preferred Stock, 933,200 of which
are issued and outstanding; 1,229,240 of which shares have been designated
Series B Preferred Stock, all of which are issued and outstanding; 2,460,000
of which shares have been designated Series C Preferred Stock, 1,762,280 of
which are issued and outstanding; 5,800,000 of which shares have been
designated Series D Preferred Stock, 3,661,636 of which are issued and
outstanding; 3,972,240 of which shares have been designated Series E
Preferred Stock, all of which are issued and outstanding; 7,000,000 of which
shares have been designated Series F-1 Preferred Stock, 4,508,480 of which
are issued and outstanding; 1,080,000 of which shares have been designated
Series F-2 Preferred Stock, 848,000 of which are issued and outstanding;
1,928,000 of which shares have been designated Series G-1 Preferred Stock,
none of which are issued or outstanding; 1,292,000 of which shares have been
designated Series G-2 Preferred Stock, none of which are issued or
outstanding; 5,072,000 of which shares have been designated Series H-1
Preferred Stock, none of which are issued or outstanding; 3,398,000 of which
shares have been designated Series H-2 Preferred Stock, none of which are
issued or outstanding; and 8,000,000 of which shares have been designated
Series I Preferred Stock, some or all of which may be issued pursuant to the
Merger and (ii) 70,000,000 shares of Class A Common Stock, par value $0.01
per share (the "Class A Common Stock"), 1,310,230 of which are issued and
outstanding; and 6,000,000 shares of Class B Common Stock, par value $0.01
per share (the "Class B Common Stock;" together with the Class A Common
Stock, the "Parent Common Shares"), none of which are issued and outstanding.
All the outstanding shares of Parent's capital stock are, and all Parent
Common Shares which may be issued pursuant to the exercise of outstanding
options will be, when issued in accordance with the respective terms thereof,
duly authorized, validly issued, fully paid and non-assessable. Except for
(i) the conversion privileges of the Preferred Stock, (ii) the rights of
first refusal as set forth in Section 2.3 and 2.5 of the Sixth Amended and
Restated Investors' Rights Agreement dated as of August 18, 1997 among Parent
and the investors named therein, (iii) outstanding warrants to purchase
339,840 shares of Preferred Stock (iv) the Initial Warrants and Liquidity
Warrants (as such terms are defined in the Exchange Agreement dated as of
August 18, 1997 among Parent and the lenders named therein), (v) Warrants to
purchase the number of shares of Class A Common Stock set forth in Section
4.02(v) of the Parent Disclosure Schedule, (vi) 3,064,262 Parent Common
Shares issuable upon exercise of stock options granted to employees,
consultants, officers, or directors of Parent, its subsidiairies or its
affiliates, and (v) Preferred Shares issuable upon exchange of the Notes and
the PWH Notes (as such terms are defined in the Loan Agreement dated August
18, 1997 among Parent and the Lenders named therein) to Parent's knowledge,
as of the date of this Agreement, (i) there are no shares of capital stock of
Parent authorized, issued or outstanding and (ii) there are no
25
<PAGE>
existing options, warrants, calls, pre-emptive rights, subscriptions or other
rights, agreements, arrangements or commitments of any character, relating to
the issued or unissued capital stock of Parent or Sub, obligating Parent or
Sub to issue, transfer or sell or cause to be issued, transferred or sold any
shares of capital stock of, or other equity interest in, Parent or Sub or
securities convertible into or exchangeable for such shares or equity
interests, or obligating Parent or Sub to grant, extend or enter into any
such option, warrant, call, pre-emptive right, subscription or other right,
agreement, arrangement or commitment and (iii) there are no outstanding
obligations of Parent or Sub to vote or to repurchase, redeem or otherwise
acquire any shares of capital stock of Parent or Sub or to provide funds to
make any investment (in the form of a loan, capital contribution or
otherwise) in any subsidiary or any other entity. Other than capital stock,
no securities of Parent have the right to vote.
(b) At the Effective Time, the Parent Preferred Shares to be issued in
the Merger will be duly authorized and, upon issuance in accordance with this
Agreement, will be validly issued, fully paid and non-assessable and free of
preemptive rights, and, assuming the accuracy of the information set forth in
Exhibit 5.4 with respect to each person who is to receive Parent Preferred
Shares pursuant to this Agreement or the transactions contemplated hereby,
issued in compliance with all applicable federal and state securities laws.
The Parent Preferred Shares shall have the rights and preferences set forth
in Exhibit A hereto. The memo attached hereto as EXHIBIT 4.02, as of the
date of this Agreement, is true and correct in all material respects.
Section 4.03. AUTHORIZATION; VALIDITY OF AGREEMENT; PARENT ACTION.
Parent has full corporate power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated hereby. The
execution and delivery by Parent of this Agreement, and the consummation by
it of the transactions contemplated hereby, have been duly and validly
authorized by all requisite corporate action and, except for obtaining the
approval of its stockholders and except as contemplated by Section 5.10
hereof, no other corporate action on the part of Parent is necessary to
authorize the execution and delivery by Parent of this Agreement and the
consummation by it of the transactions contemplated hereby. This Agreement
has been duly executed and delivered by Parent and, assuming due and valid
authorization, execution and delivery hereof by the Company, is a valid and
binding obligation of Parent enforceable against Parent in accordance with
its terms. No stockholder has any preemptive rights or rights of first
refusal by reason of the issuance of the Parent Preferred Shares. The Parent
Common Shares issuable upon conversion of the Parent Preferred Shares have
been duly and validly reserved and are not subject to any preemptive rights
or rights of first refusal and when issued, will be validly issued, fully
paid and non-assessable.
Section 4.04. CONSENTS AND APPROVALS; NO VIOLATIONS. Except for the
filings set forth in Section 4.4 of the disclosure schedule delivered to the
Company (the "Parent Disclosure Schedule") and the filings, permits,
authorizations, consents and approvals as may be required under, and other
applicable requirements of, the Exchange Act, the HSR Act, and the DGCL,
neither the execution, delivery or performance of this Agreement by Parent
nor the consummation by Parent of the transactions contemplated hereby nor
compliance by Parent with any of the provisions hereof will (i) conflict with
26
<PAGE>
or result in any breach of any provision of the certificate of incorporation
or the by-laws of Parent, (ii) as of the date of this Agreement, require any
filing with, or permit, authorization, consent or approval of, any
Governmental Entity, (iii) as of the date of this Agreement, result in a
violation, conflict with or breach of, or constitute (with or without due
notice or lapse of time or both) a default (or give rise to any right of
termination, amendment, cancellation or acceleration) result in the
termination in or a right of termination or cancellation of, accelerate the
performance required by, result in the triggering of any payment or other
material obligation pursuant to, result in the creation of any lien, security
interest, charge or encumbrance upon any of the material properties of Parent
under, or result in being declared void, voidable or without further binding
effect any of the terms, conditions or provisions of any note, bond,
mortgage, indenture, lease, license, contract, agreement or other instrument
or obligation to which Parent is a party or by which Parent or any of its
properties or assets may be bound or (iv) as of the date of this Agreement,
violate any order, writ, injunction, decree, statute, rule or regulation
applicable to Parent or any of Parent's properties or assets, excluding from
the foregoing clauses (ii), (iii) and (iv) such violations, breaches or
defaults which would not, individually or in the aggregate, have a Material
Adverse Effect on Parent.
Section 4.05. SEC FILINGS; FINANCIAL STATEMENTS. (a) Since September
30, 1996, Parent has filed with the SEC all forms, reports and other
documents (the "SEC Reports") required to be filed by it under the Securities
Act of 1933 (the "Securities Act") and the Exchange Act and the rules and
regulations thereunder. As of their respective dates or, if amended, the date
of latest amendment, the SEC Reports (a) did not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading and (b) complied in
all material respects with the Exchange Act and the Securities Act, as the
case may be, and the rules and regulations thereunder. The financial
statements included in the SEC Reports have been prepared from, and are in
accordance with, the books and records of Parent and its consolidated
subsidiaries, comply in all material respects with applicable accounting
requirements, have been prepared in accordance with GAAP applied on a
consistent basis during the periods involved (except as may be indicated in
the notes thereto) and fairly present the consolidated financial position and
the consolidated results of operations and cash flows (and changes in
financial position, if any) of Parent and its consolidated subsidiaries as of
the respective dates thereof, subject, in the case of unaudited statements,
to normal recurring year-end adjustments and the absence of footnotes.
(b) Except with respect to information relating to the Company and its
subsidiaries or the transactions contemplated hereby, the Draft S-1 (a) does
not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading and (b) complies in all material respects with the Securities
Act and the rules and regulations thereunder. It is understood that such
Draft S-1 may be changed as a result of, among other things, comments from
the SEC, market and other conditions, the passage of time and the occurrence
of events, and that the fact of such change shall not, in itself, suggest
that the Draft S-1 did not meet the standards set forth in the immediately
preceding sentence.
27
<PAGE>
Section 4.06. ABSENCE OF CERTAIN CHANGES. Except as disclosed in
Section 4.6 of the Parent Disclosure Schedule or in the Draft S-1, since
December 31, 1996, (i) as of the date of this Agreement, Parent has conducted
it businesses only in the ordinary and usual course, consistent with past
practice, (ii) as of the date of this Agreement, Parent has not taken any of
the actions contemplated by Section 5.2 hereof and (iii) as of the date of
this Agreement, there have not occurred any events, changes or effects which
have had or which are reasonably likely to have, in the aggregate, a Material
Adverse Effect on Parent.
Section 4.07. NO UNDISCLOSED LIABILITIES. Except for liabilities and
obligations (x) incurred pursuant to the terms of this Agreement or (y) as
set forth in Section 4.7 of the Parent Disclosure Schedule or in the Draft
S-1, since December 31, 1996, Parent has not through the date of this
Agreement incurred any liabilities or obligations of any nature, whether or
not accrued, contingent or otherwise, whether known or unknown that have a
Material Adverse Effect on Parent, or would be required by GAAP to be
reflected on a consolidated balance sheet of the Parent and its subsidiaries
(including the notes thereto).
Section 4.08. LITIGATION. Except as disclosed in Section 4.8 of the
Parent Disclosure Schedule, (x) there is no suit, claim, action, proceeding
or investigation pending or, to the best knowledge of Parent, threatened
against Parent that would have a Material Adverse Effect on Parent and (y)
Parent is not subject to any outstanding order, writ, injunction, judgment or
decree that could have a Material Adverse Effect on Parent.
Section 4.09. NO DEFAULT; COMPLIANCE WITH APPLICABLE LAWS. Except as
disclosed in Section 4.9 of the Parent Disclosure Schedule, the business of
Parent is not being conducted in default or violation of any term, condition
or provision of (i) its certificate of incorporation or by-laws, (ii) any of
any note, bond, mortgage, indenture, lease, license, contract, agreement or
other instrument or obligation to which Parent is a party or by which Parent
or any of its properties or assets may be bound or (iii) any federal, state,
local or foreign statute, law, ordinance, rule, regulation, judgment, decree,
order, concession, grant, franchise, permit or license or other governmental
authorization or approval applicable to Parent, excluding from the foregoing
clauses (ii) and (iii), defaults or violations which would not, in the
aggregate, have a Material Adverse Effect on Parent.
Section 4.10. INTELLECTUAL PROPERTY. Parent and its subsidiaries and
affiliates own or are licensed or otherwise have the rights to use all
patents, trademarks, trade names, service marks copyrights, technology, trade
secrets, licenses know-how, processes and other intellectual property rights
material to or necessary for the conduct of its businesses as presently
conducted (collectively, "Intellectual Property Rights") set forth in Section
4.10 of Parent Disclosure Schedule, including all related licenses and
registrations and applications, as well as summary descriptions thereof. To
Parent's best knowledge, the use by Parent, any of its subsidiaries or
affiliates of all Intellectual Property Rights does not infringe on the
rights of any person. To Parent's best knowledge, no third person is
infringing on the Intellectual Property Rights of Parent.
28
<PAGE>
Section 4.11. TAXES. Except as set forth in Section 4.11 of the Parent
Disclosure Schedule, all Tax Returns required to be filed with respect to
Parent for all Taxable Periods ending on or before the date hereof have been
timely filed. All such Tax Returns (i) were prepared in the manner required
by applicable law, (ii) are true, correct and complete in all material
respects and (iii) reflect the liability for Taxes of Parent. All Taxes
shown to be payable on such Tax Returns, and all assessments of Tax made
against Parent with respect to such Tax Returns, have been paid when due. No
adjustment relating to any such Tax Return has been proposed or threatened
formally or informally by any taxing authority and no basis exists for any
such adjustment. Parent has made (or there has been made on its behalf) all
required current estimated Tax payments sufficient to avoid any underpayment
penalties. Parent has (i) timely paid or caused to be paid all Taxes that
are or were due on or prior to the date hereof, whether or not shown (or
required to be shown) on a Tax Return, and (ii) provided a sufficient reserve
for the payment of all Taxes not yet due and payable in the financial
statements included in the SEC Reports. Parent has complied (and until the
Closing Date will comply) in all material respects with the provisions of the
Code relating to the withholding and payment of Taxes, including, without
limitation, the withholding and reporting requirements under Code sections
1441 through 1464, 3401 through 3406, and 6041 through 6049, as well as
similar provisions under any other laws, and have, within the time and in the
manner prescribed by law, withheld from employee wages and paid over to the
proper governmental authorities all amounts required. No material claim has
ever been made by any taxing authority with respect to Parent in a
jurisdiction where Parent does not file Tax Returns that Parent is or may be
subject to taxation by that jurisdiction. Except for liens for real and
personal property Taxes that are not yet due and ayable, there are no liens
for any Tax upon any asset of Parent. Parent has not agreed or is required
to include in income or make any material adjustment under either Code
section 481(a) or Code section 482 (or an analogous provision of state, local
or foreign law) by reason of a change in accounting or otherwise. Except as
disclosed in Section 4.11 of the Parent Disclosure Schedule, Parent is not a
party to any agreement (other than this Agreement) to share Taxes with
respect to any Taxable Period. There is no contract, agreement, plan or
arrangement covering any person that, individually or collectively, could
give rise to the payment of any amount that would not be deductible by the
Parent thereof by reason of Code section 280G. No indebtedness of Parent
constitutes "corporate acquisition indebtedness" within the meaning of Code
section 279.
Section 4.12. EMPLOYEE BENEFIT PLANS. (a) Section 4.12(a) of the
Parent Disclosure Schedule contains a true and complete list of all employee
profit-sharing, incentive, deferred compensation, welfare, pension,
retirement, group insurance, bonus, severance, stock option, stock purchase,
and other employee benefit plans, programs or arrangements (oral or written),
including, without limitation, any such plan or arrangement that is an
"employee benefit plan", as such term is defined in section 3(3) of the
Employee Retirement Income Security Act of 1974 (a "Parent Plan"), as amended
("ERISA"), maintained or contributed to by Parent or by any trade or business
(an "ERISA Affiliate") that together with Parent would be deemed a "single
employer" within the meaning of section 4001(a)(14) of ERISA. With respect
to each Parent Plan, Parent has heretofore delivered to the Company true and
complete copies of (i) the Parent Plan (including all amendments thereto),
(ii) the annual reports and actuarial reports for
29
<PAGE>
the last two years and (iii) any trust or other funding agreement relating
thereto (including all amendments to any such document) and the latest
financial statements thereof.
(b) No liability under Title IV of ERISA has been incurred by Parent or
any ERISA Affiliate and no condition exists that presents a material risk of
incurring any such liability. No prohibited transaction, as described in
section 406 of ERISA, has occurred with respect to any Parent Plan and no
tax has been imposed pursuant to section 4975 or 4976 of the Code. Full
payment has been made of all amounts which Parent or any ERISA Affiliate is
required to pay each Parent Plan and no Company Plan has incurred any
"accumulated funding deficiency" (as defined in section 412 of the Code),
whether or not waived. Each Parent Plan has been operated and administered in
accordance with its terms and applicable law, there are no pending or, to the
knowledge of Parent, threatened or anticipated claims with respect to any
Parent Plan (other than routine claims for benefits) and each Parent Plan
which is intended to be "qualified" under section 401(a) of the Code is so
qualified. No Parent Plan provides benefits with respect to current or
former employees of Parent or any ERISA Affiliate beyond their retirement or
other termination of service.
(c) Section 4.12(c) of the Parent Disclosure Schedule contains an
accurate and complete list of all employment, compensation, consulting,
benefit and severance plans, agreements, arrangements or understandings
between Parent, on the one hand, and any directors or officers of Parent, on
the other hand.
(d) Except as disclosed in Section 4.12(d) of the Parent Disclosure
Schedule, the consummation of the transactions contemplated by this Agreement
(either alone or together with any other event) will not (i) entitle any
current or former director, officer or employee of Parent or any ERISA
Affiliate to severance pay, unemployment compensation or any other payment,
(ii) accelerate the time of payment or vesting, or increase the amount of
compensation due any such director, officer or employee or (iii) increase the
benefits or other rights of any such director, officer or employee under any
Company Plan, or create a funding obligation under any Parent Plan.
Section 4.13. ENVIRONMENTAL MATTERS. Except as would not, in the
aggregate, have a Material Adverse Effect on Parent, (i) Parent complies, and
Parent and its predecessors at all times during their existence have complied
with all applicable Environmental Laws; (ii) as of the date of this
Agreement, none of Parent or any of its predecessors has received any notice,
demand, letter, claim or request for information alleging that Parent, or any
of its predecessors may be in violation of or liable under any Environmental
Law, and none of Parent or any of its predecessors is subject to any
agreement, order or decree involving liability under any Environmental Law;
(iii) to the knowledge of Parent, there are no Hazardous Substances located
on the properties currently or formerly owned or operated by Parent or any of
its predecessors (including soil, groundwater and surface features and
buildings and structures thereon) (the "Parent Properties") the existence of
which would give rise to liability under Environmental Law, and none of the
Parent Properties contain, or has contained, any underground improvements,
including, but not limited to, treatment or storage tanks, pumps, gas or oil
wells, or associated piping; (iv) to the knowledge of Parent, no Hazardous
Substance has
30
<PAGE>
been disposed of or released at, to or from any of the Parent Properties; (v)
to the knowledge of Parent, Parent is not subject to liability for off-site
disposal of or contamination by any Hazardous Substance; (vi) to the
knowledge of Parent, there are no circumstances or conditions involving
Parent or any of its predecessors that would reasonably be expected to result
in any claims, liability, investigations, costs or losses, or any
restrictions on the ownership, use or transfer of any Parent Property
pursuant to any Environmental Law.
Section 4.14. TAX FREE REORGANIZATION. As of the date of this
Agreement, neither Parent nor any of its subsidiaries has taken any action or
failed to take any action, or has knowledge of any fact or circumstance,
which would prevent the Merger constituting as a reorganization within the
meaning of Section 368(a) of the Code.
Section 4.15. NO BROKERS. Parent has not entered into any contract,
arrangement or understanding with any person or firm which may result in the
obligation of Parent to pay any finder's fees, brokerage or agent's
commissions or other like payments in connection with the negotiations
leading to this Agreement or the consummation of the transactions
contemplated hereby, except that Parent has retained TD Securities (USA) Inc.
as its financial advisor.
ARTICLE V
COVENANTS AND AGREEMENTS
Section 5.01. INTERIM OPERATIONS OF THE COMPANY. The Company covenants
and agrees that, except (i) as expressly contemplated by this Agreement, (ii)
as set forth in Section 5.1 of the Company Disclosure Schedule or (iii) as
agreed in writing by Parent (such consent in the case of clauses (a) - (c),
(e) - (i), (k), (m) and (n) not to be unreasonably withheld, and provided
that any debt, obligation or liability contemplated by clause (g) is
immediately prepayable without cost), the business of the Company and its
subsidiaries shall be conducted only in the ordinary and usual course,
consistent with past practice, and, to the extent consistent therewith, each
of the Company and its subsidiaries shall use commercially reasonable efforts
to preserve its business organization intact and maintain its existing
relations with customers, suppliers, employees, creditors and business
partners and neither the Company nor any of its subsidiaries shall:
(a) amend its certificate of incorporation or by-laws or similar
organizational documents;
(b) (i) declare, set aside or pay any dividend or other distribution
with respect to its capital stock, (ii) redeem, purchase or otherwise acquire
directly or indirectly any of its capital stock other than existing Company
Options; (iii) issue, sell, pledge, dispose of or encumber any securities (or
any rights to acquire such securities), other than Company Common Shares
issued upon the exercise of Company Options outstanding on the date hereof in
accordance with the terms of such Company Options as in effect on the date
hereof or (iv) split, combine or reclassify its outstanding capital stock;
31
<PAGE>
(c) acquire or agree to acquire, any material assets or securities
either by purchase, merger or otherwise;
(d) transfer, lease, license, sell, mortgage, pledge, dispose of, or
encumber any material assets or securities other than in the ordinary and
usual course of business and consistent with past practice; or authorize,
propose or announce an intention to authorize or propose, or enter into an
agreement with respect to, any merger, consolidation or business combination
(other than the Merger);
(e) (i) grant any increase in the compensation payable or to become
payable to any of its executive officers or key employees, (ii)(A) adopt any
new, or (B) amend or otherwise increase, or, except as required pursuant to
agreements existing on the date hereof, accelerate the payment or vesting of
the amounts payable or to become payable under any existing, bonus, incentive
compensation, deferred compensation, severance, profit sharing, stock option,
stock purchase, insurance, pension, retirement or other employee benefit plan
agreement or arrangement, (iii) enter into any employment or severance
agreement with or, except in accordance with the existing written agreements,
grant any severance or termination pay to any officer, director or employee
other than if paid at Closing and deemed to be Expenses for purposes hereof
or (iv) except in the ordinary course of business, consistent with past
practice, increase the compensation or benefits of any employee;
(f) modify, amend or terminate or enter into any material contract or
waive, release or assign any material rights or claims, except in the
ordinary course of business and consistent with past practice;
(g) (i) incur or assume any long-term debt, or except in the ordinary
course of business, incur or assume any short-term indebtedness in amounts
not consistent with past practice; (ii) incur or modify any material
indebtedness or other liability; (iii) assume, guarantee, endorse or
otherwise become liable or responsible (whether directly, contingently or
otherwise) for the obligations of any other person, except in the ordinary
course of business and consistent with past practice; or (iv) make any loans,
advances or capital contributions to, or investments in, any other person
(other than to wholly owned subsidiaries of the Company or customary loans or
advances to employees in accordance with past practice); PROVIDED, that the
Company may take action in the case of either subclause of this clause (g)(i)
or (ii) without the consent of Parent so long as such items are prepayable at
no cost to Parent;
(h) change any of the accounting methods used by it unless required by
GAAP;
(i) pay, discharge or satisfy any claims, liabilities or obligations
(absolute, accrued, asserted or unasserted, contingent or otherwise), other
than the payment, discharge or satisfaction of any such claims, liabilities
or obligations, in the ordinary course of business and consistent with past
practice, of claims, liabilities or obligations reflected or reserved against
in, or contemplated by, the consolidated financial statements (or the notes
thereto) of the Company and its consolidated subsidiaries and other than
32
<PAGE>
payments made in connection with this Agreement and the transactions
contemplated hereby;
(j) transfer, lease, license, sell, mortgage, pledge, dispose of, or
encumber, directly or indirectly, any Channel or any interest in any SMR
Channel listed in Section 3.15(c) of the Company Disclosure Schedule;
(k) except as expressly contemplated by this Agreement, engage in any
transactions with any stockholders or other affiliates of the Company or
enter into any agreements with such stockholders or affiliates;
(l) fail to take any required actions (consistent with applicable law)
in order to maintain its Licenses, including, but not limited to, any
build-out and loading requirements, filings or any requirements that payments
be made. For purposes of this clause (l), "required" shall mean reasonably
required in order to maintain such licenses, including as a result of any
changes in law or regulation, industry practices, enforcement practices,
notices from relevant Governmental Entities or otherwise;
(m) make any material election with respect to Taxes;
(n) engage in any other material transaction, except as otherwise
permitted under clause (f) of this Section 5.01; or
(o) enter into an agreement, contract, commitment or arrangement to do
any of the foregoing, or to authorize any of the foregoing.
Section 5.02. INTERIM OPERATIONS OF PARENT. Parent covenants and
agrees that, except (i) as expressly contemplated by this Agreement, (ii) as
set forth in Section 5.2 of the Parent Disclosure Schedule or (iii) as agreed
in writing by the Company, the business of Parent shall be conducted only in
the ordinary and usual course, consistent with past practice, and, to the
extent consistent therewith, Parent shall use commercially reasonable efforts
to preserve its business organization intact and maintain its existing
relations with customers, suppliers, employees, creditors and business
partners and Parent shall not:
(a) amend its certificate of incorporation or by-laws or similar
organizational documents;
(b) (i) declare, set aside or pay any dividend or other distribution
with respect its capital stock, (ii) redeem, purchase or otherwise acquire
directly or indirectly any of its capital stock or (iii) split, combine or
reclassify its outstanding capital stock;
(c) not take any action that would affect the rights of the Stockholders
in a manner that is more adverse than the effect of such action on holders of
Series B Preferred through Series E Preferred;
33
<PAGE>
(d) enter into an agreement, contract, commitment or arrangement to do
any of the foregoing, or to authorize, recommend, propose or announce an
intention to do any of the foregoing.
Notwithstanding the foregoing, subject to Section 5.05(c), Parent and its
subsidiaries may engage in any transactions they consider appropriate if such
transactions are arm's length transactions with third parties or transactions
in compliance with Parent's Indenture with Marine Midland, as trustee, as in
effect on the date hereof.
Section 5.03. INVESTIGATION. Each of the Company and Parent shall
afford to one another and to one another's officers, employees, accountants,
counsel and other authorized representatives full and complete access during
normal business hours, throughout the period prior to the earlier of the
Effective Time or the date of termination of this Agreement, to its and its
subsidiaries' plants, properties, contracts, commitments, books, and records
and any report, schedule or other document filed or received by it pursuant
to the requirements of federal or state securities laws, shall use their
reasonable best efforts to cause their respective representatives to furnish
promptly to one another such additional financial and operating data and
other information as to its and its subsidiaries' respective businesses and
properties as the other or its duly authorized representatives may from time
to time reasonably request and shall cooperate with one another to (i)
produce all financial statements and other information necessary for Parent
to comply with its reporting obligations under the Exchange Act or required
by Parent to be included in any registration statement filed or to be filed
by Parent with the SEC, the cost and expense of such production to be borne
by the Company to the extent performed in accordance with past practice of
the Company or required pursuant to agreements of the Company other than this
Agreement (otherwise such cost and expense shall be borne by Parent), (ii)
conduct an audit of the Company and its subsidiaries for the year ended
December 31, 1997 (PROVIDED, that nothing contained herein shall obligate the
Company to complete such audit prior to the Effective Time). The parties
hereby agree that each of them will treat any such information in accordance
with the Joint Non-Disclosure Agreement, dated as of February 7, 1997,
between the Company and Parent (the "Confidentiality Agreement").
Section 5.04. STOCKHOLDER AGREEMENTS; CONSULTING/NON-COMPETITION
AGREEMENT. (a) The Company shall, prior to the Effective Time, deliver to
Parent a list setting forth the names and addresses of all Stockholders. The
Company shall furnish such information and documents as Parent may reasonably
request for the purpose of reviewing such list. The Company shall use its
reasonable efforts to cause each Stockholder to execute a written agreement
on or prior to the Effective Time, in substantially the form of EXHIBIT 5.4
hereto.
(b) The Company shall cause the Chief Executive Officer to enter into a
Consultant Agreement (the "Consultant Agreement") and a Non-Competition
Agreement (the "Non-Competition Agreement") with Parent substantially in the
forms of EXHIBITS E and F hereto.
34
<PAGE>
Section 5.05. FILINGS; OTHER ACTION. The Company and Parent shall
each (a) promptly make the required filings and thereafter make any other
required submissions under the HSR Act and any other filings with any
Governmental Entity in connection with the Company's Licenses, (b) use
reasonable best efforts to cooperate with one another in (i) determining
whether any other filings are required to be made with, or consents, permits,
authorizations or approvals are required to be obtained from, any third party
or any Governmental Entity in connection with the execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby
and thereby, (ii) timely making all such filings and timely seeking all such
consents, permits, authorizations or approvals, including obtaining the
agreement of the holders of the OPIC Note to extend the period during which
no default or event of default shall have occurred under such note until a
date no earlier than 30 days after the Closing, and (iii) negotiating and
executing employment agreements with certain key employees currently employed
by the Company's subsidiaries as reasonably requested by Parent, (c) perform
its covenants set forth herein and otherwise use reasonable best efforts to
take, or cause to be taken, all other actions and do, or cause to be done,
all other things necessary, proper or advisable to consummate and make
effective the transactions contemplated hereby as promptly as practicable,
and (d) not take any action which would adversely affect its ability to
consummate the transactions contemplated hereby.
Section 5.06. FURTHER ASSURANCES. In case at any time after the
Effective Time any further action is necessary or desirable to carry out the
purposes of this Agreement, the proper officers of the Company and Parent
shall take all such necessary action.
Section 5.07. NO SOLICITATION. From and after the date hereof,
the Company will not, and shall use its reasonable best efforts not to permit
any of its officers, directors, employees, attorneys, financial advisors,
agents or other representatives or those of any of its subsidiaries to,
directly or indirectly, solicit, initiate or encourage (including by way of
furnishing confidential or non-public information) any Takeover Proposal from
any person, or engage in or continue discussions or negotiations relating
thereto. The Company will promptly (but in no case later than 48 hours)
notify Parent of the receipt of any Takeover Proposal, including the material
terms and conditions thereof (and shall inform Parent within such time period
of any material amendments to any such Takeover Proposal) and the identity of
the person or group making such Takeover Proposal. As used in this
Agreement, "Takeover Proposal" shall mean any bona fide proposal or offer
(other than a proposal or offer by Parent or any of its subsidiaries) for a
merger, consolidation or other business combination involving, or any
purchase of at least 25% of the assets or voting securities of, the Company,
or any similar transaction.
Section 5.08. PUBLIC ANNOUNCEMENTS. The Company and Parent will
consult with each other before issuing any press release relating to this
Agreement or the transactions contemplated hereby and shall not issue any
such press release prior to such consultation, except as may be required by
law or by obligations pursuant to any listing agreement with any national
securities exchange.
35
<PAGE>
Section 5.09. CERTIFICATE OF DESIGNATION. No later than
immediately prior to the Effective Time, Parent shall file an Amended and
Restated Certificate of Incorporation authorizing the issuance of the Parent
Preferred Shares with the Delaware Secretary of State.
Section 5.10. STOCKHOLDER APPROVAL. Parent shall promptly use its
reasonable best efforts to take all action necessary to cause the holders of
its stock to approve and adopt the merger, this agreement and the other
transactions contemplated hereby within 21 days after the date hereof.
Section 5.11. TAX COVENANTS. Notwithstanding any other provision
of this Agreement, all transfer, documentary, sales, use, registration and
other such Taxes (including, without limitation, all applicable real estate
transfer or gains taxes and stock transfer Taxes), any penalties, interest
and additions to Tax and fees incurred in connection with this Agreement and
the transactions contemplated hereby shall be paid by the Stockholders. Each
party to this Agreement shall cooperate in the timely making of all filings,
returns, reports and forms as may be required in connection therewith. After
the Closing, the parties hereto shall (i) provide, and shall cause each of
their affiliates to provide, to the other party and its affiliates (at the
expense of the requesting party) such information relating to Company and its
subsidiaries as such party may reasonably request with respect to Tax matters
and (ii) cooperate with each other in the conduct of any audit or other
proceeding with respect to any Tax involving Company and its subsidiaries and
shall retain or cause to be retained all books and records pertinent to
Company and its subsidiaries for each Taxable Period or portion thereof
ending on or prior to the date of Closing until the expiration of the
applicable statute of limitations (giving effect to any and all extensions
and waivers). At the Closing, the Company shall deliver to Parent, a
properly executed statement conforming to the requirements of Treasury
Regulation Sections 1.897-2(h)(1)(I) and 1.445-2(c)(3) and the Company
further agrees to provide notification to the Internal Revenue Service
required pursuant to Treasury Regulation Section 1.897-2(h)(2).
Section 5.12. INTERIM FINANCIAL STATEMENTS. Within 30 days after
the end of each calendar month after the date of this Agreement but prior to
Closing, the Company will deliver to Parent unaudited balance sheets with
respect to the Company and its subsidiaries for such calendar month and for
year-to-date. All such financial statements shall fairly present the
financial position, results of operations and changes in financial position
of the Company as at the dates or for the periods indicated and in accordance
with GAAP. All unaudited financial statements delivered pursuant to this
Section shall be prepared on a basis consistent with the Company Financial
Statements.
Section 5.13. FUNDING. (a) Parent shall use commercially
reasonable efforts to obtain the Funding.
(b) Provided that such amounts are Expenses, simultaneously with
the Effective Time, Parent shall pay $4.7 million (or $4.8 million if Parent
has not obtained the Funding on or prior to December 31, 1997) in cash
directly to those persons and in
36
<PAGE>
the amounts as set forth in Section 5.13 of the Company Disclosure Schedule
(as it may be updated by the Company from time to time).
Section 5.14. INDEMNIFICATION. (a) For a period of six years
from and after the Effective Time, Parent will cause the Surviving
Corporation to fulfill and honor in all respects, to the extent consistent
with law, the obligations of the Company pursuant to (i) each indemnification
agreement currently in effect between the Company and each person who is or
was a director or officer of the Company at or prior to the Effective Time
and (ii) any indemnification provision under the Company's Restated
Certificate of Incorporation or by-laws as each is in effect on the date
hereof. The Certificate of Incorporation and by-laws of the Surviving
Corporation shall contain the provisions with respect to indemnification and
exculpation from liability set forth in the Company's Restated Certificate of
Incorporation and by-laws on the date of this Agreement, which provisions
shall not be amended, repealed or otherwise modified for a period of six
years after the Effective Time in any manner that would adversely affect the
rights of any person entitled to be indemnified thereunder.
(b) This Section shall survive the consummation of the Merger and shall
be binding on all successors and assigns of Parent and the Surviving
Corporation.
Section 5.15. NOTIFICATION. The Company shall give prompt notice
to Parent, and Parent shall give prompt notice to the Company, of (i) any
representation or warranty made by it or contained in this Agreement becoming
untrue or inaccurate in any material respect and (ii) the failure by it to
comply with or satisfy in any material respect any covenant, condition or
agreement to be complied with or satisfied by it under this Agreement. For
purposes of this Section 5.15, any references in the representations and
warranties to "as of the date of this Agreement" or "as of the date hereof"
or the like shall be ignored. No notification pursuant to this Section 5.15
shall affect the representations, warranties, covenants or agreements of the
parties or the conditions to the obligations of the parties under this
Agreement.
Section 5.16 LIQUIDATION OF PARENT. Prior to the Closing or the
termination of this Agreement, Parent shall not enter into an agreement with
a third party regarding a Corporate Transaction (as defined in Article
V.B.1.(e)(i) the Amended and Restated Certificate of Incorporation of
Parent); PROVIDED, HOWEVER, that if Parent wishes to enter into such
agreement, it shall so notify the Company and all references to December 31,
1997 (or January 15, 1998 if Parent has not obtained the Funding on or prior
to December 31, 1997) in this Agreement shall thereupon be changed to the
earlier of (A) December 31, 1997 (or January 15, 1998 if Parent has not
obtained the Funding on or prior to December 31, 1997) and (B) the date
immediately prior to the entering into of such agreement. Accordingly,
depending on whether, on the one hand, all conditions to the obligations of
the parties to effect the Merger are satisfied or waived by such time, or, on
the other hand, they are not, the Merger shall be effected or this Agreement
shall be terminated, in each case prior to the entering into of such
agreement regarding a Corporation Transaction. If the Merger is to be
consummated, the notice provisions set forth in Section 1.02 shall not be
obviated by the foregoing.
37
<PAGE>
ARTICLE VI
CONDITIONS TO THE MERGER
Section 6.01. CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE
MERGER. The respective obligations of each party to effect the Merger is
subject to the conditions that:
(a) This Agreement shall have been duly adopted by the requisite vote of
holders of Company Shares.
(b) The transactions contemplated hereby, including the amendment of
Parent's Amended and Restated Certificate of Incorporation, shall
have been duly approved by the requisite vote of holders of Parent
Shares.
(c) No statute, rule, regulation, executive order, writ, decree, ruling
or injunction shall have been enacted, entered, promulgated or enforced
by any court or other tribunal or governmental body or authority which
prohibits the consummation of the Merger and no litigation or
proceeding shall have been commenced by a Governmental Entity which
would prohibit such consummation. In the event any order, decree or
injunction shall have been issued, each party shall use its reasonable
efforts to remove any such order, decree or injunction.
(d) Any applicable waiting period under the HSR Act shall have expired
or been terminated, any filing with, or permit, authorization, consent
or approval of any Governmental Entity or any third party shall have
been made or obtained, except where the failure to obtain such other
approvals would not, in the aggregate, have a Material Adverse Effect
on the Company or Parent, as the case may be.
Section 6.02. CONDITIONS TO OBLIGATIONS OF THE COMPANY TO EFFECT THE
MERGER. The obligation of the Company to effect the Merger is further subject
to the conditions that:
(a) The representations and warranties of Parent contained herein shall
be true and correct (without giving effect to the materiality
qualifiers contained in such representations and warranties) as of the
date hereof and as of the Effective Time (excluding those
representations which are made as of a specific date which shall be
true and correct as of such date) with the same effect as though made
as of the Effective Time unless the failure to be so true and correct
would not in the aggregate have a Material Adverse Effect on Parent.
(b) Parent shall have performed in all material respects all obligations
and complied with all covenants required by this Agreement to be
performed or complied with by it prior to the Effective Time.
38
<PAGE>
(c) Parent shall have delivered to the Company an opinion dated the
Closing Date, of Parent's legal counsel, substantially in the form of
Exhibit H hereto. Parent shall have delivered to the Company a
certificate, dated the Effective Time and signed by its Chairman of the
Board and Chief Executive Officer or a Senior Vice President,
certifying to both such effects, and such other evidence as the Company
shall reasonably request as to the satisfaction of the conditions
hereto.
(d) Parent shall not have suffered a Material Adverse Effect from the
date of this Agreement to the Closing Date (or, if Parent shall have
suffered such effect, it shall have been cured).
(e) The Investor Rights Agreement in the form of Exhibit I shall be in full
force and effect as of the Closing.
Section 6.03. CONDITIONS TO OBLIGATIONS OF PARENT TO EFFECT THE
MERGER. The obligation of Parent to effect the Merger is further subject to
the conditions that:
(a) The representations and warranties of the Company contained
herein shall be true and correct (without giving affect to the
materiality qualifiers contained in such representations and
warranties) as of the date hereof and as of the Effective Time
(excluding those representations which are made as of a specific
date which shall be true and correct as of such date) with the same
effect as though made as of the Effective Time unless the failure to
be so true and correct would not in the aggregate have a Material
Adverse Effect on the Company.
(b) The Company shall have performed in all material respects all
obligations and complied with all covenants required by this Agreement
to be performed or complied with by it prior to the Effective Time.
(c) The Company shall not have suffered a Material Adverse Effect
from the date of this Agreement to the Closing Date (or, if the Company
shall have suffered such effect, it shall have been cured).
(d) No federal, state, local or foreign statute, law, ordinance,
rule, regulation, decree or order, applicable to the Company or any of
its subsidiaries, including without limitation, the Licenses and
Channels of the Company and its subsidiaries, shall have been adopted
or officially proposed by an applicable Governmental Entity, which
would, in the aggregate, have a Material Adverse Effect on the Company.
(e) Fewer than 7.5% of the outstanding Company Shares shall be
Dissenting Shares.
(f) The Company shall have delivered to Parent opinions, dated the
Closing Date, of the Company's and its subsidiaries' legal counsel,
substantially in the form of EXHIBIT G hereto. The Company shall have
delivered to Parent a certificate,
39
<PAGE>
dated the Effective Time and signed by its Chief Executive Officer
and President or a Senior Vice President, certifying to the effects set
forth in (a)-(e), and such other evidence as Parent shall reasonably
request as to the satisfaction of the conditions hereto.
(g) Parent shall be reasonably satisfied that the transactions
contemplated hereby do not require registration under the Securities
Act (PROVIDED, that to the extent registration under the Securities Act
is required as a result of actions taken by Parent (other than the
actions set forth herein), then this clause (g) shall not be a
condition to Parent's obligation to consummate the transactions
contemplated hereby).
Section 6.04. FRUSTRATION OF CLOSING CONDITIONS. None of the Company,
Parent or Sub may rely on the failure of any condition set forth in Section
6.01, 6.02 or 6.03, as the case may be, to be satisfied if such failure was
directly caused by such party's failure to use commercially reasonable
efforts to consummate the Merger and the other transactions contemplated by
this Agreement, as required by and subject to Section 5.05.
ARTICLE VII
TERMINATION, WAIVER, AMENDMENT
Section 7.01. TERMINATION OR ABANDONMENT. Notwithstanding anything
contained in this Agreement to the contrary, this Agreement may be terminated
and abandoned at any time prior to the Effective Time:
(a) by the mutual written consent of the Company and Parent;
(b) by either the Company or Parent if the Effective Time shall
not have occurred on or before December 31, 1997 (or January 15, 1998
if Parent has not obtained the Funding on or prior to December 31,
1997); PROVIDED, that the party seeking to terminate this Agreement
pursuant to this clause 7.01(b) shall not have breached in any material
respect its obligations under this Agreement in any manner that shall
have proximately contributed to the failure to consummate the Merger on
or before such date;
(c) by either the Company or Parent if (i) a statute, rule,
regulation or executive order shall have been enacted, entered or
promulgated prohibiting the consummation of the Merger substantially on
the terms contemplated hereby or (ii) an order, decree, ruling or
injunction shall have been entered permanently restraining, enjoining
or otherwise prohibiting the consummation of the Merger and such order,
decree, ruling or injunction shall have become final and
non-appealable; provided, that the party seeking to terminate this
Agreement pursuant to this clause 7.01(c)(ii) shall have used its
reasonable best efforts to remove such injunction, ruling, order or
decree;
(d) by the Company or Parent if there shall have been a breach by
the other of any of its representations, warranties, covenants or
agreements contained in this Agreement which would have a Material
Adverse Effect and such breach shall
40
<PAGE>
not have been cured within 30 days after notice thereof shall have
been received by the party alleged to be in breach;
(e) by the Company if the requisite vote of its stockholders as
contemplated by Section 5.10, or the other approvals or waivers set
forth in Section 4.3, and the first sentence of Section 4.4 (excluding
any Blue Sky filings or approvals), of the Parent Disclosure Schedule,
have not been obtained on or prior to the date which is 21 days from
the date hereof; PROVIDED, that the Company has given Parent at least 7
days notice of such proposed termination and; PROVIDED, FURTHER, that
the Company may not terminate this Agreement pursuant to this Section
7.01(e) if such vote (or such other approvals or consents) shall be
obtained prior to such termination; or
(f) By Parent if the requisite vote of the holders of the Company
Shares has not been obtained on or prior to December 1, 1997.
In the event of termination of this Agreement pursuant to this Section
7.01, this Agreement shall terminate (except for the confidentiality
agreement referred to in the last sentence of Section 5.03 and Section 8.02),
and there shall be no other liability on the part of the Company or Parent to
the other except liability arising out of a willful breach of this Agreement.
Section 7.02. AMENDMENT OR SUPPLEMENT. At any time prior to the
Effective Time, whether before or after the approval of this Agreement by the
stockholders of Parent or the Company this Agreement may be amended or
supplemented in writing by the Company and Parent with respect to any of the
terms contained in this Agreement (PROVIDED, that no amendment shall be made
subsequent to receipt of stockholder approval that by law requires a further
approval of such stockholders without obtaining such approval).
Section 7.03. EXTENSION OF TIME, WAIVER, ETC. At any time prior to the
Effective Time, the Company and Parent may: (a) extend the time for the
performance of any of the obligations or acts of the other party, (b) waive
any inaccuracies in the representations and warranties of the other party
contained herein or in any document delivered pursuant hereto or (c) waive
compliance with any of the agreements or conditions of the other party
contained herein. Notwithstanding the foregoing no failure or delay by the
Company or Parent in exercising any right hereunder shall operate as a waiver
thereof nor shall any single or partial exercise thereof preclude any other
or further exercise thereof or the exercise of any other right hereunder. Any
agreement on the part of a party hereto to any such extension or waiver shall
be valid only if set forth in an instrument in writing signed on behalf of
such party.
ARTICLE VIII
MISCELLANEOUS
Section 8.01. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties of the Company shall survive for a period of
one year
41
<PAGE>
following the Closing, provided that if any claim is made by Parent prior to
the expiration of such one year period, such claim shall survive until it is
finally determined. The Stockholders shall indemnify and hold Parent
harmless for damages (including as a result of any diminution of value as a
result of such breach or compared to the value if there had been no such
breach) resulting from any breach of the representations, warranties,
covenants and agreements of the Company contained in this Agreement;
PROVIDED, that the Stockholders will not have any liability under this
Section 8.01 in respect of any claim for a breach of a representation or
warranty of the Company contained in this Agreement until the aggregate
amount of all damages to Parent (including, without limitation, reasonable
expenses of investigation and reasonable attorneys' and accountants' fees and
expenses in connection with any action, suit or proceeding) ("Losses") with
respect to breaches of representations and warranties equals or exceeds
$100,000, at which time all Losses shall be recoverable. Other than as set
forth above, no representation or warranty shall survive the Effective Time.
Following the Effective Time, the sole and exclusive remedy for any claim
arising under this Agreement (other than claims arising out of fraud) and
adjustments set forth in Article II hereof shall be the Escrow Fund.
Section 8.02. EXPENSES. Whether or not the Merger is consummated, all
costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby and thereby shall be paid by the party
incurring such expenses, except as otherwise contemplated hereby; PROVIDED,
HOWEVER, that one-half of the expenses incurred in connection with the audit
by KPMG of the Company's June 30, 1997 financial statements shall be
considered Expenses and one half shall be borne by Parent, unless the Merger
is not consummated, in which case such expenses shall be paid by Parent.
Section 8.03. COUNTERPARTS; EFFECTIVENESS. This Agreement may be
executed in two or more consecutive counterparts, each of which shall be an
original, with the same effect as if the signatures thereto and hereto were
upon the same instrument.
Section 8.04. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, without
regard to the principles of conflicts of laws thereof.
Section 8.05. NOTICES. All notices and other communications hereunder
shall be in writing (including telecopy or similar writing) and shall be
effective upon receipt by the following:
to the Company:
RMD
7900 Glades Road
Suite 630
Boca Raton, Florida 33434
Fax: 561-470-0321
42
<PAGE>
Attention: Robert Dupuis
with a copy to:
the Representative, at such address as he may designate in writing
and to:
John Roos
Wilson, Sonsini, Goodrich & Rosati
650 Page Mill Road
Palo Alto, California 94304
Fax: 415-493-6811
to Parent:
International Wireless Communications Holdings, Inc.
400 South El Camino Real
Suite 1275
San Mateo, CA 94402
Fax: 650-548-1842
Attention: John D. Lockton, Jr.
with a copy to:
Richard D. Pritz
Dewey Ballantine LLP
1301 Avenue of the Americas
New York, New York 10019
Fax: 212-259-6333
and a copy to:
Brooks Stough
Gunderson Dettmer Stough Villeneuve Franklin & Hachigian, LLP
155 Constitution Drive
Menlo Park, CA 94025
Fax: 650-321-2800
or to such other address as may be specified by such notice.
Section 8.06. ASSIGNMENT; BINDING EFFECT. Neither this Agreement nor
any of the rights, interests or obligations hereunder shall be assigned by
any of the parties hereto (whether by operation of law or otherwise) without
the prior written consent of the other parties, provided that Sub may assign
its rights and obligations hereunder to any wholly owned subsidiary of
Parent, and the parties shall execute such documents as may
43
<PAGE>
be necessary to reflect such assignment. Subject to the preceding sentence,
this Agreement shall be binding upon and shall inure to the benefit of the
parties hereto and their respective successors and assigns.
Section 8.07. SEVERABILITY. Any term or provision of this Agreement
which is invalid or unenforceable in any jurisdiction shall, as to that
jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining
terms and provisions of this Agreement in any other jurisdiction. If any
provision of this Agreement is so broad as to be unenforceable, such
provision shall be interpreted to be only so broad as is enforceable.
Section 8.08. ENFORCEMENT OF AGREEMENT. The parties hereto agree that
money damages or other remedy at law would not be sufficient or adequate
remedy for any breach or violation of, or a default under, this Agreement by
them and that in addition to all other remedies available to them, each of
them shall be entitled to the fullest extent permitted by law to an
injunction restraining such breach, violation or default or threatened
breach, violation or default and to any other equitable relief, including,
without limitation, specific performance, without bond or other security
being required.
Section 8.09. MISCELLANEOUS. This Agreement: (a) along with the
Confidentiality Agreement, the Amended and Restated Certificate of
Incorporation of Parent, the Seventh Amended and Restated Investor Rights
Agreement attached hereto as EXHIBIT H and the Escrow Agreement constitutes
the entire agreement, and supersedes all other prior agreements and
understandings, both written and oral, between the parties, or any of them,
with respect to the subject matter hereof and thereof; and (b) except as
contemplated by Section 5.14 hereof, is not intended to and shall not confer
upon any Person other than the parties hereto any rights or remedies
hereunder.
Section 8.10. HEADINGS. Headings of the Articles and Sections of this
Agreement are for convenience of the parties only, and shall be given no
substantive or interpretive effect whatsoever.
Section 8.11. SUBSIDIARIES; AFFILIATES. References in this Agreement
to "subsidiaries" of the Company or Parent shall mean any corporation or
other form of legal entity of which 50% or more of the outstanding voting
securities having general voting powers, general partnership interests or
equity interests are directly or indirectly owned by the Company or Parent,
as the case may be. References in this Agreement to "affiliates" shall mean,
as to any person, any other person which, directly or indirectly, controls,
or is controlled by, or is under common control with, such person. As used in
this definition, "control" (including, with its correlative meanings,
"controlled by" and "under common control with") shall mean the possession,
directly or indirectly, of the power to direct or cause the direction of
management or policies of a Person, whether through the ownership of
securities or partnership of other ownership interests, by contract or
otherwise. References in the Agreement to "person" shall mean an individual,
a corporation, a partnership, an association, a trust or any other entity or
organization, including, without limitation, a governmental body or authority.
44
<PAGE>
Section 8.12. CONSENT TO JURISDICTION. The parties hereto agree that the
federal and state courts of the State of Delaware shall be the exclusive forum
for the resolution of disputes arising under this Agreement or in connection
with the transactions contemplated hereby, consent to such jurisdiction, waive
any objection to venue or forum therein and agree not to bring any actions in
any other jurisdiction (other than to enforce final judgements of such courts).
The parties acknowledge that service of process by any means specified in
Section 8.05 hereof shall be deemed valid service of process for all purposes in
connection herewith.
45
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered as of the date first above written.
INTERNATIONAL WIRELESS
COMMUNICATIONS HOLDINGS, INC.
By:
--------------------------------
Name:
Title:
RADIO MOVIL DIGITAL AMERICAS, INC.
By:
--------------------------------
Name:
Title:
46
<PAGE>
Exhibit 2.11B
AMENDMENT NO. 1 TO AGREEMENT AND PLAN OF MERGER
AMENDMENT NO. 1, dated as of January 15, 1998, by and among
International Wireless Communications Holdings, Inc., a Delaware corporation
("Parent"), and Radio Movil Digital Americas, Inc., a Delaware corporation
(the "Company"), to the Agreement and Plan of Merger, dated as of November
22, 1997 (the "Merger Agreement"), by and among Parent and the Company (this
"Agreement").
Parent and the Company agree as follows:
1. The first sentence of Section 1.02 of the Merger Agreement is hereby
amended and restated in its entirety to read as follows:
"Upon the terms and subject to the conditions of this Agreement, the
closing of the Merger (the "Closing") will take place no later than 10:00
a.m., California time, on January 23, 1998 (PROVIDED, HOWEVER, that if prior
to such time Parent has obtained $25 million in funding specifically
allocated for purposes of consummating the transactions contemplated hereby
(the "Funding"), the Closing shall take place on the date Parent obtains such
funding), unless another time or date is agreed to by the parties hereto, at
the offices of Gunderson Dettmer Stough Villeneuve Franklin & Hachigian, LLP,
155 Constitution Drive, Menlo Park, California."
2. Section 2.02 (a) of the Merger Agreement is hereby amended and
restated in its entirety to read as follows:
"(a) EXCHANGE AGENT. Parent shall act as exchange agent (the "Exchange
Agent") for the purpose of exchanging, in accordance with this Article II,
Parent Certificates representing the number of whole Parent Preferred Shares
issuable pursuant to Section 2.01(c) (such Parent Preferred Shares, together
with any dividends or distributions with respect thereto with a record date
after the Effective Time and any cash payable in lieu of any fractional Parent
Preferred Shares being hereinafter referred to as the "Exchange Fund")."
3. The third to last paragraph of Section 2.04 of the Merger Agreement
is hereby amended and restated in its entirety to read as follows:
"In addition to the foregoing adjustments, the Stock Value shall be
decreased by $1,820,000 ("the "Bovespa/Real Adjustment")."
4. Notwithstanding the second to last paragraph of Section 2.04 of the
Merger Agreement, for purposes of the Merger Agreement, the Bovespa/Real
Escrow shall equal zero and shall have no effect on the Stock Value paid at
the Closing.
5. Sections 6.02(a), 6.02(d), 6.03(a) and 6.03(c) of the Merger
Agreement are hereby amended to replace the phrases "the Effective Time" and
"the Closing Date" each with "January 15, 1998".
<PAGE>
6. Section 7.01(b) of the Merger Agreement is hereby amended and
restated in its entirety to read as follows:
"by either the Company or Parent if the Effective Time shall not have
occurred on or before January 23, 1998; PROVIDED, that the party seeking to
terminate this Agreement pursuant to this clause 7.01(b) shall not have
breached in any material respect its obligations under this Agreement in
any manner that shall have proximately contributed to the failure to
consummate the Merger on or before such date;"
7. This Amendment may be terminated by either Parent or the Company, by
written notice to the other, on or before 4:00 p.m., California time, on
January 16, 1998 in accordance with the provisions of Section 8.05 of the
Merger Agreement. Upon such termination, this Amendment shall be null and
void ab initio, and the Merger Agreement shall continue in full force and
effect in accordance with its terms, as in effect immediately prior to the
execution hereof, as if this Amendment had not been executed.
8. Except as explicitly set forth herein, the Merger Agreement shall
continue in full force and effect in accordance with its terms.
2
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
INTERNATIONAL WIRELESS
COMMUNICATIONS HOLDINGS, INC.
By:
--------------------------------
Name:
Title:
RADIO MOVIL DIGITAL AMERICAS, INC.
By:
--------------------------------
Name:
Title:
3
<PAGE>
Exhibit 2.11C
AMENDMENT NO. 2 TO AGREEMENT AND PLAN OF MERGER
AMENDMENT NO. 2, dated as of January 23, 1998, by and among IWC
Acquisition Corporation, a Delaware corporation ("Acquisition Corp."),
International Wireless Communications Holdings, Inc., a Delaware corporation
("Parent"), and Radio Movil Digital Americas, Inc., a Delaware corporation
(the "Company"), to the Agreement and Plan of Merger, dated as of November
22, 1997, as amended (the "Merger Agreement"), by and among Parent and the
Company (this "Agreement").
Parent, Acquisition Corp. and the Company agree as follows:
1. By this Agreement, Acquisition Corp. is hereby an additional
party to the Merger Agreement subject to the provisions thereunder and to the
obligations created thereunder. Acquisition Corp. is the wholly owned
subsidiary of Parent referred to as "Sub" in the Merger Agreement and shall,
upon the terms and subject to the conditions of the Merger Agreement, be merged
with and into the Company. By executing this Agreement, Acquisition Corp. shall
be deemed to have executed and delivered the Merger Agreement.
2. Except as explicitly set forth herein, the Merger Agreement shall
continue in full force and effect in accordance with its terms.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
INTERNATIONAL WIRELESS
COMMUNICATIONS HOLDINGS, INC.
By:
--------------------------------
Name:
Title:
IWC ACQUISITION CORPORATION
By:
--------------------------------
Name:
Title:
RADIO MOVIL DIGITAL AMERICAS, INC.
By:
--------------------------------
Name:
Title:
2
<PAGE>
Exhibit 2.11D
ESCROW AGREEMENT
Escrow Agreement dated as of January 23, 1998, by and among George
Billings (the "Representative") acting on behalf of the stockholders of Radio
Movil Digital Americas, Inc., a Delaware corporation ("RMD"), International
Wireless Communications Holdings, Inc., a Delaware corporation ("Parent"), and
Toronto Dominion [Texas], Inc. ("Escrow Agent").
WHEREAS, on November 22, 1997, RMD and Parent entered into an Agreement and
Plan of Merger ("Merger Agreement") pursuant to which a direct or indirect
wholly owned subsidiary of Parent will merge with and into RMD, with RMD being
the surviving corporation. Pursuant to Section 2.06(a) of the Merger Agreement,
728,438 Parent Preferred Shares (the "Escrow Closing Amount") are being
deposited by Parent with Escrow Agent to be held in an escrow fund ("Escrow
Account"), subject to the terms of this Escrow Agreement. The Escrow Closing
Amount, together with all accretions thereto, dividends and/or interest accrued
or earned thereon, and any property substituted therefor, shall hereafter be
referred to collectively as the "Funds." Escrow Agent acknowledges receipt of
the Escrow Closing Amount; and
WHEREAS, Escrow Agent is willing to hold the Escrow Closing Amount in
escrow in accordance with the terms of this Escrow Agreement and to act as
Escrow Agent hereunder.
NOW, THEREFORE, in consideration of the mutual terms, conditions and
covenants contained herein, and intending to be legally bound hereby, the
parties hereto agree as follows:
1. DEFINITIONS. Unless otherwise set forth herein, all capitalized terms
in this Agreement shall have the respective meanings ascribed to them in the
Merger Agreement.
2. APPOINTMENT OF ESCROW AGENT. Representative and Parent hereby appoint
Escrow Agent to serve as Escrow Agent hereunder, subject to and in accordance
with the provisions of this Escrow Agreement, and Escrow Agent hereby accepts
such appointment.
3. FORMATION OF ESCROW. Simultaneously with the execution of this
Agreement, Parent has delivered to Escrow Agent the Escrow Closing Amount to be
held in the Escrow Account, and Escrow Agent acknowledges receipt of the Escrow
Closing Amount. Escrow Agent will hold, keep custody of and dispose of the
Funds, in accordance with the terms and conditions of this Escrow Agreement.
4. RELEASE OF ESCROW. Promptly, and in any event within three business
days after the determination, in accordance with the Merger Agreement, that
amounts are to be released from the Escrow Fund pursuant to Sections 2.06(c)-(f)
of the Merger Agreement, Parent and Representative will provide written notice
to Escrow Agent of the amounts to be
<PAGE>
so released and Escrow Agent shall release to Parent or Representative, as
the case may be, from the Escrow Account, within three business days
following receipt by Escrow Agent of such notice, Parent Preferred Shares (or
other assets or securities, if applicable) in the amount to be released.
For purposes of any such release, Parent Preferred Shares shall be valued at
the $13.728 per share. Parent and the Representative agree to provide such
notice upon the final and binding determination that amounts are to be
released pursuant to such Sections of the Merger Agreement. In lieu of such
notice, the Escrow Agent shall act on notice from (1) the Reviewing
Accountant certifying that it has made a final determination pursuant to the
provisions of the Merger Agreement as provided in Section 2.05 of the Merger
Agreement or (2) the parties or entities specified in Section 5.3(1) or (2)
hereof.
5. INDEMNIFICATION CLAIMS OF PARENT.
5.1 If Parent shall determine to make a claim for indemnification
under Section 8.01 of the Merger Agreement ("Indemnification Claim"), Parent
shall give written notice to Representative and Escrow Agent simultaneously in
the form of a certificate signed by Parent ("Indemnification Claim Notice") (i)
stating that Parent is asserting an Indemnification Claim against the Escrow
Account based upon the Stockholders' indemnification obligations, (ii)
specifying in reasonable detail the basis for and the amount of its
Indemnification Claim and (iii) stating that if Representative does not respond
within 30 days following its receipt of the Indemnification Claim Notice with a
written objection, that Escrow Agent will pay the amount specified in the
Indemnification Claim Notice to Parent. If the Representative objects to or
disputes Parent's Indemnification Claim (the "Objection"), Representative shall,
within 30 days following its receipt of the Indemnification Claim Notice
("Objection Period") notify Parent and Escrow Agent simultaneously in writing in
the form of a certificate signed by the Representative ("Objection Notice")
stating that Representative is disputing the Indemnification Claim and further
setting forth the nature and grounds for such Objection.
5.2 If by the termination of the Objection Period with respect to an
Indemnification Claim, the Escrow Agent does not receive an Objection Notice
from Representative, then, in such event, Escrow Agent shall promptly (and in
any event within three business days) pay the amount specified in the
Indemnification Claim Notice to Parent by delivering stock certificates
representing shares of capital stock of Parent held in the Escrow Account whose
Offer Price is equal to the amount of the Indemnification Claim.
5.3 If Representative shall deliver an Objection Notice to Parent and
Escrow Agent within the Objection Period, Escrow Agent shall forward a copy of
the same to Parent, and Escrow Agent shall refrain from disbursing any shares of
capital stock of Parent held in the Escrow Account until resolution of such
dispute in the form of (1) a final arbitration award following arbitration
conducted in accordance with the rules of the American Arbitration Association
then obtaining, in accordance with Section 16 hereof which there is no right of
appeal or (2) joint directions of Parent and Representative as communicated to
Escrow Agent in writing and signed by both Parent and Representative. Any
Parent Preferred Shares released from the Escrow Account shall be valued at the
Offer Price. Escrow Agent shall be fully protected in paying from the Escrow
Account any
2
<PAGE>
amount as may be specified in a certified copy of any judgment, decree, award
or original written instruction as provided in the immediately preceding
sentence unless, in connection with making such payment, Escrow Agent shall
have acted with willful neglect, gross negligence or bad faith.
6. CLOSING OF ESCROW; DISTRIBUTION TO THE STOCKHOLDERS. Subject to the
following sentence, the closing of this escrow shall be on the first anniversary
of the Effective Time ("Termination Date"). On the Termination Date, all
remaining Funds shall be distributed by Escrow Agent to Representative (to be
distributed as provided in Exhibit B of the Merger Agreement), unless, on that
date, there are any Claims pending against the Escrow Account the validity and
aggregate amount of which have not been finally determined as of the Termination
Date ("Unresolved Claims"). If there are Unresolved Claims as of the
Termination Date, assuming that there are Funds in the Escrow Account at that
time, Escrow Agent shall distribute to Representative the amount of Funds held
in the Escrow Account whose Offer Price is in excess of the Unresolved Claims,
and the Escrow Account shall remain open pending the resolution of the
Unresolved Claims.
7. RIGHTS WITH RESPECT TO SHARES OF CAPITAL STOCK OF PARENT; INVESTMENT
OF FUNDS. All shares of capital stock of Parent held in the Escrow Account will
be voted in the same proportion as all other outstanding Parent Preferred Shares
held by the holders of Parent Preferred Shares received pursuant to the Merger
Agreement. All dividends and distributions in respect of shares of capital
stock of Parent held in the Escrow Account shall be deposited into the Escrow
Account. To the extent any portion of the Funds is in the form of cash or cash
equivalents and the amounts of such Funds is in excess of $5,000, Escrow Agent
is authorized and instructed to invest such Funds in obligations issued or
guaranteed by the United States of America or any agency or instrumentality
thereof whose terms and remaining maturities are no greater than 60 days.
8. DUTIES AND LIABILITY OF ESCROW AGENT LIMITED.
8.1 DUTIES LIMITED. The duties of Escrow Agent hereunder are that of
a custodian, shall be entirely administrative and not discretionary, and,
accordingly, Escrow Agent does not and will not have any interest in the Funds
(other than as contemplated by Section 10 hereof). Escrow Agent's duties shall
be limited to those expressly set forth herein.
8.2 INDEMNIFICATION; RELIANCE. Parent and the Representative agree
to indemnify and hold harmless Escrow Agent from and against any losses, claims,
damages and liabilities, including costs of investigation and reasonable
attorney's fees and disbursements ("Losses"), which may be asserted against or
imposed upon Escrow Agent or to which Escrow Agent may be exposed or which it
may incur by reason hereunder, including, without limitation, any litigation or
arbitration arising or resulting from this Agreement or involving the subject
matter hereof, unless such Losses arise from or are based upon a claim of the
willful neglect, gross negligence or bad faith of Escrow Agent. Subject to the
foregoing, Escrow Agent (i) may rely upon, and shall be protected in acting or
refraining from acting upon, any written notice, instruction, certificate,
request, consent
3
<PAGE>
or other instrument ("Writing") furnished to it in connection with its duties
as Escrow Agent and reasonably believed by Escrow Agent to be genuine, (ii)
may reasonably rely on Writings not only as to the due execution, validity
and effectiveness thereof but also as to the truth and accuracy of the
information contained therein, (iii) may rely on the contents of any Writing
of any court, arbitrator or party without any liability therefor, and (iv)
shall have no liability to any third party as a result of any acts taken or
omissions made by Escrow Agent in the performance of its duties hereunder and
no person shall have any rights as a third party beneficiary with respect to
this Agreement, except with respect to voting rights as contemplated by the
first sentence of Section 7 hereof. As to any legal questions arising in
connection with Escrow Agent's performance of its duties and responsibilities
hereunder, Escrow Agent may consult or obtain opinions from legal counsel
selected by it and reasonably satisfactory to Parent and Representative, and
Escrow Agent shall be free from any liability for acting in reliance on such
advice of counsel so long as in doing so Escrow Agent shall not have acted
with willful neglect, gross negligence or bad faith. Escrow Agent shall not
be bound by any notice of, or demand with respect to, any waiver,
modification, amendment, termination, or rescission of the provisions of this
Agreement uness such notice or demand is received by Escrow Agent in writing
and has been signed by both Parent and Representative.
8.3 RESIGNATION OR TERMINATION OF ESCROW AGENT; APPOINTMENT OF A
SUCCESSOR.
8.3.1 Escrow Agent may resign and be discharged from its duties
and obligations hereunder for any reason. Such resignation shall be made by
giving written notice of such resignation to Parent and Representative but shall
not become effective until a successor Escrow Agent shall have been appointed by
mutual agreement of Parent and Representative and shall have accepted such
appointment in writing. Parent and Representative shall use reasonable best
efforts to appoint any such successor Escrow Agent as promptly as practicable
following receipt of the notice of resignation as contemplated by the
immediately preceding sentence. Parent and Representative shall also have the
right, by mutual agreement, to terminate the appointment of Escrow Agent
hereunder by giving to it notice of such termination, specifying the date on
which such termination shall take effect and designating a successor Escrow
Agent. In any such event, Parent and Representative shall, by mutual agreement,
reasonably approve and designate a successor Escrow Agent to such resigning or
terminated Escrow Agent.
8.3.2 Any successor Escrow Agent shall execute and deliver to the
then serving Escrow Agent a written instrument accepting the appointment and
agreeing to the terms of this Agreement. Upon receipt thereof from such
successor Escrow Agent, all property in the Escrow Account shall be turned over
and delivered to such successor Escrow Agent who shall thereupon be bound by all
of the provisions hereof as if an original signatory hereto. No resignation or
removal of Escrow Agent shall be effective until the acceptance of appointment
by the successor Escrow Agent in the manner provided above.
9. NOTICE. Notices to Parent and Representative shall be sent to such
addresses as are set forth in the Merger Agreement. Notices to Escrow Agent
shall be sent to Toronto
4
<PAGE>
Dominion Bank, 909 Fannin, Suite 1700, Houston, Texas 77010, Attn: Warren
Finlay, Phone # (713) 653-8208, Fax # (713) 951-9921.
10. FEES AND EXPENSES OF ESCROW AGENT. For its services hereunder, Escrow
Agent shall be entitled to a fee of $1,000 and reimbursement of reasonable and
documented out-of-pocket expenses incurred by Escrow Agent in connection with
the performance of such services. All amounts due to Escrow Agent pursuant to
this Section 10 shall be paid from the Funds. To the extent there are
Unresolved Claims at the Termination Date as contemplated by Section 6 hereof,
Escrow Agent shall be entitled to an additional fee of $100 per month for each
month following the Termination Date that the Fund remains unsettled.
11. TERM. This Agreement shall terminate upon the final distribution of
all Funds.
12. ENTIRE UNDERSTANDING; NO ORAL AGREEMENTS. This Agreement and the
referenced provisions of the Merger Agreement set forth the entire understanding
among the parties with respect to the subject matter hereof and thereof, and
supersedes all prior and contemporaneous oral and written, express or implied,
communications, agreements and understandings with respect to the subject matter
thereof (PROVIDED, HOWEVER, that nothing herein shall in any way modify or limit
the provisions of the Merger Agreement). No amendment, modification,
supplement, or termination of this Agreement shall bind or be enforceable
against any party unless set forth in a written document signed by all of the
parties hereto.
13. BINDING AGREEMENT. This Agreement and all of the terms and provisions
therein shall be binding upon, inure to the benefit of, and be enforceable by
all of the parties hereto and their respective heirs, legal and personal
representatives (similar or dissimilar), estates, executors, successors and
assigns. No party hereto shall assign any of such party's rights or delegate
any of its obligations under this Agreement without the express written consent
of the other parties hereto, except as may be expressly provided herein;
PROVIDED, THAT, Parent may assign, in whole or in part its rights (but not its
obligations) under this Agreement, to lenders of Parent solely as collateral
security for such lenders.
14. GENDER; SECTIONS AND HEADINGS. All words used in this Agreement shall
be construed to be of such number and gender as the context requires or permits.
The structure and headings of all sections and subsections in this Agreement are
inserted for convenience of reference only, and shall neither constitute a part
of this Agreement nor affect its construction, interpretation, meaning or
effect.
15. GOVERNING LAW. This Agreement shall be governed by the laws of New
York applicable to contracts executed and to be performed therein, without
regard to principles of conflicts of laws.
16. ARBITRATION. All disputes hereunder, including disputes with respect
to the disposition of the Funds and Section 8.01 of the Merger Agreement, shall
be resolved by
5
<PAGE>
arbitration in New York City under the rules of the American Arbitration
Association, unless this Agreement or the Merger Agreement provides for
another dispute resolution mechanism, such as a determination by the
Reviewing Accountant. Parent and the Representative shall cooperate in
respect of any such arbitration, including by furnishing any information
reasonably requested by the other or by the arbitrator in connection with any
dispute. The fees and expenses of the arbitrator shall be borne equally by
Parent and the Representative. Decisions of the arbitrator shall be final
and binding.
6
<PAGE>
WITNESS THE DUE EXECUTION AND DELIVERY HEREOF as of the date first set
forth above.
REPRESENTATIVE:
_____________________________
George Billings
INTERNATIONAL WIRELESS
COMMUNICATIONS HOLDINGS, INC.
By: ___________________________
Name:
Title:
TORONTO DOMINION [TEXAS], INC.
By: ___________________________
Name:
Title:
<PAGE>
Exhibit 2.11E
CONSULTING AGREEMENT
CONSULTING AGREEMENT, dated as of November 22, 1997, by and between
Radio Movil Digital Americas, Inc., a Delaware corporation (the "Company"),
and Robert Dupuis ("Consultant").
WHEREAS, concurrently with the execution of this Agreement, the
Company, International Wireless Communications Holdings, Inc. ("IWC") and
[RMD Acquisition Sub], a wholly owned subsidiary of IWC, are entering into an
Agreement and Plan of Merger (the "Merger Agreement"), dated as of the date
hereof;
WHEREAS, IWC intends to enter into a non-competition agreement with
Consultant (the "Non-Competition Agreement"), dated as of the date hereof;
and
WHEREAS, the Company desires to engage Consultant to assist in the
Company's business operations, and Consultant desires to provide consulting
services to aid the Company in connection with its business operations.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements contained herein, and intending to be legally bound
hereby, the parties hereby agree as follows:
1. ENGAGEMENT.
The Company hereby engages Consultant to provide consulting
services to the Company and IWC and their respective subsidiaries and related
entities, and Consultant hereby accepts such engagement. During the time
that Consultant is performing services for the Company under this Agreement,
and for all purposes hereunder, the status of Consultant shall be that of an
independent contractor of the Company and Consultant shall not have the
benefits, rights and privileges ordinarily accorded to an employee of the
Company.
Consultant shall be available to advise and counsel IWC and the
Company, including their respective subsidiaries and related entities, and
consult with its employees, representatives, agents or contractors as to such
matters and to perform such other services as the Company shall reasonably
request. Consultant shall make himself available to provide such services
at such time or times as the Company shall request for the performance of the
services contemplated hereby. During the first six weeks of this Agreement,
the Company shall request the Consultant to perform services on a full-time
basis and for the next six weeks of this Agreement, the Company shall request
the Consultant to perform services for 2.5 days per week. Consultant agrees
to make all reasonable efforts to make himself available at the Company's
offices or at such other locations as the Company may reasonably request for
the Consultant to perform such services.
2. TERM. The period of engagement of Consultant hereunder shall
commence on the date of the closing of the transactions contemplated by the
Merger
<PAGE>
Agreement and shall terminate on the earlier of May 1, 1998 and the three
month anniversary of such date, unless sooner terminated as hereinafter
provided. During the term of this Agreement as provided herein, Consultant
may engage in any business and perform any service for his own account,
provided that such business or service shall not violate any provision of the
Non-Competition Agreement.
3. CONSULTING FEES. For each day of services rendered hereunder,
Consultant shall be entitled to receive from the Company an amount equal to
$3,000 per day during which the Consultant performs services at the Company's
request or during which the Company requests that the Consultant make himself
available to perform such services, which amount shall be calculated and paid
at the end of each month during the term of this Agreement. As used in this
Agreement, a "day" shall refer to a period of service of eight cumulative
hours, whether or not performed in a single calendar day, but excluding
travel time of Consultant unless (i) during such travel time Consultant is
performing services for the Company pursuant to this Agreement or (ii) such
travel is to or from California or Latin America at the Company's request.
The parties hereby acknowledge and agree that all amounts paid to
the Consultant during the term of this Agreement shall represent fees for his
consulting services as an independent contractor, and shall therefore be paid
without any deductions or withholdings taken therefrom for taxes or any other
purpose. Consultant further acknowledges that the Company makes no warranties
as to any tax consequences of such payments, and specifically agrees that the
determination of any tax liability or other consequences of the payment set
forth above is his sole and complete responsibility and that he will pay all
federal, state, local and foreign taxes, if any, assessed on such payments.
4. TERMINATION OF CONSULTING ENGAGEMENT. Notwithstanding any
other provision of this Agreement to the contrary, the engagement of
Consultant hereunder may be terminated, at the option of the Company, in the
event of: (i) Consultant's willful failure or refusal to perform the
consulting services required by Section 1 hereof upon 10 days advance notice
from the Company and provided that Consultant shall have a reasonable
opportunity to cure such failure or refusal within such 10 days,(ii) willful
fraud or material dishonesty in connection with Consultant's performance
hereunder, (iii) the death or disability of Consultant; for purposes hereof,
disability shall exist if Consultant shall be rendered incapable of
performing his duties hereunder by reason of any physical or mental
impairment, (iv) Consultant's conviction for, or plea of NOLO CONTENDERE to,
a charge of commission of a felony or (v) any violation by Consultant of any
provision of the Non-Competition Agreement.
Upon the termination of this engagement for any of the foregoing
reasons, Consultant shall be entitled to receive, on the scheduled payment
dates, any accrued but unpaid consulting fees through the date of such
termination.
5. EXPENSES. During the term of this Agreement, Consultant may be
required to incur business expenses in connection with the performance of its
duties
2
<PAGE>
hereunder. The Company shall reimburse Consultant for all such expenses that
are reasonable and are appropriately documented in accordance with the
Company's policies.
6. MISCELLANEOUS.
A. COUNTERPARTS; EFFECTIVENESS. This Agreement may be
executed in one or more counterparts, each of which shall be deemed an
original and all of which shall constitute one and the same instrument, but
only one of which need be produced.
B. MODIFICATION; AMENDMENT; WAIVER. No modification,
amendment or waiver of any provisions of this Agreement shall be effective
unless approved in writing by both parties. The failure at any time to
enforce any of the provisions of this Agreement shall in no way be construed
as a waiver of such provisions and shall not affect the right of either party
thereafter to enforce each and every provision hereof in accordance with its
terms.
C. GOVERNING LAW; JURISDICTION. This Agreement and
performance under it, and all proceedings that may ensue from its breach,
shall be construed in accordance with and under the laws of the State of
Delaware, and the parties submit to the jurisdiction of the courts of the
State of Delaware for purposes of any actions or proceedings that may be
required to enforce this Agreement.
D. SEVERABILITY. Any term or provision of this Agreement
which is invalid or unenforceable in any jurisdiction shall, as to that
jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining
terms and provisions of this Agreement in any other jurisdiction. If any
provision of this Agreement is so broad as to be unenforceable, such
provision shall be interpreted to be only so broad as is enforceable.
E. SUCCESSORS AND ASSIGNS. This Agreement shall inure to the
benefit of and the successors and assigns of the Company. The Company may
assign its rights under this Agreement in connection with any sale, transfer
of other disposition of all or a substantial portion of the stock or assets
of the Company. The Consultant may not assign his duties or obligations
hereunder.
F. EFFECTIVENESS. This Agreement shall become effective upon
consummation of the transactions contemplated by the Merger Agreement and
prior thereto shall be of no force and effect. If the Merger Agreement shall
be terminated in accordance with its terms, this Agreement shall
automatically be deemed to have been terminated and shall thereafter be of no
force or effect.
G. NOTICES. All notices and other communications under this
Agreement shall be in writing and shall be given in person or by telegraph,
telefax or first class mail, certified or registered with return receipt
requested, and shall be deemed to have been duly given when delivered
personally or three days after mailing or one day after transmission of a
telegram or telefax, as the case may be, to the respective persons named
below:
3
<PAGE>
If to the Company:
----------------------------
----------------------------
----------------------------
----------------------------
If to the Consultant:
----------------------------
----------------------------
----------------------------
----------------------------
4
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the day and year first above written.
RADIO MOVIL DIGITAL AMERICAS,
INC.
By:
------------------------------
Name:
Title:
ROBERT DUPUIS
---------------------------------
5
<PAGE>
Exhibit 2.11F
NON-COMPETITION AGREEMENT
NON-COMPETITION AGREEMENT, dated as of November 22, 1997, by and between
International Wireless Communications Holdings, Inc. (the "Company") and Robert
Dupuis (the "Executive");
WHEREAS, the Executive is the Chief Executive Officer of Radio Movil
Digital Americas, Inc. ("RMD");
WHEREAS, concurrently with the execution and delivery of this Agreement,
the Company and RMD are entering into an Agreement and Plan of Merger (the
"Merger Agreement"), dated as of the date hereof;
WHEREAS, RMD intends to enter into a consulting agreement (the "Consulting
Agreement") with the Executive dated as of the date hereof;
WHEREAS, the Executive has substantial experience and significant business
relationships in the specialized mobile radio trunking business;
WHEREAS, the Company and RMD would suffer damages, including the loss of
profits, if the Executive disclosed any confidential information of the Company
or RMD, engaged in any business that is competitive with the Company or RMD or
solicited the termination of the Company's or RMD's relationships with its
suppliers, customers or employees;
WHEREAS, the Company would not have entered into the Merger Agreement
absent the execution by the Executive of this Agreement;
WHEREAS, it is the interest of the Executive that the transactions
contemplated by the Merger Agreement be consummated; and
WHEREAS, this Agreement has been reached in good faith in arms-length
negotiations.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements contained herein, and intending to be legally bound hereby, the
parties hereto agree as follows:
<PAGE>
1. PAYMENTS. In consideration of the execution, delivery and
performance of this Agreement and the covenants contained herein, upon the
effectiveness of this Agreement as contemplated by Section 9 hereof, the
Company shall pay the Executive $450,000.
2. CONFIDENTIAL INFORMATION. The Executive recognizes and acknowledges
that he has had access to certain information of members of the Company Group
(as defined below) and that such information is confidential and constitutes
valuable, special and unique property of such members of the Company Group.
The Executive shall not at any time after the date hereof, disclose to
others, use, copy or permit to be copied, except in pursuance of his duties
for and on behalf of the Company and RMD, their respective successors,
assigns or nominees, any Confidential Information of any member of the
Company Group (regardless of whether developed by the Executive) without the
prior written consent of the Company.
As used herein, "Company Group" means the Company (including RMD), and
any entity that directly or indirectly controls, is controlled by, or is
under common control with, the Company and RMD, and for purposes of this
definition "control" means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of such
entity, whether through the ownership of voting securities, by contract or
otherwise.
The term "Confidential Information" with respect to any person means any
secret or confidential information or know-how and shall include, but shall
not be limited to, the plans, customers, costs, prices, uses, and
applications of products and services (including all licenses and airwave
frequencies), results of investigations, studies or experiments owned or used
by such person, and all apparatus, products, processes, compositions,
samples, formulas, computer programs, computer hardware designs, computer
firmware designs, and servicing, marketing or manufacturing methods and
techniques at any time used, developed, investigated, made or sold by such
person, all financial matters and information relating to merger and
acquisitions, in all such cases before or during the term of this Agreement,
that are not readily available to the public or that are maintained as
confidential by such person. The Executive shall maintain in confidence any
Confidential Information of third parties received as a result of his
Consulting with the Company in accordance with the Company's obligations to
such third parties and the policies established by the Company.
3. NO COMPETITION. For the term of the Consulting Agreement and for a
period of 2 years following the date of the expiration of the term of the
Consulting Agreement, the Executive shall not directly or indirectly engage
in Latin America in the specialized mobile radio trunking business (the "SMR
Business"). For purposes of this Section 2, the Executive shall be deemed to
engage in a business if he, directly or indirectly, engages or invests in,
owns, manages, operates, controls or participates in the ownership,
management, operation or control of, is employed by, associated or in any
manner connected with, or renders services or advice to, any business engaged
in the SMR Business; PROVIDED, HOWEVER, that the Executive may invest in the
securities of any enterprise (but without otherwise participating in the
activities of such enterprise) if (x) such securities are listed on any
national or regional securities exchange or have been registered under
Section 12(g) of the Securities Exchange Act of 1934 and (y) the Executive
does not beneficially own (as
2
<PAGE>
defined Rule 13d-3 promulgated under the Securities Exchange Act of 1934) in
excess of 3% of the outstanding equity of such enterprise. The foregoing
shall not prevent the Executive from being employed by a company or a
subsidiary, division or business unit of a company (each, a "Separate Unit")
where the Separate Unit itself is not engaged in the SMR Business and where
the Executive has no business relationship with any other parts of the
company that are engaged in the SMR Business and where the Executive is not
involved, directly or indirectly, in any part of the company's (or any other
Separate Unit's) SMR Business activities.
4. NO SOLICITATION. During the same period as the restrictions of
Section 2 hereof shall apply, the Executive shall not (a) request, induce or
attempt to influence any distributor or supplier of goods or services to any
member of the Company Group to curtail or cancel any business they may
transact with any member of the Company Group; (b) request, induce or attempt
to influence any customers of any member of the Company Group that have done
business with or potential customers which have been in contact with any
member of the Company Group to curtail or cancel any business they may
transact with any member of the Company Group, (c) request, induce or attempt
to influence any employee of any member of the Company Group to terminate his
or her Consulting with such member of the Company Group or (d) request,
induce or attempt to influence any governmental entity or regulatory
authority to terminate, revoke or materially and adversely alter or impair
any SMR license or channel held, owned, used or reserved for the Company
Group.
5. ENFORCEABILITY. The Executive agrees that if a court of competent
jurisdiction determines that the length of time or any other restriction, or
portion thereof, set forth in this Agreement is overly restrictive and
unenforceable, the court may reduce or modify such restrictions to those
which it deems reasonable and enforceable under the circumstances, and as so
reduced or modified, the parties hereto agree that the restrictions of this
Agreement shall remain in full force and effect. The Executive further
agrees that if a court of competent jurisdiction determines that any
provision of this Agreement is invalid or against public policy, the
remaining provisions of this Agreement and the remainder of this Agreement
shall not be affected thereby, and shall remain in full force and effect.
The Executive acknowledges and the business of the Company Group is
international in scope and that the restrictions imposed by the Agreement are
legitimate, reasonable and necessary to protect the Company's and its
affiliates' investment in their businesses and the goodwill thereof. The
Executive acknowledges that the scope and duration of the restrictions
contained herein are reasonable in light of the time that the Executive has
been engaged in the SMR Business, the Executive's reputation in the markets
for the SMR Businesses and the Executive's relationship with the suppliers,
customers and clients of the RMD and its affiliates. The Executive further
acknowledges that the restrictions contained herein are not burdensome to the
Executive in light of the consideration paid therefor and the other
opportunities that remain open to the Executive. Moreover, the Executive
acknowledges that he has other means available to him for the pursuit of his
livelihood.
6. REMEDIES. The Executive acknowledges that money damages or other
remedy at law would not be sufficient or adequate remedy for any breach or
violation of, or default
3
<PAGE>
under, this Agreement, but the Executive agrees that in addition to all other
remedies available to the Company, the Company shall be entitled to the
fullest extent permitted by law to an injunction restraining such breach,
violation or default or threatened breach, violation or default and to any
other equitable relief, including, without limitation, specific performance,
without bond or other security interest being required. The Company shall
have the right to offset against amounts to be paid to the Executive to the
Company. The termination of the Consulting Agreement shall not be deemed to
be a waiver by the Company of any breach by the Executive of this Agreement
or any other obligation owed the Company, and notwithstanding such a
termination of the Executive shall be liable for all damages attributable to
such a breach.
7. INTENT OF PARTIES. Each of the parties hereto recognizes and agrees
that this Agreement is necessary and essential to enable the Company to
realize and derive all of the benefits, rights and expectation of the Merger
Agreement; that the area and duration of the covenants herein are in all
things, under the circumstances of the Merger Agreement, reasonable; and that
good and valuable consideration exists for Executive's agreeing to be bound
by such covenants.
8. SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit
of and the successors and assigns of the Company. The Company may assign its
rights under this Agreement in connection with any sale, transfer of other
disposition of all or a substantial portion of the stock or assets of the
Company. The Executive may not assign his duties or obligations hereunder,
but this Agreement shall be enforceable against the Executive's heirs and
estate to the extent of any violation hereof by the Executive.
9. EFFECTIVENESS. This Agreement shall become effective upon
consummation of the merger contemplated by the Merger Agreement and prior
thereto shall be of no force and effect. If the Merger Agreement shall be
terminated in accordance with its terms, this Agreement shall automatically
be deemed to have been terminated and shall thereafter be of no force or
effect.
10. GOVERNING LAW. This Agreement and the rights and obligations of
the parties hereto shall be governed, construed and enforced in accordance
with the laws of the State of Delaware.
11. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original and all of which
shall constitute one and the same instrument, but only one of which need be
produced.
12. HEADINGS. The headings of this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning of this
Agreement.
*****
4
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
INTERNATIONAL WIRELESS
COMMUNICATIONS HOLDINGS, INC.
By:
-------------------------------
Name:
Title:
ROBERT DUPUIS
-------------------------------
5
<PAGE>
Exhibit 3.5
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF INTERNATIONAL WIRELESS COMMUNICATIONS HOLDINGS, INC.
a Delaware Corporation
International Wireless Communications Holdings, Inc. (the
"Corporation"), a corporation organized and existing under and by virtue of
the General Corporation Law of the State of Delaware (the "General
Corporation Law"), does hereby certify that:
FIRST: The name of the Corporation is International Wireless
Communications Holdings, Inc. and the Corporation was originally incorporated
on July 8, 1996.
SECOND: The following resolutions amending and restating the
Corporation's Certificate of Incorporation were duly approved at a meeting of
the Board of Directors of the Corporation on November 24, 1997 and were duly
adopted by the stockholders of the Corporation in accordance with the
provisions of Sections 242 and 245 of the General Corporation Law by written
consent of the stockholders given in accordance with Section 228 of the
General Corporation Law:
NOW, THEREFORE, BE IT RESOLVED, that the Certificate of
Incorporation of the Corporation be, and it hereby is, amended and
restated in its entirety as follows:
ARTICLE I
The name of this corporation is International Wireless
Communications Holdings, Inc. (the "Corporation").
ARTICLE II
The address of the Corporation's registered office in the State of
Delaware is 15 East North Street, Dover, Kent County, Delaware. The name of
its registered agent at such address is Incorporating Services, Ltd.
ARTICLE III
The purpose of the Corporation is to engage in any lawful act or
activity for which a corporation may be organized under the General
Corporation Law.
ARTICLE IV
The number of directors which shall constitute the whole Board of
Directors of the Corporation shall be as specified in the by-laws of the
Corporation.
<PAGE>
A. CLASSES OF STOCK. The Corporation is authorized to issue three
classes of stock to be designated, respectively, "Class 1 Common Stock,"
"Class 2 Common Stock" (together with Class 1 Common Stock, "Common Stock")
and "Preferred Stock." The total number of shares which the Corporation is
authorized to issue is One Hundred Twenty-Six Million (126,000,000). Seventy
Million (70,000,000) shares shall be Class 1 Common Stock, with a par value
of $0.01 per share, Six Million (6,000,000) shares shall be Class 2 Common
Stock, with a par value of $0.01 per share, and Fifty Million (50,000,000)
shares shall be Preferred Stock, with a par value of $0.01 per share.
B. RIGHTS, PREFERENCES AND RESTRICTIONS OF PREFERRED STOCK. The
Preferred Stock authorized by this Amended and Restated Certificate of
Incorporation may be issued from time to time in one or more series. There
is hereby designated a Series A Preferred Stock (the "Series A Preferred
Stock"), a Series B Preferred Stock (the "Series B Preferred Stock"), a
Series C Preferred Stock (the "Series C Preferred Stock"), a Series D
Preferred Stock (the "Series D Preferred Stock), a Series E Preferred Stock
(the "Series E Preferred Stock"), a Series F-1 Preferred Stock (the "Series
F-1 Preferred Stock"), a Series F-2 Preferred Stock (the "Series F-2
Preferred Stock;" and the Series F-1 Preferred Stock are collectively
referred to as the "Series F Preferred Stock"), a Series G-1 Preferred Stock
(the "Series G-1 Preferred Stock"), a Series G-2 Preferred Stock (the "Series
G-2 Preferred Stock;" and the Series G-1 Preferred Stock are collectively
referred to as the "Series G Preferred Stock"), a Series H-1 Preferred Stock
(the "Series H-1 Preferred Stock"), a Series H-2 Preferred Stock (the "Series
H-2 Preferred Stock; and the Series H-1 Preferred Stock are collectively
referred to as the "Series H Preferred Stock"), and a Series I Preferred
Stock (the "Series I Preferred Stock") (the Series A, Series B, Series C,
Series D, Series E, Series F, Series G, Series H and Series I Preferred Stock
are collectively referred to as the "Existing Preferred Stock"). The rights,
preferences, privileges, and restrictions granted to and imposed on the
Series A Preferred Stock, which Series shall consist of One Million Two
Hundred Thousand (1,200,000) shares, the Series B Preferred Stock, which
Series shall consist of One Million Two Hundred Twenty-Nine Thousand Two
Hundred Forty (1,229,240) shares, the Series C Preferred Stock, which Series
shall consist of Two Million Four Hundred Sixty (2,460,000) shares, the
Series D Preferred Stock, which Series shall consist of Five Million Eight
Hundred Thousand (5,800,000) shares, the Series E Preferred Stock, which
Series shall consist of Three Million Nine Hundred Seventy-Two Thousand Two
Hundred Forty (3,972,240) shares, the Series F-1 Preferred Stock, which
Series shall consist of Seven Million (7,000,000) shares, the Series F-2
Preferred Stock, which Series shall consist of One Million Eighty Thousand
(1,080,000) shares, the Series G-1 Preferred Stock, which Series shall
consist of One Million Nine Hundred Twenty-Eight Thousand (1,928,000) shares,
the Series G-2 Preferred Stock, which Series shall consist of One Million Two
Hundred Ninety-Two Thousand (1,292,000) shares, the Series H-1 Preferred
Stock, which Series shall consist of Five Million Seventy-Two Thousand
(5,072,000) shares, the Series H-2 Preferred Stock, which Series shall
consist of Three Million Three Hundred Ninety-Eight Thousand (3,398,000)
shares, and the Series I Preferred Stock, which series shall consist of Eight
Million (8,000,000) shares, are as set forth below in this Article V(B);
provided, that anything contained herein to the contrary notwithstanding, the
economic rights, preferences and privileges of (i) the Series F-1 and
2
<PAGE>
Series F-2 Preferred Stock shall be identical, (ii) the Series G-1 and Series
G-2 Preferred Stock shall be identical and (iii) the Series H-1 and Series
H-2 Preferred Stock shall be identical. The Board of Directors is hereby
authorized to fix or alter the rights, preferences, privileges and
restrictions granted to or imposed upon additional Series of Preferred Stock,
and the number of shares constituting any such Series and the designation
thereof, or of any of them. Subject to compliance with applicable protective
voting rights which have been or may be granted to the Preferred Stock or
Series thereof in Certificates of Designation or the Corporation's Amended
and Restated Certificate of Incorporation ("Protective Provisions"), but
notwithstanding any other rights of the Preferred Stock or any Series
thereof, the rights, privileges, preferences and restrictions of any such
additional Series may be subordinated to, PARI PASSU with (including, without
limitation, with respect to liquidation and acquisition preferences,
redemption and/or approval of matters by vote or written consent), or senior
to any of those of any present or future class or Series of Preferred or
Common Stock. Subject to compliance with applicable Protective Provisions,
the Board of Directors is also authorized to increase or decrease the number
of shares of any Series of Preferred Stock (other than the Existing Preferred
Stock), prior or subsequent to the issue of that series, but not below the
number of shares of such Series then outstanding. In case the number of
shares of any Series shall be so decreased, the shares constituting such
decrease shall resume the status which they had prior to the adoption of the
resolution originally fixing the number of shares of such series.
1. LIQUIDATION PREFERENCE.
(a) In the event of any liquidation, dissolution or winding
up of the Corporation, either voluntary or involuntary, the holders of Series
B, Series C, Series D, Series E, Series F, Series G, Series H and Series I
Preferred Stock shall be entitled to receive, prior and in preference to any
distribution of any assets of the Corporation to the holders of the Series A
Preferred Stock and Common Stock by reason of their ownership thereof, the
following amounts (with respect to each such Series of Preferred Stock, the
"Preferred Preferential Amount") in the following order of priority:
(i) First, the holders of Series G Preferred Stock
shall be entitled to receive an amount per share equal to the sum of (i) the
IWCH Note Exchange Price (as defined below), as appropriately adjusted for
any stock dividends, combinations, splits or the like with respect to such
shares after the initial issuance thereof (the "Original Series G Issue
Price"), and (ii) an amount equal to declared but unpaid dividends on such
share, subject to reduction in accordance with subsection V.B.1(a)(vi);
(ii) Then the holders of Series H Preferred Stock shall
be entitled to receive an amount per share equal to the sum of (i) the PWH
Note Exchange Price (as defined below), as appropriately adjusted for any
stock dividends, combinations, splits or the like with respect to such shares
after the initial issuance thereof (the "Original Series H Issue Price"), and
(ii) an amount equal to declared but unpaid dividends on such share, subject
to reduction in accordance with subsection V.B.1(a)(vi);
3
<PAGE>
(iii) Then, the holders of Series F Preferred Stock
shall be entitled to receive an amount per share equal to the sum of (i) the
product of (A) .50 multiplied by (B) $9.375, as appropriately adjusted for
any stock dividends, combinations, splits or the like with respect to such
shares (the "Original Series F Issue Price"), and (ii) an amount equal to
declared but unpaid dividends on such share, subject to reduction in
accordance with subsection V.B.1(a)(vi);
(iv) Then, the holders of Series B, Series C, Series D,
Series E and Series I Preferred Stock (the "Junior Preferred Stock") shall be
entitled to receive an amount per share calculated as follows:
(A) the holders of Series B Preferred Stock shall be entitled
to receive an amount per share equal to the sum of (i) the product of (A) .55
multiplied by (B) $0.9193, as appropriately adjusted for any stock dividends,
combinations, splits or the like with respect to such shares (the "Original
Series B Issue Price"), and (ii) an amount equal to declared but unpaid
dividends on such share, subject to reduction in accordance with subsection
V.B.1(a)(vi);
(B) the holders of Series C Preferred Stock shall
be entitled to receive an amount per share equal to the sum of (i) the
product of (A) .55 multiplied by (B) $2.223, as appropriately adjusted for
any stock dividends, combinations, splits, or the like with respect to such
shares (the "Original Series C Issue Price"), and (ii) an amount equal to
declared but unpaid dividends on such share, subject to reduction in
accordance with subsection V.B.1(a)(vi);
(C) the holders of Series D Preferred Stock shall
be entitled to receive an amount per share equal to the sum of (i) the
product of (A) .55 multiplied by (B) $6.55, as appropriately adjusted for any
stock dividends, combinations, splits or the like with respect to such shares
(the "Original Series D Issue Price"), and (ii) an amount equal to declared
but unpaid dividends on such share, subject to reduction in accordance with
subsection V.B.1(a)(vi);
(D) the holders of Series E Preferred Stock shall
be entitled to receive an amount per share equal to the sum of (i) the
product of (A) .55 multiplied by (B) $6.2938, as appropriately adjusted for
any stock dividends, combinations, splits or the like with respect to such
shares (the "Original Series E Issue Price"), and (ii) an amount equal to
declared but unpaid dividends on such share, subject to reduction in
accordance with subsection V.B.1(a) (vi); and
(E) the holders of Series I Preferred Stock shall
be entitled to receive an amount per share equal to the sum of (i) the
product of (A) .55 multiplied by (B) $13.728, as appropriately adjusted for
any stock dividends, combinations, splits or the like with respect to such
shares (the "Original Series I Issue Price"), and (ii) an amount equal to
declared but unpaid dividends on such share, subject to reduction in
accordance with subsection IV.B.1(a)(vi);
4
<PAGE>
(v) Then, the holders of the Junior Preferred Stock
and the Series F Preferred Stock shall be entitled to receive an amount per
share calculated as follows:
(A) the holders of Series B Preferred Stock shall
be entitled to receive an amount per share equal to the product of (1) .50
multiplied by (2) the Original Series B Issue Price, subject to reduction in
accordance with subsection V.B.1(a)(vi);
(B) the holders of Series C Preferred Stock shall
be entitled to receive an amount per share equal to the product of (1) .50
multiplied by (2) the Original Series C Issue Price, subject to reduction in
accordance with subsection V.B.1(a)(vi);
(C) the holders of Series D Preferred Stock shall
be entitled to receive an amount per share equal to the product of (1) .50
multiplied by (2) the Original Series E Issue Price, subject to reduction in
accordance with subsection V.B.1(a)(vi);
(D) the holders of Series E Preferred Stock shall
be entitled to receive an amount per share equal to the product of (1) .50
multiplied by (2) the Original Series E Issue Price, subject to reduction in
accordance with subsection V.B.1(a)(vi);
(E) the holders of Series F Preferred Stock shall
be entitled to receive an amount per share equal to the product of (1) .50
multiplied by (2) the Original Series F Issue Price, subject to reduction in
accordance with subsection V.B.1(a)(vi); and
(F) the holders of Series I Preferred Stock shall
be entitled to receive an amount per share equal to the product of (1) .50
multiplied by (2) the Original Series I Issue Price, subject to reduction in
accordance with V.B.1(a)(vi).
(vi) Notwithstanding the foregoing,
(A) If the assets and funds of the Corporation are
insufficient to permit the payment in full to the holders of Series G
Preferred Stock and Series H Preferred Stock in accordance with clauses (i)
and (ii) above, then, the entire assets and funds of the Corporation legally
available for distribution shall be distributed ratably among the holders of
outstanding shares of Series G Preferred Stock and Series H Preferred Stock
in proportion to their respective aggregate Preferred Preferential Amounts
(as defined above);
(B) if the assets and funds of the Corporation
are insufficient to permit the payment in full to the holders of Series F
Preferred Stock in accordance with clause (iii) above, then, the entire
assets and funds of the Corporation legally available for distribution, after
completion of the distributions required by clauses (i) and (ii) above, shall
be distributed ratably among the holders of the shares of Series F Preferred
Stock in proportion to the number of shares of Series F Preferred Stock then
outstanding;
5
<PAGE>
(C) if the assets and funds of the Corporation
are insufficient to permit the payment in full to the holders of the Junior
Preferred Stock in accordance with clause (iv) above, then, the entire assets
and funds of the Corporation legally available for distribution, after
completion of the distribution required by clauses (i), (ii) and (iii) above,
shall be distributed ratably among the holders of each Series of Junior
Preferred Stock in proportion to the total amounts to be paid to the holders
of such Series of Preferred Stock, and ratably among the holders of shares of
each such Series in proportion to the number of shares of such Series of
Preferred Stock then outstanding; and
(D) if the assets and funds of the Corporation are
insufficient to permit the payment in full to the holders of the Junior
Preferred Stock and the Series F Preferred Stock in accordance with clause
(v) above, then, the entire assets and funds of the Corporation legally
available for distribution, after completion of the distribution required by
clauses (i), (ii), (iii) and (iv) above, shall be distributed ratably among
the holders of each such Series of Preferred Stock in proportion to the total
amounts to be paid to the holders of such Series of Preferred Stock, and
ratably among the holders of shares of each such Series in proportion to the
number of shares of such Series of Preferred Stock then outstanding.
(b) Upon the completion of the distribution required by
subsection (a) above, if assets remain in the Corporation, the holders of the
Series A Preferred Stock of the Corporation shall be entitled to receive,
prior and in preference to any distribution of any of the assets of the
Corporation to the holders of Common Stock by reason of their ownership
thereof, an amount per share equal to the sum of (i) $0.85, as appropriately
adjusted for any stock dividends, combinations, splits or the like with
respect to such shares (the "Original Series A Issue Price") and (ii) an
amount equal to declared but unpaid dividends on such shares (together, the
"Series A Preferential Amount"), subject to reduction in accordance with the
next sentence and section V.B.2. If upon the occurrence of such event, the
assets and funds to be distributed among the holders of the Series A
Preferred Stock shall be insufficient to permit the payment to such holders
of the full Series A Preferential Amount, then, the entire assets and funds
of the Corporation legally available for distribution shall be distributed
ratably among the holders of Series A Preferred Stock in proportion to the
number of shares of such Series owned by each such holder.
(c) Upon the completion of the distribution required by
subsections (a) and (b) above and any other distribution that may be required
with respect to Series of Preferred Stock that may from time to time come
into existence, if assets remain in the Corporation, the holders of the
Common Stock of the Corporation shall be entitled to receive an amount per
share equal to the sum of (i) $0.50 per share of Common Stock, as
appropriately adjusted for any stock dividends, combinations, splits or the
like with respect to such shares (the "Original Common Issue Price"), and
(ii) all declared and unpaid dividends on such shares (the "Common
Preferential Amount"), subject to reduction in accordance with the next
sentence and section V.B.2. If upon the occurrence of such event, the assets
and funds to be distributed among the holders of the Common Stock shall be
insufficient to permit the payment to such holders of the full Common
Preferential Amount, then, subject to the rights of Series of Preferred Stock
that may from time to time come into existence, the entire assets and funds
of the Corporation legally
6
<PAGE>
available for distribution shall be distributed ratably among the holders of
Common Stock in proportion to the number of shares of Common Stock owned by
each such holder.
(d) After the distributions described in subsections (a), (b)
and (c) above have been paid, the remaining assets of the Corporation
available for distribution to stockholders shall be distributed among the
holders of Existing Preferred Stock and Common Stock pro rata based on the
number of shares of Common Stock held by each, such that each holder of
shares of Existing Preferred Stock shall be entitled to the same amount of
distributions as would have been paid thereon had such shares been converted
into Common Stock as of the record date fixed for determining the holders of
Common Stock entitled to receive such distribution.
Notwithstanding the foregoing, upon the consummation of a
Corporate Transaction (as defined below) in which the consideration
thereunder, net of all direct expenses of the Corporate Transaction, equals
or exceeds $18.75 per share (as adjusted appropriately for stock dividends,
combinations, splits or the like with respect to such shares) on a fully
diluted basis, then in lieu of the distributions set forth in subsections (a)
through (d) above, all proceeds of such Corporate Transaction shall be
distributed to the stockholders of the Corporation pro rata based upon the
number of shares of Common Stock owned by each stockholder (assuming the
conversion into Common Stock of all securities convertible into Common Stock).
(e) (i) For purposes of this Section 1, a liquidation,
dissolution or winding up of the Corporation shall be deemed to be occasioned
by, and to include, (A) the acquisition of the Corporation by another entity
by means of any transaction or series of related transactions (including,
without limitation, any reorganization, merger or consolidation but,
excluding any merger effected exclusively for the purpose of changing the
domicile of the Corporation); or (B) a sale of all or substantially all of
the assets of the Corporation; UNLESS the Corporation's stockholders of
record as constituted immediately prior to such acquisition or sale will,
immediately after such acquisition or sale (by virtue of securities issued as
consideration for the Corporation's acquisition or sale or otherwise) hold at
least 50% of the voting power of the surviving or acquiring entity. Any such
transaction contemplated by this subsection (e)(i) shall be hereinafter
referred to as a "Corporate Transaction."
(ii) In any of such events, if the consideration received
by the Corporation is other than cash, for purposes of determining the value
of any assets of the Corporation which are to be distributed to the
stockholders of the Corporation in any liquidation, winding up or
dissolution, its value will be deemed its fair market value, as determined
below:
(A) Securities not subject to investment letter
or other similar restrictions on free marketability covered by (B) below:
(1) If traded on a securities exchange or
through the Nasdaq National Market, the value shall be deemed to be the
average of the closing prices of the securities on such exchange or market
over the thirty (30)-day period ending three (3) days prior to the closing;
7
<PAGE>
(2) If actively traded over-the-counter
other than the Nasdaq National Market, the value shall be deemed to be the
average of the closing bid or sale prices (whichever is applicable) over the
thirty (30)-day period ending three (3) days prior to the closing; and
(3) If there is no active public market, the
value shall be the fair market value thereof, as mutually determined by the
Corporation and the holders of a majority of the voting power of all then
outstanding shares of Preferred Stock, with holders of a majority of the
shares of Series F Preferred Stock voting in favor thereof.
(B) The method of valuation of securities subject
to investment letter or other restrictions on free marketability (other than
restrictions arising solely by virtue of a stockholder's status as an
affiliate or former affiliate) shall be to make an appropriate discount from
the market value determined as above in subsection (A)(1), (2) or (3) to
reflect the approximate fair market value thereof, as mutually determined by
the Corporation and the holders of a majority of the voting power of all then
outstanding shares of such Preferred Stock, with holders of a majority of the
shares of Series F Preferred Stock voting in favor thereof.
(C) The value of assets other than securities
will be their fair market value as mutually determined by the Corporation and
the holders of a majority of the voting power of all then outstanding shares
of Preferred Stock, with holders of a majority of the shares of Series F
Preferred Stock voting in favor thereof.
(D) If the Corporation and holders of Preferred
Stock are unable to mutually determine the value of any securities or other
assets as provided above, then the fair market value of such securities or
other assets shall be determined as follows:
(1) The Corporation and a representative
(the "Representative") of the holders of a majority of the voting power of
all then outstanding shares of Preferred Stock shall negotiate in good faith
to determine the fair market value of such securities or assets. Such
Representative shall be selected by holders of a majority of the voting power
of all then outstanding shares of Preferred Stock (other than the Series F
Preferred Stock) and the holders of a majority of the shares of Series F
Preferred Stock. If the Corporation and the Representative so agree, the
fair market value shall be the amount so agreed upon.
(2) If no such agreement is reached within
thirty (30) days after negotiations commence, the Corporation, on the one
hand, and the Representative, on the other hand, shall within fifteen (15)
business days thereafter each select an investment banker to value such
securities or assets. The Corporation shall give representatives of each
investment banker full access to all information that they may reasonably
request concerning the Corporation. Within thirty (30) days of their
selection, each investment banker must propose a fair market value for such
securities or assets.
(3) If the fair market value proposed by the
investment banker selected by the Representative is lower or higher by not
more than 10% of
8
<PAGE>
the fair market value proposed by the Corporation's investment banker, then
the fair market value shall be the average of such proposed fair market
values. If, however, the fair market value proposed by the investment banker
selected by the Representative is more than 10% higher than the fair market
value proposed by the Corporation's investment banker, then the parties again
shall consult as to a fair market value. If they are unable to agree on a
fair market value within fifteen (15) days after the receipt of the
investment bankers' reports, they shall cause their investment bankers to
jointly select a third investment banker who shall have access to all
information it may reasonably request concerning the Corporation.
(4) The third investment banker shall have
within thirty (30) days after its selection to choose the fair market value
which best reflects its professional opinion of the fair market value of such
securities or assets, which value shall be either the fair market value
proposed by the Corporation's investment banker or the fair market value
proposed by the investment banker selected by the Representative and which
choice shall be final and be deemed to be the fair market value. The party
whose investment banker's proposed fair market value was not chosen shall be
responsible for all of the costs and expenses incurred by, and the fees of,
the third investment banker. For such purpose, the holders of the Preferred
Stock shall be deemed to constitute a single party and shall bear the costs,
if any, imposed by the immediately preceding sentence severally in proportion
to the number of shares of Preferred Stock held. Otherwise, the Corporation
shall be responsible for all reasonable costs and expenses incurred by the
holders and Corporation for each of the investment bankers retained in
connection with the Corporation's purchase of the holders' shares of
Preferred Stock.
(5) The investment bankers appointed for
purposes of determining the fair market value of such securities or assets
may apply such factors and discounts as are customarily utilized.
(iii) The Corporation shall give each holder of record
of Existing Preferred Stock written notice of such impending transaction not
later than twenty (20) days prior to the stockholders' meeting called to
approve such transaction, or twenty (20) days prior to the closing of such
transaction, whichever is earlier, and shall also notify such holders in
writing of the final approval of such transaction. The first of such notices
shall describe the material terms and conditions of the impending transaction
and the provisions of this Section 1, and the Corporation shall thereafter
give such holders prompt notice of any material changes. The transaction
shall in no event take place sooner than twenty (20) days after the
Corporation has given the first notice provided for herein or sooner than ten
(10) days after the Corporation has given notice of any material changes
provided for herein; provided, however, that such periods may be shortened
upon the written consent of the holders of Existing Preferred Stock
(excluding the Series F-2 Preferred Stock) that are entitled to such notice
rights or similar notice rights and that represent at least a majority of the
voting power of all then outstanding shares of Existing Preferred Stock
(excluding the Series F-2 Preferred Stock) and a majority of the voting power
of the Series F Preferred Stock (excluding the Series F-2 Preferred Stock)
then outstanding.
(f) The following terms shall have the following meanings:
9
<PAGE>
(i) "Series G Exchange Date" means the date on which
the Corporation issues Series G Preferred Stock pursuant to Section 2 of the
Exchange Agreement.
(ii) "Series H Exchange Date" means the date on which
the Corporation issues Series H Preferred Stock pursuant to Section 3 of the
Exchange Agreement.
(iii) "Exchange Agreement" means that term as defined in
the IWCH Loan Agreement.
(iv) "IWCH Loan Agreement" means the Loan Agreement
dated August 18, 1997 between the Corporation and the lenders named therein.
(v) "IWCH Note Exchange Price" has the meaning set
forth in the Exchange Agreement.
(vi) "IWCH Notes" mean the Notes (as defined in the IWCH
Loan Agreement).
(vii) "PWH Loan Agreement" means the Loan Agreement dated
August 18, 1997 among Pakistan Wireless Holdings Limited and the lenders
named therein.
(viii) "PWH Note Exchange Price" has the meaning set forth
in the Exchange Agreement.
(ix) "PWH Notes" mean the Notes (as defined in the PWH
Loan Agreement).
2. DISTRIBUTIONS. When, as and if declared by the
Corporation's Board of Directors, and subject to the Protective Provisions of
the holders of Preferred Stock, for all distributions of funds and assets of
the Corporation, holders of Existing Preferred Stock shall be entitled to
receive distributions at the same time and on the same basis as holders of
Common Stock when, as and if declared by the Corporation's Board of Directors
(each holder of shares of Existing Preferred Stock to be entitled to the same
amount of distributions as would have been declared or paid thereon had such
shares been converted into Common Stock as of the record date fixed for
determining the holders of Common Stock entitled to receive such
distribution). If any such dividends are declared which are payable in
shares of Common Stock, then dividends shall be declared which are payable at
the same rate on both classes of Common Stock and the dividends payable in
shares of Class 1 Common Stock shall be payable to holders of Class 1 Common
Stock and the dividends payable in shares of Class 2 Common Stock shall be
payable to holders of Class 2 Common Stock. If any such dividends consist
of other voting securities of the Corporation, then the Corporation shall
make available to each holder of Series F-2, Series G-2 and Series H-2
Preferred Stock, at such holder's request, dividends consisting of securities
of the Corporation having voting rights comparable to the Series F-2, Series
G-2 or
10
<PAGE>
Series H-2 Preferred Stock, as the case may be, and which are otherwise
identical to such other voting securities and which are convertible into or
exchangeable for such other voting securities on the same terms as Series
F-2, Series G-2 or Series H-2 Preferred Stock, as the case may be, are
convertible into Class 2 Common.
3. REDEMPTION.
(a) (i) On or after the later of (i) such date (the "Note
Payment Date") as all of the Corporation's Senior Secured Discount Notes due
2001 or senior debt securities of the Corporation containing substantially
identical terms issued in exchange therefor (collectively, the "Senior
Notes"), the IWCH Notes and the PWH Notes shall have been repaid in full
(whether by repurchase, redemption, payment at maturity, exchange pursuant to
the Exchange Agreement or otherwise) or (ii) December 31, 1998, but within
forty-five (45) days (the "Redemption Date") after the receipt by the
Corporation of a written request from the holders of not less than a majority
of the then outstanding shares of Series B, Series C, Series D, Series E,
Series F, Series G, Series H and Series I Preferred Stock (voting on an as
converted basis) that shares of Series B, Series C, Series D, Series E,
Series F, Series G, Series H and Series I Preferred Stock be redeemed (a
"Redemption Request"), the Corporation shall in accordance with this Section
3, to the extent it may lawfully do so, redeem all of the shares of Series B,
Series C, Series D, Series E, Series F, Series G, Series H and Series I
Preferred Stock by paying in cash therefor a sum per share (with respect to
each Series of Preferred Stock, the "Redemption Price") equal to the greater
of (1) the then fair market value of the Series B Preferred Stock on an
as-converted basis for each share of Series B Preferred Stock, the then fair
market value of the Series C Preferred Stock on an as-converted basis for
each share of Series C Preferred Stock, the then fair market value of the
Series D Preferred Stock on an as-converted basis for each share of Series D
Preferred Stock, the then fair market value of the Series E Preferred Stock
on an as-converted basis for each share of Series E Preferred Stock, the then
fair market value of the Series F Preferred Stock on an as-converted basis
for each share of Series F Preferred Stock, the then fair market value of the
Series G Preferred Stock on an as-converted basis for each share of Series G
Preferred Stock, the then fair market value of the Series H Preferred Stock
on an as-converted basis for each share of Series H Preferred Stock, and the
then fair market value of the Series I Preferred Stock on an as-converted
basis for each share of Series I Preferred Stock, as the case may be, as
determined in accordance with subsection V.B.1.(e)(ii) hereof (except that,
to the extent the holders of Preferred Stock are entitled to vote on any
matters relating to such valuation, only holders of Preferred Stock which is
being redeemed shall be entitled to so vote, and the "closing" as used
therein shall instead refer to the redemption provided for by this subsection
3(a)), or (2) the full Preferred Preferential Amount payable in respect of
each such Series of Preferred Stock in accordance with subsection V.B.1(a).
All payments by the Corporation in respect of any redemption shall be made to
the holders of the Series F, Series G and Series H Preferred Stock and Junior
Preferred Stock in the same priorities or order of distribution and in the
same proportions as distributions of funds and assets are to be made to such
holders in the case of a liquidation, dissolution or winding-up of the
Corporation. In the event of a liquidation, dissolution or winding-up of the
Corporation prior to the payment in full of the Redemption Price for any
shares to be redeemed
11
<PAGE>
hereunder, the partial payment hereunder shall be credited toward the payment
of the Preferred Preferential Amount to be paid to the holders of each Series
of Preferred Stock.
(ii) On or after the later of (i) the Note Payment Date
or (ii) December 31, 2000, but within forty-five (45) days (a "Series F
Redemption Date") after the receipt by the Corporation of a written request
from the holders of not less than a majority of the then outstanding shares
of Series F Preferred Stock that shares of Series F Preferred Stock be
redeemed (a "Series F Redemption Request"), the Corporation shall in
accordance with this Section 3, to the extent it may lawfully do so, redeem
all of the shares of Series F Preferred Stock by paying in cash therefor at
the Redemption Price of the Series F Preferred Stock.
(iii) Upon the occurrence of a Change of Control (as
defined in the Securities Purchase Agreement dated as of December 6, 1995
among the Corporation and the investors named therein (the "Securities
Purchase Agreement")) that is not approved by all of the Series F Directors
(as defined in subsection V.B.6(b)), then the holders of a majority of the
shares of Series F Preferred Stock then outstanding shall have the right, by
written demand to the Corporation (a "Series F Redemption Request"), to
require the Corporation, on or after the Note Payment Date, to redeem
immediately, to the extent it may lawfully do so, all of the shares of Series
F Preferred Stock then outstanding, at a price per share equal to the
Redemption Price of the Series F Preferred Stock on the date of redemption (a
"Series F Redemption Date").
(iv) On or after the later of (i) the Note Payment
Date, (ii) the Series G Exchange Date (in the case of Series G Preferred
Stock) or the Series H Exchange Date (in the case of Series H Preferred
Stock), (iii) December 31, 1998 and (iv) the first date upon which holders of
Series F Preferred Stock shall be entitled to make a redemption request
pursuant to subsection V.B.3(a)(ii) or (iii) above, but within 45 days (a
"Series G/H Redemption Date") after the receipt by the Corporation of a
written request from the holders of not less than the majority of the then
outstanding shares of Series G or Series H Preferred Stock that shares of
Series G or Series H Preferred Stock, respectively, be redeemed (a "Series
G/H Redemption Request"), the Corporation shall in accordance with this
Section 3, to the extent it may lawfully do so, redeem all of the shares of
the Series G Preferred Stock or the Series H Preferred Stock by paying in
cash therefore at the Redemption Price of the Series G Preferred Stock and
the Series H Preferred Stock, respectively.
(v) In the case of any Redemption Request made by
holders of a majority of the Series F, Series G or Series H Preferred Stock
pursuant to subsection V.B.3(a)(ii), (iii) or (iv), the holders of a majority
of the shares of each such other Series (e.g., the holders of the Series G
and Series H, if the Redemption Request is given by the holders of a majority
of the Series F) will be deemed to have made a Redemption Request pursuant to
subsection V.B.3(ii), (iii) or (iv), as appropriate, unless holders of a
majority of the shares of such other Series decline such redemption by giving
the Corporation written notice to that effect within 10 days after delivery
of the related Redemption Notice. If redemptions pursuant to subsections
V.B.3(a)(ii), (iii) and (iv) above occur on the same date, the liquidation
preference provisions provided in Section V.B.1 above shall apply.
12
<PAGE>
(b) Within ten (10) days after receipt of a Redemption
Request, a Series F Redemption Request or a Series G/H Redemption Request,
written notice shall be mailed, first class postage prepaid, to each holder
of record (at the close of business on the business day next preceding the
day on which notice is given) of Series B, Series C, Series D, Series E,
Series F, Series G, Series H and Series I Preferred Stock, pursuant to
subsection V.B3(a)(i)(i), or solely to each holder of Series F, Series G or
Series H Preferred Stock pursuant to subsection V.B(3)(a)(ii), (iii), or
(iv), at the address last shown on the records of the Corporation for such
holder, notifying such holder of the redemption to be effected, specifying
the Redemption Date, Series F Redemption Date or Series G/H Redemption Date,
as the case may be, the Redemption Price, the place at which payment may be
obtained and calling upon such holder to surrender to the Corporation, in the
manner and at the place designated, his, her or its certificate or
certificates representing the shares (the "Redemption Notice"). Except as
provided in subsection (3)(c) below, on or after the Redemption Date, Series
F Redemption Date or Series G/H Redemption Date, as the case may be, each
holder of Series B, Series C, Series D, Series E, Series F, Series G, Series
H and Series I Preferred Stock, pursuant to subsection V.B3(a)(i), solely to
each holder of Series F, Series G and Series H Preferred Stock pursuant to
subsection V.B3(a)(ii) or (iii), subsection V.B3(a)(iv), or subsection
V.B3(a)(iv), as the case may be, shall surrender to the Corporation the
certificate or certificates representing such shares, in the manner and at
the place designated in the Redemption Notice, and thereupon the respective
Redemption Price of such shares shall be payable to the order of the person
whose name appears on such certificate or certificates as the owner thereof
and each surrendered certificate shall be cancelled.
(c) From and after the Redemption Date, unless there shall
have been a default in payment of the Redemption Price, all rights of a
holder of shares of Series B, Series C, Series D, Series E, Series F, Series
G, Series H and Series I Preferred Stock as a holder of such Preferred Stock
(except the right to receive the Redemption Price without interest upon
surrender of their certificate or certificates) shall cease with respect to
such shares, and such shares shall not thereafter be transferred on the books
of the Corporation or be deemed to be outstanding for any purpose whatsoever.
From and after a Series F Redemption Date, unless there shall have been a
default in payment of the Redemption Price, all rights of a holder of shares
of Series F Preferred Stock as a holder of such Preferred Stock (except the
right to receive the Redemption Price without interest upon surrender of
their certificate or certificates) shall cease with respect to such shares,
and such shares shall not thereafter be transferred on the books of the
Corporation or be deemed to be outstanding for any purpose whatsoever. From
and after the Series G/H Redemption Date, unless there shall have been a
default in payment of the Redemption Price, all rights of a holder of shares
of Series G or Series H Preferred Stock, as the case may be, as a holder of
such Preferred Stock (except the right to receive the Redemption Price
without interest upon surrender of their certificate or certificates) shall
cease with respect to such shares, and such shares shall not thereafter be
transferred in the books of the Corporation or be deemed to be outstanding
for any purpose whatsoever. If the funds of the Corporation legally
available for redemption of shares of Series B, Series C, Series D, Series E,
Series F, Series G, Series H and Series I Preferred Stock on any Redemption
Date, or of shares of the Series F, Series G or Series H Preferred Stock to
be redeemed on any Series F Redemption Date or Series G/H Redemption Date, as
the case may be, are insufficient to redeem the total number of
13
<PAGE>
shares of Series B, Series C, Series D, Series E, Series F, Series G, Series
H and Series I Preferred Stock to be redeemed on such date, as the case may
be, those funds which are legally available will be used to redeem shares of
Series B, Series C, Series D, Series E, Series F, Series G, Series H and
Series I Preferred Stock to be redeemed in the order and in the priorities
set forth in subsection V.B.3(a) above. The shares of Preferred Stock not
redeemed shall remain outstanding and entitled to all the rights and
preferences provided herein. At any time thereafter when additional funds of
the Corporation are legally available for the redemption of such shares of
Preferred Stock, such funds will immediately be used to redeem the balance of
the shares which the Corporation has become obliged to redeem on any
Redemption Date, Series F Redemption Date or Series G/H Redemption Date, but
which it has not redeemed.
(d) On or prior to the Redemption Date, a Series F Redemption
Date or a Series G/H Redemption Date, as the case may be, the Corporation
shall deposit the respective Redemption Price of all shares of Preferred
Stock designated for redemption in the Redemption Notice, and not yet
redeemed or converted, with a bank or trust corporation having aggregate
capital and surplus in excess of $100,000,000 as a trust fund for the benefit
of the respective holders of the shares designated for redemption and not yet
redeemed, with irrevocable instructions and authority to the bank or trust
corporation to pay the Redemption Price for such shares to their respective
holders on or after the Redemption Date, a Series F Redemption Date or a
Series G/H Redemption Date, as the case may be, upon receipt of notification
from the Corporation that such holder has surrendered his, her or its share
certificate to the Corporation pursuant to subsection V.B.3(b) above. As of
the date of such deposit (even if prior to the Redemption Date or a Series F
Redemption Date), the deposit shall constitute full payment of the shares to
their holders, and from and after the date of the deposit the shares so
called for redemption shall be redeemed and shall be deemed to be no longer
outstanding, and the holders thereof shall cease to be stockholders with
respect to such shares and shall have no rights with respect thereto except
the rights to receive from the bank or trust corporation payment of the
Redemption Price of the shares, without interest, upon surrender of their
certificates therefor, and the right to convert such shares as provided in
Section V.B.4 below. Such instructions shall also provide that any moneys
deposited by the Corporation pursuant to this subsection 3(d) for the
redemption of shares thereafter converted into shares of the Common Stock
pursuant to Section V.B.4 below prior to the Redemption Date, a Series F
Redemption Date or a Series G/H Redemption Date, as the case may be, shall be
returned to the Corporation forthwith upon such conversion. The balance of
any moneys deposited by the Corporation pursuant to this subsection 3(d)
remaining unclaimed at the expiration of two (2) years following the
Redemption Date shall thereafter be returned to this corporation upon its
request expressed in a resolution of its Board of Directors.
4. CONVERSION. The holders of Existing Preferred Stock shall have
conversion rights as follows (the "Conversion Rights"):
(a1) RIGHT TO CONVERT. Each share of Series A Preferred Stock
shall be convertible, at the option of the holder thereof, at any time after
the date of issuance of such share, at the office of the Corporation or any
transfer agent for such stock, into such number of fully paid and
nonassessable shares of Class 1 Common Stock as is determined by dividing
14
<PAGE>
the Original Series A Issue Price by the Conversion Price applicable to such
share, determined as hereafter provided, in effect on the date the
certificate is surrendered for conversion. Each share of Series B Preferred
Stock shall be convertible, at the option of the holder thereof, at any time
after the date of issuance of such share, at the office of the Corporation or
any transfer agent for such stock, into such number of fully paid and
nonassessable shares of Class 1 Common Stock as is determined by dividing the
Original Series B Issue Price by the Conversion Price applicable to such
share, determined as hereafter provided, in effect on the date the
certificate is surrendered for conversion. Each share of Series C Preferred
Stock shall be convertible, at the option of the holder thereof, at any time
after the date of issuance of such share, at the office of the Corporation or
any transfer agent for such stock, into such number of fully paid and
nonassessable shares of Class 1 Common Stock as is determined by dividing the
Original Series C Issue Price by the Conversion Price applicable to such
share, determined as hereafter provided, in effect on the date the
certificate is surrendered for conversion. Each share of Series D Preferred
Stock shall be convertible, at the option of the holder thereof, at any time
after the date of issuance of such share, at the office of the Corporation or
any transfer agent for such stock, into such number of fully paid and
nonassessable shares of Class 1 Common Stock as is determined by dividing the
Original Series D Issue Price by the Conversion Price applicable to such
share, determined as hereafter provided, in effect on the date the
certificate is surrendered for conversion. Each share of Series E Preferred
Stock shall be convertible, at the option of the holder thereof, at any time
after the date of issuance of such share, at the office of the Corporation or
any transfer agent for such stock, into such number of fully paid and
nonassessable shares of Class 1 Common Stock as is determined by dividing the
Original Series E Issue Price by the Conversion Price applicable to such
share, determined as hereafter provided, in effect on the date the
certificate is surrendered for conversion. Each share of Series F-1
Preferred Stock shall be convertible, at the option of the holder thereof, at
any time after the date of issuance of such share, at the office of the
Corporation or any transfer agent for such stock, into such number of fully
paid and nonassessable shares of Class 1 Common Stock as is determined by
dividing the Original Series F Issue Price by the Conversion Price applicable
to such share, determined as hereafter provided, in effect on the date the
certificate is surrendered for conversion. Each share of Series F-2
Preferred Stock shall be convertible, at the option of the holder thereof, at
any time after the date of issuance of such share, at the office of
Corporation or any transfer agent for such stock, into such number of fully
paid and nonassessable shares of Class 2 Common Stock (or, subject to
subsection V.B.4(a2) below, Class 1 Common Stock) as is determined by
dividing the Original Series F Issue Price by the Conversion Price applicable
to such share, determined as hereafter provided, in effect on the date this
certificate is surrendered for conversion. Each share of Series G-1
Preferred Stock shall be convertible, at the option of the holder thereof, at
any time after the date of issuance of such share, at the office of the
Corporation or any transfer agent for such stock, into such number of fully
paid and nonassessable shares of Class 1 Common Stock as is determined by
dividing the Original Series G Issue Price by the Conversion Price applicable
to such share, determined as hereafter provided, in effect on the date the
certificate is surrendered for conversion. Each share of Series G-2
Preferred Stock shall be convertible, at the option of the holder thereof, at
any time after the date of issuance of such share, at the office of the
Corporation or any transfer agent for such stock, into such number of fully
paid and nonassessable shares of Class 2 Common Stock (or, subject to
subsection V.B.4(a2) below, Class 1 Common Stock) as is determined by
dividing
15
<PAGE>
the Original Series G Issue Price by the Conversion Price applicable to such
share, determined as hereafter provided, in effect on the date the
certificate is surrendered for conversion. Each share of Series H-1 Preferred
Stock shall be convertible, at the option of the holder thereof, at any time
after the date of issuance of such share, at the office of the Corporation or
any transfer agent for such stock, into such number of fully paid and
nonassessable shares of Class 1 Common Stock as is determined by dividing the
Original Series H Issue Price by the Conversion Price applicable to such
share, determined as hereafter provided, in effect on the date the
certificate is surrendered for conversion. Each share of Series H-2 Preferred
Stock shall be convertible, at the option of the holder thereof, at any time
after the date of issuance of such share, at the office of the Corporation or
any transfer agent for such stock, into such number of fully paid and
nonassessable shares of Class 2 Common Stock (or, subject to subsection
V.B.4(a2) below, Class 1 Common Stock) as is determined by dividing the
Original Series H Issue Price by the Conversion Price applicable to such
share, determined as hereafter provided, in effect on the date the
certificate is surrendered for conversion. Each share of Series I Preferred
Stock shall be convertible, at the option of the holder thereof, at any time
after the close of business on the Series I Adjustment Date (as defined
below), at the office of the Corporation or any transfer agent for such
stock, into such number of fully paid and nonassessable shares of Class 1
Common Stock as is determined by dividing the Original Series I Issue Price
by the Conversion Price applicable to such share, determined as hereafter
provided, in effect on the date the certificate is surrendered for
conversion. The initial Conversion Price per share for shares of Series A
Preferred Stock shall be the Original Series A Issue Price; the initial
Conversion Price per share for shares of Series B Preferred Stock shall be
the Original Series B Issue Price; the initial Conversion Price per share for
shares of Series C Preferred Stock shall be the Original Series C Issue
Price; the initial Conversion Price per share for shares of Series D
Preferred Stock shall be the Original Series D Issue Price; the initial
Conversion Price per share for shares of Series E Preferred Stock shall be
the Original Series E Issue Price; the initial Conversion Price per share for
shares of Series F Preferred Stock shall be the Original Series F Issue
Price; the initial Conversion Price per share for shares of Series G
Preferred Stock shall be the Original Series G Issue Price; the initial
Conversion Price per share for shares of Series H Preferred Stock shall be
the Original Series H Issue Price; the initial Conversion Price per share for
shares of Series I Preferred Stock shall be the Original Series I Issue
Price; provided, however, that the Conversion Price for each Series of
Existing Preferred Stock shall be subject to applicable adjustment as set
forth in subsection V.B.4(d) below.
In addition, each share of Series F-2 Preferred Stock shall,
subject to subsection V.B.4(a2) below, be convertible, at the option of the
holder thereof, at any time after the date of issuance of such share, at the
office of the Corporation or any transfer agent for such stock, into one (1)
fully paid and nonassessable share of Series F-1 Preferred Stock, each share
of Series G-2 Preferred Stock shall, subject to subsection V.B.4(a2) below,
be convertible, at the option of the holder thereof, at any time after the
date of issuance of such share, at the office of the Corporation or any
transfer agent for such stock, into one (1) fully paid and nonassessable
share of Series G-1 Preferred Stock, and each share of Series H-2 Preferred
Stock shall, subject to subsection V.B.4(a2) below, be convertible, at the
option of the holder thereof, at any time after the date of issuance of such
share, at the office of the Corporation or any transfer agent for such stock,
into one (1) fully paid and nonassessable share of Series H-1 Preferred Stock.
16
<PAGE>
(a2) ADDITIONAL RESTRICTION ON CONVERSION OF SERIES F-2, G-2
AND H-2 PREFERRED STOCK.
(i) Upon the occurrence (or the expected occurrences
described in subsection V.B.4(a2)(iii) below) of any Conversion Event (as
defined below), each holder of Series F-2, G-2 and H-2 Preferred Stock shall
be entitled to convert any or all of the shares of such holder's Series F-2,
G-2 or H-2 Preferred Stock being (or expected to be) distributed, disposed of
or sold in connection with such Conversion Event into (a) the same number of
shares of Class 1 Common Stock as the number of shares of Class 2 Common
Stock into which such shares of Series F-2, G-2 or H-2 Preferred Stock,
respectively, would otherwise have been convertible pursuant to subsection
V.B.4(a1) above or (b) the same number of shares of Series F-1, Series G-1 or
Series H-1 Preferred Stock, respectively, as the number of shares of Series
F-2, G-2 or H-2 Preferred Stock, respectively, being so converted pursuant to
subsection V.B.4(a1) above.
(ii) A "Conversion Event" shall mean (a) any sale of
securities in any public offering or public sale of securities of the
Corporation (including a public offering registered under the Securities Act
of 1933, as amended, and a public sale pursuant to Rule 144 of the Securities
and Exchange Commission or any similar rule then in force), (b) any sale of
securities of the Corporation (including by virtue of a merger, consolidation
or similar transaction involving the Corporation) to a person or group of
persons (within the meaning of the Securities Exchange Act of 1934, as
amended (the "1934 Act")) if, after such sale, such person or group of
persons in the aggregate would own or control securities which possess in the
aggregate the ordinary voting power to elect a majority of the Corporation's
directors (provided that such sale has been approved by the Corporation's
Board of Directors or a committee thereof), (c) any sale of securities of the
Corporation (including by virtue of a merger, consolidation or similar
transaction involving the Corporation) to a person or group of persons
(within the meaning of the Securities Exchange Act of 1934, as amended) if,
after such sale, such person or group of persons in the aggregate would own
or control securities of the Corporation (excluding any Class 2 Common being
converted and disposed of in connection with such Conversion Event) which
possess in the aggregate the ordinary voting power to elect a majority of the
Corporation's directors, or (d) any sale of securities of the Corporation to
a person or group of persons (within the meaning of the 1934 Act) if, after
such sale, such person or group of persons in the aggregate would not own,
control or have the right to acquire more than two percent (2%) of the
outstanding securities of any class of voting securities of the Corporation.
"Person" shall include any natural person and any corporation, partnership,
joint venture, trust, unincorporated organization and any other entity or
organization.
(iii) Each holder of Series F-2, G-2 and H-2 Preferred
Stock shall be entitled to convert such shares of Preferred Stock in
connection with any Conversion Event if such holder reasonably believes that
such Conversion Event will be consummated. A written request for conversion
from any holder of Series F-2, G-2 or H-2 Preferred Stock to the Corporation
stating such holder's reasonable belief that a Conversion Event will occur
shall be conclusive and shall obligate the Corporation to effect such
conversion in a timely manner so as to enable each such holder to participate
in such Conversion Event. The
17
<PAGE>
Corporation will not cancel the shares of Series F-2, G-2 or H-2 Preferred
Stock so converted before the tenth day following such Conversion Event and
will reserve such shares until such tenth day for reissuance in compliance
with the next sentence. If any shares of Series F-2, G-2 or H-2 Preferred
Stock are converted into shares of Class 1 Common, Series F-1 Preferred
Stock, Series G-1 Preferred Stock or Series H-1 Preferred Stock, as the case
may be, in connection with a Conversion Event and such shares of capital
stock are not actually distributed, disposed of or sold pursuant to such
Conversion Event, such shares of capital stock shall be promptly converted
back into the same number of shares of Series F-2, G-2 and H-2 Preferred
Stock, as the case may be.
(a3) SPECIAL ADJUSTMENT OF SERIES I PREFERRED STOCK CONVERSION
PRICE.
(i) The following terms shall have the following meanings:
(A) "Series I Adjustment Date" means the date which
is the earlier of (i) the date on which a Series I Valuation Event occurs or
(ii) the 270th Day.
(B) "270th Day" means December 1, 1998.
(C) "RMD Agreement" means the Agreement and Plan of
Merger dated as of November 22, 1997 among the Corporation, RMD Acquisition
Corp., a Delaware corporation and wholly owned subsidiary of the Corporation,
and Radio Movil Digital Americas, Inc.
(D) "Series I Valuation Event" means (i) any IPO (as
defined in the RMD Merger Agreement), or (ii) any Corporate Transaction.
Notwithstanding the foregoing, if the consideration received by the
stockholders in connection with such Corporate Transaction is not cash or
securities that are salable in a securities market without restriction (other
than restrictions on transfer that lapse within 180 days after the closing of
such Corporate Transaction or restrictions arising solely by virtue of a
stockholder's status as an affiliate or former affiliate), then such
Corporate Transaction (a "Private Corporate Transaction") shall be deemed to
constitute a Series I Valuation Event only if holders of more than fifty
percent (50%) of the then outstanding shares of Series I Preferred Stock
consent to such Corporate Transaction constituting a Series I Valuation Event.
(E) "Series I Valuation Price" with respect to any
Series I Valuation Event means:
(i) in the case of any IPO, the gross sale price
offered to the public (before any underwriting discount or commission) of the
Corporation's Common Stock in the IPO; and
18
<PAGE>
(ii) in the case of any Corporate Transaction
described in clause (ii) of the definition of the term "Series I Valuation
Event," the price per share of the Corporation's Common Stock (taking into
account cash consideration and the fair market value of all consideration
other than cash) reflected in such Corporate Transactions as determined in
accordance with Section V.B.1(e)(ii), provided that in the case of a Private
Corporate Transaction holders of a majority of the then outstanding Series I
Preferred Stock consent to the calculation of such price per share.
(ii) (A) If a Series I Valuation Event occurs on or
before the close of business on the 270th Day, the Conversion Price for the
Series I Preferred Stock in effect immediately prior to a Series I Valuation
Event shall be adjusted to a price equal to the Series I Valuation Price;
PROVIDED, HOWEVER, that no adjustment pursuant to this subsection
V.B.4(a3)(ii) shall be made for more than one Series I Valuation Event.
(B) If no Series I Valuation Event occurs on or
before the close of business on the 270th Day, the Conversion Price for the
Series I Preferred Stock in effect immediately prior to such time shall be
adjusted to a price equal to the lower of (i) $12.48 (as appropriately
adjusted pursuant to Section V.B.4(d) for any transactions specified in
subsections (i), (iii) and (iv) that occur after the Effective Time (as
defined in the RMD Agreement) assuming for purposes of such adjustment that
the Conversion Price of the Series I Preferred Stock at the Effective Time
equals such price) or (ii) if applicable, 93% of the low end of the pricing
range for Common Stock indicated in the latest registration statement
relating to the IPO, as filed with the Securities and Exchange Commission, if
such registration statement includes a pricing range (as appropriately
adjusted pursuant to Section VI.B.4(d) for any transactions specified in
subsections (i), (iii) and (iv) that occur after the Effective Time assuming
for purposes of such adjustment that the Conversion Price of the Series I
Preferred Stock Time at the Effective Time equals such price).
Notwithstanding the foregoing, in the event of any distribution covered by
Section V.B.4(e) on or before the close of business on the earlier of (i) the
270th Day and (ii) the Series I Adjustment Date, the Conversion Price for the
Series I Preferred Stock calculated pursuant to this Section V.B.4(a3)(ii)
shall equal the sum of (i) the Conversion Price per share of Series I
Preferred Stocks calculated pursuant to this Section V.B.4(a3)(ii) without
regard to this sentence, and (ii) the value of such distribution per share of
Series I Preferred Stock (as determined in good faith by the Corporation's
Board of Directors).
(b) AUTOMATIC CONVERSION. Each share of Existing Preferred
Stock (other than Series F-2, G-2 and H-2 Preferred Stock) shall
automatically be converted into shares of Class 1 Common Stock, and each
share of Series F-2, G-2 and H-2 Preferred Stock shall automatically be
converted into shares of Class 2 Common Stock, at the then effective
Conversion Price immediately upon, except as provided in subsection V.B.4(c)
below, the Corporation's sale of its Common Stock in a firm commitment
underwritten public offering pursuant to a registration statement under the
Securities Act of 1933, as amended (a "Public Offering"), the public offering
per share price of which is not less than two times the then applicable
Conversion Price for the Series D Preferred Stock and the aggregate offering
price is
19
<PAGE>
not less than $8,000,000; PROVIDED, HOWEVER, that upon such Public Offering
(i) the shares of Series F Preferred Stock shall not automatically be
converted into Common Stock unless the following shall occur (a "Threshold
Public Offering"): (A) the Public Offering is consummated on or prior to
December 31, 1998, (B) the Public Offering per share price is at least two
times the Original Series F Issue Price and (C) the aggregate offering price
is not less than $25,000,000 and (ii) the shares of Series G Preferred Stock
and Series H Preferred Stock shall not be automatically converted into Common
Stock unless all other shares of Preferred Stock are converted into Common
Stock at the consummation of such Public Offering.
(c) MECHANICS OF CONVERSION. Before any holder of Existing
Preferred Stock shall be entitled to convert the same into shares of Common
Stock pursuant to subsection (a1) or subsection (a2) (collectively
"subsection (a)" above), or in the event that any Existing Preferred Stock is
automatically converted pursuant to subsection (b) above, the holder shall
surrender the certificate or certificates therefor, duly endorsed, at the
office of the Corporation or of any transfer agent for the Preferred Stock.
If the conversion is pursuant to subsection (a) above, the holder electing to
convert any Existing Preferred Stock shall give written notice to the
Corporation at its principal corporate office, of the election to convert the
same and shall state therein the name or names in which the certificate or
certificates for shares of Common Stock are to be issued. The Corporation
shall, as soon as practicable thereafter, issue and deliver at such office to
such holder of Preferred Stock, or to the nominee or nominees of such holder,
a certificate or certificates for the number of shares of Common Stock to
which such holder shall be entitled as aforesaid. Such conversion shall be
deemed to have been made immediately prior to the close of business on the
date of such surrender of the shares of Preferred Stock to be converted, and
the person or persons entitled to receive the shares of Common Stock issuable
upon such conversion shall be treated for all purposes as the record holder
or holders of such shares of Common Stock as of such date. If the conversion
is in connection with an underwritten offering of securities registered
pursuant to the Securities Act of 1933, as amended, the conversion may, at
the option of any holder tendering Existing Preferred Stock (including Series
F-2, Series G-2 or Series H-2 Preferred Stock) for conversion, be conditioned
upon the closing with the underwriter(s) of the sale of securities pursuant
to such offering, in which event the person(s) entitled to receive the Common
Stock upon conversion of the Existing Preferred Stock shall not be deemed to
have converted such Series of Preferred Stock until immediately prior to the
closing of such sale of securities.
(d) CONVERSION PRICE ADJUSTMENTS OF PREFERRED STOCK FOR
CERTAIN DILUTIVE ISSUANCES, SPLITS AND COMBINATIONS. The Conversion Price of
the Existing Preferred Stock shall be subject to adjustment from time to time
as follows:
(i) (A) Subject to subsection V.B.4(d)(i)(B), if the
Corporation shall issue, after the time this Amended and Restated Certificate
of Incorporation becomes effective ("Effective Time"), any Additional Stock
(as defined below) without consideration or for a consideration per share
less than the applicable Conversion Price for such Series of Preferred Stock
in effect immediately prior to the issuance of such Additional Stock, the
applicable Conversion Price:
20
<PAGE>
(i) for the Series B,Series C, Series D, Series E, Series F
and Series I Preferred Stock in effect immediately prior to each such
issuance shall forthwith (except as otherwise provided in this clause (i)) be
adjusted to a price determined by multiplying such Conversion Price by a
fraction, the numerator of which shall be the number of shares of Common
Stock which would be outstanding immediately prior to such issuance assuming
the conversion of all outstanding shares of Preferred Stock into Common Stock
(not including shares excluded from the definition of Additional Stock by
subsection V.B.4(d)(ii)) plus the number of shares of Common Stock that the
aggregate consideration received by the Corporation for such issuance would
purchase at such Conversion Price; and the denominator of which shall be the
number of shares of Common Stock which would be outstanding immediately prior
to such issuance assuming the conversion of all outstanding shares of
Preferred Stock into Common Stock (not including shares excluded from the
definition of Additional Stock by subsection V.B.4(d)(ii)) plus the number of
shares of such Additional Stock;
(ii) for the Series G Preferred Stock in effect immediately
prior to such issuance shall forthwith (except as otherwise provided in this
clause (ii)) be adjusted to a price equal to the average consideration per
share received by the Corporation for such issuance of Additional Stock;
provided, however, that no adjustment shall be made for any issuance of
Additional Stock before the Series G Exchange Date.
(iii) for the Series H Preferred Stock in effect immediately
prior to such issuance shall forthwith (except as otherwise provided in this
clause (iii)) be adjusted to a price equal to the average consideration per
share received by the Corporation for such issuance of Additional Stock;
provided, however, that no adjustment shall be made for any issuance of
Additional Stock before the Series H Exchange Date.
(B) No adjustment of the Conversion Price for the Series B, Series
C, Series D, Series E, Series F, Series G, Series H or Series I Preferred
Stock shall be made in an amount less than one cent per share, provided that
any adjustments which are not required to be made by reason of this sentence
shall be carried forward and shall be taken into account in any subsequent
adjustment. Notwithstanding the foregoing, if a Series I Valuation Event
occurs on or before the 270th Day, any adjustment to the Conversion Price for
the Series I Preferred Stock as a result of any issuance of Additional Stock
that occurs on or before the Series I Adjustment Date shall be disregarded
and given no effect (it being understood that this sentence shall not apply
and such adjustment shall not be disregarded and given no effect as a result
of an adjustment to the Conversion Price of the Series I Preferred Stock
pursuant to Section V.B.4(a3)(ii)(B)). Except to the limited extent provided
for in subsections (E)(3) and (E)(4) below, no adjustment of such Conversion
Price pursuant to this subsection V.B.4(d)(i) shall have the effect of
increasing the Conversion Price above the Conversion Price in effect
immediately prior to such adjustment.
(C) In the case of the issuance of Common Stock for cash, the
consideration shall be deemed to be the amount of cash paid therefor before
deducting any reasonable discounts, commissions or other expenses allowed,
paid or incurred by
21
<PAGE>
the Corporation for any underwriting or otherwise in connection with the
issuance and sale thereof.
(D) In the case of the issuance of the Common Stock for a
consideration in whole or in part other than cash, the consideration other
than cash shall be deemed to be the fair value thereof as determined in good
faith by the Corporation's Board of Directors irrespective of any accounting
treatment.
(E) In the case of the issuance (whether before, on or after the
Effective Time) of options to purchase or rights to subscribe for Common
Stock, securities by their terms convertible into or exchangeable for Common
Stock or options to purchase or rights to subscribe for such convertible or
exchangeable securities, the following provisions shall apply for all
purposes of this subsection 4(d)(i) and subsection 4(d)(ii):
(1) The aggregate maximum number of shares of
Common Stock deliverable upon exercise (assuming the satisfaction of any
conditions to exercisability, including without limitation, the passage of
time, but without taking into account potential antidilution adjustments) of
such options to purchase or rights to subscribe for Common Stock shall be
deemed to have been issued at the time such options or rights were issued and
for a consideration equal to the consideration (determined in the manner
provided in subsections V.B.4(d)(i)(C) and (d)(i)(D)), if any, received by
the Corporation upon the issuance of such options or rights plus the minimum
exercise price provided in such options or rights (without taking into
account potential antidilution adjustments) for the Common Stock covered
thereby.
(2) The aggregate maximum number of shares of
Common Stock deliverable upon conversion of or in exchange (assuming the
satisfaction of any conditions to convertibility or exchangeability,
including, without limitation, the passage of time, but without taking into
account potential antidilution adjustments) for any such convertible or
exchangeable securities or upon the exercise of options to purchase or rights
to subscribe for such convertible or exchangeable securities and subsequent
conversion or exchange thereof shall be deemed to have been issued at the
time such securities were issued or such options or rights were issued and
for a consideration equal to the consideration, if any, received by the
Corporation for any such securities and related options or rights (excluding
any cash received on account of accrued interest or accrued dividends), plus
the minimum additional consideration, if any, to be received by the
Corporation (without taking into account potential antidilution adjustments)
upon the conversion or exchange of such securities or the exercise of any
related options or rights (the consideration in each case to be determined in
the manner provided in subsections V.B.4(d)(i)(C) and (d)(i)(D)).
(3) In the event of any change in the number of
shares of Common Stock deliverable or in the consideration payable to the
Corporation upon exercise of such options or rights or upon conversion of or
in exchange for such convertible or exchangeable securities, including, but
not limited to, a change resulting from the antidilution provisions thereof,
the Conversion Price of the Series B, Series C, Series D,
22
<PAGE>
Series E, Series F, Series G, Series H or Series I Preferred Stock, to the
extent in any way affected by or computed using such options, rights or
securities, shall be recomputed to reflect such change, but no further
adjustment shall be made for the actual issuance of Common Stock or any
payment of such consideration upon the exercise of any such options or rights
or the conversion or exchange of such securities.
(4) Upon the expiration of any such options or
rights, the termination of any such rights to convert or exchange or the
expiration of any options or rights related to such convertible or
exchangeable securities, the Conversion Price of the Series B, Series C,
Series D, Series E, Series F, Series G, Series H or Series I Preferred Stock,
to the extent in any way affected by or computed using such options, rights
or securities or options or rights related to such securities, shall be
recomputed to reflect the issuance of only the number of shares of Common
Stock (and convertible or exchangeable securities which remain in effect)
actually issued upon the exercise of such options or rights, upon the
conversion or exchange of such securities or upon the exercise of the options
or rights related to such securities.
(5) The number of shares of Common Stock deemed
issued and the consideration deemed paid therefor pursuant to subsections
V.B.4(d)(i)(E)(1) and (2) shall be appropriately adjusted to reflect any
change, termination or expiration of the type described in either subsection
V.B.4(d)(i)(E)(3) or (4).
(ii) "Additional Stock" shall mean any shares of Common Stock
issued (or deemed to have been issued pursuant to subsection V.B.4(d)(i)(E))
by the Corporation after the Effective Time other than
(A) shares of Common Stock issued pursuant to a
transaction described in subsection V.B.4(d)(iii), (e) or (f) hereof;
(B) shares of Common Stock issuable or issued to
employees, consultants, directors or vendors (if in transactions with
primarily non-financing purposes) of the Corporation directly or pursuant to
a stock option plan or restricted stock plan approved by the stockholders and
Board of Directors of the Corporation at any time when the total number of
shares of Common Stock so issuable or issued (and not repurchased at cost by
the Corporation in connection with the termination of employment) does not
exceed 3,000,000 (as appropriately adjusted for any stock dividends,
combinations, splits or the like with respect to shares of Common Stock) plus
such additional number of shares of Common Stock as shall be approved by
holders of at least sixty-six and two-thirds percent (66-2/3%) of the then
outstanding shares of Series B, Series C, Series D, Series E, Series F,
Series G and Series I Preferred Stock;
(C) shares of Common Stock or Existing Preferred Stock
issuable as a result of the conversion of any shares of Existing Preferred
Stock;
(D) shares of Common Stock issued or deemed issued to a
corporation, partnership or other entity with which the Corporation has a
partnership, joint venture or other business relationship, provided that such
issuances are for other than
23
<PAGE>
primarily equity financing purposes; provided that holders of at least eighty
percent (80%) of the Series F Preferred Stock then outstanding shall have
consented thereto in writing;
(E) shares of Common Stock issued or deemed issued in
connection with the acquisition by the Corporation of the stock or assets of
another corporation, partnership or other entity; provided that holders of at
least eighty percent (80%) of the Series F Preferred Stock then outstanding
shall have consented thereto in writing;
(F) shares of Common Stock issued or deemed issued in
connection with any equipment lease financing or the incurrence by the
Corporation of any indebtedness for money borrowed; provided that holders of
at least eighty percent (80%) of the Series F Preferred Stock then
outstanding shall have consented thereto in writing;
(G) shares of Common Stock issued or deemed issued by
the Corporation in connection with the merger of a wholly owned subsidiary of
the Corporation with and into International Wireless Communications, Inc.
(including shares of Common Stock (aa) issued or issuable upon the exercise
of options assumed in such merger (bb) issued or issuable upon the conversion
of Preferred Stock and (cc) issued and issuable upon the exercise of warrants
assumed in such merger);
(H) shares of Common Stock issued or deemed issued
pursuant to warrants issued by the Corporation in connection with the Senior
Notes and pursuant to the IWCH Loan Agreement, the PWH Loan Agreement and the
Reimbursement Agreement dated September 18, 1997 between IWC China Limited
and Vanguard Cellular Operating Corp.;
(I) shares of Common Stock issued or issuable for the
purchase from Continental Communications Limited of shares of Pakistan Mobile
Communications Limited; or
(J) shares of Series I Preferred Stock or Common Stock
issued or issuable in connection with the transactions contemplated by the
RMD Agreement.
(iii) Subject to the following sentence, in the event the
Corporation should at any time or from time to time after the Effective Time
fix a record date for the effectuation of a split or subdivision of the
outstanding shares of Common Stock or the determination of holders of Common
Stock entitled to receive a dividend or other distribution payable in
additional shares of Common Stock or other securities or rights convertible
into, or entitling the holder thereof to receive directly or indirectly,
additional shares of Common Stock (hereinafter referred to as "Common Stock
Equivalents") without payment of any consideration by such holder for the
additional shares of Common Stock or the Common Stock Equivalents (including
the additional shares of Common Stock issuable upon conversion or exercise
thereof), then, as of such record date (or the date of such dividend
distribution, split or subdivision if no record date is fixed), the
Conversion Price of the Existing Preferred Stock shall be appropriately
decreased so that the number of shares of Common Stock issuable on conversion
of each share of
24
<PAGE>
such Series shall be increased in proportion to such increase of the
aggregate of shares of Common Stock outstanding and those issuable with
respect to such Common Stock Equivalents with the number of shares issuable
with respect to Common Stock Equivalents determined from time to time in the
manner provided for deemed issuances in subsection V.B.4(d)(i)(E).
Notwithstanding the foregoing, upon the occurrence of a Series I Valuation
Event, any adjustment of the Conversion Price for the Series I Preferred
Stock as a result of any such split, subdivision, dividend or other
distribution that occurs on or before the close of business on the date on
which a Series I Valuation Event occurs shall be disregarded and given no
effect (it being understood that this sentence shall not affect any
adjustment pursuant to subsection V.B.4(a3)(ii)(B) as a result of any such
split, subdivision, dividend or other distribution).
(iv) Subject to the following sentence, if the number of
shares of Common Stock outstanding at any time after the Effective Time is
decreased by a combination of the outstanding shares of Common Stock, then,
following the record date of such combination, the Conversion Price for the
Existing Preferred Stock shall be appropriately increased so that the number
of shares of Common Stock issuable on conversion of each share of such Series
shall be decreased in proportion to such decrease in outstanding shares.
Notwithstanding the foregoing, no adjustment of the Conversion Price for the
Series I Preferred Stock shall be made for any such combination that occurs
on or before the Series I Adjustment Date.
(e) OTHER DISTRIBUTIONS. Subject to the following sentence, in
the event the Corporation shall declare a distribution payable in securities
of other persons, evidences of indebtedness issued by the Corporation or
other persons, assets (excluding cash dividends) or options or rights not
referred to in subsection V.B.4(d)(iii), then, in each such case for the
purpose of this subsection 4(e), the holders of the Existing Preferred Stock
shall be entitled to a share of any such distribution as such distribution
shall be made in accordance with and subject to the provisions of Section
V.B.2. As provided therein, all distributions shall be made to the holders
of the Preferred Stock and the Common Stock in the same priorities and order
of distribution and in the same proportions as distributions of funds and
assets are to be made in the case of a liquidation, dissolution or winding-up
of the Corporation. All amounts so distributed to the holders of any Series
of Preferred Stock or Common Stock, as the case may be, in accordance
therewith shall be credited toward the payment of the Preferred Preferential
Amount, the Series A Preferential Amount or Common Preferential Amount, as
the case may be, to be paid to the holders of each Series of Preferred Stock
or Common Stock, as the case may be.
(f) RECAPITALIZATIONS. Subject to the following sentence, if at
any time or from time to time there shall be a recapitalization of the Common
Stock (other than a subdivision, combination or merger, sale of assets or
other transaction provided for elsewhere in this Section 4 or in Section 2)
provision shall be made so that the holders of the Existing Preferred Stock
shall thereafter be entitled to receive upon conversion of the Preferred
Stock the number of shares of stock or other securities or property of the
Corporation or otherwise, to which a holder of Common Stock deliverable upon
conversion would have been entitled on such recapitalization (provided, in
the case of any such recapitalization occurring on or before the
25
<PAGE>
close of business on the Series I Adjustment Date, the number of shares of
Common Stock issuable upon conversion of each share of Series I Preferred
Stock shall be the number of shares of Common Stock issuable upon such
conversion immediately after the close of business on the Series I Adjustment
Date). In any such case, appropriate adjustment shall be made in the
application of the provisions of this Section 4 with respect to the rights of
the holders of the Existing Preferred Stock after the recapitalization to the
end that the provisions of this Section 4 (including adjustment of the
Conversion Price then in effect and the number of shares purchasable upon
conversion of the Existing Preferred Stock) shall be applicable after that
event as nearly equivalent as may be practicable.
(g) NO IMPAIRMENT. The Corporation will not, by amendment of its
Certificate of Incorporation or through any reorganization, recapitalization,
transfer of assets, consolidation, merger, dissolution, issue or sale of
securities or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms to be observed or performed
hereunder by the Corporation, but will at all times in good faith assist in
the carrying out of all the provisions of this Section 4 and in the taking of
all such action as may be necessary or appropriate in order to protect the
Conversion Rights of the holders of the Existing Preferred Stock against
impairment.
(h) NO FRACTIONAL SHARES AND CERTIFICATE AS TO ADJUSTMENTS.
(i) No fractional shares shall be issued upon the conversion
of any share or shares of the Existing Preferred Stock, and the number of
shares of Common Stock to be issued shall be rounded to the nearest whole
share. Whether or not fractional shares are issuable upon such conversion
shall be determined on the basis of the total number of shares of Preferred
Stock the holder is at the time converting into Common Stock and the number
of shares of Common Stock issuable upon such aggregate conversion.
(ii) Upon the occurrence of each adjustment or readjustment
of the Conversion Price of Existing Preferred Stock pursuant to this Section
4, the Corporation, at its expense, shall promptly compute such adjustment or
readjustment in accordance with the terms hereof and prepare and furnish to
each holder of Preferred Stock of a Series of which the applicable Conversion
Price has been adjusted a certificate setting forth such adjustment or
readjustment and showing in detail the facts upon which such adjustment or
readjustment is based. The Corporation shall, upon the written request at
any time of any holder of Existing Preferred Stock, furnish or cause to be
furnished to such holder a like certificate setting forth such adjustment and
readjustment, the Conversion Price for such Series of Preferred Stock at the
time in effect, and the number of shares of Common Stock and the amount, if
any, of other property which at the time would be received upon the
conversion of a share of each Series of Preferred Stock.
(i) NOTICES OF RECORD DATE. In the event of any taking by the
Corporation of a record of the holders of any class of securities for the
purpose of determining the holders thereof who are entitled to receive any
dividend (other than a cash dividend) or other distribution, any right to
subscribe for, purchase or otherwise acquire any shares of stock of any
26
<PAGE>
class or any other securities or property, or to receive any other right, the
Corporation shall mail to each holder of Existing Preferred Stock, at least
20 days prior to the date specified therein, a notice specifying the date on
which any such record is to be taken for the purpose of such dividend,
distribution or right, and the amount and character of such dividend,
distribution or right.
(j) RESERVATION OF STOCK ISSUABLE UPON CONVERSION. The
Corporation shall at all times reserve and keep available out of its
authorized but unissued shares of Common Stock, solely for the purpose of
effecting the conversion of the shares of the Existing Preferred Stock, such
number of its shares of Common Stock as shall from time to time be sufficient
to effect the conversion of all outstanding shares of the Existing Preferred
Stock; and if at any time the number of authorized but unissued shares of
Common Stock shall not be sufficient to effect the conversion of all then
outstanding shares of the Existing Preferred Stock, in addition to such other
remedies as shall be available to the holder of such Existing Preferred
Stock, the Corporation will take such corporate action as may, in the opinion
of its counsel, be necessary to increase its authorized but unissued shares
of Common Stock to such number of shares as shall be sufficient for such
purposes, including, without limitation, engaging in best efforts to obtain
the requisite stockholder approval of any necessary amendment to these
articles.
(k) NOTICES. Any notice required by the provisions of this
Section 4 to be given to the holders of shares of Preferred Stock shall be
deemed given if deposited in the United States mail, by registered or
certified mail, postage prepaid, and addressed to each holder of record at
his address appearing on the books of the Corporation.
5. VOTING RIGHTS.
(a) Except as otherwise provided herein, the holder of each share
of Existing Preferred Stock (other than the Series F-2 , G-2 and H-2
Preferred Stock) shall have the right to one vote for each share of Common
Stock into which such Series of Preferred Stock could then be converted (or,
with respect to the Series I Preferred Stock, would be converted were such
Series I Preferred Stock convertible into Common Stock at the time of the
applicable vote), and with respect to such vote, such holder shall have full
voting rights and powers equal to the voting rights and powers of the holders
of Common Stock, and shall be entitled, notwithstanding any provision hereof,
to notice of any stockholders' meeting in accordance with the bylaws of the
Corporation, and shall be entitled to vote, together with holders of Common
Stock, with respect to any question upon which holders of Common Stock have
the right to vote. Fractional votes shall not, however, be permitted and any
fractional voting rights available on an as-converted basis (after
aggregating all shares into which shares of Existing Preferred Stock held by
each holder could be converted) shall be rounded to the nearest whole number
(with one-half being rounded upward). Notwithstanding the foregoing, the
approval of the holders of a majority of the outstanding Series F-2, G-2 or
H-2 Preferred Stock, as the case may be, shall be required for any merger or
consolidation of the Corporation with or into another entity or entities, any
sale of all or substantially all of the Corporation's assets or any
recapitalization or reorganization, if as a result of any of the foregoing
the shares of such Series would receive or be exchanged for consideration
different on a per share basis than the
27
<PAGE>
consideration received with respect to or in exchange for shares of Series
F-1, G-1 or H-1 Preferred Stock, as the case may be, or would otherwise be
treated differently from shares of Series F-1, Series G-1 or Series H-1
Preferred Stock, respectively, in connection with such transaction, except
that shares of Series F-2, G-2 and H-2 Preferred Stock may (and, at the
request of the holders of a majority of the shares of such Series, shall),
without such a separate class vote, receive or be exchanged for securities
having voting rights comparable to the Series F-2, Series G-2 or Series H-2
Preferred Stock, as the case may be, and which are otherwise identical on a
per share basis in amount and form to the voting securities received with
respect to or exchanged for Series F-1, G-1 and H-1 Preferred Stock, as the
case may be, so long as (i) such non-voting securities are convertible into
such voting securities on the same terms as Series F-2, G-2 and H-2 Preferred
Stock, as the case may be, is convertible into Class 2 Common Stock and (ii)
all other consideration is equal on a per share basis.
(b) The holders of the Series E Preferred Stock, voting separately
as a class, shall be entitled to elect three (3) directors at each annual
meeting of stockholders of the Corporation at which any director is elected
or at the time of any written consent to action in lieu of any such meeting.
For so long as 20% of the shares of Series F Preferred Stock issued on the
Closing Date (as defined in the Securities Purchase Agreement), pursuant to
the Securities Purchase Agreement remain outstanding, the holders of the
Series F-1 Preferred Stock, voting separately as a class, shall be entitled
to elect at least three (3) directors (the "Series F Directors") at each
annual meeting of stockholders of the Corporation at which any director is
elected or at the time of any written consent to action in lieu of any such
meeting; PROVIDED, that (i) for so long as Electra Investment Trust P.L.C.
and Electra Associates, Inc. (collectively, "Electra") owns at least 213,360
shares of Series F Preferred Stock (as such number may be adjusted
appropriately for stock splits, stock dividends, combinations and other
recapitalizations), Electra shall have the right to elect one (1) of the
directors (the "Electra Director") to be elected by the holders of the Series
F-1 Preferred Stock; (ii) for so long as Central Investment Holdings, Inc.
("CIH") owns at least 213,360 shares of Series F Preferred Stock (as such
number may be adjusted appropriately for stock splits, stock dividends,
combinations and other recapitalizations), CIH shall have the right to elect
one (1) of the directors to be elected by the holder of the Series F-1
Preferred Stock; and (iii) for so long as Toronto Dominion owns at least
213,360 shares of Series F Preferred Stock (as such number may be adjusted
appropriately for stock splits, stock dividends, combinations and other
recapitalizations), Toronto Dominion shall have the right to elect one (1) of
the directors to elected by the holders of the Series F Preferred Stock;
PROVIDED, HOWEVER, that Toronto Dominion shall not be entitled to so elect
such director if exercising this right would be in violation of the Bank
Holding Company Act. At least one of the Series F Directors, which shall be
the Electra Director, if any, shall have the right to be a member of the
Audit and Compensation Committees of the Board, if any, or of any committee
of the Board performing comparable functions. The holders of Series G-1 and
H-1 Preferred Stock, voting together as a single class, on an as-converted
basis, shall be entitled to elect one (1) director at each annual meeting of
stockholders of the Corporation at which any director is elected or at any
time by written consent to action in lieu of such meeting; provided that such
right to elect a director may not be exercised if holders of more than ten
percent (10%) of the combined shares of Series G and H Preferred Stock then
outstanding, on an as-converted basis, shall have any other rights to
28
<PAGE>
elect a director of the Corporation by virtue of holding any other class or
Series of the Corporation's capital stock.
In addition to the above rights of the holders of the Series F-1
Preferred Stock to elect the Series F Directors of the Corporation and, in
addition to any other rights the holders of the Series F Preferred Stock may
have hereunder, under the Securities Purchase Agreement, or in law or equity,
to the extent provided in Section 7.1 of the Securities Purchase Agreement,
immediately upon written notice to the Corporation from the holders of a
majority of the shares of Series F-1 Preferred Stock then outstanding, the
number of directors constituting the Board of Directors of the Corporation
shall automatically and without further action be increased by one, and upon
the exercise of such right by the holders of the Series F-1 Preferred Stock,
the holders of the shares of Series F-1 Preferred Stock then outstanding
shall have the right to elect, by voting as a class, one additional director
to the Board of Directors of the Corporation; provided, however, that the
right of the holders of Series F-1 Preferred Stock to increase the number of
directors constituting such Board of Directors and to elect such additional
director may only be exercised once. No director(s) so elected by the
holders of the Series E or Series F-1 Preferred Stock, Electra, CIH or
Toronto Dominion, as the case may be, may be removed without the prior
consent, given in person or by proxy, either in writing or at a special
meeting called for that purpose, of the holders of such Series of Preferred
Stock, voting separately as a class, Electra, CIH or Toronto Dominion, as the
case may be. In case of the death, resignation or other removal of the
director elected by the holders of the Series E or Series F-1 Preferred Stock
or Electra, as the case may be, such holders may elect, voting separately as
a class, by written notification delivered to the Board of Directors of the
Corporation, a successor to hold office for the unexpired term of such
removed director. Except as provided in this subsection V.B.6(b), the
holders of Series E Preferred Stock may not vote for the election of
directors.
(c) The directors not elected to the Corporation's Board of
Directors pursuant to subsection V.B.6(b) hereof shall be elected by the
holders of the Class 1 Common Stock and Preferred Stock (other than the
Series E, F-2, G-2 and H-2 Preferred Stock and, for so long as the holders of
Series F-1 Preferred Stock shall be entitled to elect the Series F Directors
pursuant to subsection V.B.6(b) hereof, Series F-1 Preferred Stock), voting
separately as a class.
(d) Until the earlier of (i) a Threshold Public Offering and (ii)
the date on which less than 20% of the shares of Series F Preferred Stock
issued on the Closing Date pursuant to the Securities Purchase Agreement
remain outstanding, the majority of the Corporation's Board of Directors may
not be comprised of (y) representatives collectively designated by Vanguard
Cellular Operating Corp. or any of its Affiliates pursuant to subsection
V.B.5(b) hereof, and/or (z) officers of the Corporation (or any individual
performing a similar function).
(e) The Corporation shall give to each holder of Series F-2,
Series G-2 or Series H-2 Preferred Stock, or Class 2 Common Stock, notice of
any stockholders' meetings for which notice is sent in accordance with the
bylaws of the Corporation to other stockholders of the Corporation, and shall
permit such holders to attend such meetings.
29
<PAGE>
6. PROTECTIVE PROVISIONS.
(a) Subject to the provisions of subsection V.B.6(g) below,
so long as any shares of Series B, Series C, Series D, Series E, Series F-1,
Series G-1, Series H-1 or Series I Preferred Stock are outstanding, the
Corporation shall not without first obtaining the approval (by vote or written
consent, as provided by law) of the holders of at least fifty percent (50%) in
the aggregate of the then outstanding shares of Series B, Series C, Series D,
Series E, Series F-1, Series G-1, Series H-1 and Series I Preferred Stock
(voting on an as converted basis):
(i) authorize or create any new class or Series of
stock or any instrument convertible into such stock or authorize an increase in
the authorized number of shares of any existing class or Series of stock that
has a preference over, or is on a parity with, the Series B, Series C, Series D,
Series E, Series F, Series G, Series H or Series I Preferred Stock with respect
to voting, dividends, or upon liquidation;
(ii) authorize, issue, redeem or acquire any
shares of capital stock of the Corporation to officers, directors and employees
of and consultants to the Corporation, otherwise than pursuant to employee
benefit plans or other compensatory arrangements approved by the Corporation's
Board of Directors; provided, however, that the aggregate number of shares of
such capital stock so approved shall not exceed 3,000,000 shares of Common Stock
(as appropriately adjusted for any stock dividends, combinations, splits or the
like with respect to such shares);
(iii) approve a Corporate Transaction, as defined
in subsection V.B.1(e)(i);
(iv) approve any amendment of this Amended and
Restated Certificate of Incorporation, as the same may be amended from time to
time or of the by-laws of the Corporation;
(v) permit the Corporation to organize or acquire an
interest in any business unrelated to the international wireless communications
business or the personal communications services (PCS) business;
(vi) declare or pay any dividends in cash, stock
or other property;
(vii) reinvest more than $3 million in proceeds
from the sale or liquidation of any single investment by the Company; or
(viii) liquidate or dissolve the Corporation.
(b) So long as any shares of Series B, Series C, Series D,
Series E, Series F-1, Series G-1, Series H-1 or Series I Preferred Stock are
outstanding, the Corporation shall not without first obtaining the approval (by
vote or written consent, as provided by law) of the holders of at least two-
thirds (66 2/3%) in the aggregate of the then
30
<PAGE>
outstanding shares of Series B, Series C, Series D, Series E, Series
F-1, Series G-1, Series H-1 and Series I Preferred Stock voting on an as
converted basis):
(i) increase or decrease the number of authorized
directors of the Corporation; or
(ii) remove with or without cause any officer or
director of the Corporation, excluding directors elected by the holders of
shares of a Series of Preferred Stock pursuant to subsection V.B.5(b) hereof
(who may only be removed by such holders).
(c) So long as any shares of Series F-1 Preferred Stock are
outstanding, the Corporation shall not, without first obtaining the approval (by
vote or written consent) of the holders of at least seventy-five percent (75%)
of the then outstanding shares of Series F-1 Preferred Stock, (i) take any
action which would violate any of the provisions of Section 6.9, 6.11(B), 6.13
or 6.15 of the Securities Purchase Agreement, or (ii) take any other actions
which require the consent of the holders of any other Series of Preferred Stock
(whether now existing or created in the future) voting as a class, or with
respect to which a director or other designee of that Series of Preferred Stock
must approve such action.
(d) So long as any shares of the Series F-1 Preferred Stock
are outstanding, the Corporation shall not, and shall not permit any of its
Subsidiaries to, take any action (or fail to take any action, as the case may
be) that would violate any of the provisions of Sections 6.1 or 6.14 of the
Securities Purchase Agreement without first obtaining the approval (by vote or
written consent) of (i) the holders of at least eighty percent (80%) of the then
outstanding shares of Series F-1 Preferred Stock or (ii) at least (A) a majority
of the members of the Board of Directors of the Corporation and (B) all of the
Series F Directors. So long as any shares of Series F-1 Preferred Stock are
outstanding, the Corporation shall not, and shall not permit any of its
Subsidiaries to, take any action (or fail to take any action, as the case may
be) that would violate any of the provisions of Section 5.3, 5.4, 5.6, 6.4, 6.8
or 6.16 of the Securities Purchase Agreement without first obtaining the
approval (by vote or written consent) of (i) the holders of at least seventy-
five percent (75%) of the then outstanding shares of Series F-1 Preferred Stock
or (ii) at least (A) a majority of the members of the Board of Directors of the
Corporation and (B) one Series F Director, if there shall be two Series F
Directors on the Board of Directors of the Corporation, or a majority of the
Board of Directors of the Corporation, if there shall be more than two Series F
Directors on the Board of Directors of the Corporation. So long as any shares
of Series F-1 Preferred Stock are outstanding, the Corporation shall not, and
shall not permit any of its Subsidiaries to, take any action that would violate
any of the provisions of Section 6.5, 6.6, 6.7, 6.10 or 6.11(A) of the
Securities Purchase Agreement without first obtaining the approval (by vote or
written consent) of (i) the holders of at least seventy-five (75%) of the then
outstanding shares of Series F-1 Preferred Stock or (ii) at least (A) seventy-
five percent (75%) of the members of the Board of Directors of the Corporation
and (B) at least one Series F Director, if there shall be two Series F Directors
on the Board of Directors of the Corporation, or a majority of the Series F
Directors, if there shall be more than two Series F Directors on the Board of
Directors of the Corporation. Notwithstanding the foregoing, if any the
foregoing actions may not be approved by the requisite number of Series F
Directors solely
31
<PAGE>
because the number of Series F Directors present at such meeting is
insufficient to approve such action, then such meeting of the Board of
Directors shall be adjourned and held on a date, not less than 10 days nor
more than 20 days following such adjournment, on which such requisite number
of Series F Directors are present at such meeting (whether in person or by
telephone); PROVIDED, that if there is no date during such period on which
the requisite number of Series F Directors may be present, such action may be
taken at any meeting held not less than 20 days nor more than 30 days
following such originally adjourned meeting if approved by (i) at least a
majority or seventy-five (75%), as the case may be, of the members of the
Board of Directors of the Corporation and (ii) all of the Series F Directors
present, if any, at such meeting.
(e) So long as any shares of a Series of Existing Preferred
Stock (an "Existing Series") are outstanding, the Corporation shall not, without
first obtaining the approval (by vote or written consent, as provided by law) of
the holders of at least a majority of the shares of such Existing Series then
outstanding, amend the Corporation's Amended and Restated Certificate of
Incorporation to alter or change the rights, preferences or privileges of the
shares of such Existing Series, if such Existing Series would be adversely
affected by such amendment in a manner different from other then outstanding
Existing Series (it being understood that, without limiting the foregoing,
different Existing Series shall not be affected differently because of
differences in the amounts of their respective issue prices, liquidation
preferences and redemption prices or because of changes in the public offering
price per share at which Preferred Stock automatically converts to Common Stock
pursuant to subsection V.B.4(b) above).
(f) So long as any shares of Series E Preferred Stock are
outstanding, the Corporation shall not without, first obtaining the approval (by
vote or written consent, as provided by law) of the holders of at least two-
thirds (2/3) of the shares of Series E Preferred Stock then outstanding, amend
subsection V.B.5(b) hereof to adversely affect the right of holders of Series E
Preferred Stock to elect a director of the Corporation pursuant thereto. So
long as any shares of Series F-1, Series G-1 or Series H-1 Preferred Stock are
outstanding, the Corporation shall not without first obtaining the approval (by
vote or written consent, as provided by law) of the holders of at least two-
thirds (2/3) of the shares of Series F-1, Series G-1 and Series H-1 Preferred
Stock then outstanding, amend subsection V.B.5(b) hereof to adversely affect the
right of holders of Series F-1, Series G-1 and Series H-1 Preferred Stock,
respectively, to elect directors of the Corporation pursuant thereto.
(g) So long as any shares of Series G or Series H Preferred
Stock are outstanding, the Corporation shall not without first obtaining the
approval (by vote or written consent, as provided by law) of the holders of at
least fifty percent (50%) in the aggregate of the then outstanding shares of
Series G and Series H Preferred Stock (voting on an as-converted basis):
(i) authorize or create any new class or Series of
stock or any instrument convertible into such stock or authorize an increase in
the authorized number of shares of any existing class or Series of stock that
has a preference over, or is on a parity with,
32
<PAGE>
the Series G or Series H Preferred Stock with respect to voting, dividends,
or upon redemption or liquidation.
(h) The Corporation shall not, without first obtaining the
approval (by vote or written consent, as provided by law) of the holders of at
least a majority of the shares of the Class 2 Common Stock, Series F-2,
Series G-2 and Series H-2 Preferred Stock then outstanding, voting together as a
single class on an as converted basis, amend the Corporation's Amended and
Restated Certificate of Incorporation to alter or change the rights, preferences
or privileges of the shares of the Class 2 Common Stock, if the Class 2 Common
would be adversely affected by such amendment in a manner different from the
Class 1 Common Stock (it being understood that, without limiting the foregoing,
different Classes of Common Stock shall not be affected differently because of
differences in the amounts of their respective issue prices).
7. STATUS OF REDEEMED AND CONVERTED STOCK. Subject to
subsection V.B.4(a2) above, in the event any shares of Preferred Stock shall be
redeemed or converted pursuant to Sections 3 or 4, respectively hereof, the
shares so redeemed or converted shall be cancelled and shall not be issuable by
the Corporation. The Amended and Restated Certificate of Incorporation of the
Corporation shall be appropriately amended to effect the corresponding reduction
in the Corporation's authorized capital stock.
7. COMMON STOCK.
1. DIVIDEND RIGHTS. Subject to the prior rights of holders of
all classes of stock at the time outstanding having prior rights as to
dividends, the holders of the Common Stock shall be entitled to receive, when
and as declared by the Board of Directors, out of any assets of the Corporation
legally available therefor, such dividends as may be declared from time to time
by the Board of Directors.
2. LIQUIDATION RIGHTS. Upon the liquidation, dissolution or
winding up of the Corporation, the assets of the Corporation shall be
distributed as provided in Section 1 of Division (B) of Article V hereof.
3. REDEMPTION. The Common Stock is not redeemable.
4. CONVERSION OF CLASS 2 COMMON STOCK.
(a) Upon the occurrence (or the expected occurrence as
described in subsection V.C.4(b) below) of any Conversion Event, each holder of
Class 2 Common Stock shall be entitled to convert, into the same number of
shares of Class 1 Common Stock, any or all of the shares of such holder's Class
2 Common Stock being (or expected to be) distributed, disposed of or sold in
connection with such Conversion Event.
(b) Each holder of Class 2 Common Stock shall be entitled
to convert such shares of Class 2 Common Stock in connection with any Conversion
Event if such holder reasonably believes that such Conversion Event will be
consummated. A written request
33
<PAGE>
for conversion from any holder of Class 2 Common Stock to the Corporation
stating such holder's reasonable belief that a Conversion Event will occur
shall be conclusive and shall obligate the Corporation to affect such
conversion in a timely manner so as to enable each such holder to participate
in such Conversion Event. The Corporation will not cancel the shares of
Class 2 Common Stock so converted before the tenth day following such
Conversion Event and will reserve such shares until such tenth day for
reissuance in compliance with the next sentence. If any shares of Class 2
Common Stock are converted into shares of Class 1 Common Stock in connection
with a Conversion Event and such shares of Class 1 Common Stock are not
actually distributed, disposed of or sold pursuant to such Conversion Event,
such shares of Class 1 Common Stock shall be promptly converted back into the
same number of shares of Class 2 Common Stock.
5. VOTING RIGHTS. The holder of each share of Class 1 Common
Stock shall have the right to one vote, and shall be entitled to notice of any
stockholders' meeting in accordance with the bylaws of the Corporation, and
shall be entitled to vote upon such matters and in such manner as may be
provided by law. Notwithstanding the foregoing, the approval of the holders of
a majority of the outstanding Class 2 Common Stock, voting together as a single
class, shall be required for any merger or consolidation of the Corporation with
or into another entity or entities, any sale of all or substantially all of the
Corporation's assets or any recapitalization or reorganization, if as a result
of any of the foregoing the shares of Class 2 Common Stock would receive or be
exchanged for consideration different on a per share basis than the
consideration received with respect to or in exchange for shares of Class 1
Common Stock, or would otherwise be treated differently from shares of Class 1
Common Stock in connection with such transaction, except that shares of Class 2
Common Stock may (and, at the request of a majority of the shares of such
Series, shall) receive or be exchanged for securities having voting rights
comparable to the Class 2 Common Stock, so long as (i) such non-voting
securities are convertible into such voting securities on the same terms as
Class 2 Common Stock is convertible into Class 1 Common Stock, and (ii) all
other consideration is equal on a per share basis.
ARTICLE VI
Except as otherwise provided in this Amended and Restated
Certificate of Incorporation, in furtherance and not in limitation of the
powers conferred by statute, the Board of Directors is expressly authorized
to make, repeal, alter, amend and rescind any or all of the Bylaws of the
Corporation.
ARTICLE VII
Elections of directors need not be by written ballot
unless the Bylaws of the Corporation shall so provide.
ARTICLE VIII
Meetings of stockholders may be held within or without
the State of Delaware, as the Bylaws may provide. The books of the Corporation
may be kept (subject to any provision
34
<PAGE>
contained in the statutes) outside the State of Delaware at such place or
places as may be designated from time to time by the Board of Directors or in
the Bylaws of the Corporation.
ARTICLE IX
A director of the Corporation shall, to the full extent
permitted by the Delaware General Corporation Law as it now exists or as it may
hereafter be amended, not be liable to the Corporation or its stockholders for
monetary damages for breach of fiduciary duty as a director. Neither any
amendment nor repeal of this Article IX, nor the adoption of any provision of
this Amended and Restated Certificate of Incorporation inconsistent with this
Article IX, shall eliminate or reduce the effect of this Article IX, in respect
of any matter occurring, or any cause of action, suit or claim that, but for
this Article IX, would accrue or arise, prior to such amendment, repeal or
adoption of an inconsistent provision. If the Delaware General Corporation Law
is amended to authorize, with the approval of the Corporation's stockholders,
further reductions in the liability of the Corporation's directors, then a
director of the Corporation shall not be liable for any such breach to the
fullest extent permitted by the Delaware General Corporation Law as so amended.
ARTICLE X
The Corporation reserves the right to amend, alter, change
or repeal any provision contained in this Amended and Restated Certificate of
Incorporation, in the manner now or hereafter prescribed by statute, and all
rights conferred upon stockholders herein are granted subject to this
reservation.
ARTICLE XI
At the Effective Time, each share of the Class 2 Common
Stock then issued and outstanding shall be changed into one (1) fully paid and
nonassessable share of Class 1 Common Stock of the Corporation. The Corporation
shall, upon the request of each holder of record of a certificate representing
shares of Class 2 Common Stock of the Corporation issued and outstanding
immediately prior to the Effective Time, issue and deliver to such holder a new
certificate or certificates representing the number of shares of Class 1 Common
Stock represented by such certificate immediately prior to the Effective Time.
35
<PAGE>
IN WITNESS WHEREOF, said International Wireless Communications
Holdings, Inc. has caused this certificate to be signed by its Executive Vice
President, Douglas S. Sinclair and its Secretary, Aarti C. Gurnani, this 23rd
day of January, 1998.
INTERNATIONAL WIRELESS
COMMUNICATIONS HOLDINGS, INC.
By: /s/ Douglas S. Sinclair
------------------------------------
Douglas S. Sinclair, Executive Vice
President
Attest:
/s/ Aarti C. Gurani
- ------------------------------------
Aarti C. Gurnani, Secretary
<PAGE>
Exhibit 4.1A
______________________________________
INTERNATIONAL WIRELESS COMMUNICATIONS HOLDINGS, INC.
as ISSUER
AND
MARINE MIDLAND BANK
as TRUSTEE
__________________________
FIRST SUPPLEMENTAL INDENTURE
Dated as of January 23, 1998
__________________________
14% Senior Secured Discount Notes due 2001
Supplemental to Indenture
Dated as of August 15, 1996
______________________________________
<PAGE>
FIRST SUPPLEMENTAL INDENTURE, dated as of January 23, 1998, between
INTERNATIONAL WIRELESS COMMUNICATIONS HOLDINGS, INC., a Delaware corporation,
having its principal office at 400 South El Camino Real, San Mateo, CA 94402
(hereinafter called the "Company"), and MARINE MIDLAND BANK, a New York
banking corporation and trust company, as Trustee under the Indenture
mentioned below (hereinafter called the "Trustee").
RECITALS
WHEREAS, the Company and the Trustee have heretofore entered into an
Indenture, dated as of August 15, 1996 (hereinafter called the "Original
Indenture"), to provide, among other things, for the issuance of the 14%
Senior Secured Discount Notes due 2001;
WHEREAS, Section 9.01 of the Original Indenture provides that, without
the consent of the Holders of any of the Securities, the Company, when
authorized by a Board Resolution, and the Trustee may amend or supplement the
Original Indenture for the purpose of, among other things, curing any
ambiguity, defect or inconsistency;
WHEREAS, the entry into this Supplemental Indenture by the parties
hereto is in all respects authorized by the provisions of the Original
Indenture, and the Trustee has determined that this First Supplemental
Indenture is in form satisfactory to it; and
WHEREAS, all acts and proceedings required by law, by the Original
Indenture and by the Certificate of Incorporation and By-laws of the Company
necessary to constitute this First Supplemental Indenture a valid and binding
agreement of the Company for the uses and purposes herein set forth, in
accordance with its terms, have been done and taken, and the execution and
delivery of this First Supplemental Indenture have been in all respects duly
authorized.
NOW, THEREFORE, THIS SUPPLEMENTAL INDENTURE WITNESSETH:
For and in consideration of the premises, it is mutually covenanted and
agreed, for the equal and proportionate benefit of all Holders, as follows:
ARTICLE I.
DEFINITIONS
SECTION 1.1. DEFINITIONS. For all purposes of this Supplemental
Indenture, except as otherwise herein expressly provided or unless the
context otherwise requires:
(1) terms used herein in capitalized form and defined in the Original
Indenture shall have the meaning specified in the Original Indenture;
(2) the words "herein", "hereof" and "hereunder" and other words of
similar import used in this Supplemental Indenture refer to this Supplemental
Indenture as a whole and not to any particular Article, Section or other
subdivision; and
<PAGE>
(3) the term defined in the first paragraph of the Recitals herein shall
have the meaning specified therein.
For all purposes of the Original Indenture, except as otherwise
expressed provided or unless the context otherwise requires:
The terms defined in this Article I have the meaning assigned to them in
this Article I and include the plural as well as the singular.
"FIRST SUPPLEMENTAL INDENTURE" or THIS "SUPPLEMENTAL INDENTURE" means
this instrument as originally executed or, if amended or supplemented
pursuant to the applicable provisions of the Original Indenture, as amended
or supplemented.
ARTICLE II.
MODIFICATION
SECTION 2.1. AMENDMENT TO SECTION 1.01 OF THE ORIGINAL INDENTURE.
Section 1.01 of the Original Indenture is hereby amended by amending the
following definition contained therein to read in full as follows:
"Non-Recourse Debt" means, with respect to any Person, Indebtedness or
that portion of Indebtedness (a) as to which the specified Person (i) does
not provide credit support of any kind (including, without limitation,
pursuant to any undertaking, agreement or instrument that would constitute
Indebtedness), (ii) is not directly or indirectly liable (as a guarantor or
otherwise), or (iii) does not constitute the lender; and (b) no default with
respect to which (including any rights that the holders thereof may have to
take enforcement action against an Unrestricted Subsidiary) would permit
(upon notice, lapse of time or both) any holder of such Indebtedness to take
any action against the specified Person or, except in the case of any Project
Financing otherwise permitted by clause (e) of the second paragraph of
Section 4.09 hereof, would permit any holder of Indebtedness of the specified
Person to declare a default on such other Indebtedness or cause the payment
thereof to be accelerated or payable prior to its stated maturity; and (c) as
to which the lenders have been notified in writing that they will not have
any recourse to the stock or assets of the specified Person.
ARTICLE III
MISCELLANEOUS PROVISIONS
SECTION 3.1. REPRESENTATIONS, WARRANTIES, COVENANTS, AND AGREEMENTS OF
THE COMPANY. The Company makes and reaffirms as of the date of execution of
this Supplemental Indenture all of its representations, warranties, covenants
and agreements set forth in the Original Indenture.
SECTION 3.2. TRUSTEE NOT RESPONSIBLE FOR RECITALS. The recitals
contained herein shall be taken as the statements of the Company, and the
Trustee assumes no responsibility for their correctness, except for the
recital indicating the Trustee's approval of the form of this First
3
<PAGE>
Supplemental Indenture. The Trustee makes no representation as to the
validity or sufficiency of this Supplemental Indenture.
SECTION 3.3. EFFECT OF HEADINGS. The Article and Section headings
herein are for convenience only and shall not affect the construction hereof.
SECTION 3.4. SUCCESSORS AND ASSIGNS. All covenants, stipulations,
promises and agreements in this Supplemental Indenture by or on behalf of the
Company shall bind and inure to the benefit of its successors and assigns,
whether so expressed or not.
SECTION 3.5. SEPARABILITY CLAUSE. In case any provision in this
Supplemental Indenture shall be invalid, illegal or unenforceable, the
validity, legality, and enforceability of the remaining provisions shall not
in any way be affected or impaired thereby.
SECTION 3.6. BENEFITS OF INDENTURE. Nothing in this Supplemental
Indenture, express or implied, shall give to any Person, other than the
parties hereto, any Paying Agent, any Registrar and their successors under
the Indenture and the Holders of Securities, any benefit or any legal or
equitable right, remedy or claim under the Indenture.
SECTION 3.7. GOVERNING LAW. This Supplemental Indenture shall be
deemed to be a contract made under the laws of the State of New York, and for
all purposes shall be construed in accordance with the laws of said State.
SECTION 3.8. COUNTERPARTS. This Supplemental Indenture may be executed
in any number of counterparts, each of which shall be an original, but such
counterparts shall together constitute but one and the same instrument.
4
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Supplemental
Indenture as of the date first above written.
INTERNATIONAL WIRELESS
COMMUNICATIONS HOLDINGS, INC.
By:
-----------------------------------
Douglas S. Sinclair
Executive Vice President and
Chief Financial Officer
MARINE MIDLAND BANK,
as Trustee
By:
----------------------------------
Name:
Title:
5
<PAGE>
Exhibit 10.29
INTERNATIONAL WIRELESS COMMUNICATIONS HOLDINGS, INC.
SEVENTH AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
As of December 13, 1997
<PAGE>
TABLE OF CONTENTS
PAGE
----
1. Registration Rights. . . . . . . . . . . . . . . . . . . . . . . . . 2
1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . 2
1.2 Request for Registration. . . . . . . . . . . . . . . . . . 3
1.3 Company Registration. . . . . . . . . . . . . . . . . . . . 5
1.4 Obligations of the Company. . . . . . . . . . . . . . . . . 5
1.5 Furnish Information . . . . . . . . . . . . . . . . . . . . 7
1.6 Expenses of Demand Registration . . . . . . . . . . . . . . 7
1.7 Expenses of Company Registration. . . . . . . . . . . . . . 7
1.8 Underwriting Requirements . . . . . . . . . . . . . . . . . 8
1.9 Delay of Registration . . . . . . . . . . . . . . . . . . . 8
1.10 Indemnification. . . . . . . . . . . . . . . . . . . . . . 9
1.11 Reports Under Securities Exchange Act of 1934. . . . . . . 10
1.12 Form S-3 Registration. . . . . . . . . . . . . . . . . . . 11
1.13 Assignment of Registration Rights. . . . . . . . . . . . . 12
1.14 Limitations on Subsequent Registration Rights;
Registration Rights Agreement. . . . . . . . . . . . . . . 12
1.15 "Market Stand-Off" Agreement . . . . . . . . . . . . . . . 13
1.16 Termination of Registration Rights . . . . . . . . . . . . 14
2. Covenants of the Company . . . . . . . . . . . . . . . . . . . . . . 14
2.1 Delivery of Financial Statements. . . . . . . . . . . . . . 14
2.2 Inspection. . . . . . . . . . . . . . . . . . . . . . . . . 15
2.3 Right of First Offer on Primary Sales . . . . . . . . . . . 15
2.4 Restrictions on Sale or Other Disposition of Shares . . . . 17
2.5 Right of First Offer on Certain Secondary Sales . . . . . . 19
2.6 Board Representation. . . . . . . . . . . . . . . . . . . . 21
2.7 Observer Rights . . . . . . . . . . . . . . . . . . . . . . 23
2.8 Co-Sale Rights. . . . . . . . . . . . . . . . . . . . . . . 23
2.9 Stock Purchases by Employees, Officers, Directors and
Consulants. . . . . . . . . . . . . . . . . . . . . . . . . 27
2.10 Additional Liquidity Rights . . . . . . . . . . . . . . . . 27
2.11 Termination of Certain Covenants. . . . . . . . . . . . . . 28
2A Toronto Dominion Regulatory Compliance. . . . . . 28
2A.1 Violation of BHCA or SBIA . . . . . . . . . . . . 28
2A.2 SBIC Requirements . . . . . . . . . . . . . . . . 29
2A.3 Acquisition of Shares . . . . . . . . . . . . . . 30
2A.4 BHCA Issue, SBIC Issue and SBIC Requirements
Defined . . . . . . . . . . . . . . . . . . . . . 30
3. Miscellaneous. . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
3.1 Successors and Assigns. . . . . . . . . . . . . . . . . . . 30
3.2 Governing Law . . . . . . . . . . . . . . . . . . . . . . . 31
3.3 Counterparts. . . . . . . . . . . . . . . . . . . . . . . . 31
i
<PAGE>
3.4 Titles and Subtitles. . . . . . . . . . . . . . . . . . . . 31
3.5 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . 31
3.6 Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . 31
3.7 Amendments and Waivers. . . . . . . . . . . . . . . . . . . 31
3.8 Severability. . . . . . . . . . . . . . . . . . . . . . . . 32
3.9 Aggregation of Stock. . . . . . . . . . . . . . . . . . . . 32
3.10 Entire Agreement; Amendment; Waiver. . . . . . . . . . . . 32
Schedule A Schedule of Investors
ii
<PAGE>
SEVENTH AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
THIS SEVENTH AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT is made as
of the 13th day of December, 1997, by and among International Wireless
Communications Holdings, Inc., a Delaware corporation (the "Company"), and
the investors listed on SCHEDULE A hereto, each of which is herein referred
to as an "Investor."
RECITALS
WHEREAS, certain of the Investors (the "Existing Investors") hold shares
of the Company's Preferred Stock and/or shares of Common Stock issued upon
conversion thereof and/or other securities convertible or exchangeable into
the Company's Preferred Stock and possess registration rights, information
rights, rights of first offer, co-sale rights and other rights pursuant to
the Sixth Amended and Restated Investor Rights Agreement dated as of August
18, 1997, among the Company and such Investors, as amended as of October 24,
1997; and
WHEREAS, certain of the Existing Investors are lenders under the Loan
Agreement dated August 18, 1997 among the Company and the lenders named
therein (the "IWCH Loan Agreement") and under the Loan Agreement dated August
18, 1997 among Pakistan Wireless Holdings Limited, a Mauritius Company
("PWH"), and the lenders named therein (the "PWH Loan Agreement;" together
with the IWCH Loan Agreement, the "Loan Agreements"); and
WHEREAS, subject to certain terms and conditions, the Notes, as that
term is defined in the IWCH Loan Agreement (the "IWCH Notes") may be
exchanged for Series G-1 or Series G-2 Preferred Stock of the Company and the
Notes, as that term is defined in the PWH Loan Agreement (the "PWH Notes;"
together with the IWCH Notes, the "IWCH/PWH Notes") may be exchanged for
shares of Series H-1 or Series H-2 Preferred Stock of the Company (the shares
of Series G-1, Series G-2, Series H-1 and Series H-2 Preferred Stock issuable
upon exchange of the IWCH/PWH Notes or the conversion of other shares of
Series G-1, Series G-2, Series H-1 or Series H-2 Preferred Stock being
referred to as the "Series G/H Preferred Shares"); and
WHEREAS, the Company has issued or may issue to certain of the Existing
Investors the Warrants, as that term is defined in the IWCH Loan Agreement
(individually an "IWCH/PWH Warrant"; collectively, the "IWCH/PWH Warrants");
and
WHEREAS, certain of the Investors are former stockholders of Radio Movil
Digital Americas, Inc., a Delaware corporation ("RMD"), that acquired shares
of the Company's Series I Preferred Stock or Common Stock (collectively, the
"Merger Shares") pursuant to the Agreement and Plan of Merger dated November
22, 1997 (the "RMD Merger Agreement") among the Company, a wholly owned
subsidiary of the Company and RMD; and
WHEREAS, the Company desires to grant certain registration rights,
information rights, rights of first offer, co-sale rights and other rights to
holders of the Merger Shares; and
<PAGE>
WHEREAS, the Existing Investors desire to amend and restate the Prior
Agreement and to accept the rights created pursuant hereto in lieu of the
rights granted to them under the Prior Agreement;
NOW, THEREFORE, in consideration of the mutual promises and covenants
set forth herein, the parties hereto agree as follows:
1. REGISTRATION RIGHTS. The Company covenants and agrees as follows:
1.1. DEFINITIONS. For purposes of this Agreement:
(a) The term "Act" means the Securities Act of 1933, as
amended.
(b) The term "Form S-3" means such form under the Act as in
effect on the date hereof or any registration form under the Act subsequently
adopted by the SEC which permits inclusion or incorporation of substantial
information by reference to other documents filed by the Company with the SEC.
(c) The term "Holder" means any person owning or having the
right to acquire Registrable Securities or any assignee thereof in accordance
with Section 1.13 hereof. For purposes of this Agreement, the holders of
securities which are convertible or exchangeable into Registrable Securities,
or which are convertible or exchangeable into other securities which are
convertible or exchangeable into Registrable Securities, shall be treated as
Holders of such underlying Registrable Securities, and references to
Registrable Securities held by such holders shall include such underlying
Registrable Securities.
(d) The term "1934 Act" shall mean the Securities Exchange
Act of 1934, as amended.
(e) The term "register", "registered", and "registration"
refer to a registration effected by preparing and filing a registration
statement or similar document in compliance with the Act, and the declaration
or ordering of effectiveness of such registration statement or document.
(f) The term "Registrable Securities" means (i) (A) the
Common Stock of the Company ("Common Stock") issuable or issued upon
conversion of (aa) the Series B, Series C, Series D, and Series E Preferred
Stock of the Company and (bb) the Series I Preferred Stock of the Company
issued pursuant to the RMD Merger Agreement (if any) and (B) the Common Stock
issued pursuant to the RMD Merger Agreement (if any), (ii) the Common Stock
issuable or issued upon conversion of Preferred Stock of the Company issuable
or issued (A) upon exercise of the warrants issued to Vanguard pursuant to
that certain Series C Preferred Stock Purchase Agreement dated as of February
24, 1994, as such warrants are amended and restated pursuant to the Warrant
Amendment Agreement dated as of July 31, 1995 (the "Vanguard Warrant
Shares"), (B) upon the exercise of warrants issued to certain Investors
pursuant to that certain Note and Warrant Purchase Agreement dated as of May
6, 1994 (the
2
<PAGE>
"1994 Warrant Shares"), (C) upon exercise of warrants (the "1995 Warrant
Shares") issued to certain Investors pursuant to that certain Securities
Purchase Agreement dated as of July 12, 1995 (the "Securities Purchase
Agreement"), (D) upon exercise of warrants issued to Vanguard pursuant to the
Note and Warrant Purchase Agreement dated as of July 31, 1995 (the
"Additional Vanguard Warrant Shares"), and (E) upon exercise of warrants
issued to Toronto Dominion Investments, Inc. or its Affiliates (collectively,
"Toronto Dominion"), pursuant to the Note and Warrant Purchase Agreement (the
"TD Purchase Agreement") and the Loan Agreement, each dated as of August 14,
1995 (the "TD Warrant Shares", together with Vanguard Warrant Shares, the
1994 Warrant Shares, the 1995 Warrant Shares, and the Additional Vanguard
Warrant Shares, the "Warrant Shares"), (iii) Common Stock that is issued or
issuable upon exercise of the Warrant to Purchase Common Stock granted to
Vanguard Cellular Financial Corp., a North Carolina corporation ("Vanguard"),
pursuant to Section 2.01(c) of the Reimbursement Agreement dated September
18, 1997 between Vanguard and IWC China Limited, (iv) the Common Stock
issuable or issued upon conversion of Preferred Stock issuable or issued upon
conversion of the two $900,000 notes issued to Vanguard pursuant to that
certain Note Purchase Agreement dated as of October 26, 1994, as amended by
the Amendment to Note Purchase Agreement dated as of July 12, 1995 between
the Company and Vanguard (collectively, the "Vanguard Notes"), and (v) Common
Stock issued as (or issuable upon the conversion or exercise of any warrant,
right or other security that is issued as) a dividend or other distribution
with respect to, or in exchange for or in replacement of, the shares
referenced in (i) above, excluding in all cases, however, any Registrable
Securities sold by a person in a transaction in which the related rights
under this Section 1 are not assigned pursuant to Section 1.13.
(g) The term "SEC" shall mean the Securities and Exchange
Commission.
1.2. REQUEST FOR REGISTRATION.
(a) If the Company shall receive at any time after the
earlier of (i) December 31, 1997, or (ii) six (6) months after the effective
date of the first registration statement for a public offering of securities
of the Company (other than a registration statement relating either to the
sale of securities to employees of the Company pursuant to a stock option,
stock purchase or similar plan or a SEC Rule 145 transaction), a written
request from the Holders of at least forty percent (40%) of the Registrable
Securities then outstanding that the Company file a registration statement
under the Act covering the registration of at least forty percent (40%) of
the Registrable Securities then outstanding (or a lesser percent if the
anticipated aggregate offering price, net of underwriting discounts and
commissions, would exceed $2,500,000), then the Company shall:
(i) within twenty (20) days of the receipt thereof,
give written notice of such request to all Holders; and
(ii) use its best efforts to effect as soon as
practicable, and in any event within 60 days of the receipt of such request,
the registration under the Act of all Registrable Securities which the
Holders request to be registered, subject to the limitations of
3
<PAGE>
subsection 1.2(b), within twenty (20) days of the mailing of such notice by
the Company in accordance with Section 3.5.
(b) If the Holders initiating the registration request
hereunder ("Initiating Holders") intend to distribute the Registrable
Securities covered by their request by means of an underwriting, they shall
so advise the Company as a part of their request made pursuant to subsection
1.2(a) and the Company shall include such information in the written notice
referred to in subsection 1.2(a). The underwriter will be selected by the
Company and shall be reasonably acceptable to holders of a majority of the
Registrable Securities then held by Initiating Holders. In such event, the
right of any Holder to include his Registrable Securities in such
registration shall be conditioned upon such Holder's participation in such
underwriting and the inclusion of such Holder's Registrable Securities in the
underwriting (unless otherwise mutually agreed by holders of a majority of
the Registrable Securities then held by Initiating Holders and such Holder)
to the extent provided herein. All Holders proposing to distribute their
securities through such underwriting shall (together with the Company as
provided in subsection 1.4(e)) enter into an underwriting agreement in usual
and customary form with the underwriter or underwriters selected for such
underwriting. Notwithstanding any other provision of this Section 1.2, if
the underwriter advises the Initiating Holders in writing that marketing
factors require a limitation of the number of shares to be underwritten, then
the Initiating Holders shall so advise all Holders of Registrable Securities
which would otherwise be underwritten pursuant hereto, and the number of
shares of Registrable Securities that may be included in the underwriting
shall be allocated among all Holders thereof, including the Initiating
Holders, in proportion (as nearly as practicable) to the amount of
Registrable Securities of the Company held by each Holder; provided, however,
that, except as provided in that certain Amended and Restated Registration
Rights Agreement dated as of August 18, 1997 among the Company and the
holders of "Registrable Securities" as defined therein (the "Registration
Rights Agreement"), the number of shares of Registrable Securities to be
included in such underwriting shall not be reduced unless all other
securities are first entirely excluded from the underwriting.
(c) Notwithstanding the foregoing, if the Company shall
furnish to Holders requesting a registration statement pursuant to this
Section 1.2, a certificate signed by the Chief Executive Officer of the
Company stating that in the good faith judgment of the Board of Directors of
the Company, it would be seriously detrimental to the Company and its
stockholders for such registration statement to be filed and it is therefore
essential to defer the filing of such registration statement, the Company
shall have the right to defer taking action with respect to such filing for a
period of not more than 120 days after receipt of the request of the
Initiating Holders; provided, however, that the Company may not utilize this
right more than once in any twelve-month period.
(d) In addition, the Company shall not be obligated to
effect, or to take any action to effect, any registration pursuant to this
Section 1.2:
(i) After the Company has effected two registrations
pursuant to this Section 1.2 and such registrations have been declared or
ordered effective;
4
<PAGE>
(ii) During the period starting with the date sixty (60)
days prior to the Company's good faith estimate of the date of filing of, and
ending on a date one hundred eighty (180) days after the effective date of, a
registration subject to Section 1.3 hereof; provided that the Company is
actively employing in good faith all reasonable efforts to cause such
registration statement to become effective; or
(iii) If the Initiating Holders propose to dispose
of shares of Registrable Securities that may be immediately registered on
Form S-3 pursuant to a request made pursuant to Section 1.12 below.
1.3. COMPANY REGISTRATION. If (but without any obligation to do
so) the Company proposes to register (including for this purpose a
registration effected by the Company for stockholders other than the Holders)
any of its stock or other securities under the Act in connection with the
public offering of such securities solely for cash (other than a registration
relating solely to the sale of securities to participants in a Company stock
plan, a registration on any form which does not include substantially the
same information as would be required to be included in a registration
statement covering the sale of the Registrable Securities or a registration
in which the only Common Stock being registered is Common Stock issuable upon
conversion of debt securities which are also being registered), the Company
shall, at such time, promptly give each Holder written notice of such
registration. Upon the written request of each Holder given within twenty
(20) days after mailing of such notice by the Company in accordance with
Section 3.5, the Company shall, subject to the provisions of Section 1.8,
cause to be registered under the Act all of the Registrable Securities that
each such Holder has requested to be registered.
1.4. OBLIGATIONS OF THE COMPANY. Whenever required under this
Section 1 to effect the registration of any Registrable Securities, the
Company shall, as expeditiously as reasonably possible:
(a) Prepare and file with the SEC a registration statement
with respect to such Registrable Securities and use its best efforts to cause
such registration statement to become effective, and, upon the request of the
Holders of a majority of the Registrable Securities registered thereunder,
keep such registration statement effective for a period of up to one hundred
twenty (120) days or until the distribution contemplated in the Registration
Statement has been completed; provided, however, that (i) such 120-day period
shall be extended for a period of time equal to the period the Holder
refrains from selling any securities included in such registration at the
request of an underwriter of Common Stock (or other securities) of the
Company; and (ii) in the case of any registration of Registrable Securities
on Form S-3 which are intended to be offered on a continuous or delayed
basis, such 120-day period shall be extended, if necessary, to keep the
registration statement effective until all such Registrable Securities are
sold, provided that Rule 415, or any successor rule under the Act, permits an
offering on a continuous or delayed basis, and provided further that
applicable rules under the Act governing the obligation to file a
post-effective amendment permit, in lieu of filing a post-effective amendment
which (I) includes any prospectus required by Section 10(a)(3) of the Act or
(II) reflects facts or events representing a material or fundamental change
in the information set
5
<PAGE>
forth in the registration statement, the incorporation by reference of
information required to be included in (I) and (II) above to be contained in
periodic reports filed pursuant to Section 13 or 15(d) of the 1934 Act in the
registration statement.
(b) Prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in
connection with such registration statement as may be necessary to comply
with the provisions of the Act with respect to the disposition of all
securities covered by such registration statement.
(c) Furnish to the Holders such numbers of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Act, and such other documents as they may reasonably
request in order to facilitate the disposition of Registrable Securities
owned by them.
(d) Use its best efforts to register and qualify the
securities covered by such registration statement under such other securities
or Blue Sky laws of such jurisdictions as shall be reasonably requested by
the Holders; provided that the Company shall not be required in connection
therewith or as a condition thereto to qualify to do business or to file a
general consent to service of process in any such states or jurisdictions,
unless the Company is already subject to service in such jurisdiction and
except as may be required by the Act.
(e) In the event of any underwritten public offering, enter
into and perform its obligations under an underwriting agreement, in usual
and customary form, with the managing underwriter of such offering. Each
Holder participating in such underwriting shall also enter into and perform
its obligations under such an agreement.
(f) Notify each Holder of Registrable Securities covered by
such registration statement at any time when a prospectus relating thereto is
required to be delivered under the Act of the happening of any event as a
result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing.
(g) Cause all such Registrable Securities registered
pursuant hereunder to be listed on each securities exchange on which similar
securities issued by the Company are then listed.
(h) Provide a transfer agent and registrar for all
Registrable Securities registered pursuant hereunder and a CUSIP number for
all such Registrable Securities, in each case not later than the effective
date of such registration.
(i) Furnish, at the request of any Holder requesting
registration of Registrable Securities pursuant to this Section 1, on the
date that such Registrable Securities are delivered to the underwriters for
sale in connection with a registration pursuant to this Section 1, if such
securities are being sold through underwriters, or, if such securities are
not
6
<PAGE>
being sold through underwriters, on the date that the registration statement
with respect to such securities becomes effective, (i) an opinion, dated such
date, of the counsel representing the Company for the purposes of such
registration, in form and substance as is customarily given to underwriters
in an underwritten public offering, addressed to the underwriters, if any,
and to the Holders requesting registration of Registrable Securities and (ii)
a letter dated such date, from the independent certified public accountants
of the Company, in form and substance as is customarily given by independent
certified public accountants to underwriters in an underwritten public
offering, addressed to the underwriters, if any, and to the Holders
requesting registration of Registrable Securities.
1.5. FURNISH INFORMATION. It shall be a condition precedent to
the obligations of the Company to take any action pursuant to this Section 1
with respect to the Registrable Securities of any selling Holder that such
Holder shall furnish to the Company such information regarding itself, the
Registrable Securities held by it, and the intended method of disposition of
such securities as shall be required to effect the registration of such
Holder's Registrable Securities.
1.6. EXPENSES OF DEMAND REGISTRATION. All expenses other than
underwriting discounts and commissions incurred in connection with
registrations, filings or qualifications pursuant to Section 1.2, including
(without limitation) all registration, filing and qualification fees,
printing and accounting fees, fees and disbursements of counsel for the
Company (including fees and disbursements of counsel for the Company in its
capacity as counsel to the selling Holders hereunder; if Company counsel does
not make itself available for this purpose, the Company will pay the
reasonable fees and disbursements of one counsel for the selling Holders
selected by them) shall be borne by the Company; provided, however, that the
Company shall not be required to pay for any expenses of any registration
proceeding begun pursuant to Section 1.2 if the registration request is
subsequently withdrawn at the request of the Holders of a majority of the
Registrable Securities to be registered (in which case all participating
Holders shall bear such expenses on a pro rata basis based on the number of
Registrable Securities requested to be registered), unless the Holders of a
majority of the Registrable Securities requested to be registered agree to
forfeit their right to one demand registration pursuant to Section 1.2;
provided further, however, that if at the time of such withdrawal, the
Holders have learned of a material adverse change in the condition, business,
or prospects of the Company from that known to the Holders at the time of
their request and have withdrawn the request with reasonable promptness
following disclosure by the Company of such material adverse change, then the
Holders shall not be required to pay any of such expenses and shall retain
their rights pursuant to Section 1.2.
1.7. EXPENSES OF COMPANY REGISTRATION. The Company shall bear and
pay all expenses incurred in connection with any registration, filing or
qualification of Registrable Securities with respect to the registrations
pursuant to Section 1.3 for each Holder, including (without limitation) all
registration, filing and qualification fees, printing and accounting fees
relating or apportionable thereto and the fees and disbursements of counsel
for the Company (including fees and disbursements of counsel for the Company
in its capacity as counsel to the selling Holders hereunder; if Company
counsel does not make itself available for
7
<PAGE>
this purpose, the Company will pay the reasonable fees and disbursements of
one counsel for the selling Holders selected by them), but excluding
underwriting discounts and commissions relating to Registrable Securities.
1.8. UNDERWRITING REQUIREMENTS. In connection with any offering
involving an underwriting of shares of the Company's capital stock, the
Company shall not be required under Section 1.3 to include any of the
Holders' securities in such underwriting unless they accept the terms of the
underwriting as agreed upon between the Company and the underwriters selected
by it (or by other persons entitled to select the underwriters), and then
only in such quantity as the underwriters determine in their sole discretion
will not jeopardize the success of the offering by the Company. If the total
amount of securities, including Registrable Securities, requested by
stockholders to be included in such offering exceeds the amount of securities
sold other than by the Company that the underwriters determine in their sole
discretion is compatible with the success of the offering, then the Company
shall be required to include in the offering only that number of such
securities, including Registrable Securities, which the underwriters
determine in their sole discretion will not jeopardize the success of the
offering (the securities so included to be apportioned pro rata among the
selling stockholders according to the total amount of securities entitled to
be included therein owned by each selling stockholder or in such other
proportions as shall mutually be agreed to by such selling stockholders) but
in no event, except as otherwise required by the Registration Rights
Agreement, shall (i) the amount of securities of the selling Holders included
in the offering be reduced below thirty percent (30%) of the total amount of
securities included in such offering, unless such offering is the initial
public offering of the Company's securities in which case the selling
stockholders may be excluded entirely if the underwriters make the
determination described above and no other stockholder's securities are
included or (ii) notwithstanding (i) above, any shares being sold by a
stockholder exercising a demand registration right similar to that granted in
Section 1.2 be excluded from such offering. For purposes of the preceding
parenthetical concerning apportionment, for any selling stockholder which is
a holder of Registrable Securities and which is a partnership or corporation,
the partners, retired partners and stockholders of such holder, or the
estates and family members of any such partners and retired partners and any
trusts for the benefit of any of the foregoing persons shall be deemed to be
a single "selling stockholder", and any pro-rata reduction with respect to
such "selling stockholder" shall be based upon the aggregate amount of shares
carrying registration rights owned by all entities and individuals included
in such "selling stockholder", as defined in this sentence.
1.9. DELAY OF REGISTRATION. No Holder shall have any right to
obtain or seek an injunction restraining or otherwise delaying any such
registration as the result of any controversy that might arise with respect
to the interpretation or implementation of this Section 1.
1.10. INDEMNIFICATION. In the event any Registrable
Securities are included in a registration statement under this Section 1:
(a) To the extent permitted by law, the Company will
indemnify and hold harmless each Holder, any underwriter (as defined in the
Act) for such
8
<PAGE>
Holder and each person, if any, who controls such Holder or underwriter
within the meaning of the Act or the 1934 Act, against any losses, claims,
damages, or liabilities (joint or several) to which they may become subject
under the Act, the 1934 Act or other federal or state law, insofar as such
losses, claims, damages, or liabilities (or actions in respect thereof) arise
out of or are based upon any of the following statements, omissions or
violations (collectively a "Violation"): (i) any untrue statement or alleged
untrue statement of a material fact contained in such registration statement,
including any preliminary prospectus or final prospectus contained therein or
any amendments or supplements thereto, (ii) the omission or alleged omission
to state therein a material fact required to be stated therein, or necessary
to make the statements therein not misleading, or (iii) any violation or
alleged violation by the Company of the Act, the 1934 Act, any state
securities law or any rule or regulation promulgated under the Act, the 1934
Act or any state securities law; and the Company will pay to each such
Holder, underwriter or controlling person, as incurred, any legal or other
expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability, or action; provided,
however, that the indemnity agreement contained in this subsection 1.10(a)
shall not apply to amounts paid in settlement of any such loss, claim,
damage, liability, or action if such settlement is effected without the
consent of the Company (which consent shall not be unreasonably withheld),
nor shall the Company be liable in any such case for any such loss, claim,
damage, liability, or action to the extent that it arises out of or is based
upon a Violation which occurs in reliance upon and in conformity with written
information furnished expressly for use in connection with such registration
by any such Holder, underwriter or controlling person.
(b) To the extent permitted by law, each selling Holder will
indemnify and hold harmless the Company, each of its directors, each of its
officers who has signed the registration statement, each person, if any, who
controls the Company within the meaning of the Act, any underwriter, any
other Holder selling securities in such registration statement and any
controlling person of any such underwriter or other Holder, against any
losses, claims, damages, or liabilities (joint or several) to which any of
the foregoing persons may become subject, under the Act, the 1934 Act or
other federal or state law, insofar as such losses, claims, damages, or
liabilities (or actions in respect thereto) arise out of or are based upon
any Violation, in each case to the extent (and only to the extent) that such
Violation occurs in reliance upon and in conformity with written information
furnished by such Holder expressly for use in connection with such
registration; and each such Holder will pay, as incurred, any legal or other
expenses reasonably incurred by any person intended to be indemnified
pursuant to this subsection 1.10(b), in connection with investigating or
defending any such loss, claim, damage, liability, or action; provided,
however, that the indemnity agreement contained in this subsection 1.10(b)
shall not apply to amounts paid in settlement of any such loss, claim,
damage, liability or action if such settlement is effected without the
consent of the Holder, which consent shall not be unreasonably withheld;
provided, that, in no event shall any indemnity under this subsection 1.10(b)
exceed the gross proceeds from the offering received by such Holder.
(c) Promptly after receipt by an indemnified party under
this Section 1.10 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect
thereof is to be made against any indemnifying party under this Section 1.10,
deliver to the indemnifying party a written notice of the
9
<PAGE>
commencement thereof and the indemnifying party shall have the right to
participate in, and, to the extent the indemnifying party so desires, jointly
with any other indemnifying party similarly noticed, to assume the defense
thereof with counsel mutually satisfactory to the parties; provided, however,
that an indemnified party (together with all other indemnified parties which
may be represented without conflict by one counsel) shall have the right to
retain one separate counsel, with the fees and expenses to be paid by the
indemnifying party, if representation of such indemnified party by the
counsel retained by the indemnifying party would be inappropriate due to
actual or potential differing interests between such indemnified party and
any other party represented by such counsel in such proceeding. The failure
to deliver written notice to the indemnifying party within a reasonable time
of the commencement of any such action, if prejudicial to its ability to
defend such action, shall relieve such indemnifying party of any liability to
the indemnified party under this Section 1.10, but the omission so to deliver
written notice to the indemnifying party will not relieve it of any liability
that it may have to any indemnified party otherwise than under this Section
1.10.
(d) If the indemnification provided for in this Section 1.10
is held by a court of competent jurisdiction to be unavailable to an
indemnified party with respect to any loss, liability, claim, damage, or
expense referred to therein, then the indemnifying party, in lieu of
indemnifying such indemnified party hereunder, shall contribute to the amount
paid or payable by such indemnified party as a result of such loss,
liability, claim, damage, or expense in such proportion as is appropriate to
reflect the relative fault of the indemnifying party on the one hand and of
the indemnified party on the other in connection with the statements or
omissions that resulted in such loss, liability, claim, damage, or expense as
well as any other relevant equitable considerations. The relative fault of
the indemnifying party and of the indemnified party shall be determined by
reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission to state a material fact relates
to information supplied by the indemnifying party or by the indemnified party
and the parties' relative intent, knowledge, access to information, and
opportunity to correct or prevent such statement or omission.
(e) The obligations of the Company and Holders under this
Section 1.10 shall survive the completion of any offering of Registrable
Securities in a registration statement under this Section 1, and otherwise.
1.11. REPORTS UNDER SECURITIES EXCHANGE ACT OF 1934. With a
view to making available to the Holders the benefits of Rule 144 promulgated
under the Act and any other rule or regulation of the SEC that may at any
time permit a Holder to sell securities of the Company to the public without
registration or pursuant to a registration on Form S-3, the Company agrees to:
(a) make and keep public information available, as those
terms are understood and defined in SEC Rule 144, at all times after ninety
(90) days after the effective date of the first registration statement filed
by the Company for the offering of its securities to the general public;
10
<PAGE>
(b) take such action, including the voluntary registration of
its Common Stock under Section 12 of the 1934 Act, as is necessary to enable
the Holders to utilize Form S-3 for the sale of their Registrable Securities,
such action to be taken as soon as practicable after the end of the fiscal
year in which the first registration statement filed by the Company for the
offering of its securities to the general public is declared effective;
(c) file with the SEC in a timely manner all reports and
other documents required of the Company under the Act and the 1934 Act; and
(d) furnish to any Holder, so long as the Holder owns any
Registrable Securities, forthwith upon request (i) a written statement by the
Company that it has complied with the reporting requirements of SEC Rule 144
(at any time after ninety (90) days after the effective date of the first
registration statement filed by the Company), the Act and the 1934 Act (at
any time after it has become subject to such reporting requirements), or that
it qualifies as a registrant whose securities may be resold pursuant to Form
S-3 (at any time after it so qualifies), (ii) a copy of the most recent
annual or quarterly report of the Company and such other reports and
documents so filed by the Company, and (iii) such other information as may be
reasonably requested in availing any Holder of any rule or regulation of the
SEC which permits the selling of any such securities without registration or
pursuant to such form.
1.12. FORM S-3 REGISTRATION. In case the Company shall receive
from any Holder or Holders of at least 20% in the aggregate of Registrable
Securities a written request or requests that the Company effect a
registration on Form S-3 and any related qualification or compliance with
respect to all or a part of the Registrable Securities owned by such Holder
or Holders, the Company will:
(a) promptly give written notice of the proposed
registration, and any related qualification or compliance, to all other
Holders; and
(b) as soon as practicable, effect such registration and all
such qualifications and compliances as may be so requested and as would
permit or facilitate the sale and distribution of all or such portion of such
Holder's or Holders' Registrable Securities as are specified in such request,
together with all or such portion of the Registrable Securities of any other
Holder or Holders joining in such request as are specified in a written
request given within 15 days after receipt of such written notice from the
Company; provided, however, that the Company shall not be obligated to effect
any such registration, qualification or compliance, pursuant to this section
1.12: (1) if Form S-3 is not available for such offering by the Holders; (2)
if the Holders, together with the holders of any other securities of the
Company entitled to inclusion in such registration, propose to sell
Registrable Securities and such other securities (if any) at an aggregate
price to the public (net of any underwriters' discounts or commissions) of
less than $250,000; (3) if the Company shall furnish to the Holders a
certificate signed by the President of the Company stating that in the good
faith judgment of the Board of Directors of the Company, it would be
seriously detrimental to the Company and its stockholders for such Form S-3
registration to be effected at such time, in which event the Company shall
have the right to defer the filing of the Form S-3 registration statement for
a period of not more than
11
<PAGE>
60 days after receipt of the request of the Holder or Holders under this
Section 1.12; provided, however, that the Company shall not utilize this
right more than once in any twelve month period; or (4) in any particular
jurisdiction in which the Company would be required to qualify to do business
or to execute a general consent to service of process in effecting such
registration, qualification or compliance.
(c) Subject to the foregoing, the Company shall file a
registration statement covering the Registrable Securities and other
securities so requested to be registered as soon as practicable after receipt
of the request or requests of the Holders. All expenses incurred in
connection with a registration requested pursuant to Section 1.12, including
(without limitation) all registration, filing, qualification, printer's and
accounting fees and the reasonable fees and disbursements of counsel for the
selling Holder or Holders and counsel for the Company, but excluding any
underwriters' discounts or commissions associated with Registrable
Securities, shall be borne by the Company, unless the Company has within the
12 month period preceding the date of such request paid the expenses incurred
in connection with a registration pursuant to Section 1.12, in which case the
expenses shall be borne pro rata by the Holder or Holders participating in
the Form S-3 registration. Registrations effected pursuant to this Section
1.12 shall not be counted as demands for registration or registrations
effected pursuant to Sections 1.2 or 1.3, respectively.
1.13. ASSIGNMENT OF REGISTRATION RIGHTS. The rights to cause the
Company to register Registrable Securities pursuant to this Section 1 may be
assigned (but only with all related obligations) by a Holder to a transferee
or assignee of such securities, provided: (a) the transferee or assignee
receives at least 10,000 shares of Registrable Securities (subject to
adjustment for stock splits, stock dividends and the like) in the transfer of
such securities; (b) the Company is, within a reasonable time after such
transfer, furnished with written notice of the name and address of such
transferee or assignee and the securities with respect to which such
registration rights are being assigned; (c) such transferee or assignee
agrees in writing to be bound by and subject to the terms and conditions of
this Agreement, including without limitation the provisions of Section 1.15
below; and (d) such assignment shall be effective only if immediately
following such transfer the further disposition of such securities by the
transferee or assignee is restricted under the Act.
1.14. LIMITATIONS ON SUBSEQUENT REGISTRATION RIGHTS; REGISTRATION
RIGHTS AGREEMENT. From and after the date of this Agreement, the Company
shall not, without the prior written consent of the Holders of a majority of
the outstanding Registrable Securities, enter into any agreement with any
holder or prospective holder of any securities of the Company which would
allow such holder or prospective holder (a) to include such securities in any
registration filed under Section 1.2 hereof, unless under the terms of such
agreement, such holder or prospective holder may include such securities in
any such registration only to the extent that the inclusion of his securities
will not reduce the amount of the Registrable Securities of the Holders which
is included or (b) to make a demand registration which could result in such
registration statement being declared effective prior to the earlier of
either of the dates set forth in subsection 1.2(a) or within one hundred
twenty (120) days of the effective date of any registration effected pursuant
to Section 1.2. Notwithstanding anything herein to the contrary,
12
<PAGE>
the holders of Registrable Securities acknowledge the terms and provisions of
the Registration Rights Agreement and agree that to the extent that this
Agreement conflicts in any respect with the Registration Rights Agreement,
the terms and provisions of the Registration Rights Agreement shall govern in
all respects, including, without limitation, the terms and provisions of
Sections 2, 3, and 12 of the Registration Rights Agreement governing the
priorities of inclusion of securities of the Company in a registration,
whether such registration is by the Company for its own account or on behalf
of any security holder of the Company (including the Holders) exercising a
demand or incidental registration right.
1.15. "MARKET STAND-OFF" AGREEMENT. Each Investor hereby agrees
that, during the period of duration specified by the Company and an
underwriter of common stock or other securities of the Company, following the
date of the first sale to the public pursuant to a registration statement of
the Company filed under the Act, it shall not, to the extent requested by the
Company and such underwriter, directly or indirectly sell, offer to sell,
contract to sell (including, without limitation, any short sale), grant any
option to purchase or otherwise transfer or dispose of (other than to donees
who agree to be similarly bound) any securities of the Company held by it at
any time during such period except common stock included in such
registration; provided, however, that:
(a) such agreement shall be applicable only to the first such
registration statement of the Company which covers common stock (or other
securities) to be sold on its behalf to the public in an underwritten
offering;
(b) all officers and directors of the Company and all other
persons with registration rights (whether or not pursuant to this Agreement)
enter into similar agreements;
(c) such market stand-off time period shall not exceed one
hundred and twenty (120) days; and
(d) such agreement shall not preclude transfer in a private
transaction to an institutional buyer who agrees to be bound by such
agreement.
In order to enforce the foregoing covenant, the Company may impose
stop-transfer instructions with respect to the Registrable Securities of each
Investor (and the shares or securities of every other person subject to the
foregoing restriction) until the end of such period.
Notwithstanding the foregoing, the obligations described in this Section
1.15 shall not apply to a registration relating solely to employee benefit
plans on Form S-l or Form S-8 or similar forms which may be promulgated in
the future, or a registration relating solely to a SEC Rule 145 transaction.
1.16. TERMINATION OF REGISTRATION RIGHTS. The right of any Holder
to request registration or inclusion in any registration pursuant to Section
1.3 shall terminate on the closing of the first Company-initiated registered
public offering of Common Stock of the
13
<PAGE>
Company if all shares of Registrable Securities held or entitled to be held
upon conversion by such Holder may immediately be sold under Rule 144 during
any 90-day period, or on such date after the closing of the first
Company-initiated registered public offering of Common Stock of the Company
as all shares of Registrable Securities held or entitled to be held upon
conversion by such Holder may immediately be sold under Rule 144 during any
90-day period.
2. COVENANTS OF THE COMPANY.
2.1. DELIVERY OF FINANCIAL STATEMENTS. The Company shall deliver
to each Investor:
(a) as soon as practicable, but in any event within ninety
(90) days after the end of each fiscal year of the Company, an income
statement for such fiscal year, a balance sheet of the Company and statement
of stockholder's equity as of the end of such year, and a statement of cash
flows for such year, including notes thereto, such year-end financial reports
to be in reasonable detail, prepared in accordance with generally accepted
accounting principles ("GAAP"), and audited and certified by independent
public accountants of nationally recognized standing selected by the Company;
(b) within thirty (30) days of the end of each month, an
unaudited income statement, a balance sheet and a statement of cash flows for
and as of the end of such month, in reasonable detail;
(c) as soon as practicable, but in any event sixty (60) days
prior to the end of each fiscal year, a budget and business plan for the next
fiscal year, prepared on a monthly basis, including income statements,
balance sheets and statements of cash flows for such months and, as soon as
prepared, any other budgets, including internally prepared quarterly budget
forecasts or revised budgets prepared by the Company;
(d) within fifteen (15) days of the end of each calendar
quarter, a quarterly operations reports summarizing activities during
preceding quarter;
(e) with respect to the financial statements called for in
subsection (b) of this Section 2.1, an instrument executed by the Chief
Financial Officer or President of the Company and certifying that such
financial statements were prepared in accordance with GAAP consistently
applied with prior practice for earlier periods (with the exception of
footnotes that may be required by GAAP) and fairly present the financial
condition of the Company and its results of operation for the period
specified, subject to year-end audit adjustment; and
(f) such other information relating to the financial
condition, business, prospects or corporate affairs of the Company as the
Investor or any assignee of the Investor may from time to time request,
provided, however, that the Company shall not be obligated under this
subsection (f) or any other subsection of Section 2.1 to provide information
which it deems in good faith to be a trade secret or similar confidential
information.
14
<PAGE>
2.2. INSPECTION. The Company will also permit each Investor and
its authorized representatives, at all reasonable times and as often as
reasonably requested, to visit and inspect, at the expense of such Investor,
any of the properties of the Company, to inspect its books and records and to
make extracts therefrom, and to discuss the affairs, finances and accounts of
the Company with its officers and consult with and advise the officers of the
Company as to the management of the Company, provided that the Investors
shall maintain the confidentiality of any proprietary information of the
Company thereby obtained and provided further that the Investors shall
conduct all such inspections in a manner that is not disruptive to the
employees or operations of the Company.
2.3. RIGHT OF FIRST OFFER ON PRIMARY SALES. Subject to the terms
and conditions specified in this Section 2.3, the Company hereby grants to
each Major Investor (as hereinafter defined) a right of first offer with
respect to future sales by the Company of its Securities (as hereinafter
defined). For purposes of this Section 2.3, a Major Investor shall mean (i)
any Investor who is a Holder of at least 10% of either the Registrable
Securities or the Other Registrable Securities (as defined below) initially
acquired by such Investor, but in any event not less than 4000 shares of
either the Registrable Securities or the Other Registrable Securities and
(ii) any person who acquires at least 10% in the aggregate of any of the
Series B, Series C, Series D, Series E, Series F, Series G, Series H or
Series I Preferred Stock (or the Common Stock issued or issuable upon
conversion thereof) outstanding as of the date hereof. For purposes of this
Agreement, the term "Other Registrable Securities" and the term "Holder" as
used in relation thereto shall have the meanings given to the terms
"Registrable Securities" and "Holder" in the Registration Rights Agreement,
and the term "Affiliates" shall have the meaning given to such term in
Section 2.4(e) below. For purposes of this Section 2.3, Investor includes
any general partners and Affiliates of an Investor. An Investor shall be
entitled to apportion the right of first offer hereby granted it among itself
and its partners and affiliates in such proportions as it deems appropriate.
Each time the Company proposes to offer any shares of, or securities
convertible into or exercisable for any shares of, any class of its capital
stock or any debt securities ("Securities"), the Company shall first make an
offering of such Securities to each Major Investor in accordance with the
following provisions:
(a) The Company shall deliver a notice by certified mail
("Section 2.3 Notice") to each Major Investor stating (i) its bona fide
intention to offer such Securities, (ii) the number of such Securities to be
offered, and (iii) the price and terms, if any, upon which it proposes to
offer such Securities.
(b) By written notification received by the Company within
twenty (20) calendar days after receiving the Section 2.3 Notice, each Major
Investor may elect to purchase or obtain, at the price and on the terms
specified in the Section 2.3 Notice, up to that portion of such Securities
which equals the total number of Securities multiplied by a fraction, (a) the
numerator of which is the sum of the number of Registrable Securities
referred to in clauses (i) and (iv) of Section 1.1(f) and the number of Other
Registrable Securities then held by such Major Investor, and (b) the
denominator of which is the total number of shares of Common
15
<PAGE>
Stock then outstanding (assuming full conversion of all then outstanding
securities that are convertible into and exchangeable and exercisable for
shares of Common Stock of the Company). The Company shall promptly, in
writing, inform each Major Investor which purchases all of the Securities
available to it under this Section 2.3 ("Fully Exercising Investor") of any
other Major Investor's failure to do likewise. During the ten (10)-day
period commencing after receipt of such information, each Fully Exercising
Investor shall be entitled to purchase up to that portion of the Securities
for which Major Investors were entitled to subscribe but which were not
subscribed for by the Major Investors which is equal to the total number of
unsubscribed Securities multiplied by a fraction, (a) the numerator of which
is the sum of the number of Registrable Securities referred to in clauses (i)
and (iv) of Section 1.1(f) and the number of Other Registrable Securities, as
the case may be, then held by such Fully Exercising Investor, and (B) the
denominator of which is the total number of Registrable Securities referred
to in clauses (i) and (iv) of Section 1.1(f) and the number of Other
Registrable Securities then held by all Fully Exercising Investors who wish
to purchase some of the unsubscribed shares.
(c) If all Securities which Major Investors are entitled to
purchase pursuant to subsection 2.3(b) are not elected to be purchased as
provided in subsection 2.3(b) hereof, the Company may, during the ninety
(90)-day period following the expiration of the period provided in subsection
2.3(b) hereof, offer the remaining unsubscribed portion of such Securities to
any person or persons at a price not less than, and upon terms no more
favorable to the offeree than those specified in the Section 2.3 Notice. If
the Company does not enter into an agreement for the sale of the Securities
within such period, or if such agreement is not consummated within thirty
(30) days of the execution thereof, the right provided hereunder shall be
deemed to be revived and such Securities shall not be offered unless first
reoffered to the Major Investors in accordance herewith.
(d) The right of first offer in this paragraph 2.3 shall not
be applicable (i) to the issuance or sale of up to 2,811,526 shares of Common
Stock (or such additional number of shares of Common Stock as may be approved
in writing by holders of a majority of the number of outstanding Registrable
Securities and holders of a majority of the Other Registrable Securities at
the time of such approval) (in each case, as appropriately adjusted for any
stock dividends, contributions, splits, reclassifications or the like) to
officers, directors and employees of and consultants to the Company for the
primary purpose of soliciting or retaining their services, provided each such
person executes an agreement, pursuant to which such person agrees to resell
to the Company at the original purchase price thereof all shares of the
Company's Common Stock that are not vested on the date of termination of such
employee's term of service with the Company and not to transfer any unvested
shares of the Company's Common Stock to any person except to members of his
or her immediate family or to a trust for the benefit of members of his or
her immediate family, or (ii) to or after consummation of a Threshold Public
Offering (as defined in the Amended and Restated Certificate of Incorporation
of the Company), (iii) to the issuance of securities pursuant to the
conversion or exercise of convertible or exercisable securities (including
the Warrant Shares and the Series G/H Preferred Shares and the Common Stock
issuable upon conversion thereof and upon exercise of the IWCH/PWH Warrants),
(iv) to the issuance of securities in connection with a bona fide business
acquisition of or by the Company, whether by merger, consolidation, sale of
assets, sale or
16
<PAGE>
exchange of stock or otherwise, (v) to the issuance of stock, warrants or
other securities or rights to persons or entities with which the Company has
business relationships provided such issuances are for other than primarily
equity financing purposes (provided that no more than 1% of the total number
of shares of Common Stock then outstanding (assuming full conversion of all
then outstanding convertible securities of the Company) may be excluded from
the right of first offer pursuant to this clause (v) during any twelve
(12)-month period), and (vi) to the issuance of Securities upon conversion of
the Vanguard Notes and exchange of the IWCH/PWH Notes.
(e) The right of first offer set forth in this Section 2.3
may not be assigned or transferred, except that (i) such right is assignable
by each Holder and each Holder (within the meaning of the Registration Rights
Agreement) of Other Registrable Securities (an "Other Holder") to any wholly
owned subsidiary or parent of, or to any corporation or entity that is,
within the meaning of the Act, controlling, controlled by or under common
control with, any such Holder or Other Holder, and (ii) such right may be
transferred to a third party who buys (x) at least 40,000 shares of the
Registrable Securities or Other Registrable Securities (subject to adjustment
for stock splits, stock dividends and the like) or (y) all shares held by an
Investor.
2.4. RESTRICTIONS ON SALE OR OTHER DISPOSITION OF SECURITIES. (a) No
Investor shall, either directly or indirectly, sell, assign, mortgage,
hypothecate, transfer, pledge, create a security interest in or lien upon,
encumber, give, place in trust, or otherwise voluntarily or involuntarily
dispose of (collectively hereinafter sometimes referred to as "Transfer") any
of the shares of Capital Stock (as defined in the Securities Purchase
Agreement (as defined in the Registration Rights Agreement)) then owned or
controlled by such party except in accordance with Section 2.4(b), 2.4(d),
2.4(f), 2.5 or 2.8. No Transfer of any shares of Capital Stock in violation
of the provisions of this Agreement shall be made or recorded on the books of
the Corporation and any such purported transfer shall be void and of no force
or effect.
(b) Notwithstanding anything to the contrary contained in
this Agreement, any Investor shall have the right at any time to Transfer any
of its shares of Capital Stock of the Company to any Affiliate, upon such
terms as may be agreed upon by such party and its transferee; PROVIDED,
HOWEVER, that (i) any such Transfer shall be made in compliance with the
Securities Act and applicable state securities laws, or pursuant to an
exemption therefrom, and (ii) any such transferee shall (A) acquire the
shares so transferred subject to all the terms and conditions of this
Agreement, (B) shall agree in writing, at the time of the Transfer, to be
bound by all of the provisions of this Agreement which would be applicable to
the Investor if it continued to own the shares so transferred, and (C) shall
be an "accredited investor" within the meaning of Regulation D under the
Securities Act. In addition to and subject to compliance with the foregoing,
Electra Investment Trust P.L.C. ("EIT") and Electra Associates, Inc.
(collectively, "Electra"), shall have the right to Transfer any of its shares
of Capital Stock of the Company to Electra Fleming Equity Partners (provided
that at the time of such Transfer such entity is an Affiliate of EIT).
Notwithstanding anything to the contrary in this Agreement, each Investor
other than a Section 2.5 Stockholder (as defined below) shall be permitted to
Transfer such Investor's shares of Capital Stock of the Company, subject only
to compliance with clauses (i) and (ii) of the proviso to the first sentence
of this Section 2.4(b). Notwithstanding anything to the contrary contained
in this Agreement, Toronto Dominion Investments, Inc. ("Toronto
17
<PAGE>
Dominion") shall have the unrestricted right to assign or transfer any of its
shares of Capital Stock of the Company to an indirect or direct wholly or
majority owned subsidiary of the ultimate parent of Toronto Dominion
including, without limitation, a subsidiary established as (or which is
expected by Toronto Dominion to become) a small business investment company
pursuant to the Small Business Investment Act of 1958, as amended from time
to time, subject to compliance with clauses (i) and (ii) of the proviso to
the first sentence of this Section 2.4(b). Notwithstanding anything to the
contrary contained in this Agreement, Vanguard shall have the right at any
time to Transfer any shares of Capital Stock of the Company (whether now
owned or hereafter acquired by Vanguard) to the Vanguard Lenders (as defined
below) pursuant to that certain Amended and Restated Subsidiary Pledge
Agreement dated as of December 23, 1994 between Vanguard and Toronto Dominion
(Texas), Inc., as Collateral Agent, as amended, subject to and in accordance
with the Fourth Amended and Restated Investor Rights Agreement dated as of
July 31, 1995, among the Company and the investors name therein (the "Fourth
Amended and Restated Investor Rights Agreement") and, Vanguard Lenders shall
have the right to Transfer any such shares acquired upon the exercise of
their rights under such Amended and Restated Subsidiary Pledge Agreement
subject to and in accordance with the Fourth Amended and Restated Investor
Rights Agreement, in each case as if the Prior Agreement were in full force
and effect on the date of Transfer. "Vanguard Lenders" shall have the
meaning given to the term "Lenders" in that certain Amended and Restated Loan
Agreement dated as of December 23, 1994 among Vanguard, the Lenders, and the
other parties thereto. Any Transfer under this Section 2.4(b) shall not be
subject to the provisions of Section 2.5.
(c) In the event of any Transfer in accordance with the
provisions of Section 2.4(b), prompt written notice of the Transfer shall be
delivered by the Transferor to the Corporation, and, in the case of any
Transfer pursuant to Section 2.4 hereof, references herein to the Investor
shall include, from and after the date of such permitted transfer, each such
permitted transferee (transferees acquiring such shares pursuant to Section
2.4(b) are hereinafter sometimes referred to as "Permitted Transferees").
(d) For so long as any shares of Series F Preferred Stock
shall remain outstanding, none of John D. Lockton, Hugh B. L. McClung,
Douglas S. Sinclair, Samuel Endy, Patrick Ciganer, or James Dixon
(collectively, "Management") may Transfer any Capital Stock of the Company
owned at any time by such individual. The foregoing transfer restrictions
shall not (i) apply to any member of Management (other than a director of the
Company) who owns 20,000 or fewer shares of Capital Stock of the Company or
(ii) prevent any member of Management (other than a director of the Company)
who as of the date of this Agreement owns 20,000 or fewer shares of Capital
Stock of the Company and who hereafter owns more than 20,000 shares of
Capital Stock of the Company from Transferring up to 20,000 shares of Capital
Stock of the Company.
(e) For purposes of this Agreement, the term "Affiliate"
means, (i) with respect to any person, any other person (A) which directly or
indirectly of record or beneficially owns or holds fifty percent (50%) or
more of the equity interest of such person, or (B) fifty percent (50%) or
more of the equity interest which is owned or held, directly or indirectly,
of record or beneficially, by such person and (ii) with respect to any person
that is an
18
<PAGE>
investment fund, any other person which is an investment fund and which has
as its investment managers or adviser, the same investment manager or adviser
as such a person or an investment manager or adviser a majority of the
individual investment professionals of which are the same as the individual
investment professionals of the investment manager or adviser of such other
person.
(f) Prior to the earlier of the second anniversary of the
date of this Agreement and the date on which any shares of Series F Preferred
Stock no longer remain outstanding, except as set forth in Section 2.4(b)
above, neither Vanguard nor any of its Affiliates may Transfer any of its
Capital Stock of the Company unless (i) immediately following such Transfer
Vanguard and its Affiliates collectively own not less than 30% of the then
issued and outstanding shares of Capital Stock of the Company and (ii) the
consideration per share received by Vanguard or such Affiliate of Vanguard,
as the case may be, with respect to such Transfer equals or exceeds 9.375 per
share (as appropriately adjusted for stock splits, stock dividends,
combinations and other recapitalizations).
2.5. RIGHT OF FIRST OFFER ON CERTAIN SECONDARY SALES. Subject to
the terms and conditions specified in this Section 2.5, each Investor who, as
of the date of this Agreement or hereafter, holds at least 100,000 shares of
Registrable Securities referred to in clauses (i) and (iv) of Section 1.1(f)
and/or Other Registrable Securities (as appropriately adjusted for any stock
dividends, contributions, splits, reclassifications or the like)
(individually a "Section 2.5 Stockholder," and collectively the "Section 2.5
Stockholders"), hereby grants to each other Section 2.5 Stockholder (but
excluding each holder of Series A Preferred Stock) (individually a "Section
2.5 Rights Holder," and collectively the "Section 2.5 Rights Holders") a
right of first offer with respect to future sales of Securities by such
Section 2.5 Stockholder. Notwithstanding any other provision of this
Agreement, a Section 2.5 Stockholder; (i) includes any general partners and
Affiliates of such Section 2.5 Stockholder; and (ii) excludes each Investor
listed on SCHEDULE 1 attached hereto, provided that each such Investor shall
be excluded only for so long as such Investor and its Affiliates own in the
aggregate in excess of 800,000 shares of the Capital Stock of the Company (as
appropriately adjusted for any stock dividends, contributions, splits,
reclassifications or the like). The Section 2.5 Stockholder, shall be
entitled to a portion of the right of first offer hereby granted it among
itself and its partners and Affiliate in such proportions as it deems
appropriate.
Each time a Section 2.5 Stockholder (an "Initiating Section 2.5
Stockholder") proposes to offer any Securities, except as provided in Section
2.4(b) above, the Section 2.5 Stockholder shall first make an offering of
such shares to each other Section 2.5 Rights Holder in accordance with the
following provisions:
(a) The Initiating Section 2.5 Stockholder shall deliver a
written notice by certified mail ("Section 2.5 Notice") to the Section 2.5
Rights Holders stating (i) its bona fide intention to offer such Securities,
(ii) the number of Securities to be offered ("Section 2.5 Shares") and (iii)
the price and terms, if any, upon which it proposes to offer the Section 2.5
Shares.
19
<PAGE>
(b) By written notification received by the Initiating Section 2.5
Stockholder within ten (10) business days after receiving the Section 2.5
Notice, each Section 2.5 Rights Holder may elect to purchase or obtain, at
the price and on the terms specified in the Section 2.5 Notice, up to that
number of the Section 2.5 Shares equal to the product of the total number of
Section 2.5 Shares multiplied by a fraction (A) the numerator of which is the
sum of the number of Registrable Securities referred to in clauses (i) and
(iv) of Section 1.1(f) and the number of Other Registrable Securities, as the
case may be, then held by such Section 2.5 Rights Holder and (B) the
denominator of which is the total number of shares of Common Stock then
outstanding (assuming full conversion of all then outstanding securities that
are convertible into and exchangeable and exercisable for shares of Common
Stock of the Company). The Initiating Section 2.5 Stockholder shall
promptly, in writing, inform each Section 2.5 Rights Holder which purchases
all of the Section 2.5 Shares available to it ("Fully Exercising Section 2.5
Rights Holder") of any other Section 2.5 Rights Holder's failure to do
likewise. During the ten (10) business day period commencing after receipt
of such information, each Fully Exercising Section 2.5 Rights Holder shall be
entitled to purchase up to that portion of the Section 2.5 Shares that the
Section 2.5 Rights Holders were entitled to subscribe but which were not
subscribed for by the Section 2.5 Rights Holders which is equal to the
proportion that the sum of the number of Registrable Securities referred to
in clauses (i) and (iv) of Section 1.1(f) and the number of Other Registrable
Securities then held, by such Fully Exercising Section 2.5 Rights Holder
bears to the sum of the number of Registrable Securities referred to in
clauses (i) and (iv) of Section 1.1(f) and the number of Other Registrable
Securities then held, by all Fully Exercising Section 2.5 Rights Holders who
wish to purchase some of the unsubscribed Securities.
(c) If all of the Section 2.5 Shares which Section 2.5 Rights
Holders are entitled to purchase pursuant to subsection 2.5(b) hereof are not
elected to be purchased as provided in such subsection and if such purchases
have not been consummated within thirty (30) days of the expiration of the
periods provided in such subsection 2.5(b), the Initiating Section 2.5
Stockholder may, during the sixty (60)-day period following the expiration of
the period provided in such subsection 2.5(b), offer the remaining
unsubscribed portion of such Section 2.5 Shares to the offeree at a price not
less than, and upon terms more favorable to the offeree than those specified
in the Section 2.5 Notice. If the Initiating Section 2.5 Stockholder does
not enter into an agreement for the sale of such Section 2.5 Shares within
such period, or if such agreement is not consummated within the ninety
(90)-day period following the expiration of the period provided in such
subsection 2.5(b), the right provided herein shall be deemed to be revived in
such Section 2.5 Shares shall not be offered unless first reoffered to the
Section 2.5 Stockholders in accordance herewith.
(d) The Company may, at its discretion, cause any additional
purchaser of Capital Stock of the Company to agree to comply with the
provisions of this Section 2.5 as a Section 2.5 Stockholder.
(e) Notwithstanding the foregoing, the provisions of this Section
2.5 shall not apply to the sale of any Securities (i) to the public pursuant
to a registration
20
<PAGE>
statement filed with, and declared effective by, the SEC under the Act or
pursuant to Rule 144 or 701 under the Act or (ii) to the Company.
Notwithstanding any other provision of this Agreement, each of Mitsui &
Co. Ltd. and its Affiliates and Mitsubishi Corporation and its Affiliates
(individually, a "Section 2.5A Stockholder;" collectively, the "Section 2.5A
Stockholders") may, at its sole discretion, elect not to be a Section 2.5
Stockholder for purposes of this Agreement if all of the following conditions
are satisfied:
(i) the Company shall acquire a direct or indirect interest in a
United States PCS License ("License") or an entity that holds a License;
(ii) at the time of such acquisition by the Company, such Section
2.5A Stockholder holds a direct or indirect interest in a License or an
entity that holds a License;
(iii) as a result of such acquisition by the Company, such Section
2.5A Stockholder would violate applicable United States federal or state
communications laws, including the United States Federal Communications Act,
or the rules and regulations thereunder, by continuing to hold both its
equity interest in the Company and a direct or indirect interest in a License
or an entity that holds a License; and
(iv) such Section 2.5A Stockholder notifies the Company within
sixty days after receiving notice from the Company that the Company has
acquired a direct or indirect interest in a License or an entity that holds a
License.
2.6. BOARD REPRESENTATION. (a) [intentionally left blank]
(b) From and after such time as the criteria set forth in Section
V.B.5(b) of the Company's Amended and Restated Certificate of Incorporation
with respect to the election of directors by the Series F Holders are no
longer satisfied, for so long as 20% of the Series F Conversion Shares (as
defined below) are held by Series F Holders, each Investor covenants to vote
his or its shares in favor of at least three (3) directors (the "Series F
Directors") designated by the holders of a majority of the Series F
Conversion Shares held by the Series F Holders at each annual meeting of
stockholders of the Corporation at which any director is elected or at the
time of any written consent to action in lieu of any such meeting; PROVIDED,
that (i) for so long as Electra (or its assignee) owns at least 213,360
Series F Conversion Shares (as such number may be adjusted appropriately for
stock splits, stock dividends, combinations and other recapitalizations),
Electra (or its assignee, provided such assignee is an Affiliate of Electra)
shall have the right to designate one (1) of the directors (the "Electra
Director") to be designated by the holders of the Series F Conversion Shares,
(ii) for so long as Central Investment Holdings, Inc. ("CIH") (or its
assignee) owns at least 213,360 Series F Conversion Shares (as such number
may be adjusted appropriately for stock splits, stock dividends, combinations
and other recapitalizations), CIH (or its assignee, provided such assignee is
an Affiliate of CIH) shall have the right to designate one (1) of the
directors to be designated by the holders of the Series F Conversion Shares;
and (iii) for so long as Toronto Dominion (or its
21
<PAGE>
assignee) owns at least 213,360 Series F Conversion Shares (as such number
may be adjusted appropriately for stock splits, stock dividends, combinations
and other recapitalizations), Toronto Dominion (or its assignee, provided
such assignee is an Affiliate) shall have the right to designate one (1) of
the directors to be designated by the holders of the Series F Conversion
Shares, PROVIDED, HOWEVER, that Toronto Dominion or such Affiliate shall not
be entitled to so designate such director if exercising this right would be
in violation of the Bank Holding Company Act (as defined in Section 2A.4).
At least one of the Series F Directors, which shall be the Electra Director,
if any, shall have the right to be a member of the Audit and Compensation
Committees of the Board, if any, or of any committee of the Board performing
comparable functions. For purposes of this Section 2.6(b), "Series F
Conversion Shares" shall mean the shares of Common Stock issued or issuable
upon conversion of the shares of Series F-1 Preferred Stock originally issued
pursuant to the Series F Purchase Agreement or shares of Common Stock issued
or issuable upon conversion of the shares of Series F-1 Preferred Stock
issued upon conversion of the Series F-2 Preferred Stock originally issued
pursuant to the Series F Purchase Agreement.
No director(s) so designated by the holders of the Series F Conversion
Shares, or Electra, CIH or Toronto Dominion (or its respective assignee,
provided such assignee is a Section 2.4 Affiliate of Electra, CIH or Toronto
Dominion), as the case may be, may be removed without the prior consent,
given in person or by proxy, either in writing or at a special meeting called
for that purpose, of the holders of such Series F Conversion Shares, voting
separately as a class. In case of the death, resignation or other removal of
any Series F Director, including the Electra Director, the holders of a
majority of the Series F Conversion Shares held by the Series F Holders, or
Electra (or its assignee), as the case may be, shall have the right to
designate a successor director to hold such office for the unexpired term of
such removed director. Each Investor covenants and agrees to vote his or its
shares, as promptly as possible, either at a special meeting called for such
purpose or by written consent in lieu of a meeting, in favor of the election
of such successor designee.
Until the Company completes an initial public offering of its Common
Stock or is sold to or merges with another entity, none of Vanguard or
Electra, in their capacity as stockholders of the Company, will take any
actions which would result in the representative of BEA Associates, as the
manager of certain investment funds that are stockholders of the Company,
being removed from the Board of Directors of IWC, so long as such investment
funds retain their current level of ownership of Registrable Securities (as
defined in Section 1.1(f) hereof) and Registrable Securities (as defined in
the Registration Rights Agreement).
2.7. OBSERVER RIGHTS. Each Investor who is the Holder of not less than
either 80,000 Registrable Securities referred to in clauses (i), (iii) and
(iv) of Section 1.1(f) or the Holder (within the meaning of the Registration
Rights Agreement) of not less than 80,000 Other Registrable Securities
(subject to appropriate adjustment for stock splits, stock dividends,
combinations and other recapitalizations) is entitled to have one
representative designated by such Investor attend all meetings of its Board
in the capacity of a nonvoting, observer who may participate in discussions
and, in this respect, copies of all notices, minutes, consents, and other
materials that the Company provides to its directors shall be given to such
representative;
22
<PAGE>
PROVIDED, HOWEVER, that such representative shall agree to hold in confidence
and trust and to act in a fiduciary manner with respect to all information so
provided; and, provided further, that the Company reserves the right to
withhold any information and to exclude such representative from any meeting
or portion thereof if access to such information or attendance at such
meeting could adversely affect the attorney-client privilege between the
Company and its counsel or would result in disclosure of trade secrets to
such representative of if such Investor or its representative is a direct
competitor of the Company. Each Investor that is an entity may designate a
representative to attend such meetings on its behalf. Each Investor (or
representative thereof) may designate an alternate to attend such meetings on
its behalf if such Investor (or representative thereof) is unable to attend.
The Company acknowledges that it is contractually required to comply with the
obligations of this Section 2.7.
2.8. CO-SALE RIGHTS.
(a) Any Section 2.5 Rights Holder which does not elect to purchase
any of the Section 2.5 Shares available to it may elect to participate (a
Section 2.5 Rights Holder so electing being herein a "Participant") in the
Initiating Section 2.5 Stockholder's sale of Securities in accordance with
this Section 2.8.
(b) Subject to subsection 2.8(l) below, each Participant shall
have the right (the "Participation Right") to Transfer to the purchaser and
any Section 2.5 Rights Holders who has exercised the Right of First Offer set
forth in Section 2.5 above a number of Securities equal to the product of (i)
the aggregate number of Section 2.5 Shares and (ii) such Participant's Pro
Rata Percentage Amount (as defined below); PROVIDED, HOWEVER, that (A) with
respect to any Participant (other than an Original Series G/H Participant)
which is a holder of Series G/H Registrable Securities (as defined in the
Registration Rights Agreement), until such time as such Participant shall
have received proceeds upon the Transfer of Series G/H Registrable Securities
and the Preferred Stock of the Company underlying such Registrable Securities
which equals or exceeds the product of (x) the aggregate liquidation
preference of all such Series G/H Registrable Securities and underlying
Preferred Stock acquired by such participant (where the "liquidation
preference" of Series G Preferred Stock and Series H Preferred Stock means
the Original Series G Issue Price and the Original Series H Issue Price (as
those terms are defined in the Company's certificate of incorporation),
respectively) and (y) 0.50, and (B) with respect to any Participant which is
a Series F Holder, until such time as such Participant shall have received
proceeds upon the Transfer of Series F Registrable Securities (as defined in
the Registration Rights Agreement) which equals or exceeds the product of (x)
the number of Series F Registrable Securities purchased by such Participant,
(y) $9.375 (as appropriately adjusted for any stock dividends, combinations,
splits or the like with respect to such shares), and (z) .50, each such
Participant specified in clause (A) and (B) above shall have the right to
Transfer a number of Securities equal to the product of (i) the aggregate
number of Section 2.5 Shares, (ii) such Participant's Pro Rata Percentage
Amount and (iii) 150%. For purposes of this Section 2.8, a Participant's Pro
Rata Percentage Amount shall be equal to the fraction, the numerator of which
is the number of shares of Common Stock owned by such Participant at the time
of the sale or transfer (assuming the full conversion, exchange and exercise
of all convertible, exchangeable and exercisable securities of the Company
then owned
23
<PAGE>
by such Participant) and the denominator of which is the total
number of shares of Common Stock owned by the Initiating Section 2.5
Stockholder and all Participants at the time of the Transfer (assuming the
full conversion, exchange and exercise of all convertible, exchangeable and
exercisable securities of the Company then owned by the Initiating Section
2.5 Stockholder and all Participants), and rounded to the nearest whole
number.
(c) Each Participant shall effect its participation in the sale by
promptly delivering to the Initiating Section 2.5 Stockholder for transfer to
the prospective purchaser one or more certificates, properly endorsed for
transfer, which represent:
(i) the type and number of shares of Common Stock which such
Participant elects to sell; or
(ii) that number of shares of Preferred Stock which is at such
time convertible into the number of shares of Common Stock which such
Participant elects to sell; provided, however, that if the prospective
purchaser objects to the delivery of Preferred Stock in lieu of Common Stock,
such Participant shall convert such Preferred Stock into Common Stock and
deliver Common Stock as provided in subsection 2.8(c)(i) above. The Company
agrees to make any such conversion concurrent with the actual transfer of
such shares to the purchaser.
(d) The stock certificate or certificates that the Participant
delivers to the Initiating Section 2.5 Stockholder pursuant to paragraph
2.8(c) shall be transferred to the prospective purchaser in consummation of
the sale of the Securities pursuant to the terms and conditions specified in
the Notice, and the Initiating Section 2.5 Stockholder shall concurrently
therewith remit to such Participant that portion of the sale proceeds to
which such Participant is entitled by reason of its participation in such
sale. To the extent that any prospective purchaser or purchasers prohibits
such assignment or otherwise refuses to purchase shares or other securities
from a Participant exercising its rights of co-sale hereunder, the Initiating
Section 2.5 Stockholder shall not sell to such prospective purchaser or
purchasers any Securities unless and until, simultaneously with such sale,
the Initiating Section 2.5 Stockholder shall purchase such shares or other
securities from such Participant.
(e) The exercise or non-exercise of the rights of the Participants
hereunder to participate in one or more sales of Securities made by an
Initiating Section 2.5 Stockholder shall not adversely affect their rights to
participate in subsequent sales of Securities subject to this Section 2.8.
(f) Notwithstanding the foregoing, the co-sale rights of the
Investors shall not apply to (i) any pledge of Securities made pursuant to a
bona fide loan transaction that creates a mere security interest; (ii) any
transfer to the ancestors, descendants or spouse or to trusts for the benefit
of such persons of a Investor; (iii) any bona fide gift, provided that the
transferring Investor shall inform the other Investors of such pledge,
transfer or gift prior to effecting it; (iv) a transfer by an Investor that
is a partnership to a partner of such partnership or a retired partner of
such partnership who retires after the date hereof, or to the estate of any
such partner or retired partner or (v) a transfer by any Investor to any
Affiliate of such Investor;
24
<PAGE>
provided that in each such case the pledgee, transferee or donee, as the case
may be, shall furnish to the Company and the other Investor a written
agreement to be bound by and comply with all the provisions of this Section
2.8. Such transferred Securities shall remain "Securities" hereunder.
(g) Notwithstanding the foregoing, the provisions of this Section
2.8 shall not apply to (A) the sale of any Securities (i) to the public
pursuant to a registration statement filed with, and declared effective by,
the SEC under the Act or pursuant to Rule 144 or 701 under the Act or (ii) to
the Company or (B) the Post-Exchange Sale (as that term is defined in the
Exchange Agreement).
(h) In the event an Initiating Section 2.5 Stockholder should
sell any Securities in contravention of the co-sale rights of the Investor
under this agreement (a "Prohibited Transfer"), the Investors, in addition to
such other remedies as may be available at law, in equity or hereunder, shall
have the put option provided below, and the Initiating Section 2.5
Stockholder shall be bound by the applicable provisions of such option.
(i) In the event of a Prohibited Transfer, each Investor shall have
the right to sell to the Initiating Section 2.5 Stockholder the type and
number of Securities equal to the number of shares each Investor would have
been entitled to transfer to the purchaser had the Prohibited Transfer been
effected pursuant to and in compliance with the terms hereof. Such sale
shall be made on the following terms and conditions:
(i) The price per share at which the Securities are to be
sold to the Initiating Section 2.5 Stockholder shall be equal to the price
per share paid by the purchaser to the seller in the Prohibited Transfer.
The Initiating Section 2.5 Stockholder shall also reimburse each Investor for
any and all fees and expenses, including legal fees and expenses, incurred
pursuant to the exercise or the attempted exercise of the Investor's rights
under this Section 2.8.
(ii) Within 90 days after the later of the dates on which the
Investor (A) received notice of the Prohibited Transfer or (B) otherwise
become aware of the Prohibited Transfer, each Investor shall, if exercising
the option created hereby, deliver to the Initiating Section 2.5 Stockholder
the certificate or certificates representing shares to be sold, each
certificate to be properly endorsed for transfer.
(iii) The Initiating Section 2.5 Stockholder shall, upon
receipt of the certificate or certificates for the shares to be sold by a
Investor, pursuant to this subsection 2.8(i), pay the aggregate purchase
price therefor and the amount of reimbursable fees and expense, as specified
in clause (i) of this subsection 2.8(i), in cash or by other means acceptable
to the Investor.
(iv) Notwithstanding the foregoing, any attempt by an
Initiating Section 2.5 Stockholder to transfer Securities in violation of
this Section 2.8 hereof shall be void and the Company agrees it will not
effect such a transfer nor will it treat any alleged
25
<PAGE>
transferee as the holder of such shares without the written consent of a
majority in interest of the Investors.
(j) Each certificate representing shares of Capital Stock of the
Company now or hereafter owned by each Investor or issued to any person in
connection with a transfer pursuant to Subsections 2.8(d) and (i) hereof
shall be endorsed with the following legend:
"THE SALE, PLEDGE, HYPOTHECATION OR TRANSFER OF THE
SECURITIES REPRESENTED BY THIS CERTIFICATE IS SUBJECT
TO THE TERMS AND CONDITIONS OF A CERTAIN CO-SALE
AGREEMENT BY AND BETWEEN THE STOCKHOLDER, THE
CORPORATION AND CERTAIN HOLDERS OF STOCK OF THE
CORPORATION. COPIES OF SUCH AGREEMENT MAY BE OBTAINED
UPON WRITTEN REQUEST TO THE SECRETARY OF THE CORPORATION."
(k) Each Investor agrees that the Company may instruct its transfer
agent to impose transfer restrictions on the shares represented by
certificates bearing the legend referred to in subsection 2.8(j) above to
enforce the provisions of this Agreement and the Company agrees to promptly
do so. The legend shall be removed upon termination of this Agreement.
(l) Each Original Series G/H Participant (as defined below) shall
have the right (the "Original Series G/H Participation Right") to transfer to
the purchaser and any Section 2.5 Rights Holders who have exercised the Right
of First Offer set forth in Section 2.5 above, Original Series G/H
Registrable Securities pro rata according to the respective Original Series
G/H Pro Rata Percentage Amounts (as defined below) of the Original Series G/H
Participants who exercise the Original Series G/H Participation Right with
respect to such transfer. The Original Series G/H Participation Right of
each holder of Original Series G/H Registrable Securities shall terminate
when the aggregate amount of the proceeds received by Original Series G/H
Participants in respect of Original Series G/H Registrable Securities that
all Original Series G/H Participants have included in Transfers pursuant to
this subsection 2.8(l) (regardless of whether such holders have exercised
such right) is at least equal to the aggregate principal amount of, and
accrued but unpaid interest on, the IWCH/PWH Notes exchanged for Series G and
Series H Preferred Stock pursuant the Exchange Agreement. The Original
Series G/H Participation Right may be exercised prior to and in preference
over any Participation Right in subsection 2.8(b) hereof. For purposes of
this subsection 2.8(l):
(i) "Original Series G/H Participant" means any holder of
Original Series G/H Registrable Securities;
(ii) "Original Series G/H Pro Rata Percentage Amount" for any
Original Series G/H Participant means the fraction, the numerator of which is
the number of Original Series G/H Registrable Securities owned by such
participant at the time of the
26
<PAGE>
Transfer and the denominator of which is the total number of Original Series
G/H Registrable Securities held by all Original Series G/H Participants at
such time; and
(iii) "Original Series G/H Registrable Securities" means (A)
all shares of Series G and Series H Preferred Stock that were acquired by the
holder thereof (or an Affiliate of such holder) pursuant to Sections 2, 2A or
3 of the Exchange Agreement and not transferred to any third party (other
than an Affiliate of such holder), (B) all shares of Series G and Series H
Preferred Stock held by such holder (or an Affiliate thereof) and issued upon
the conversion of any shares of Series G or Series H Preferred Stock
described in clause (A) above and (C) all shares of Common Stock held by such
holder (or an Affiliate thereof) and issued or issuable upon conversion of
such shares of Series G and Series H Preferred Stock described in clause (A)
or clause (B).
2.9. STOCK PURCHASES BY EMPLOYEES, OFFICERS, DIRECTORS AND CONSULTANTS.
Each employee who purchases any of the shares of the Company's Common Stock
that are subject to vesting and are reserved for issuance to officers and
employees of the Company shall execute and deliver to the Company an employee
stock purchase agreement committing each such person to resell to the Company
at the original purchase price thereof all shares of the Company's Common
Stock that are not vested on the date of termination of such employee's term
of employment with the Company, and restricting each such person from
transferring any unvested shares of the Company's Common Stock to any person
except to members of his or her immediate family or to a trust for the
benefit of members of his or her immediate family.
2.10. ADDITIONAL LIQUIDITY RIGHTS. Each Investor with a representative
on the Board shall cause such representative to take all steps necessary to
cause the Board to maintain a committee of the Board (the "Committee")
consisting of a representative of the Board designated by Vanguard (as long
as Vanguard or Affiliate thereof owns not less than fifty percent (50%) of
the shares of Series C Preferred Stock it holds as of the date hereof (or an
equivalent amount of Common Stock issued upon conversion thereof)), a Series
F Director (but only so long as the holders of Series F-1 Preferred stock
shall be entitled to elect the Series F Directors pursuant to subsection
V.B.6(b) of the Restated Certificate), which shall be the Electra Director,
if any, a representative of the Board designated by the other outside
investors and a representative of the Company's Executive Management. (If
Vanguard shall at any time fail the ownership requirements set forth in the
preceding sentence, the Board at its sole discretion may elect to the
Committee a representative of the Board not designated by Vanguard.) The
Committee shall, from time to time at the request of any member, consult with
an investment banking firm of recognized national standing that is
unaffiliated with the Committee members. The Committee shall request such
investment banking firm to thereafter make a formal presentation to the
Committee as to the commercial reasonableness of proceeding with an initial
public offering of the Company's Common Stock ("IPO") in light of then
prevailing market conditions and the condition and performance of the
Company. Based on the recommendation of such investment banking firm, the
Committee shall make a recommendation to the full Board about proceeding with
an IPO. If the Board approves proceeding with an IPO, the Company shall,
subject to the rights of the Series F Holders under the Series F Registration
Rights
27
<PAGE>
Agreement, use commercially reasonable efforts to proceed with an IPO
unless three directors vote to oppose proceeding with the IPO. In such
event, the Company shall submit to binding arbitration to be completed within
30 days whether it is commercially feasible to proceed with an IPO. Such
arbitration shall be conducted in accordance with the procedures set forth in
Section 8.3 of the Reorganization Agreement. The arbitrators shall be
representatives of nationally known investment banking firms unaffiliated
with the Company. Upon a finding of commercial feasibility, the Company
shall, subject to the rights of the Series F Holders under the Series F
Registration Rights Agreement, use commercially reasonable efforts to proceed
with an IPO. If no IPO occurs by December 31, 1996, the Committee shall then
explore in good faith other means to provide liquidity for all outside
investors. The Committee shall again consult with an investment banking firm
of recognized national standing that is unaffiliated with any of the
Committee members and request such investment banking firm to submit a
written report to the Committee regarding liquidity alternatives, including
the sale of the Company, the repurchase of the Company's stock by all
electing investors and any other commercially feasible liquidity strategies.
2.11. TERMINATION OF CERTAIN COVENANTS. The covenants set forth in
Sections 2.1, 2.2, 2.3, 2.4, 2.5, 2.7, 2.8, 2.9, and 2.10 shall terminate and
be of no further force or effect upon the consummation of a Threshold Public
Offering.
2A. TORONTO DOMINION REGULATORY COMPLIANCE.
2A.1 VIOLATION OF BHCA OR SBIA. If Toronto Dominion or an affiliate of
Toronto Dominion determines that it has a BHCA Issue (as defined below) or an
SBIC Issue (as defined below), the Company and all other Investors agree to
take all such actions as are reasonably requested by Toronto Dominion or such
affiliate in order to, at the option of Toronto Dominion or such affiliate,
either (a) permit Toronto Dominion or such affiliate to convert all or any
portion of any shares of Series F-1 Preferred Stock held by Toronto Dominion
or its affiliate into an equal number of shares of Series F-2 Preferred Stock
(which Series F-2 Preferred Stock shall be convertible back into Series F-1
Preferred Stock on such terms as may be permitted by regulatory
considerations then prevailing) or (b) effectuate and facilitate a Transfer
by Toronto Dominion or such affiliate of all or a part of its interest in the
Company to a person or entity designated by Toronto Dominion or such
affiliate, provided that such assignment or transfer is in compliance with
applicable federal and state securities laws and the assignee or transferee
agrees to be bound by the Agreement.
2A.2 SBIC REQUIREMENTS.
(a) The Company and each Investor hereby agree to take all action and
execute all such instruments as may be reasonably required by Toronto
Dominion or its permitted assignee or transferee, in either case which may
hereafter become (or which is expected by Toronto Dominion to become) a small
business investment company (an "SBIC") subject to the SBIC Requirements, so
that such SBIC shall be entitled to legally hold its shares of Capital Stock
of the Company as a small business investment company under the SBIC
Requirements. Such actions shall be taken at the reasonable request of
Toronto Dominion or such affiliate within a reasonable
28
<PAGE>
time in advance of the earlier of (i) Toronto Dominion or such affiliate
becoming an SBIC or (ii) Toronto Dominion assigning or transferring the
shares of Capital Stock in the Company held by it to an SBIC or an affiliate
of Toronto Dominion which is expected by Toronto Dominion to become an SBIC.
(b) Such actions referred to in clause (a) above shall include, without
limitation, an amendment to this Agreement providing for (i) the provision of
financial statements and other information by the Company as required by and
on forms specified by SBIC Requirements (including information with respect
to the Company's use of proceeds and to confirm the Company's size for
purposes of eligibility under the SBIC Requirements), (ii) in the event that
the SBIC Requirements are not met for such SBIC to legally hold such Capital
Stock (including, without limitation, as a result of a diversion of the
proceeds from the reported use thereof or a change in the Company's business
activities), the SBIC's right to put its shares of Capital Stock of the
Company back to the Company for prompt payment at the original purchase price
of such shares and (iii) such other representations, warranties and covenants
for the benefit of such SBIC as may be reasonably required by the SBIC
Requirements. Notwithstanding any other provision of this Agreement, SBIC's
right under clause (ii) of the first sentence of this Section 2A.2(b) shall
arise solely if (i) the Company shall become an ineligible investment for
SBIC (within the meaning of the SBIC Requirements) as a result of (A)
changing its business activity (within the meaning of the SBIC Requirements)
from that contemplated by the Memorandum or (B) using the proceeds from the
sale of Series F Preferred Stock pursuant to the Series F Purchase Agreement
in a manner different than that contemplated by the Memorandum (as defined in
the Series F Purchase Agreement) and the Series F Purchase Agreement and (ii)
as a result of such change in business activity or use of proceeds, SBIC
would violate the SBIC Requirements by maintaining its investment in the
Company. In addition, before exercising its rights under clause (ii) of the
first sentence of this Section 2A.2(b), SBIC shall use commercially
reasonable efforts to obtain approval of the Small Business Administration to
permit it to maintain its investment in the Company notwithstanding such
change in business activity.
2A.3 ACQUISITION OF SECURITIES. Notwithstanding anything contained in
this Agreement to the contrary, Toronto Dominion shall not be entitled to
acquire any shares of Capital Stock of the Company hereunder, including,
without limitation, under Sections 2.3 and 2.5, if the acquisition of such
shares would cause Toronto Dominion to hold shares of Capital Stock in the
Company in excess of the amount permitted under the Bank Holding Company Act
(as defined below).
2A.4 BHCA ISSUE, SBIC ISSUE AND SBIC REQUIREMENTS DEFINED.
(a) For purposes of this Agreement, a "BHCA Issue" means any facts or
circumstances under which Toronto Dominion or an affiliate of Toronto
Dominion is or may be in violation or potential violation of the Bank Holding
Company Act of 1956, as amended from time to time (and any successor law
thereto), or the rules and regulations promulgated from time to time
thereunder (collectively, the "Bank Holding Company Act"), or any assertion
by any governmental regulatory agency that Toronto Dominion or an affiliate
of Toronto Dominion is or may be in violation or potential violation of the
Bank Holding Company Act by virtue of Toronto Dominion
29
<PAGE>
or an affiliate of Toronto Dominion holding, or exercising any significant
right with respect to, any Capital Stock of the Company.
(b) For purposes of this Agreement, an "SBIC Issue" means any facts or
circumstances under which Toronto Dominion or an affiliate of Toronto
Dominion is or may be in violation or potential violation of the Small
Business Investment Act of 1958, as amended from time to time (and any
successor law thereto), or the rules and regulations promulgated thereunder
(collectively, the "Small Business Investment Act"), or any assertion by the
U.S. Small Business Administration or other governmental agency that Toronto
Dominion or an affiliate of Toronto Dominion is or may be in violation or
potential violation of the Small Business Investment Act or other laws or
regulations pertaining to small business investment companies by virtue of
Toronto Dominion or an affiliate of Toronto Dominion holding, or exercising
any significant right with respect to, any Capital Stock of the Company.
(c) For purposes of this Agreement, "SBIC Requirements" means all of the
requirements of the Small Business Investment Act relating to small business
investment companies and investments by small business investment companies
as in effect on the date hereof or as they may be amended or supplemented
from time to time.
3. MISCELLANEOUS.
3.1. SUCCESSORS AND ASSIGNS. Except as otherwise provided herein, the
terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the respective successors and assigns of the parties (including
transferees of any shares of Registrable Securities). Nothing in this
Agreement, express or implied, is intended to confer upon any party other
than the parties hereto or their respective successors and assigns any
rights, remedies, obligations, or liabilities under or by reason of this
Agreement, except as expressly provided in this Agreement.
3.2. GOVERNING LAW. This Agreement shall be governed by and construed
under the laws of the State of Delaware as applied to agreements among
Delaware residents entered into and to be performed entirely within Delaware.
3.3. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
3.4. 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.
3.5. NOTICES. Unless otherwise provided, any notice required or
permitted under this Agreement shall be given in writing and shall be deemed
effectively given upon personal delivery to the party to be notified or upon
deposit with the United States Post Office, by registered or certified mail,
postage prepaid and addressed to the party to be notified at
30
<PAGE>
the address indicated for such party on the signature page hereof, or at such
other address as such party may designate by at least ten (10) days' advance
written notice to the other parties.
3.6. EXPENSES. If any action at law or in equity is necessary to
enforce or interpret the terms of this Agreement, the prevailing party shall
be entitled to reasonable attorneys' fees, costs and necessary disbursements
in addition to any other relief to which such party may be entitled.
3.7. AMENDMENTS AND WAIVERS. Any term of this Agreement may be amended
and the observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and the Holders
of seventy-five percent (75%) of the then outstanding Registrable Securities
and Holders (as defined in the Registration Rights Agreement) of a majority
of the Series F Registrable Securities and a majority of the Series G/H
Registrable Securities (as defined in the Registration Rights Agreement).
Any amendment or waiver effected in accordance with this Section 3.7 shall be
binding upon each Holder of any Registrable Securities, Series F Registrable
Securities or Series G/H Registrable Securities then outstanding, each future
Holder of all such Registrable Securities or the Series F Registrable
Securities, and the Company. Notwithstanding the foregoing, (i) the rights of
Section 2.5 Stockholders pursuant to Section 2.5 hereof, (ii) the rights of
Investors pursuant to Section 2.7 hereof and (iii) the rights of Investors
pursuant to Section 2.10 hereof may not be amended without the written
consent of Holders of a majority of the Registrable Securities and
seventy-five percent (75%) of the Series F Registrable Securities and
seventy-five percent (75%) of the Series G/H Registrable Securities then held
by the Section 2.5 Stockholders in the case of clause (i) hereof, each Holder
of at least 80,000 Registrable Securities in the case of clause (ii) hereof,
and Holders of a majority of the Registrable Securities and Other Registrable
Securities in the case of clause (iii) hereof. By executing this Agreement,
an Existing Investor hereby consents to amending and restating the Prior
Agreement in its entirety as set forth herein upon the effectiveness of this
Agreement and to waive any rights that would otherwise arise under the Prior
Agreement by virtue of the transactions contemplated by the Loan Agreements.
3.8. SEVERABILITY. If one or more provisions of this Agreement are
held to be unenforceable under applicable law, such provision shall be
excluded from this Agreement and the balance of the Agreement shall be
interpreted as if such provision were so excluded and shall be enforceable in
accordance with its terms.
3.9. AGGREGATION OF STOCK. All shares of Registrable Securities and
Other Registrable Securities held or acquired by affiliated entities or
persons shall be aggregated together for the purpose of determining the
availability of any rights under this Agreement.
3.10. ENTIRE AGREEMENT; AMENDMENT; WAIVER. This Agreement hereby
amends and restates the Prior Agreement in its entirety and any other
previous agreements among any of the parties hereto with respect to the
subject matter of this Agreement, and any such previous agreements shall be
of no further force and effect.
31
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Seventh Amended and
Restated Investor Rights Agreement as of the date first above written.
INTERNATIONAL WIRELESS
COMMUNICATIONS HOLDINGS, INC.
By:
-------------------------------------
Name:
-----------------------------------
Title:
-----------------------------------
Address: 400 So. El Camino Real, Suite 1275
San Mateo, CA 94402
INVESTOR
By:
-------------------------------------
Name:
-----------------------------------
Title:
-----------------------------------
Address:
---------------------------------------
---------------------------------------
SIGNATURE PAGE TO SEVENTH AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
<PAGE>
SCHEDULE A
SCHEDULE OF INVESTORS
Electra Investment Trust P.L.C.
Electra Associates, Inc.
The Emerging Markets Infrastructure Fund, Inc.
The Emerging Markets Telecommunications Fund, Inc.
Latin America Investment Fund, Inc.
Latin America Equity Fund, Inc.
Latin America Capital Partners
Argentina Equity Investments Partnership
JAFCO America Ventures, Inc.
Japan Associated Finance Co., Ltd.
JAFCO G-5 Investment Enterprise Partnership
JAFCO R-1(A) Investment Enterprise Partnership
JAFCO R-1(B) Investment Enterprise Partnership
JAFCO R-2 Investment Enterprise Partnership
U.S. Information Technology Investment Enterprise Partnership
Northwood Ventures
Northwood Capital Partners LLC
Henry T. Wilson
Gateway Venture Partners III, L.P.
Bayview Investors, Ltd.
R & S Co. IV, L.P.
Drysdale Partners
George M. Drysdale
Dixon R. Doll
Gary J. Morgenthaler
The Pavey Family Partnership
Brooks Stough
Vanguard Cellular Operating Corp.
Mary L. Walton
C.I. Global Fund
C.I. Emerging Markets Fund
C.I. Latin American Fund
Richard B. Keller II
Richard B. Keller II, IRA DLJSC as Custodian
Keller Enterprises, Inc.
Harris Corporation
Toronto Dominion Investments, Inc.
Michael Bennett
James Dixon
John Lockton
S-1
<PAGE>
SCHEDULE A
SCHEDULE OF INVESTORS (CONTINUED)
Melissa Morgan
Roger Quayle
Larry Salzer
Andrew Woodfield
BPPA IWC LLC
[RMD Stockholders]
S-1
<PAGE>
Exhibit 10.30A
________________________________________________________________________________
________________________________________________________________________________
AMENDED AND RESTATED SENIOR SECURED
NOTE AND WARRANT PURCHASE AGREEMENT
DATED AS OF JANUARY 23, 1998
AMONG
INTERNATIONAL WIRELESS COMMUNICATIONS HOLDINGS, INC.,
RADIO MOVIL DIGITAL AMERICAS, INC.
AND
BT FOREIGN INVESTMENT CORPORATION
________________________________________________________________________________
________________________________________________________________________________
<PAGE>
TABLE OF CONTENTS
Page
1. CERTAIN DEFINITIONS AND RELATED MATTERS...................................1
1.1 CERTAIN DEFINITIONS................................................1
1.2 ACCOUNTING PRINCIPLES.............................................10
1.3 OTHER INTERPRETIVE MATTERS........................................10
2. AUTHORIZATION AND CLOSING................................................11
2.1 AUTHORIZATION OF THE SECURITIES...................................11
2.2 SALE AND ISSUANCE OF THE SECURITIES...............................11
2.3 CLOSINGS..........................................................11
3. CONDITIONS OF BTFIC'S OBLIGATION AT THE INITIAL CLOSING..................12
3.1 REPRESENTATIONS, WARRANTIES AND COVENANTS; NO EVENT OF DEFAULT....12
3.2 SECURITIES LAW COMPLIANCE.........................................13
3.3 MERGER AGREEMENT..................................................13
3.4 INITIAL CLOSING FEES AND EXPENSES.................................13
3.5 NO INDEBTEDNESS; LIENS............................................13
3.6 FIRST PRIORITY SECURITY INTEREST..................................14
3.7 GUARANTY..........................................................14
3.8 OPINION OF THE COMPANY'S COUNSEL..................................14
3.9 INITIAL CLOSING DOCUMENTS.........................................14
3.10 PROCEEDINGS.......................................................15
3.11 WAIVER............................................................15
3.12 COMPLIANCE WITH APPLICABLE LAWS...................................15
4. COVENANTS................................................................16
4.1 FINANCIAL STATEMENTS AND OTHER INFORMATION........................16
4.2 INSPECTION OF PROPERTY............................................18
4.3 ATTENDANCE AT BOARD MEETINGS......................................19
4.4 AFFIRMATIVE COVENANTS.............................................20
4.5 NOTE RESTRICTIVE COVENANTS........................................21
4.6 COMPLIANCE WITH AGREEMENTS; NO NON-RESTRICTIVE AGREEMENTS.........23
4.7 CURRENT PUBLIC INFORMATION........................................23
4.8 REGULATORY COMPLIANCE COOPERATION.................................24
4.9 COMPLIANCE WITH LAWS..............................................25
4.10 LIEN ON COLLATERAL; ADDITIONAL UNDERTAKING........................25
-i-
<PAGE>
4.11 COVENANTS REGARDING POST-MERGER REORGANIZATIONS...................26
5. TRANSFER OF RESTRICTED SECURITIES........................................27
5.1 GENERAL PROVISIONS................................................27
5.2 OPINION DELIVERY..................................................27
5.3 RULE 144A.........................................................27
5.4 LEGEND REMOVAL....................................................27
Section 6. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.....................27
6.1 ORGANIZATION, CORPORATE POWER AND LICENSES........................28
6.2 CAPITAL STOCK AND RELATED MATTERS.................................28
6.3 SUBSIDIARIES; INVESTMENTS.........................................29
6.4 AUTHORIZATION; NO BREACH..........................................30
6.5 NO MATERIAL ADVERSE CHANGE........................................31
6.6 BROKERAGE.........................................................31
6.7 AFFILIATED TRANSACTIONS...........................................31
6.8 SOLVENCY, ETC. ...................................................31
6.9 DISCLOSURE........................................................31
6.10 OTHER REPRESENTATIONS AND WARRANTIES..............................32
6.11 CONDITION OF SYSTEM...............................................32
6.12 FEES; LICENSES COMPLIANCE.........................................32
6.13 COLLATERAL........................................................33
6.14 INITIAL CLOSING DATE..............................................33
7. EVENTS OF DEFAULT........................................................33
7.1 DEFINITION........................................................33
7.2 CONSEQUENCES OF EVENTS OF DEFAULT.................................35
8. MISCELLANEOUS............................................................35
8.1 EXPENSES..........................................................35
8.2 REMEDIES..........................................................36
8.3 PURCHASER'S INVESTMENT REPRESENTATIONS............................36
8.4 AMENDMENTS AND WAIVERS............................................37
8.5 SURVIVAL OF AGREEMENT.............................................38
8.6 PAYMENTS, ETC. ...................................................38
8.7 RIGHT OF SETOFF...................................................39
8.8 SUCCESSORS AND ASSIGNS............................................40
8.9 AGGREGATION.......................................................40
8.10 SEVERABILITY......................................................40
-ii-
<PAGE>
8.11 COUNTERPARTS......................................................40
8.12 DESCRIPTIVE HEADINGS..............................................40
8.13 GOVERNING LAW.....................................................40
8.14 NOTICES...........................................................41
8.15 CONSIDERATION FOR WARRANTS........................................43
8.16 CONSTRUCTION......................................................44
8.17 COMPLETE AGREEMENT................................................44
8.18 INDEMNIFICATION...................................................44
8.19 PAYMENT SET ASIDE.................................................45
8.20 JURISDICTION AND VENUE............................................45
8.21 WAIVER OF RIGHT TO JURY TRIAL; WAIVER OF IMMUNITY.................46
8.22 CERTAIN WAIVERS...................................................46
8.23 FURTHER ASSURANCES................................................46
8.24 CONFIDENTIALITY...................................................46
Section 9. THE AGENT.........................................................47
9.1 APPOINTMENT AND AUTHORIZATION.....................................47
9.2 DELEGATION OF DUTIES..............................................47
9.3 LIABILITY OF COLLATERAL AGENT.....................................47
9.4 RELIANCE BY COLLATERAL AGENT......................................48
9.5 NO NOTICE OF EVENT OF DEFAULT.....................................48
9.6 CREDIT DECISION...................................................48
9.7 INDEMNIFICATION...................................................49
9.8 COLLATERAL AGENT IN INDIVIDUAL CAPACITY...........................50
9.9 SUCCESSOR COLLATERAL AGENT........................................50
9.10 COLLATERAL MATTERS................................................50
-iii-
<PAGE>
AMENDED AND RESTATED SENIOR SECURED
NOTE AND WARRANT PURCHASE AGREEMENT
THIS AGREEMENT (the "AGREEMENT") is entered into as of January 23, 1998,
by and among INTERNATIONAL WIRELESS COMMUNICATIONS HOLDINGS, INC., a Delaware
corporation ("HOLDINGS"), with its principal executive offices at 400 South
El Camino Real, San Mateo, California 94402, RADIO MOVIL DIGITAL AMERICAS,
INC., a Delaware corporation (the "COMPANY"), with its principal office at
555 Fairway Drive, Suite 203, Deerfield Beach, Florida 33441, BT FOREIGN
INVESTMENT CORPORATION ("BTFIC") with its principal executive office at
1011 Centre Road, Suite 200, Wilmington, Delaware 19805-1266, which is a
subsidiary of Bankers Trust New York Corporation ("BTNYC"), a bank holding
company with its principal office at One Bankers Trust Plaza, New York, New
York 10006 and each of the other Persons, if any, that become a party hereto
in accordance with the terms hereof. BTFIC, each other Person that is deemed
a "Purchaser" hereunder, and its and their direct and indirect successors
and assigns are sometimes individually referred to as a "PURCHASER" and
collectively as the "PURCHASERS."
The Company and BTFIC are parties to a $14,000,000 Note Purchase
Agreement, dated as of July 23, 1996 (as amended by Amendment No. 1 dated as
of July 23, 1997 and Amendment No. 2 dated as of September 30, 1997, as so
amended, the "$14,000,000 NOTE AGREEMENT") and a $1,000,000 Note Purchase
Agreement dated as of July 23, 1997 (as amended by Amendment No. 1, dated as
of September 30, 1997, as so amended, the "$1,000,000 NOTE AGREEMENT").
The parties hereto desire for BTFIC to provide additional financing to
the Company for the purposes set forth herein and, to amend and restate the
$14,000,000 Note Agreement and the $1,000,000 Note Agreement on the terms set
forth herein.
The parties hereto, intending to be legally bound, hereby agree as
follows:
Section 1. CERTAIN DEFINITIONS AND RELATED MATTERS.
1.1 CERTAIN DEFINITIONS. For the purposes of this Agreement, the
following terms have the meanings set forth below:
"ADDITIONAL BRAZILIAN COLLATERAL" means all of the equity interests,
assets and property of the Brazilian Entities (including International
Wireless Communications Latin American Holdings, Ltd.), other than (i) the
Initial Brazilian Collateral and the Via 1 Collateral,
<PAGE>
(ii) licenses of the Brazilian Entities, and (iii) other assets and property
(if any) which BTFIC has notified the Company in writing do not constitute
Additional Brazilian Collateral (if BTFIC determines that any such assets or
property should no longer be excluded from Additional Brazilian Collateral
under this clause (iii), then such assets or property shall not be Additional
Brazilian Collateral, for purposes of the perfection requirement hereunder,
until the time period, reasonably determined by BTFIC and Company (not to
exceed 45 days absent extraordinary and unusual circumstances), for
perfecting a security interest against such assets or property, from the date
of BTFIC's notice to Company, has elapsed).
"AFFILIATE" of any particular Person means any other Person directly or
indirectly controlling, controlled by or under common control with such
particular Person. The term "CONTROL" means the possession, directly or
indirectly, of the power to direct the management and policies of a Person
whether through the ownership of voting securities, by contract or otherwise.
"AGENT" means any agent of one or more of the Purchasers appointed
pursuant to this Agreement or any of the other Transaction Documents.
"BRAZILIAN ENTITY" means any Subsidiary of Holdings (other than the
Company, International Wireless Communications, Inc. and, other than as set
forth in the definition of "Additional Brazilian Collateral" and other than
for purposes of Section 4.1, until such time as International Wireless
Communications Latin American Holdings, Ltd. becomes a Subsidiary of the
Company, International Wireless Communications Latin American Holdings, Ltd.)
or any Investee, after giving effect to the Closing or thereafter, that is
(i) incorporated in, or owns assets located in, Brazil or (ii) directly or
indirectly holds equity interests in a Person described in the immediately
preceding clause (i).
"BRAZILIAN HOLDING ENTITY" means each Brazilian Entity that does not
have a direct or indirect stockholder that is a Brazilian Entity.
"BRAZILIAN INDEBTEDNESS THRESHOLD" means $0 until such time that the six
month average monthly EBITDA is greater than $500,000, in which case the
Brazilian Indebtedness Threshold shall then become the product of four and
the average monthly EBITDA for the immediately preceding six-month period.
"BTCO FEE LETTER" means that certain fee letter, dated as of the date
hereof, between Bankers Trust Company, a New York banking corporation and a
subsidiary of BTNYC, and the Company relating to the fee (the "BTCO FEE") to
be paid to BTNYC in connection with the transactions contemplated hereby.
-2-
<PAGE>
"BUSINESS DAY" means any day other than a Saturday, Sunday or public
holiday under the laws of the State of New York or other day on which banking
institutions are authorized or obligated to close in New York, New York.
"CLOSING" means the Initial Closing or any Subsequent Closing.
"COLLATERAL" means the Initial Brazilian Collateral, and from and after
such time as pledged or required to be pledged hereunder pursuant to the
terms of this Agreement, the Additional Brazilian Collateral, the Via 1
Collateral, and all other equity interests, assets and property which are
pledged pursuant to the Security Documents, including the Sales Reserve
Account.
"COMMON STOCK" means collectively, the Nonvoting Common Stock and the
Voting Common Stock.
"CONVERTIBLE SECURITIES" has the meaning defined in the Warrants.
"DIVIDEND" means any distribution by a corporation or other entity with
respect to its capital stock or other ownership interests whether in cash,
securities (including common and preferred stock) or other property.
"DISCLOSURE LETTER" means the letter addressed to the Purchasers from
the Company and dated the date of this Agreement disclosing certain matters
relating to this Agreement, as in effect as of the date hereof.
"EBITDA" means net income or loss of the Brazilian Entities on a
consolidated basis before interest, federal income taxes, depreciation and
amortization, after giving effect to minority interests (or majority
interests if Holdings or its Subsidiary only holds a minority interest in
such Brazilian Entity), as determined in accordance with United States
generally accepted accounting principles, consistently applied.
"EVENT OF DEFAULT" has the meaning specified in Section 7.1.
"GAAP" means generally accepted accounting principles as promulgated by
the Financial Accounting Standards Board, as in effect from time to time, and
when used with respect to the consolidating statements of a Latin American
Entity shall mean the generally accepted accounting principles of the country
in which such Latin American Entity is located.
"INDEBTEDNESS" means at a particular time, without duplication, (i) any
-3-
<PAGE>
indebtedness for borrowed money or issued in substitution for or exchange of
indebtedness for borrowed money, (ii) any indebtedness evidenced by any note,
bond, debenture or other debt security, (iii) any indebtedness for the
deferred purchase price of property or services with respect to which a
Person is liable, contingently or otherwise, as obligor or otherwise,
(iv) any commitment by which a Person assures a creditor against loss
(including contingent reimbursement obligations with respect to letters of
credit), (v) any indebtedness guaranteed in any manner by a Person (including
guarantees in the form of an agreement to repurchase or reimburse), (vi) any
obligations under capitalized leases with respect to which a Person is
liable, contingently or otherwise, as obligor, guarantor or otherwise, or
with respect to which obligations a Person assures a creditor against loss,
(vii) any indebtedness secured by a Lien on a Person's assets and (viii) any
unsatisfied obligation for "withdrawal liability" to a "multiemployer plan"
as such terms are defined under ERISA.
"INITIAL BRAZILIAN COLLATERAL" means all of the equity interests of the
Company and each Brazilian Entity that is a Subsidiary of the Company or
Holdings immediately prior to the Merger and all of the equity interests of
the Affiliates of Holdings in Via 1, together with intercompany notes issued
by the Company to International Wireless Communications, Inc.
"INDENTURE" means the Indenture, dated as of August 15, 1996, between
Holdings and Marine Midland Bank, as Trustee.
"INVESTEE" means any Person (other than a Subsidiary of Holdings) in
which a Latin American Entity, any of its Subsidiaries or any other Investee
has any direct or indirect Investment (either through itself or through one
or more of its direct or indirect Subsidiaries or Investees), including any
Subsidiary of any other Investee.
"INVESTMENT" as applied to any Person means (i) any direct or indirect
purchase or other acquisition by such Person of any notes, obligations,
instruments, stock, securities or ownership interest (including partnership
interests and joint venture interests) of any other Person and (ii) any
capital contribution by such Person to any other Person. The term
"Investment" shall include the acquisition of a company, business or product
line.
"INVESTOR RIGHTS AGREEMENT" means the Seventh Amended and Restated
Investor Rights Agreement, dated as of the date hereof, by and among Holdings
and certain investors of Holdings from time to time a party thereto.
"LATIN AMERICAN ENTITY" means any Brazilian Entity or Latin American
Non-Brazilian Entity.
-4-
<PAGE>
"LATIN AMERICAN HOLDING ENTITY" means each Latin American Entity that
does not have a direct or indirect stockholder that is a Latin American
Entity.
"LATIN AMERICAN NON-BRAZILIAN ENTITY" means any Subsidiary of Holdings
(other than the Company and International Wireless Communications, Inc. and
any Brazilian Entity) or any Investee, after giving effect to the Closing or
thereafter, that is (i) incorporated in, or owns assets located in, Latin
America (other than Brazil) or (ii) directly or indirectly holds equity
interests in a Person described in the immediately preceding clause (i).
"LIENS" means, with respect to any asset or property, any mortgage,
pledge, security interest, encumbrance, lien or charge of any kind (including
any conditional sale or other title retention agreement or lease in the
nature thereof), any sale of receivables with recourse against any Person,
any filing or agreement to file a financing statement as debtor under the
Uniform Commercial Code or any similar statute other than to reflect
ownership by a third party of property leased under a lease which is not in
the nature of a conditional sale or title retention agreement, or any
subordination arrangement in favor of another Person (other than any
subordination arising in the ordinary course of business).
"MATERIAL" means, with respect to any specified Person, any matter that,
in the aggregate with all other matters, has resulted or might result in a
cost, liability, expense, damage or claim to such Person, its Subsidiaries or
other Persons in which such Person or its Subsidiaries has an Investment,
involving $250,000 or more.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on (a) the
business operations, properties, assets, liabilities, condition (financial or
otherwise) or prospects of the Company and the Brazilian Entities, taken as a
whole (but after taking into account the Company's and Holdings' interest in
such Brazilian Entities); or (b) the ability of the Company or any Affiliate
thereof or any Brazilian Entity to perform its obligations under this
Agreement, the Notes or any of the Security Documents to which it is a party,
or the ability of any Purchaser or any Agent to exercise any right or remedy
with respect to, or otherwise to realize upon (which, for purposes of this
clause (b), will also include changes in the value of the Collateral taken as
a whole), any of the security for the Obligations or any other right or
remedy under this Agreement, the Notes or any of the Security Documents, if
any of the same would impair the value or collectibility of the Obligations
in full, or (c) the validity or enforceability of this Agreement, the Notes
or any of the Security Documents.
"MERGER" has the meaning specified in Section 3.3.
"NONVOTING COMMON STOCK" means Holdings' Class 2 Common Stock, par value
-5-
<PAGE>
$0.01 per share, which is convertible into Holdings' Class A Common Stock.
"OBLIGATIONS" means all obligations, liabilities and Indebtedness of
every nature from time to time owed to an Indemnitee under, this Agreement,
the Notes and the other Security Documents including the principal amount of
all debts, claims, Indebtedness, accrued and unpaid interest and all fees,
costs and expenses, whether primary, secondary, direct, contingent, fixed or
otherwise, heretofore, now or from time to time hereafter owing, due or
payable whether before or after the filing of a proceeding under applicable
bankruptcy, insolvency or similar laws in effect from time to time, by the
Company or any of its Affiliates or Investees that is a party to this
Agreement, the Notes or any of the Security Documents, and whether or not
allowed or allowable as a claim in any such proceeding.
"OFFICER'S CERTIFICATE" means a certificate signed by the chief
financial officer on behalf of the Company stating that (i) the officer
signing such certificate has made or has caused to be made such
investigations as are necessary in order to permit him to verify the accuracy
of the information set forth in such certificate and (ii) such certificate
does not misstate any material fact and does not omit to state any fact
necessary to make the certificate not misleading.
"OPTIONS" has the meaning defined in the Warrants.
"PERMITTED BRAZILIAN INDEBTEDNESS" means (i) trade payables and, to the
extent permitted by the Indenture, vendor financing, in each case as incurred
in the ordinary course of business by an operating entity, (ii) so long as
the requirements set forth in Section 4.10 are satisfied fully and the BTCO
Fee has been fully paid, other Indebtedness not to exceed the Brazilian
Indebtedness Threshold for all Brazilian Entities at any time outstanding in
the aggregate, (iii) intercompany Indebtedness (other than that existing on
the Closing Date and disclosed in the "BRAZILIAN INDEBTEDNESS SCHEDULE"
referenced in the Disclosure Letter and not otherwise described in the
definition of "Initial Brazilian Collateral"), the note, if any, evidencing
such Indebtedness has been pledged to the Purchasers, and the Purchasers have
been delivered satisfactory evidence (which may include the receipt of an
acceptable opinion other than with respect to priority) that the Purchasers
have a first priority Lien on such Indebtedness as collateral security for
the Obligations; and (iv) Indebtedness existing on the date hereof which is
not intended to be repaid at the Closing and set forth on the "Brazilian
Indebtedness Schedule" referenced in the Disclosure Letter, including
intercompany Indebtedness referred to in the parenthetical contained in
clause (iii) above.
"PERMITTED BRAZILIAN LIENS" means, with respect to any asset or property
other than capital stock and other equity interests, (i) tax liens for taxes
not yet due and payable or which are being contested in good faith by
appropriate proceedings and for which appropriate
-6-
<PAGE>
reserves have been established in accordance with GAAP consistently applied;
(ii) purchase money security interests or equivalent security interests under
applicable law in any property acquired in the ordinary course of business by
an operating entity that secures Permitted Brazilian Indebtedness;
(iii) mechanics', materialmen's or contractors' liens or encumbrances or any
similar lien or restriction for amounts not yet due and payable;
(iv) easements, rights-of-way and other similar charges and encumbrances not
interfering with the ordinary conduct of the business of any Person or
materially detracting from the value of the assets of any Person; and
(v) Liens outstanding on the date hereof which secure Permitted Brazilian
Indebtedness which is not being repaid at the Closing and which are described
in the "PERMITTED BRAZILIAN LIENS SCHEDULE" referred in the Disclosure Letter.
"PERMITTED INDEBTEDNESS" means (i) any Indebtedness incurred pursuant to
the terms of this Agreement, the Notes and the Warrants, (ii) trade payables
and, to the extent permitted by the Indenture, vendor financing, in each case
as incurred in the ordinary course of business by an operating entity,
(iii) so long as the requirements set forth in Section 4.10 are satisfied
fully and the BTCO Fee has been fully paid, other Indebtedness (including
purchase money Indebtedness) not to exceed $5,400,000 (which, for purposes of
greater certainty, shall include any draws made under the OPIC facility after
the date hereof) for all Latin American Non-Brazilian Entities covered by
this definition at any time outstanding in the aggregate and (iv) Indebtedness
existing on the date hereof which is not being repaid at the Closing and set
forth on the "INDEBTEDNESS SCHEDULE" referenced in the Disclosure Letter.
"PERMITTED LIENS" means, with respect to any asset or property other
than capital stock and other equity interests, (ii) tax liens for taxes not
yet due and payable or which are being contested in good faith by appropriate
proceedings and for which appropriate reserves have been established in
accordance with GAAP consistently applied; (ii) purchase money security
interests or equivalent security interests under applicable law in any
property acquired in the ordinary course of business by an operating entity
that secures Permitted Indebtedness; (iii) mechanics', materialmen's or
contractors' liens or encumbrances or any similar lien or restriction for
amounts not yet due and payable; (iv) easements, rights-of-way and other
similar charges and encumbrances not interfering with the ordinary conduct of
the business of any Person or materially detracting from the value of the
assets of any Person; and (v) Liens outstanding on the date hereof which
secure Permitted Indebtedness which is not intended to be repaid at the
Closing and which are described on the "LIENS SCHEDULE" referenced in the
Disclosure Letter.
"PERSON" means an individual, a partnership, a corporation, a limited
liability company, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization and a governmental entity or any
department, agency or political subdivision thereof.
-7-
<PAGE>
"POTENTIAL EVENT OF DEFAULT" means any event or occurrence which with the
passage of time or the giving of notice or both would constitute an Event of
Default.
"QUALIFIED HOLDER" means each Purchaser as long as it holds any portion
of the Notes or Underlying Warrant Stock or Ultimate Warrant Stock and each
other Person (if any) holding (i) at least 5% of the aggregate principal
amount of the Notes then outstanding or (ii) at least 5% of the Underlying
Warrant Stock or Ultimate Warrant Stock then in existence.
"RELATED MERGER DOCUMENTS" means the Merger Agreement and each of the
other agreements, documents and instruments contemplated thereby.
"RESTRICTED SECURITIES" means (i) the Securities issued hereunder, (ii)
the Underlying Warrant Stock, (iii) the Ultimate Warrant Stock, and (iv) any
securities issued with respect to the securities referred to in clauses (i),
(ii) or (iii) above by way of a stock dividend or stock split or in
connection with an exchange, combination of shares, recapitalization, merger,
consolidation or other reorganization. As to any particular Restricted
Securities, such securities shall cease to be Restricted Securities when they
have (a) been effectively registered under the Securities Act and disposed of
in accordance with the registration statement covering them, (b) become
eligible for sale pursuant to Rule 144(k) (or any similar provision then in
force) under the Securities Act (without regard to any volume limitations) or
(c) been otherwise transferred and new certificates for them not bearing the
Securities Act legend set forth in Section 8.3 have been delivered by the
Company in accordance with Section 5. Whenever any particular securities
cease to be Restricted Securities, the holder thereof shall be entitled to
receive from the Company, without expense, new securities of like tenor not
bearing a Securities Act legend of the character set forth in Section 8.3.
"SALE OF THE COMPANY" means any transaction or series of transactions
pursuant to which any Person(s) in the aggregate acquire(s) (i) capital stock
of the Company possessing the voting power (other than voting rights accruing
only in the event of a default, breach or event of noncompliance) to elect a
majority of the Company's board of directors (whether by merger,
consolidation, reorganization, combination, sale or transfer of the Company's
capital stock, shareholder or voting agreement, proxy, power of attorney or
otherwise) or (ii) all or at least 50% of the Company' assets determined on a
consolidated basis.
"SALES RESERVE ACCOUNT" has the meaning set forth in the Notes.
"SECURITIES ACT" means the Securities Act of 1933, as amended, or any
similar federal laws then in force.
-8-
<PAGE>
"SECURITIES AND EXCHANGE COMMISSION" includes any governmental body or
agency succeeding to the functions thereof.
"SECURITIES EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended, or any similar federal laws then in force.
"SECURITY DOCUMENTS" means all instruments, documents and agreements
executed by or on behalf of the Company or any Affiliate or Investee thereof
to guaranty or provide collateral security with respect to the Obligations,
including any guaranty of the Obligations, any mortgage or deed of trust, and
all instruments, documents and agreements executed pursuant to the terms of
the foregoing.
"STATED MATURITY DATE" means the earliest to occur of:
(i) August 23, 1999; or
(ii) with respect to any holder of a Note, the date upon which an Event
of Default has occurred and the principal amount thereof has become due and
payable prior to August 23, 1999 in accordance with Section 7.2 hereof.
"STOCK PURCHASE" means any redemption, acquisition, purchase or other
retirement of any capital stock or ownership interest of a Person (including
preferred stock) or of any warrants, rights or other options to purchase such
capital stock or ownership interest, other than upon any conversion thereof
into or exchange thereof for other shares of such Person's capital stock.
"SUBSIDIARY" means, with respect to any Person, any corporation, limited
liability company, partnership, association or other business entity of which
(i) if a corporation, a majority of the total voting power of shares of stock
entitled (without regard to the occurrence of any contingency) to vote in the
election of directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by that Person or one or more of the
other Subsidiaries of that Person or a combination thereof, or (ii) if a
limited liability company, partnership, association or other business entity,
a majority of the partnership or other similar ownership interest thereof is
at the time owned or controlled, directly or indirectly, by any Person or one
or more Subsidiaries of that Person or a combination thereof. For purposes
hereof, a Person or Persons shall be deemed to have a majority ownership
interest in a limited liability company, partnership, association or other
business entity if such Person or Persons shall be allocated a majority of
limited liability company, partnership, association or other business entity
-9-
<PAGE>
gains or losses or shall be or control any managing director or general
partner of such limited liability company, partnership, association or other
business entity. References to a Subsidiary of Holdings shall include the
Company and its Subsidiaries after the Closing.
"TAX" or "TAXES" means federal, state, county, local, foreign or other
income, gross receipts, ad valorem, franchise, profits, sales or use,
transfer, registration, excise, utility, environmental, communications, real
or personal property, capital stock, license, payroll, wage or other
withholding, employment, social security, severance, stamp, occupation,
alternative or add-on minimum, estimated and other taxes of any kind
whatsoever (including deficiencies, penalties, additions to tax, and interest
attributable thereto) whether disputed or not.
"TRANSACTION DOCUMENTS" means this Agreement, the Notes, the Warrants,
and each of the other agreements, documents and instruments contemplated
hereby and thereby.
"ULTIMATE WARRANT STOCK" has the meaning defined in the Warrants.
"UNDERLYING WARRANT STOCK" has the meaning defined in the Warrants.
"VIA 1" means Via Movel 1 Comunicacoes S.A., a Brazilian company that is an
Investee of Holdings.
"VIA 1 COLLATERAL" means all assets and properties of Via 1 and all
assets and properties of any Subsidiary or Investee of Via, but excluding (i)
licenses of the VIA Entities, and (ii) other assets and property (if any)
which BTFIC has notified the Company in writing do not constitute Via 1
Collateral (if BTFIC determines that any such assets or property should no
longer be excluded from Via 1 Collateral under this clause (ii), then such
assets or property shall not be Via 1 Collateral, for purposes of the
perfection requirement hereunder, until the time period, reasonably
determined by BTFIC and Company (not to exceed 45 days absent extraordinary
and unusual circumstances), for perfecting a security interest against such
assets or property, from the date of BTFIC's notice to Company, has elapsed).
In addition, for purposes of greater certainty, the Via 1 Collateral shall
not include the Initial Brazilian Collateral and all other Collateral which
the Purchasers have or were intended to have a Lien on if the transactions
contemplated by Section 4.11 were not consummated.
"VIA 1 ENTITIES" means all Subsidiaries and Investees of Via 1.
"VOTING COMMON STOCK" means Holdings' Class 1 Common Stock, par value
$.01 per share.
-10-
<PAGE>
"WARRANT STOCK" has the meaning defined in the Warrants.
"WHOLLY-OWNED SUBSIDIARY" means, with respect to any Person, a
Subsidiary of which all of the outstanding capital stock or other ownership
interests are owned by such Person or another Wholly-Owned Subsidiary of such
Person.
1.2 ACCOUNTING PRINCIPLES. The classification, character and amount of
all assets, liabilities, capital accounts and reserves and of all items of
income and expense to be determined, and any consolidation or other
accounting computation to be made, and the interpretation of any definition
containing any financial term, pursuant to this Agreement shall be determined
and made in accordance with GAAP consistently applied.
1.3 OTHER INTERPRETIVE MATTERS. In this Agreement, the Notes, the
Warrants, and each other Transaction Document to which one or more of the
Purchasers and Holdings or an Affiliate thereof are the sole parties thereto,
unless a clear contrary intention appears: (a) the singular number includes
the plural number and vice versa; (b) reference to any Person includes such
Person's successors and assigns but, if applicable, only if such successors
and assigns are permitted by this Agreement, and reference to a Person in a
particular capacity excludes such Person in any other capacity or
individually; (c) reference to any gender includes each other gender; (d)
reference to any agreement (including this Agreement), document or instrument
means such agreement, document or instrument as amended or modified and in
effect from time to time in accordance with the terms thereof and, if
applicable, the terms hereof (and without giving effect to any amendment or
modification that would not be permitted in accordance with the terms
thereof); (e) reference to any applicable law means such applicable law as
amended, modified, codified or reenacted, in whole or in part, and in effect
from time to time, including rules and regulations promulgated thereunder and
reference to any particular provision of any applicable law shall be
interpreted to include any revision of or successor to that provision
regardless of how numbered or classified; (f) reference to any Article,
Section or Exhibit means such Article or Section hereof or such Exhibit
hereto; (g) "hereunder," "hereof" and words of similar import shall be deemed
references to this Agreement as a whole and not to any particular Section or
other provision hereof; (h) "including" (and with correlative meaning
"include") means including without limiting the generality of any description
proceeding such term; (i) relative to the determining of any period of time,
"from" means "from and including" and "to" and "through" means "to but
exclude"; (j) "or", "either" and "any" are not exclusive; and (k) references
to ay Subsidiary of a Person shall be given effect only at such times as such
Person has one or more Subsidiaries.
Section 2. AUTHORIZATION AND CLOSING.
-11-
<PAGE>
2.1 AUTHORIZATION OF THE SECURITIES. The Company has authorized the
issuance and sale to BTFIC and other Purchasers of its 14.5% Amended and
Restated Senior Secured Notes in an aggregate principal amount of
$35,000,000, in form and substance as set forth in EXHIBIT A attached hereto
(collectively, the "NOTES" and individually, a "NOTE"). Holdings has
authorized the issuance and sale to BTFIC of its Stock Purchase Warrants to
acquire a certain percentage of shares of capital stock of Holdings, each in
form and substance as set forth in EXHIBIT B attached hereto (collectively,
the "WARRANTS" and individually, a "WARRANT"). The Notes and the Warrants are
sometimes collectively referred to herein as the "SECURITIES" and
individually, as a "SECURITY".
2.2 SALE AND ISSUANCE OF THE SECURITIES. Subject to the terms and
conditions of this Agreement, (i) BTFIC agrees to purchase from the Company,
and the Company agrees to sell and issue to BTFIC, the Notes (which Notes,
are in part, a restatement of indebtedness previously evidenced by other
notes) being acquired at the Initial Closing and (ii) BTFIC agrees to
purchase from Holdings and Holdings agrees to issue to Purchaser, the
Warrants.
2.3 CLOSINGS.
(i) The initial closing of the separate purchases and sales of
the Securities (the "INITIAL CLOSING") shall take place at the offices
of Gunderson Dettmer Stough Villeneuve Franklin & Hachigian, LLP at
10:00 a.m. on January 23, 1998, or at such other place or on such other
date as may be mutually agreeable to Holdings, the Company and BTFIC.
At the Initial Closing, each of Holdings and the Company shall deliver
to BTFIC instruments evidencing the Securities to be purchased by BTFIC,
issued in the name of BTFIC or its nominee, upon payment of the purchase
price thereof by a cashier's or certified check, or by wire transfer of
immediately available funds pursuant to the Company's instructions, in
the aggregate amount of $10,000,000, representing the aggregate unpaid
principal amount of the Notes which is not merely a restatement of
unpaid principal amount of indebtedness previously evidenced by other
notes.
(ii) Subsequent closings (each a "SUBSEQUENT CLOSING") of the
separate purchase and sale of the Notes up to an aggregate principal
amount equal to $10,000,000 shall take place at such place and on such
date as may be mutually agreeable to the Company, BTFIC and the
Purchasers participating at such Subsequent Closing and upon fulfillment
to such Purchasers' and BTFIC's satisfaction as of such Subsequent
Closing of (a) the conditions precedent set forth in Sections 3.1, 3.10,
3.11, 3.12, except that references contained therein to the "Initial
Closing" shall refer to such "Subsequent Closing" and references to
-12-
<PAGE>
Section 3 shall refer to this Section 2.3(ii); (b) the reimbursement to
the Purchasers of all of the fees and expenses that are due and payable
pursuant paragraph 8.1; (c) the terms being offered to the Purchasers at
such Subsequent Closing in connection with the consummation of the
transactions contemplated by such Subsequent Closing shall not be more
favorable than the terms pursuant to which BTFIC acquired its Notes; (d)
BTFIC shall have received satisfactory evidence that the sale and
purchase of the Notes at such Subsequent Closing and the consummation of
the transactions thereby shall not have an adverse impact on the
perfection, priority or status of the Liens granted under the Security
Documents to secure all of the Obligations (including Obligations being
incurred at such Subsequent Closing) or on any of the guaranties
extended with respect to all of the Obligations; (e) the payment to
Bankers Trust Company of any fees due and payable pursuant to the BTCO
Fee Letter; and (f) the Purchasers shall have received the following
documents at such Subsequent Closing: (w) an Officer's Certificate,
dated the date of the Subsequent Closing, stating that the conditions
specified in this Section 2(ii) have been fully satisfied; (x) certified
copies of the resolutions duly adopted by the Company's board of
directors authorizing the execution, delivery and performance of each of
the Transaction Documents to which it is a party, the issuance and sale
of the Notes, and the consummation of all other transactions
contemplated by this Agreement at such Subsequent Closing; (y) copies of
all third party, stockholder and governmental consents, approvals and
filings required in connection with the consummation of the transactions
hereunder at such Subsequent Closing (including those listed in the
"RESTRICTIONS SCHEDULE" referenced in the Disclosure Letter supplemented
at such Subsequent Closing); and (z) such other documents relating to
the transactions contemplated by this Agreement at such Subsequent
Closing as BTFIC or its special counsel may reasonably request.
Section 3. CONDITIONS OF BTFIC'S OBLIGATION AT THE INITIAL CLOSING.
The obligation of BTFIC to purchase and pay for the Securities at
the Initial Closing is subject to the fulfillment as of the Initial
Closing of the following conditions to BTFIC's satisfaction in its
sole discretion:
3.1 REPRESENTATIONS, WARRANTIES AND COVENANTS; NO EVENT OF DEFAULT. The
representations and warranties contained in Section 6 hereof shall be
true and correct at and as of the Initial Closing as though then made,
each of Holdings and the Company shall have performed or caused to be
performed all of the covenants required to be performed or caused to be
performed by it hereunder and under the other Transaction Documents on
or prior to the Initial Closing, and there shall not exist any Event of
Default or Potential Event of Default.
-13-
<PAGE>
3.2 SECURITIES LAW COMPLIANCE. Each of Holdings and the Company shall
have made all filings under all applicable federal and state securities laws
necessary to be made before the Initial Closing to consummate the issuance of
the Securities pursuant to this Agreement and the issuance of the Underlying
Warrant Stock upon exercise of the Warrants and Ultimate Warrant Stock upon
exercise, conversion or exchange of any shares of Warrant Stock consisting of
Convertible Securities, in compliance with such laws.
3.3 MERGER AGREEMENT. The Merger Agreement, dated as of November 22,
1997, among the Company, Holdings, and IWC Acquisition Corporation, as
amended by Amendments Nos. 1 and 2 thereto (as so amended the "MERGER
AGREEMENT") shall be in form and substance satisfactory to BTFIC, shall be in
full force and effect as of the Initial Closing and shall not have been
amended or modified. The conditions of each party set forth in the Merger
Agreement shall have been satisfied in full (other than obligation to pay the
cash portion of the purchase price and certain related fees and expenses
thereunder which will be paid upon consummation of the Initial Closing), all
opinions delivered in connection with such Merger Agreement shall also be
addressed to BTFIC and its successors and assigns or accompanied by a written
authorization from the person delivering such opinion stating that BTFIC and
its successors and assigns may rely on such opinion as though it were
addressed to them, and the transactions contemplated by the Merger Agreement
(the "MERGER") shall have been consummated immediately prior to the Initial
Closing hereunder in accordance with the terms of the Merger Agreement.
3.4 INITIAL CLOSING FEES AND EXPENSES. The Company shall have (i)
paid to Bankers Trust Company, a New York banking corporation and a
subsidiary of BTNYC, the portion of the BTCO Fee that is due and payable at
the Initial Closing pursuant to the BTCO Fee Letter, and (ii) reimbursed
BTFIC for the fees and expenses as provided in paragraph 8.1 hereof.
3.5 NO INDEBTEDNESS; LIENS. Payoff letters from each holder of
Indebtedness (other than Permitted Indebtedness that BTFIC does not request
to be paid off at Initial Closing) of the Company and each Brazilian Entity
outstanding prior to the consummation of the Merger, and releases from such
holder of Indebtedness of any and all Liens securing such Indebtedness shall
have been obtained, and after giving effect to the Initial Closing, no such
Indebtedness or Liens on any of their properties and assets shall exist
except for Permitted Indebtedness that is not to be repaid at Initial Closing
and Permitted Liens. In addition, Holdings shall deliver to BTFIC
satisfactory evidence that no Indebtedness of any Brazilian Entity or Liens
with respect to any assets, property or capital stock of any Brazilian Entity
shall exist after giving effect to the Initial Closing except for Permitted
Brazilian Indebtedness that BTFIC does not request to be paid off in full at
Initial Closing and Permitted Brazilian Liens.
-14-
<PAGE>
3.6 FIRST PRIORITY SECURITY INTEREST. The Company shall have delivered
to BTFIC evidence that it has a valid and perfected first priority Lien in the
Initial Brazilian Collateral as security for the Obligations after giving effect
to the Merger, subject only to Permitted Brazilian Liens, including an
acceptable opinion of counsel to such effect, executed documents which evidence
such perfection, the execution and delivery of acceptable Security Documents
and, to the extent certificated, certificates (properly endorsed in blank for
transfer or accompanied by irrevocable undated stock powers duly endorsed in
blank) representing all of the capital stock of the Company and each Subsidiary
of Holdings or the Company that is being pledged to BTFIC and constitutes
Initial Brazilian Collateral.
3.7 GUARANTY. Each Brazilian Entity other than the Via 1 Entities shall
have delivered to BTFIC, for the benefit of the Purchasers, an unconditional and
irrevocable guaranty of the Obligations, in form and substance satisfactory to
BTFIC.
3.8 OPINION OF THE COMPANY'S COUNSEL. BTFIC shall have received from
counsel for Holdings on behalf of Holdings and the Company, an opinion, which
shall be addressed to BTFIC, dated the date of the Initial Closing and in
form and substance satisfactory to BTFIC.
3.9 INITIAL CLOSING DOCUMENTS. The Company shall have delivered to BTFIC
all of the following documents:
(i) the Note, duly completed and executed by the Company;
(ii) the Warrants, duly completed and executed by Holdings;
(iii) an Officer's Certificate, dated the date of the Initial
Closing, stating that the conditions specified in Section 2 and Sections
3.1 through 3.8, 3.9(viii) and 3.12, inclusive, have been fully
satisfied;
(iv) certified copies of (a) the resolutions duly adopted by
each of Holdings' and the Company's board of directors authorizing the
execution, delivery and performance of each of the Transaction Documents
and Related Merger Documents to which it is a party, the issuance and
sale of the Securities, the reservation for issuance upon exercise of
the Warrants and exercise, conversion or exchange of any Convertible
Securities consisting of Underlying Warrant Stock of the maximum amount
of shares of capital stock issuable upon exercise, conversion or
exchange thereof and the consummation of all other transactions
contemplated by this Agreement, and (b) the
-15-
<PAGE>
resolutions duly adopted by the stockholders of Holdings, the Company
and any other appropriate entities approving the Merger;
(v) a certificate of the secretary of each of Holdings and the
Company certifying the names and the signatures of the officers of such
entity authorized to sign this Agreement, the Securities and each of the
other Transaction Documents and Related Merger Documents;
(vi) certified copies of Holdings' Certificate of Incorporation
and bylaws, each as in effect at the Initial Closing;
(vii) certified copies of each of the Merger Agreement and other
Related Merger Documents, as in effect at the Initial Closing;
(viii) copies of all third party, stockholder and governmental
consents, approvals and filings required in connection with the
consummation of the transactions hereunder (including those listed in
the "RESTRICTIONS SCHEDULE" referenced in the Disclosure Letter) and
under the Related Merger Documents (including all blue sky law filings
and waivers of all preemptive rights and rights of first refusal
(including those set forth in the Investor Rights Agreement)); and
(ix) such other documents relating to the transactions
contemplated by this Agreement as BTFIC or its special counsel may
reasonably request.
3.10 PROCEEDINGS. All corporate and other proceedings taken or required
to be taken by the Company or Holdings in connection with the transactions
contemplated hereby or by the Related Merger Documents to be consummated at or
prior to the Initial Closing and all documents incident thereto shall be
satisfactory in form and substance to BTFIC and its special counsel in its
reasonable discretion.
3.11 WAIVER. Any condition specified in this Section 3 may be waived if
consented to by BTFIC; provided that no such waiver shall be effective against
BTFIC unless it is set forth in a writing executed by BTFIC.
3.12 COMPLIANCE WITH APPLICABLE LAWS. The purchase of the Securities by
BTFIC hereunder shall not be prohibited by any applicable law or governmental
rule or regulation and shall not subject BTFIC to any penalty, liability or,
in such BTFIC's sole judgment, other onerous condition under or pursuant to any
applicable law or governmental rule or regulation, and the purchase of the
Securities by BTFIC hereunder shall be permitted by laws,
-16-
<PAGE>
rules and regulations of the jurisdictions and governmental authorities and
agencies to which BTFIC is subject.
Section 4. COVENANTS.
4.1 FINANCIAL STATEMENTS AND OTHER INFORMATION. The Company shall
deliver (or cause to be delivered) to each Qualified Holder that the Company
becomes aware is a Qualified Holder:
(i) as soon as available but in any event within five days
after the filing of each quarterly report filed by Holdings with the
Securities and Exchange Commission for any fiscal quarter, in the case
of the Company and each Latin American Holding Company, (excluding
dormant holding or operating companies without assets or liabilities)
unaudited consolidating and consolidated, statements of income and cash
flows of such entity and its Subsidiaries for such quarterly period and
for the period from the beginning of the fiscal year to the end of such
quarter, and unaudited consolidating and consolidated, balance sheets of
such entity and its Subsidiaries as of the end of such quarterly period,
setting forth in each case comparisons to such entity's annual budget
and to the corresponding period in the preceding fiscal year, and all
such statements shall be prepared in accordance with GAAP consistently
applied, subject to the absence of footnote disclosures and to normal
year-end adjustments for recurring accruals, and shall be certified by
such entity's chief financial officer;
(ii) accompanying the financial statements referred to in
subsection (i), an Officer's Certificate (a) stating that there is no
Event of Default or Potential Event of Default in existence and that
neither the Company nor any Latin American Entity is in default under
any of its other material agreements or, if any Event of Default or
Potential Event of Default or any such default exists, specifying the
nature and period of existence thereof and what actions (if any) the
Company and its Latin American Entities have taken and propose to take
with respect thereto;
(iii) as soon as available but in any event within five days
after the filing of each annual report filed by Holdings with the
Securities and Exchange Commission for any fiscal year, in the case of
the Company and each Latin American Holding Company (excluding dormant
holding or operating companies without assets or liabilities),
consolidating and consolidated statements of income and cash flows of
such entity and its Subsidiaries for such fiscal year, and,
consolidating and consolidated balance sheets of such entity and its
Subsidiaries as of the end of such fiscal year, setting forth in each
case comparisons to such entity's annual budget and to the preceding
fiscal
-17-
<PAGE>
year, all prepared in accordance with GAAP consistently applied, and
accompanied by (a) with respect to the consolidated portions of such
statements, an opinion of an independent accounting firm of recognized
national standing or an international affiliate thereof (acceptable to
the holders of a majority of the outstanding principal amount of the
Notes) and (b) as and when prepared, a copy of such firm's annual
management letter to the board of directors;
(iv) promptly upon receipt thereof, any additional reports and
management letters concerning significant aspects of the Company's and
the Latin American Entities' operations or financial affairs given to
any such Person or any of its Affiliates by its independent accountants
(and not otherwise contained in other materials provided hereunder);
(v) at least 30 days but not more than 90 days prior to the
beginning of each fiscal year, an annual budget and business plan
prepared on a quarterly basis for the Company, and for each Latin
American Holding Entity and its Subsidiaries (excluding dormant holding
or operating companies without assets or liabilities), on a consolidated
and consolidating basis, for such fiscal year (displaying anticipated
statements of income and cash flows and balance sheets), and promptly
upon preparation thereof any other significant budgets prepared by such
entity and any revisions of such annual or other budgets, and within 30
days after any monthly period in which there is a material adverse
deviation from the annual budget and business plan, an Officer's
Certificate explaining the deviation and what actions such entity has
taken and proposes to take with respect thereto;
(vi) promptly (but in any event within five Business Days) after
the discovery or receipt of notice of any Event of Default or Potential
Event of Default, any default under any other material agreement to
which it or any of its Latin American Entities is a party, any
investigation, notice, proceeding or adverse determination from any
governmental or regulatory authority or agency, or any other change,
event or circumstance affecting the Company or any Latin American Entity
(including the filing of any litigation against any Person that could
result in any material liability to the Company or any Latin American
Entity, any Material Adverse Effect, or the existence of any dispute
with any Person which involves a reasonable likelihood of such
litigation being commenced), an Officer's Certificate specifying the
nature and period of existence thereof and what actions the Company or
any Latin American Entity has taken and propose to take with respect
thereto;
(vii) within ten days after transmission thereof, copies of all
financial
-18-
<PAGE>
statements, proxy statements and reports which Holdings sends to its
stockholders in general (including pursuant to the Investor Rights
Agreement) and copies of all regular and periodic reports and
registration statements which Holdings files with the Securities and
Exchange Commission or with any securities exchange on which any of its
securities are then listed (including, requests for extensions of dates
for filings); and
(viii) with reasonable promptness, such other information and
financial data concerning Holdings, the Company and the Latin American
Entities as any Qualified Holder may reasonably request.
Each of the financial statements referred to in subsections (i) and (iii) shall
be true and correct in all material respects as of the dates and for the periods
stated therein, subject in the case of the unaudited financial statements to
changes resulting from normal year-end adjustments for recurring accruals, and,
in each case, such financial statements shall fairly present the financial
condition and results of operations of the appropriate entity who is covered by
such financial statements .
4.2 INSPECTION OF PROPERTY.
(i) So long as the Notes are outstanding and without prejudice
to any rights which a Purchaser may have under the Investor Rights
Agreement, the Company shall permit any representatives designated by
any Qualified Holder, upon reasonable notice and during normal business
hours and at such other times as any such holder may reasonably request,
to (i) visit and inspect any of the properties of the Company and the
Latin American Entities, (ii) examine the corporate and financial
records of the Company and the Latin American Entities and make copies
thereof or extracts therefrom and (iii) to discuss the affairs, finances
and accounts of any such entities with the directors, officers, key
employees and independent accountants of the Latin American Entities
(other than, until the earlier of completion of the Post Merger
Reorganization or becoming a majority equityholder thereof, the Via 1
Entities); provided, however, that such Qualified Holder shall deliver
written notice to the Company at least five (5) business days prior to
such discussion (other than a discussion with an officer or an employee
that has substantial responsibility for monitoring the performance of
this Agreement, including John Lockton, Doug Sinclair, Larry Salzer,
Michael Joseph, Keith Taylor, Aarti Gurnani, Jim Dixon and others in
similar positions) that is initiated by a Qualified Holder, and (x) if
there then exists no Event of Default or Potential Event of Default,
such discussion must take place in the presence of John Lockton, Doug
Sinclair, Larry Salzer, Michael Joseph, Keith Taylor, Aarti Gurnani, Jim
Dixon and others in similar positions or another duly authorized
representative of the Company (whose attendance shall not be
unreasonably
-19-
<PAGE>
withheld or delayed) and (y) if there then exists an Event of Default or
Potential Event of Default, then the Company shall have the right to
have one or more representatives attend and participate in such
discussion at the time and place so designated by such Qualified Holder,
it being understood that such discussion will take place whether or not
such representatives attend and participate. The presentation of an
executed copy of this Agreement shall be deemed to constitute the
Company's and the Latin American Entities' permission that such
discussions take place.
(ii) So long as the Warrants are outstanding and until the
Investor Rights Agreement is amended to make BTFIC a party thereto,
Holdings shall provide BTFIC with inspection rights with respect to
Holdings that are identical to those granted to each Investor (as
defined in the Investor Rights Agreement) under Section 2.2 of the
Investor Rights Agreement as in effect as of the date hereof.
4.3 ATTENDANCE AT BOARD MEETINGS.
(i) The Company shall give BTFIC (or its designee) written
notice of each meeting of its and its Latin American Entities' board of
directors and each committee thereof at the same time and in the same
manner as notice is given to the directors (which notice shall be
promptly confirmed in writing to each such Person), and the Company
shall permit one representative of BTFIC to attend as an observer all
such meetings of its board of directors and all committees thereof.
Such representative shall be entitled to receive all written materials
and other information (including copies of meeting minutes) given to
directors in connection with such meetings at the same time such
materials and information are given to the directors. If Company or any
Latin American Entities proposes to take any action by written consent
in lieu of a meeting of its board of directors or of any committee
thereof, the Company shall give written notice thereof to BTFIC thereof
prior to the effective date of such consent describing in reasonable
detail the nature and substance of such action. The Company shall pay
the reasonable out-of-pocket expenses of such representative incurred in
connection with attending such board and committee meetings to the
extent that any other observers receive payment of their out-of-pocket
expenses. Notwithstanding the foregoing, Company reserves the right to
withhold any information and to exclude a representative of BTFIC from
any meeting or portion thereof (i) during the existence of an Event of
Default or Potential Event of Default; or (ii) if BTFIC is provided
evidence that access to such information or attendance at such meeting
could adversely affect the attorney-client privilege between the Company
and its counsel or would result in disclosure of trade secrets to such
representative or if BTFIC or its representative is a direct competitor
of Company.
-20-
<PAGE>
(ii) So long as the Warrants are outstanding, Holdings shall
provide to BTFIC observer rights with respect to meetings of the board
of directors of Holdings that are identical to those granted to each
Investor (as defined in the Investor Rights Agreement) pursuant to
Section 2.7 of the Investor Rights Agreement as in effect as of the date
hereof, except that the first proviso shall not be included in the
incorporation of that section by reference into this Agreement and
instead the provisions of Section 8.24 hereof shall apply. In addition
and without prejudice to any observer rights BTFIC may have hereunder or
under the Investor Rights Agreement, if the board of directors of
Holdings or any committee thereof proposes to take any action with
respect to any Latin American Entity, then (i) the observer rights
granted pursuant to Section 2.7 of the Investor Rights Agreement shall
be deemed to include meetings of any committees of the board of Holdings
at which such matters are discussed or acted upon and (ii) if the board
of Holdings or such committee thereof proposes to take such action
through written consent in lieu of a meeting, then Holdings shall give
written notice thereof prior to the effective date of such consent
describing in reasonable detail the nature and substance of such action.
Notwithstanding the foregoing, Holdings reserves the right to withhold
any information and to exclude BTFIC's representative(s) from any
meeting or portion thereof (x) during the existence of an Event of
Default or Potential Event of Default or (y) if BTFIC is provided
evidence that access to such information or attendance at such meeting
could adversely affect the attorney-client privilege between Holdings
and its counsel or would result in disclosure of trade secrets to BTFIC
or such representative(s) or its BTFIC or such representative(s) is a
direct competitor of Holdings or such Latin American Entity.
4.4 AFFIRMATIVE COVENANTS. The Company shall, and shall cause each
Latin American Entity to:
(i) cause to be done all things necessary to maintain,
preserve and renew its corporate existence, rights, franchises,
privileges and qualifications and all licenses, channels, authorizations
and permits necessary to the conduct of its businesses other than
licenses, authorizations and permits, the failure of which to maintain
will not have a Material Adverse Effect;
(ii) maintain and keep its material properties in good repair,
working order and condition (ordinary wear and tear excepted), and from
time to time make all necessary or desirable repairs, renewals and
replacements, so that its businesses may be properly and advantageously
conducted in all material respects at all times;
-21-
<PAGE>
(iii) pay and discharge when payable all Taxes, assessments and
governmental charges imposed upon its properties or upon it or its
income or profits (in each case before the same becomes delinquent and
before penalties accrue thereon) and all material claims for labor,
materials or supplies which if unpaid would by law become a Lien upon
any of its property, unless and to the extent that the same are being
contested in good faith and by appropriate proceedings and adequate
reserves (as determined in accordance with GAAP consistently applied)
have been established on its books with respect thereto;
(iv) comply with all other material obligations which it
incurs pursuant to any contract or agreement, whether oral or written,
express or implied, as such obligations become due, unless and to the
extent that (i) the same are being contested in good faith and by
appropriate proceedings or (ii) compliance with such obligation is
reasonably likely to expose the applicable entity to greater liability
than the failure to so comply with such obligation, in each case
provided that adequate reserves (as determined in accordance with GAAP
consistently applied) have been established on its books with respect
thereto;
(v) apply for and continue in force with good and responsible
insurance companies adequate insurance covering risks of such types and
covering casualties, risks and contingencies of such types and in such
amounts as are customary for prudent corporations of similar size
engaged in similar lines of business;
(vi) maintain proper books of record and account which present
fairly in all material respects its financial condition and results of
operations and make provisions on its financial statements for all such
proper reserves as in each case are required in accordance with GAAP
consistently applied;
(vii) use the proceeds from the sale and issuance of the Notes
solely for the purposes set forth in the "USE OF PROCEEDS SCHEDULE"
referenced in the Disclosure Letter, as such schedule of such Disclosure
Letter is updated in connection with Subsequent Closings; it being
understood that the Company shall cause such proceeds to be used by all
of the Latin American Entities providing security hereunder; and
(viii) take such actions as are necessary or desirable to
maintain a first priority Lien on the Initial Brazilian Collateral and,
subject to Section 4.10, take such actions as are necessary or desirable
to be granted and maintain a first priority Lien on all of the
Additional Brazilian Collateral and Via 1 Collateral, and from time to
time (but not less frequently than quarterly or as BTFIC may request)
deliver satisfactory evidence to
-22-
<PAGE>
the Purchasers of its compliance with this subsection.
4.5 NOTE RESTRICTIVE COVENANTS. So long as any of the Notes
remain outstanding, the Company shall not (except as described in the
POST-MERGER REORGANIZATION SCHEDULE referenced in the Disclosure Letter, to
which Agent and the Purchasers, by their execution hereof, but subject to the
qualifications and limitations contained in Section 4.11 being fully
satisfied, consent) without the prior written consent of the holders of a
majority of the outstanding principal amount of the Notes (which majority
shall include BTFIC):
(i) directly or indirectly declare to pay, or permit any
Brazilian Entity to declare or pay, any Dividends or intercompany
Indebtedness, except for (a) Dividends made, and intercompany
Indebtedness paid, by a Brazilian Entity (that is not a Brazilian
Holding Entity) that will ultimately be used solely by a Brazilian
Entity that is an operating entity for working capital purposes, (b)
Dividends to the Company from Latin American Non-Brazilian Entities (the
"Latin American Non-Brazilian Dividends") and the subsequent
distribution of such Latin American Non-Brazilian Dividends so long as
no Event of Default or Potential Event of Default has occurred or will
occur after such distribution and (c) intercompany Indebtedness paid to
the Company from Latin American Non-Brazilian Entities (the "Latin
American Non-Brazilian Indebtedness") and the subsequent payment of such
Latin American Non-Brazilian Indebtedness to the parent of the Company
to reduce the intercompany Indebtedness owed by the Company to its
parent so long as no Event of Default or Potential Event of Default has
occurred or will occur after such payment;
(ii) directly or indirectly make, or permit any Brazilian
Entity to make, any Stock Purchase or directly or indirectly redeem,
purchase or make, or permit any of its Brazilian Entities to redeem,
purchase or make, any payments with respect to any stock appreciation
rights, phantom stock plans or similar rights or plans;
(iii) merge or consolidate with any Person or, permit any
Brazilian Entity to merge or consolidate with any Person (other than a
merger or consolidation of Wholly-Owned Subsidiaries);
(iv) liquidate, dissolve or effect, or cause any Brazilian
Entity to liquidate, dissolve or effect, a recapitalization or
reorganization in any form of transaction or otherwise alter its legal
status;
(v) sell or permit any Brazilian Entity to sell, lease or
otherwise dispose of, more than 5% of such entity's consolidated assets
in any transaction or series
-23-
<PAGE>
of related transactions (other than sales of inventory in the ordinary
course of business) or sell or permanently dispose of any of its
licenses, authorizations or permits necessary to the conduct of its
business;
(vi) acquire any interest (including any additional interest)
or make any Investment (including any additional Investment), or permit
any Brazilian Entity to acquire any interest (including any additional
interest) or make any Investment (including any additional Investment),
in any Person (whether by a purchase of assets, purchase of stock,
loans, capital contribution, formation of an entity, merger, joint
venture or otherwise) other than another Brazilian Entity so long as
BTFIC is delivered satisfactory evidence (which may include the delivery
of an opinion with respect to perfection) that such Brazilian Entity (a)
is controlled by the Company or an Affiliate thereof and such Company or
Affiliate owns at least a majority of the equity interests thereof; (b)
has provided a guaranty to the Purchasers in substantially the same form
as the guaranty executed and delivered by such other existing Brazilian
Entities; (c) has executed and delivered acceptable Security Documents
and taken such other actions as are necessary to grant, and have
perfected and maintained, a first priority Lien on all of its equity
interests owned by the Company and its Affiliates as well as all of its
assets and properties described in the definition of "Additional
Brazilian Collateral;" and (d) is allowed to provide security hereunder
by the terms of the Indenture;
(vii) enter into, or permit any Latin American Entity to enter
into, the ownership, active management or operation of any business
unrelated to the wireless communications business or the personal
communications services (PCS) business outside of the United States of
America or expand such business into any new territories outside of
Latin America;
(viii) enter into, amend, modify or supplement, or permit any
Latin American Entity to enter into, amend, modify or supplement, any
agreement, transaction, commitment or arrangement with, or make any
payment to, any of its or any of its Subsidiaries' or Affiliates'
officers, directors, employees, stockholders or Affiliates or with any
individual related by blood, marriage or adoption to any such individual
or with any entity in which any such Person or individual owns a
beneficial interest (collectively, an "INSIDER"), except for and
pursuant to customary employment arrangements and benefit programs on
reasonable terms and, to the extent not otherwise prohibited under this
Section 4.5, arms-length agreements on fair and reasonable terms among
the Brazilian Entities;
(ix) create, incur, assume or suffer to exist, or permit any
Latin
-24-
<PAGE>
American Non-Brazilian Entity, to create, incur, assume or suffer to
exist, any Indebtedness other than Permitted Indebtedness, or Liens on
any of its assets or properties other than Permitted Liens or permit any
of its Brazilian Entities to create, incur, assume or suffer to exist,
any Indebtedness other than Permitted Brazilian Indebtedness or any
Liens on any of its assets or properties other than Permitted Brazilian
Liens;
(x) permit a Lien to exist on any of its capital stock and
other equity interests, other than in favor of the Purchasers;
(xi) prepay, or permit any Brazilian Entity to prepay any
principal or interest on any Indebtedness other than Indebtedness under
this Agreement and the Notes and scheduled payments that are due and
payable by a Brazilian Entity;
(xii) issue any capital stock of the Company (or rights or
options with respect thereto) or cause any Brazilian Entity to issue any
equity interests; or
(xiii) cause or permit a Sale of the Company to occur unless,
concurrently or immediately after giving effect to such Sale of the
Company, the Obligations are paid in full.
4.6 COMPLIANCE WITH AGREEMENTS; NO NON-RESTRICTIVE AGREEMENTS.
Each of Holdings and the Company shall perform and observe all of its
obligations, and shall cause each of its Subsidiaries to perform and observe
all of their respective obligations, to each holder of the Notes and to each
holder of Warrants and the Underlying Warrant Stock set forth herein and in
the Security Documents. The Company shall not enter into, become subject to,
amend, modify or waive, or permit any Brazilian Entities (other than
Investees) to enter into, become subject to, amend, modify or waive, any
material agreement or instrument (other than this Agreement) which by its
terms would (under any circumstances) restrict (a) the right of any of its
Subsidiaries to make loans or advances or pay dividends to, transfer property
to, or repay any Indebtedness owed to, the Company or any Brazilian Entity
thereof or (b) the Company's and its Affiliates' rights and obligations to
perform any of the provisions of any of the Transaction Documents, the
Securities or the Certificate of Incorporation
4.7 CURRENT PUBLIC INFORMATION. At all times after Holdings has
filed a registration statement with the Securities and Exchange Commission
pursuant to the requirements of either the Securities Act or the Securities
Exchange Act, Holdings shall file all reports required to be filed by it
under the Securities Act and the Securities Exchange Act and the rules and
regulations adopted by the Securities and Exchange Commission thereunder and
shall take such further action as any holder or holders of Restricted
Securities may reasonably request,
-25-
<PAGE>
all to the extent required to enable such holders to sell Restricted
Securities pursuant to Rule 144 adopted by the Securities and Exchange
Commission under the Securities Act (as such rule may be amended from time to
time) or any similar rule or regulation hereafter adopted by the Securities
and Exchange Commission. Upon request, Holdings shall deliver to any holder
of Restricted Securities a written statement as to whether it has complied
with such requirements.
4.8 REGULATORY COMPLIANCE COOPERATION.
(i) Before Holdings redeems, purchases or otherwise acquires,
directly or indirectly, or converts or takes any action with respect to the
voting rights of, any shares of any class of its capital stock or any
securities convertible into or exchangeable for any shares of any class of
its capital stock (other than an exercise of the Warrants), Holdings shall
(unless after consulting with counsel that is knowledge and experienced in
Bank Holding Company Act provisions and Regulation K and Y thereof in
particular, such counsel advises Holdings that BTFIC should not have a
Regulatory Problem after giving effect to such pending action) give written
notice of such pending action to BTFIC. Upon the written request of BTFIC
made within 10 days after its receipt of any such notice stating that after
giving effect to such action BTFIC would have a Regulatory Problem, Holdings
shall defer taking such action for such period (not to extend beyond 45 days
after BTFIC's receipt of Holdings' original notice) as BTFIC requests to
permit it and its Affiliates to reduce the quantity of Holdings' securities
they own in order to avoid the Regulatory Problem. Holdings shall and shall
cause its Subsidiaries to cooperate and assist BTFIC by taking such actions
as may be necessary or (in the opinion of BTFIC) desirable as reasonably
requested by BTFIC to resolve such Regulatory Problem. In addition, Holdings
shall not be a party to any merger, consolidation, recapitalization or other
transaction pursuant to which BTFIC would be required to take any voting
securities, or any securities convertible into voting securities, which might
reasonably be expected to cause BTFIC to have a Regulatory Problem. For
purposes of this Section, a "REGULATORY PROBLEM" means any transaction,
circumstance or situation whereby (A) BTFIC and its Affiliates would own,
control or have power over a greater quantity of securities of any kind
issued by Holdings or any other entity than are permitted under any
requirement of any governmental authority, or would cause such holder to not
be able to hold an investment in or provide financing to Holdings or the
Company in compliance with any applicable requirement of any governmental
authority, or (B) it has been asserted by any governmental regulatory agency
(or BTFIC believes that there is a risk of such assertion) that BTFIC and its
Affiliates are not entitled to hold the Underlying Warrant Stock or other
capital stock held by BTFIC or exercise any significant right with respect to
such capital stock held by such Person or provide financing to Holdings or
the Company in compliance with any applicable requirement of any governmental
authority.
(ii) At any Purchaser's request at any time (whether in connection
with any
-26-
<PAGE>
action by Holdings referred to in subparagraph (i) above or otherwise),
Holdings shall exchange with such Purchaser for such number of shares of
voting securities then held by such Purchaser as it designates a like number
of share of non-voting securities that are identical to such voting
securities except as to voting rights and as may otherwise be required by
applicable law, and Holdings shall at all times reserve and keep available
out of its authorized but unissued shares of non-voting securities, solely
for issue upon such exchanges, the number of such shares deemed sufficient by
Holdings for such purposes. In the event of any such exchange of non-voting
securities for voting securities, (a) the holders of such non-voting
securities shall be entitled to all the rights which such holders had
pursuant to this Agreement and the other Transaction Documents, as holders of
voting securities and (b) if such shares of voting securities were
"Restricted Securities" hereunder, such non-voting securities shall also be
deemed to be "Restricted Securities" hereunder.
(iii) At any Purchaser's request at any time (whether in connection
with any action by Holdings referred to in subparagraph (i) above or
otherwise), Holdings shall exchange with such Purchaser for such number of
shares of non-voting securities then held by such Purchaser as it designates
a like number of share of voting securities that are identical to such
non-voting securities except as to voting rights and as may otherwise be
required by applicable law, and Holdings shall at all times reserve and keep
available out of its authorized but unissued shares of voting securities,
solely for issue upon such exchanges, the number of such shares deemed
sufficient by Holdings for such purposes.
(iv) Holdings shall grant to any subsequent holder of Restricted
Securities, upon such holder's request, the same rights granted to BTFIC and
its Affiliates pursuant to this Section.
4.9 COMPLIANCE WITH LAWS. The Company shall, shall cause its
Subsidiaries to, and shall take all necessary actions to cause its and its
Subsidiaries' employees and agents to, comply with all material laws, rules,
regulations and policies applicable to the operation of its business,
including those of: (A) the United States of America, including the Foreign
Corrupt Practices Act, the export controls imposed by the U.S. Department of
Commerce, the International Traffic in Arms Regulations, the restrictions
imposed by the U.S. Office of Foreign Assets Control and the anti-boycott
regulations administered by the U.S. Department of Commerce and the U.S.
Department of the Treasury, in each case to the extent compliance with such
laws does not violate any applicable Brazilian or other laws, and (B) Brazil
and all other applicable countries (if any). Furthermore, the Company shall
not, and shall not cause or permit its Latin American Entities to, take or
fail to take any action, and the Company represents and warrants that, as of
the date hereof, neither the Company nor any Latin American Entities has
taken or failed to take any action, that would cause such entities, its Latin
American Entities or
-27-
<PAGE>
their employees to violate or otherwise not comply with all such applicable
material laws, rules, regulations and policies.
4.10 LIEN ON COLLATERAL; ADDITIONAL UNDERTAKING.
(i) The Company will cause BTFIC to obtain a first priority Lien
on all of the Initial Brazilian Collateral (to the extent not done so on or
prior to the Initial Closing) and all of the Additional Brazilian Collateral
(or a first priority Lien in such other Collateral acceptable to BTFIC in its
sole discretion) no later than 45 days after the date hereof and,
concurrently therewith, provide to BTFIC an opinion of counsel to such
effect, in form and substance and from counsel acceptable to BTFIC (which
opinion shall not be obliged to opine as to lien priorities). In addition
thereto, no later than 45 days prior to the date hereof, the Company shall
cause to be delivered to BTFIC a waiver from Overseas Private Investment
Corporation pursuant to which Overseas Private Investment Corporation grants
a consent similar to the consent granted by the requisite lenders under the
Pakistan facility.
(ii) The Company covenants to use its best efforts to cause the
Via 1 Entities to (and shall provide BTFIC with satisfactory evidence of such
actions, which satisfactory evidence shall include the type of opinion
referred to in clause (i) above): (a) provide a guaranty to the Purchasers in
substantially the same form as the guaranty executed and delivered by such
other existing Brazilian Entities, (b) execute and deliver acceptable
Security Documents and take such other actions as are necessary to grant, and
have perfected and maintained, a first priority Lien on all of its assets and
properties of the type described in the definition of "Additional Brazilian
Collateral" (without giving effect to the exception contained in clause (i)
thereof), and (c) grant BTFIC inspection and board observer rights with
respect to the Via 1 Entities in accordance with Sections 4.2 and Section 4.3
hereof. If the Via 1 Entities have not taken all such actions described in
clauses (a), (b) and (c) above within 90 days after the Initial Closing, then
Holdings shall upon such 90th day immediately execute and deliver an
unconditional guarantee with respect to $6,000,000 of the Obligations, which
guarantee shall not be terminated until the conditions contained in this
Section 4.10 (ii) are fully satisfied or the Obligations are indefeasibly
paid in full, and which guarantee shall be in form and substance satisfactory
to BTFIC.
4.11 COVENANTS REGARDING POST-MERGER REORGANIZATIONS. It is the
intention of the parties that as promptly as practicable after the Initial
Closing but in any event, within 180 days after the Initial Closing,
Holdings' indirect equity interest in Via 1 will be contributed to the
Company and the merger of RMD do Brasil Ltda. and Via 1 shall be effected
such that the Company shall have at least a majority interest in the
foregoing merged entity, as generally described on the POST-MERGER
REORGANIZATION SCHEDULE referenced in the Disclosure Letter (the "POST-MERGER
REORGANIZATION"). In connection with such transactions, the Company will
provide
-28-
<PAGE>
execution copies of all documents, agreements and instruments to be executed
by the Brazilian Entities or any Affiliate thereof to the Agent for review
and approval, together with an opinion of counsel to the effect that the
execution, delivery and performance of such agreements, documents and
instruments will not affect the perfection, priority or status of the
Purchasers' Lien on the Collateral (which review and approval shall be
required solely with respect to provisions contained therein that may affect
the Purchaser's interest in the Collateral and which approval shall not be
unreasonably withheld) prior to executing such documents; provided, however,
that such approval shall be deemed to be given by Agent if Agent does not
provide any written response within ten business days after receipt thereof.
Section 5. TRANSFER OF RESTRICTED SECURITIES.
5.1 GENERAL PROVISIONS. Restricted Securities are transferable
only pursuant to (i) public offerings registered under the Securities Act,
(ii) Rule 144 or Rule 144A of the Securities and Exchange Commission (or any
similar rule or rules then in force) if such rule is available and (iii)
subject to the conditions specified in Section 5.2 below, any other legally
available means of transfer.
5.2 OPINION DELIVERY. In connection with the transfer of any
Restricted Securities (other than a transfer described in Section 5.1(i) or
(ii) above, a transfer to an existing, or also involving an existing,
institutional or financial stockholder of Holdings, or a transfer to
Holdings, an Affiliate of Holdings, an Affiliate of a Purchaser or to an
institutional or financial investor or other entity with assets in excess of
$10 million), the holder thereof shall deliver written notice to Holdings
describing in reasonable detail the transfer or proposed transfer, together
with an opinion (unless waived by the Company) of Kirkland & Ellis or other
counsel which is knowledgeable in securities law matters to the effect that
such transfer of Restricted Securities may be effected without registration
of such Restricted Securities under the Securities Act. In addition, if the
holder of the Restricted Securities delivers to Holdings an opinion of
Kirkland & Ellis or such other counsel that no subsequent transfer of such
Restricted Securities shall require registration under the Securities Act,
Holdings shall promptly upon such contemplated transfer deliver new
certificates for such Restricted Securities which do not bear the Securities
Act legend set forth in Section 8.3. If Holdings is not required to deliver
new certificates for such Restricted Securities not bearing such legend, the
holder thereof shall not transfer the same until the prospective transferee
has confirmed to Holdings in writing its agreement to be bound by the
conditions contained in this Section and Section 8.3.
5.3 RULE 144A. Upon the request of any Purchaser, Holdings
shall promptly supply to such Purchaser or its prospective transferees all
information regarding Holdings required to be delivered in connection with a
transfer pursuant to Rule 144A of the Securities and
-29-
<PAGE>
Exchange Commission.
5.4 LEGEND REMOVAL. If any Restricted Securities become
eligible for sale pursuant to Rule 144(k), Holdings shall, upon the request
of the holder of such Restricted Securities, remove the legend set forth in
Section 8.3 from the certificates for such Restricted Securities.
Section 6. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. As a
material inducement to BTFIC to enter into this Agreement and purchase the
Securities hereunder, Company hereby represents and warrants that, except as
otherwise indicated in the Disclosure Letter as indicated below:
6.1 ORGANIZATION, CORPORATE POWER AND LICENSES. Each of
Holdings and the Company is a corporation duly organized, validly existing
and in good standing under the laws of Delaware and is qualified to do
business in every jurisdiction in which its ownership of property or conduct
of business requires it to qualify, except for jurisdictions in which the
failure to so qualify has not had and could not have a Material Adverse
Effect. Each of Holdings, the Company and the Latin American Entities
possesses all requisite power and authority and all licenses, permits and
authorizations necessary to own and operate its properties, to carry on its
businesses as now conducted and presently proposed to be conducted and to
carry out the transactions contemplated by this Agreement except where the
failure to do so would not have a Material Adverse Effect. The copies of
Holdings' charter documents and bylaws which have been furnished to BTFICs'
special counsel reflect all amendments made thereto at any time prior to the
date of this Agreement and are correct and complete.
6.2 CAPITAL STOCK AND RELATED MATTERS.
(i) The "CAPITALIZATION SCHEDULE" referenced in the Disclosure
Letter accurately sets forth the following information with respect to the
capitalization of Holdings as of the Initial Closing and immediately
thereafter: (1) the authorized capital stock of Holdings, (2) the number of
shares of each class of capital stock issued and outstanding, (3) the name of
each holder of capital stock and the amount of stock owned by each such
holder and (4) with respect to all outstanding options and rights to acquire
the capital stock of Holdings: the holder, and the number of shares covered,
and, where reasonably available, the exercise price and the expiration date.
Immediately after the Initial Closing, Holdings shall not have outstanding
any stock or securities convertible or exchangeable for any shares of its
capital stock or containing any profit participation features, nor shall it
have outstanding any rights or options to subscribe for or to purchase its
capital stock or any stock or securities convertible into or exchangeable for
its capital stock or any stock appreciation rights or phantom stock plans,
except for the Warrants and
-30-
<PAGE>
except as set forth on the CAPITALIZATION SCHEDULE referenced in the
Disclosure Letter. As of the Initial Closing and immediately thereafter, and
except as set forth on the CAPITALIZATION SCHEDULE referenced in the
Disclosure Letter, neither Holdings nor any Subsidiary shall be subject to
any obligation (contingent or otherwise) to repurchase or otherwise acquire
or retire any shares of Holdings' capital stock or any warrants, options or
other rights to acquire its capital stock, except indicated on the
CAPITALIZATION SCHEDULE referenced in the Disclosure Letter. As of the
Initial Closing and immediately thereafter, all of the outstanding shares of
the capital stock of Holdings shall be validly issued, fully paid and
nonassessable and the capital stock issuable directly or indirectly upon
exercise of the Warrants will, when issued, be duly authorized and validly
issued, fully paid and nonassessable.
(ii) There are no statutory or, to the best of the knowledge of
Holdings, contractual stockholders preemptive rights or rights of refusal
applicable to the issuance of the Securities hereunder or the issuance of
capital stock upon the direct or indirect exercise of the Warrants. Neither
Holdings nor any of its Subsidiaries has violated any applicable federal or
state securities laws in connection with the offer, sale or issuance of any
of its capital stock to any institutional or other material investor and the
offer, sale and issuance of the Securities hereunder and the issuance of the
capital stock upon the direct or indirect exercise of the Warrants do not
require registration under the Securities Act or any applicable state
securities laws. To the best of the Holdings' knowledge, there are no
currently operative agreements between the stockholders of Holdings with
respect to the voting or transfer of the capital stock of Holdings, except as
set forth on the "STOCKHOLDER AGREEMENT SCHEDULE" referenced in the
Disclosure Letter.
6.3 SUBSIDIARIES; INVESTMENTS. The "HOLDINGS CORPORATE ORGANIZATION
SCHEDULE" referenced in the Disclosure Letter correctly sets forth the name
of each entity in which Holdings has or, immediately after the consummation
of the Merger will have, an equity interest, the jurisdiction of its
incorporation and Holdings direct or indirect equity interest in such entity
immediately prior to and after giving effect to the Initial Closing. All of
the outstanding shares of capital stock or other equity interests of each
such entity directly or indirectly owned by Holdings are validly issued and
fully paid. Except as set forth on the HOLDINGS CORPORATE ORGANIZATION
SCHEDULE referenced in the Disclosure Letter, all such shares or equity
interests in entities in which Holdings' has invested more than $15 million
as of the date hereof or entities that are Brazilian Entities ("Significant
Investees") are owned by Holdings or a Subsidiary of Holdings free and clear
of all Liens (other than in favor of the Purchasers) and are not subject to
any option or right to purchase any such shares or equity interests.
Immediately after the Initial Closing, no such Significant Investee has
outstanding any equity interests or securities convertible or exchangeable
for any shares of its equity interests or containing any profit
-31-
<PAGE>
participation features, nor shall it have outstanding any rights or options
to subscribe for or to purchase its capital stock or any equity interests or
securities convertible into or exchangeable for its capital stock or any
stock appreciation rights or phantom stock plans. As of the Initial Closing
and immediately thereafter, none of Holdings or is Subsidiaries shall be
subject to any obligations (contingent or otherwise) to repurchase or
otherwise acquire or retire any equity interests of Subsidiary or Investee of
Holdings' or any warrants, options or other rights to acquire its equity
interests. After giving effect to the Initial Closing there are no
agreements between the equityholders of the Company or any Brazilian Entity
with respect to the voting, transfer or issuance of the equity interests of
the company or such Brazilian Entity or with respect to any other aspect of
the affairs of any such Person, except as set forth on the "BRAZILIAN
AGREEMENT SCHEDULE" referenced in the Disclosure Letter
6.4 AUTHORIZATION; NO BREACH. The execution, delivery and
performance of each of the Transaction Documents and all other agreements and
instruments contemplated hereby and thereby to which any of Holdings, the
Company or any of their Subsidiaries or Investees is a party have been duly
authorized by the appropriate entity. Each of the Transaction Documents, the
Certificate of Incorporation and all other agreements and instruments
contemplated hereby and thereby to which any of Holdings, the Company or any
of their Subsidiaries or Investees is a party each constitutes a valid and
binding obligation of the appropriate entity, enforceable in accordance with
its terms. Except as set forth on the "RESTRICTIONS SCHEDULE" referenced in
the Disclosure Letter, the execution and delivery by each of Holdings, the
Company and its and their Subsidiaries and Investees of each of the
Transaction Documents and all other agreements and instruments contemplated
hereby and thereby to which such Person is a party, the offering, sale and
issuance of the Securities hereunder, the issuance of capital stock upon the
direct or indirect exercise of Warrants, the granting and perfection of the
Liens on the Collateral to secure all of the Obligations outstanding from
time to time, the fulfillment of and compliance with the respective terms
hereof and thereof (including the Post-Merger Reorganization and the
agreements documents and instruments executed and delivered in connection
therewith and the repayment, including the required prepayments, of the
Notes) by such Person, do not and shall not (i) conflict with or result in a
breach of the terms, conditions or provisions of, (ii) constitute a default
under, (iii) result in the creation of any Lien (other than in favor of the
Purchasers or a Permitted Lien) upon Holdings', the Company's, its parent's
or any Brazilian Entities' capital stock or assets pursuant to, (iv) give any
third party the right to modify, terminate or accelerate any obligation
under, (v) result in a violation of, or (vi) require any authorization,
consent, approval or exemption by, or filing with, any court or
administrative or governmental body or agency pursuant to, the charter or
bylaws of Holdings, the Company, its parent or any Brazilian Entities, or any
material law, statute, rule or regulation to which Holdings, the Company, its
parent, or any Brazilian Entity is subject (including any usury laws
applicable to the Notes), or any material agreement, indenture (including the
Indenture),
-32-
<PAGE>
instrument, order, judgment or decree to which Holdings, the Company, its parent
or any Brazilian Entity is subject.
6.5 NO MATERIAL ADVERSE CHANGE. Except as set forth on the "MAC
SCHEDULE" referenced in the Disclosure Letter since, September 30, 1997 there
has been no event or occurrence which could have a Material Adverse Effect.
6.6 BROKERAGE. Except as set forth on the attached "BROKERAGE
SCHEDULE" referenced in the Disclosure Letter, there are no claims for
brokerage commissions, finders' fees or similar compensation in connection
with the transactions contemplated by this Agreement based on any arrangement
or agreement binding upon Holdings, the Company or any of its Subsidiaries or
Latin American Entities. The Company shall pay and hold each Purchaser
harmless against, any liability, loss or expense (including reasonable
attorneys' fees and out-of-pocket expenses) arising in connection with any
such claim.
6.7 AFFILIATED TRANSACTIONS. Except as set forth on the attached
"AFFILIATED TRANSACTIONS SCHEDULE" referenced in the Disclosure Letter, after
giving effect to the Initial Closing, no Insider is a party to any agreement,
contract, commitment, transaction or arrangement with Holdings, the Company
or any Latin American Entities or has any material interest in any material
property used by Holdings, the Company or any Latin American Entities.
6.8 SOLVENCY, ETC. The Company is solvent as of the date of this
Agreement and shall not become insolvent as a result of the consummation of
the transactions contemplated by this Agreement. The Company is, and after
giving effect to the transactions contemplated by this Agreement, and based
upon the projections and other factors described on the "SOLVENCY SCHEDULE"
referenced in the Disclosure Letter, which projections and factors Holdings
and the Company believes are reasonable, shall be, able to pay its debts as
they become due. The Company's property now has, and after giving effect to
the transactions contemplated hereby shall have, a fair salable value greater
than the amounts required to pay its debts (including a reasonable estimate
of the amount of all contingent liabilities). The Company has adequate
capital to carry on its business, and after giving effect to the transactions
contemplated by this Agreement, the Company shall have adequate capital to
conduct its business. No transfer of property is being made and no
obligation is being incurred in connection with the transactions contemplated
by this Agreement with the intent to hinder, delay or defraud either present
or future creditors of the Company.
6.9 DISCLOSURE. Neither this Agreement nor any of the exhibits,
schedules, attachments, written statements, documents, certificates or other
items prepared or supplied to any Purchaser by or on behalf of Holdings, the
Company or any of their Subsidiaries or Investees
-33-
<PAGE>
with respect to the transactions contemplated hereby or by the Merger
Documents contain any untrue statement of a material fact or omit a material
fact necessary to make each statement contained herein or therein not
misleading. There is no fact which Holdings, the Company or any of their
Subsidiaries or Investees has not disclosed to the Purchasers in writing on
the "MAC SCHEDULE" referenced in the Disclosure Letter, and of which any of
its officers, directors or executive employees of Holdings, the Company or a
Latin American Entity is aware (other than general economic conditions) and
which has had or would reasonably be expected to have a Material Adverse
Effect.
6.10 OTHER REPRESENTATIONS AND WARRANTIES. The representations and
warranties contained in the Merger Agreement are true and correct in all
respects. Each of the parties has complied with all of its obligations under
thereunder which are required to be complied with prior to the consummation
of the Merger except to the extent waived by the parties to such merger.
After giving effect to the transactions contemplated by the Merger, to the
knowledge of the Company, the Company and the Latin American Entities do not
have any obligation or liability, except for (i) liabilities and obligations
reflected on the "INDEBTEDNESS SCHEDULE" and the "PERMITTED BRAZILIAN
INDEBTEDNESS SCHEDULE" referenced in the Disclosure Letter and (ii) current
liabilities which have arisen in the ordinary course of business (none of
which relates to breach of contract, breach of warranty, tort, infringement,
violation of or liability under any legal requirements, or any action, suit
or proceeding and none of which is material individually or in the
aggregate). The Company is not subject to any law limiting its ability to
incur indebtedness for borrowed money. The Company is not engaged in the
business of extending credit for the purpose of purchasing or carrying margin
stock (as defined, from time to time, in Regulation G promulgated by the
Board of Governors of the Federal Reserve System), and no part of the
proceeds of the Notes will be used to purchase or carry any margin stock or
to extend credit for the purpose of purchasing or carrying margin stock in
violation of Regulation G or Regulation X promulgated by the Board of
Governors of the Federal Reserve System.
6.11 CONDITION OF SYSTEM. All material properties, equipment and
systems of the Company and the other Latin American Entities are in good
repair, working order and condition and are in material compliance with all
standards and rules imposed (i) by any governmental agency or authority in
which such properties, equipment and/or systems are located or operated and
(ii) under any agreements with customers.
6.12 FEES; LICENSES COMPLIANCE. Except as set forth on the attached
"FEE LICENSE SCHEDULE" referenced in the Disclosure Letter: (i) each of the
Company and the Brazilian Entities has paid material franchise license or
other fees and charges which have
-34-
<PAGE>
become due in respect of its business and has made appropriate provisions as
is required by the general accepted accounting principles of each applicable
jurisdiction for any such fees and charges which have accrued; (ii) each such
Person has duly secured all necessary permits, licenses, consents and
authorizations from and have filed all required material registrations,
applications, reports and other documents with, the appropriate governmental
agencies, authorities and commissions and other entities exercising
jurisdiction over the business of any such Person; (iii) all of such Person's
licenses, including licenses held through or by its Subsidiaries and
Investees, are valid and in full force and effect without conditions except
such conditions as are generally applicable to holders of licenses; and (iv)
all loading requirements with respect to any license have been satisfied in
all material respects. To the best of each such Person's knowledge, no event
has occurred and is continuing which could result in the termination,
revocation or adverse modification of any license. Each such Person does not
have any reason to believe that its licenses, including licenses held through
or by its Subsidiaries and Brazilian Entities, will not be renewed in the
ordinary course. The "LICENSE INFORMATION SCHEDULE" referenced in the
Disclosure Letter sets forth for each license held by a Brazilian Entities:
(i) the number of channels authorized by each licensee; and (ii) the
applicable loading date for each license and whether such loading date has
been extended or application for extension has been made (and, if made, its
status).
6.13 COLLATERAL. Each of the Company and the Latin American Entities
that is providing a pledge of Collateral hereunder holds good and marketable
title to the Collateral. There are and will be no contractual restrictions
to the sale, transfer or disposition of any of the Initial Brazilian
Collateral or Additional Brazilian Collateral except as set forth in the
"COLLATERAL RESTRICTIONS SCHEDULE" referenced in the Disclosure Letter
attached hereto.
6.14 INITIAL CLOSING DATE. The representations and warranties of each
of Holdings and the Company contained in this Section 6 and elsewhere in this
Agreement and all information contained in any exhibit, schedule or
attachment hereto or in any certificate or other writing delivered by, or on
behalf of, the Company to BTFIC shall be true and correct in all material
respects on the date of the Initial Closing as though then made, except as
affected by the transactions expressly contemplated by this Agreement.
Section 7. EVENTS OF DEFAULT.
7.1 DEFINITION. An Event of Default shall be deemed to have occurred if:
(i) (x) the full amount of any Obligation (whether for principal,
interest or any other amount) is not paid when due or otherwise required to
be paid, and such failure (in the case of all Obligations other than
principal, for which there shall be no grace period) continues for 10 days
after such Obligation is due or otherwise required to be paid or (y) the
Company fails to perform or observe (or cause to be performed or observed)
Sections 4.4(v) and (viii), 4.5, 4.10
-35-
<PAGE>
and 4.11 of this Agreement or 2(c)(i) of the Notes;
(ii) the Company, Holdings or any Latin American Entity fails to perform
or observe (or cause to be performed or observed) any other provision
contained herein or in the Notes, the Warrants, its Certificate of
Incorporation or the other Transaction Documents or any other instrument
delivered pursuant hereto or thereto, which is not cured within 20 days of
the occurrence thereof;
(iii) any representation, warranty or information contained herein or
required to be furnished to any holder of the Notes pursuant to this
Agreement, or any writing furnished to any holder of the Notes, is false or
misleading in any material respect on the date made or furnished;
(iv) (A) the Company, its parent or any of the Latin American Entities
makes an assignment for the benefit of creditors or admits in writing its
inability to pay its debts generally as they become due; or (B) an order,
judgment, decree or injunction is entered adjudicating the Company, its
parent or any of the Latin American Entities bankrupt or insolvent or
requiring the dissolution or split up of any such entity or preventing any
such entity from conducting all or any part of its business; or (C) any order
for relief with respect to any such entities is entered under the United
States Federal Bankruptcy Code or similar insolvency laws; or (D) any such
entities, petitions or applies to any tribunal for the appointment of a
custodian, trustee, receiver or liquidator of any such entities, or of any
substantial part of the assets of any such entities, or commences any
proceeding relating to any such entities under any bankruptcy
reorganization, arrangement, insolvency, readjustment of debt, dissolution or
liquidation or similar laws of any jurisdiction now or hereafter in effect;
or (E) any such petition or application is filed, or any such proceeding is
commenced, against any such entities and either (x) any such entities by any
act indicates its approval thereof, consent thereto or acquiescence therein
or (y) such petition, application or proceeding is not dismissed within 60
days;
(v) a judgment in excess of $500,000 is rendered against the Company,
its parent or any Latin American Entity and not discharged in full within 60
days after the later of the entry of such judgment or the execution of any
stay;
(vi) any Indebtedness or obligations of Holdings, the Company, its
parent or any Latin American Entities owing to one or more Persons other than
the Purchaser in excess of $500,000 in the aggregate is not paid when due or
otherwise required to be paid;
(vii) any Indebtedness or obligations of Holdings, the Company, its
parent or any Latin American Entities owing to one or more Persons other than
a Purchaser in excess of $500,000 in the aggregate becomes due or required to
be paid prior to its stated maturity;
-36-
<PAGE>
(viii) any holders (other than any Purchaser) of Indebtedness or
obligations of Holdings, the Company, its parent or any Latin American
Entities in excess of $500,000 in the aggregate may cause such Indebtedness
or obligation (including any portion thereof) to become due or paid prior to
its stated maturity;
(ix) the occurrence of an event or condition that is reasonably likely
have a Material Adverse Effect;
(x) any of this Agreement, the Notes, the Warrants or the Security
Documents shall cease to be in full force and effect or declared to be null
and void by a court of competent jurisdiction; or
(xi) the Purchasers shall, except as otherwise expressly permitted by
Section 4.10 hereof, cease to have a valid and first priority Lien on the
Initial Brazilian Collateral, Additional Brazilian Collateral and Via 1
Collateral or, except as otherwise expressly permitted by Section 4.10
hereof, the Collateral shall otherwise cease to secure all of the Obligations.
7.2 CONSEQUENCES OF EVENTS OF DEFAULT.
(i) If any Event of Default has occurred, then the interest rate on the
Notes and all other Obligations (to the extent permitted by law) shall
increase immediately by an increment of two (2) percentages points to the
extent permitted by law. Thereafter, until such time as no Events of Default
exists, the interest rate shall increase automatically at the end of each
succeeding 30-day period by an additional increment of two (2) percentage
points to the extent permitted by law. Any increase of the interest rate
resulting from the operation of this subparagraph shall terminate as of the
close of business on the date on which no Event of Default exists (subject to
the subsequent increases pursuant to this subparagraph).
(ii) If an Event of Default of the type described in Section 7.1(iv) has
occurred then the aggregate principal amount of the Notes (together with all
accrued interest thereon and all other Obligations) shall become immediately
due and payable without any action on the part of the holders of the Notes,
and the obligors shall immediately pay to the holders of the Notes all
amounts due and payable with respect to the Notes and all other Obligations.
(iii) If an Event of Default (other than under Section 7.1(iv)) has
occurred and is continuing, the holder or holders of Notes representing a
majority of the aggregate principal amount of Notes then outstanding, which
majority shall include BTFIC as long as it holds any Notes, may declare all
or any portion of the outstanding principal amount of the Notes (together
-37-
<PAGE>
with all accrued interest thereon and all other Obligations owned to them) to
be immediately due and payable and may demand immediate payment of all or any
portion of the outstanding principal amount of the Notes (together with all
such Obligations owned to them then due and payable) owned by such holder or
holders. The Company shall give prompt written notice of any such demand to
the other holders of Notes, each of which may demand immediate payment of all
or any portion of such holder's Note. If any holder or holders of the Notes
demand immediate payment of all or any portion of the Notes, the obligors
shall immediately pay to such holder or holders all amounts due and payable
with respect to such Notes together with all other Obligations owned to them.
Section 8. MISCELLANEOUS.
8.1 EXPENSES. The Company agrees to pay, and hold each Purchaser, each
Agent and all holders of Securities, Underlying Warrant Stock and Ultimate
Warrant Stock harmless against liability for the payment of, and reimburse on
demand as and when incurred from and against, (i) all reasonable costs and
expenses incurred by each of them in connection with their due diligence
review of Holdings, the Company and its and their Subsidiaries, the
preparation, negotiation, execution, interpretation, administration and
monitoring of this Agreement, the Notes, the Warrants and the agreements
contemplated hereby and thereby, and the consummation of all of the
transactions contemplated hereby and thereby (including all reasonable fees
and expenses of legal counsel), which costs and expenses shall be payable
promptly upon request, (ii) all fees and expenses incurred with respect to
any amendments or waivers (whether or not the same become effective) under or
in respect of each of the Transaction Documents, the Certificate of
Incorporation and the other agreements and instruments contemplated hereby
and thereby, including all expenses incurred in connection with any proposed
merger, sale or recapitalization of Holdings or any Subsidiary, (iii) all
fees and expenses (including all fees and expenses of legal counsel) in
connection with or relating to the Collateral, including with respect to the
perfection (including the continued perfection), enforcement or disposition
thereof, (iv) all recording and filing fees, stamp and other Taxes which may
be payable in respect of the execution and delivery of this Agreement, the
Security Documents or the other Transaction Documents, the establishment,
creation, maintenance, protection, perfection and continued perfection of the
Collateral or the issuance, delivery or acquisition of any Securities or any
shares of capital stock issuable upon exercise of the Warrants or any shares
of capital stock issuable upon conversion of capital stock, (v) the fees and
expenses (which prior to the occurrence of an Event of Default shall be
reasonable fees and expenses) incurred with respect to the interpretation and
enforcement of the rights granted under this Agreement, the Securities, the
Underlying Warrant Stock, Ultimate Warrant Stock, the Certificate of
Incorporation, the Security Documents, the other Transaction Documents and
the agreements or instruments contemplated hereby and thereby (including
costs of collection).
-38-
<PAGE>
Holdings agrees to pay all of such fees and expenses that relate to the
Warrants, the Underlying Warrant Stock, the Ultimate Warrant Stock, the
holder's equity interest therein, the Certificate of Incorporation and the
Merger, to the extent that such fees and expenses are not paid by the Company.
8.2 REMEDIES. Each holder of Securities, Underlying Warrant Stock and
Ultimate Warrant Stock and the Agents shall have all rights and remedies set
forth in this Agreement, the Securities, the Certificate of Incorporation and
the other Transaction Documents and all rights and remedies which such
holders have been granted at any time under any other agreement or contract
and all of the rights which such holders have under any law. No remedy
hereunder or thereunder conferred is intended to be exclusive of any other
remedy, and each and every such remedy shall be cumulative and shall be in
addition to every other remedy given hereunder or thereunder or now or
hereafter existing at law or in equity or by statute or otherwise. Any
Person having any rights under any provision of this Agreement and the other
Transaction Documents shall be entitled to enforce such rights specifically
(without posting a bond or other security), to recover damages by reason of
any breach of any provision of such Transaction Documents and to exercise all
other rights granted by law.
8.3 PURCHASER'S INVESTMENT REPRESENTATIONS. Each Purchaser hereby
represents that it is acquiring the Restricted Securities purchased hereunder
or acquired pursuant hereto for its own account with the present intention of
holding such securities for purposes of investment, and that it has no
intention of selling such securities in a public distribution in violation of
the federal securities laws or any applicable state securities laws; provided
that nothing contained herein shall prevent any Purchaser and subsequent
holders of Restricted Securities from transferring such securities in
compliance with the provisions of Section 5 hereof. Each certificate or
instrument representing Restricted Securities shall be imprinted with a
legend in substantially the following form:
"The securities represented by this certificate has not been registered
under the Securities Act of 1933, as amended. The transfer of the
securities represented by this certificate is subject to the conditions
specified in the Amended and Restated Note and Warrant Purchase Agreement,
dated as of January 23, 1998 and as amended and modified from time to time,
among the issuer, an affiliate of the issuer and certain investors, and
issuer shall furnish to the holder hereof a copy of such conditions upon
written request and without charge."
8.4 AMENDMENTS AND WAIVERS. Except as otherwise expressly provided
herein, the provisions of this Agreement and the provisions of the Notes may
be amended and any of Holdings or the Company may take any action herein
prohibited, or omit to perform any
-39-
<PAGE>
act herein required to be performed by it, only if such entity has obtained
the written consent of the holders of a majority of the outstanding principal
amount of the Notes (which majority shall include BTFIC as long as it holds
any Notes); PROVIDED that no such action shall change (i) the rate at which
or the manner in which interest accrues on the Notes or the time at which
such interest becomes payable or (ii) any provision relating to the scheduled
payments or prepayments of principal on the Notes, without the written
consent of the holders of at least 80% of the outstanding principal amount of
the Notes; PROVIDED FURTHER, that if there are no Notes outstanding, the
provisions of this Agreement may be amended or waived and any of Holdings or
the Company may take any action herein prohibited, only if such entity has
obtained the written consent of the holders of a majority of each of the
Underlying Warrant Stock and Ultimate Warrant Stock (which majority shall
include BTFIC so long as it holds any Underlying Warrant Stock or Ultimate
Warrant Stock); PROVIDED FURTHER, that the provisions of Sections 4.3 and 4.8
and this Section 8.4 may be amended or waived, and any of Holdings and the
Company may take any action therein prohibited, or omit to perform any act
therein required to be performed by it, only if such entity has obtained the
written consent of the holders of a majority of each of the Underlying
Warrant Stock and Ultimate Warrant Stock (which majority shall include BTFIC
so long as it holds any Underlying Warrant Stock or Ultimate Warrant Stock).
No other course of dealing between any of Holdings of the Company and the
holder of any Warrant or Underlying Warrant Stock or Ultimate Warrant Stock
or any delay in exercising any rights hereunder or under the Notes or the
Certificate of Incorporation or the other Transaction Documents shall operate
as a waiver of any rights of any such holders. For purposes of this
Agreement and the Notes or Underlying Warrant Stock or Ultimate Warrant Stock
held by Holdings or any of its Subsidiaries shall not be deemed to be
outstanding.
8.5 SURVIVAL OF AGREEMENT. All covenants, representations and
warranties contained in this Agreement, the Notes and/or the Warrants or made
in writing by any of Holdings, the Company or any Latin American Entity in
connection herewith or therewith shall survive the execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby,
regardless of any investigation made by any Purchaser or on its behalf. In
addition, notwithstanding the repayment of all amounts pursuant to this
Agreement, the Notes or the Warrants, the obligations of any of Holdings or
the Company pursuant to Sections 8.1, 8.6, 8.13, 8.14, 8.15, 8.17, 8.18,
8.19, 8.20 and 8.21 shall survive indefinitely.
8.6 PAYMENTS, ETC.
(i) Except as otherwise provided in Section 1B of the Warrants, all
payments hereunder to any Indemnitee or the Agents under the Notes, the
Warrants and the other Transaction Documents shall be made by the obligor
without setoff, offset, deduction or counterclaim, free and clear of all
Taxes, levies, imports, duties, fees and charges, and without
-40-
<PAGE>
any withholding, restriction or conditions imposed by any governmental
authority. If any obligor shall be required by any law to deduct, setoff or
withhold any amount from or in respect of any payment to any Purchaser
hereunder or under the Notes, the Warrants and the other Transaction
Documents, then the amount so payable to the Purchasers shall be increased
as may be necessary so that, after making all required deductions, setoffs
and withholdings, the Purchasers shall receive an amount equal to the sum
they would have received had no such deductions, setoffs or withholding been
made.
(ii) All payments made to the Indemnitees and the Agents under the
Transaction Documents by any Person other than Holdings will be applied in
the following order and priority: (a) first, to the payment of the BTCO Fee,
(b) second, to the payment of all fees, expenses and other Obligations
(including attorneys' fees and other legal expenses which may be payable)
other than principal or interest or premium on the Notes to any Agent under
and in accordance with this Agreement or any other Transaction Document, pro
rata among the Agents according to the respective amounts of such items which
are payable to them, (c) third, to the payment of all fees, expenses and
obligations (including Obligations) (including attorneys' fees and other
legal expenses which may be payable) not otherwise referred to in clause (d),
(e) or (f) below under and in accordance with this Agreement or any other
Transaction Document, pro rata among the Purchasers according to the
respective amounts of such items which are payable to them, (d) fourth, to
the payment of all unpaid accrued interest on the Notes (whether or not such
interest is then due and payable), on a last-accrued, first unpaid basis, pro
rata among the Purchasers according to the respective amounts of unpaid
accrued interest on the Notes held by each Purchaser, (e) fifth, to the
payment of all unpaid principal of the Notes and, if such payment of
principal occurs on or prior to the twelve-month anniversary of the date
hereof, (1) to the payment of a premium on the aggregate amount of unpaid
principal being concurrently paid equal to one (1%) percent of the aggregate
amount of such principal amount being concurrently paid if the payment occurs
on or prior to the six-month anniversary of the date hereof, or (2) .75% of
the aggregate amount of such principal amount being concurrently paid if the
payment occurs thereafter but on or prior to the twelve-month anniversary of
the date thereof, in each case, pursuant to this clause (e), pro rata among
the Purchasers according to the respective amounts of unpaid principal of the
Notes held by each Purchaser and (f) sixth, to the payment of all Indemnified
Liabilities owed to an Indemnitee under Section 8.18, pro rata among the
Indemnitees according to the respective amounts of such items which have been
payable to them. Except for payments pursuant to the unconditional guaranty
that may be provided by Holdings pursuant to Section 4.10 hereof, payments
made by Holdings pursuant to the Transaction Documents to which it is a party
shall be made solely to support obligations and liabilities of Holdings under
such Transaction Documents only and shall not be made to support any
obligations or liabilities of the Company thereunder.
-41-
<PAGE>
(iii) Each Purchaser agrees that, if such Purchaser receives a
payment which is in excess of the amount which such Purchaser is entitled to
receive pursuant to this Section 8.6, then such Purchaser will transfer a
portion of such payment to one or more other Purchasers or other Persons in
order that full effect may be given to this Section 8.6.
8.7 RIGHT OF SETOFF. To the extent permitted by law,
(i) from and after the occurrence of an Event of Default, the
Purchasers shall have the right, in addition to all other rights and remedies
available to it, without notice to any Person, to setoff against and to
appropriate and apply to the unpaid balance of the Notes, all accrued
interest thereon and all other Obligations, any debt owing to, and any other
funds held in any manner for the account of the Company or any Brazilian
Entity by the Purchasers or its Affiliates, including all funds in all
deposit accounts (general or special) now or hereafter maintained by the
Company or any Brazilian Entity that provides Collateral under the Security
Documents for its own account with any Purchaser or its Affiliates and the
Purchasers are hereby granted a Lien on all such debts (including all such
deposit accounts) for such purpose;
(ii) such right shall exist whether or not the Purchasers shall
have made any demand under this Agreement, the Notes, the Warrants or the
other Transaction Documents and whether or not the Notes, the Warrants and
such other Obligations are matured or unmatured; and
(iii) the Company hereby, and shall cause each Brazilian Entity
that provides Collateral hereunder to hereby, confirm the Purchasers' (and
such other holder's) right of banker's lien and setoff and nothing in this
Agreement shall be deemed to be any waiver or prohibition of the Purchasers'
right of banker's lien and setoff.
Upon the request of the holder or holders of Notes representing a majority of
the aggregate principal amount of the Notes at any time after the occurrence
of an Event of Default, the Company shall, and shall cause the Brazilian
Entities that have provided Collateral under the Security Documents to, remit
all cash payments received by it into an account designated by such
Purchasers for setoff as described in this Section 8.7.
8.8 SUCCESSORS AND ASSIGNS. Except as otherwise expressly
provided herein or therein, all covenants and agreements contained in this
Agreement, the Notes, the Warrants and the other Transaction Documents by or
on behalf of any of the parties hereto shall bind and inure to the benefit of
the respective successors and assigns of the parties hereto whether or not so
expressed; provided that neither Holdings nor the Company nor any Latin
American Entity shall assign its rights or obligations under this Agreement,
the Notes or the Warrants without the prior
-42-
<PAGE>
written consent of a majority of the outstanding principal amount of the
Notes and a majority of each of the Underlying Warrant Stock and Ultimate
Warrant Stock. In addition, and whether or not any express assignment has
been made, the provisions of this Agreement which are for any Purchaser's
benefit as a purchaser or holder of Securities or Underlying Warrant Stock or
Ultimate Warrant Stock are also for the benefit of, and enforceable by, any
subsequent holder of such Securities or such Underlying Warrant Stock or such
Ultimate Warrant Stock.
8.9 AGGREGATION. For purposes of this Agreement all holdings of
Notes and Underlying Warrant Stock by Persons who are Affiliates of each
other shall be aggregated for purposes of meeting any threshold tests under
this Agreement.
8.10 SEVERABILITY. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement is held to be
prohibited by or invalid under applicable law, such provision shall be
ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of this Agreement.
8.11 COUNTERPARTS. This Agreement and the other Transaction
Documents may be executed in two or more counterparts, any one of which need
not contain the signatures of more than one party, but all such counterparts
taken together shall constitute one and the same agreement.
8.12 DESCRIPTIVE HEADINGS. The descriptive headings of this
Agreement, the Notes, the Warrants and the other Transaction Documents are
inserted for convenience only and do not constitute a substantive part of
this Agreement.
8.13 GOVERNING LAW. THE CORPORATE LAW OF THE STATE OF NEW YORK
SHALL GOVERN ALL ISSUES AND QUESTIONS CONCERNING THE RELATIVE RIGHTS AND
OBLIGATIONS OF HOLDINGS AND ITS STOCKHOLDERS. ALL OTHER ISSUES AND QUESTIONS
CONCERNING THE CONSTRUCTION, VALIDITY, ENFORCEMENT AND INTERPRETATION OF THIS
AGREEMENT AND THE EXHIBITS AND THE DISCLOSURE LETTER SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT
GIVING EFFECT TO ANY CHOICE OF LAW OR CONFLICT OF LAW RULES OR PROVISIONS
(WHETHER OF THE STATE OF NEW YORK OR ANY OTHER JURISDICTION) THAT WOULD CAUSE
THE APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF NEW
YORK. IN FURTHERANCE OF THE FOREGOING, THE INTERNAL LAW OF THE STATE OF NEW
YORK SHALL CONTROL THE INTERPRETATION AND CONSTRUCTION OF THIS AGREEMENT (AND
EXHIBITS HERETO AND THE DISCLOSURE LETTER), EVEN THOUGH UNDER THAT
JURISDICTION'S CHOICE OF LAW OR CONFLICT OF LAW ANALYSIS, THE SUBSTANTIVE LAW
OF SOME OTHER JURISDICTION WOULD ORDINARILY APPLY.
-43-
<PAGE>
8.14 NOTICES. All notices, demands or other communications to be
given or delivered under or by reason of the provisions of this Agreement
shall be in writing and shall be deemed to have been given when delivered
personally to the recipient, sent to the recipient by reputable overnight
courier service (charges prepaid), mailed to the recipient by certified or
registered mail, return receipt requested and postage prepaid or faxed to the
recipient (answerback confirmed). Such notices, demands and other
communications shall be sent to each Purchaser, to Holdings and to the
Company at the address indicated below:
To Holdings: International Wireless Communications Holdings, Inc.
400 South El Camino Real
Suite 1275
San Mateo, California 94402
Attn: Douglas S. Sinclair
Chief Financial Officer
Facsimile No: (650) 685-3108
with a copy to: Gunderson Dettmer Stough
Villeneuve Franklin & Hachigian, LLP
155 Constitution Drive
Menlo Park, California 94025
Attn: Brooks Stough
Facsimile No: (650) 321-2800
To the Company: Radio Movil Digital Americas, Inc.
c/o International Wireless Communications Holdings, Inc.
400 South El Camino Real
Suite 1275
San Mateo, California 94402
Attn: Douglas S. Sinclair
Chief Financial Officer
Facsimile No: (650) 685-3108
with a copy to: Gunderson Dettmer Stough
Villeneuve Franklin & Hachigian, LLP
155 Constitution Drive
Menlo Park, California 94025
Attn: Brooks Stough
Facsimile No: (650) 321-2800
-44-
<PAGE>
To BTFIC: BT Foreign Investment Corporation
1011 Centre Road
Suite 200
Wilmington, Delaware 19805-1266
Attn: Shoba Mohan
Facsimile No: (302) 636-3333
with a copy to: Bankers Trust Company
One Bankers Trust Plaza
37th Floor, Mail Stop 2375
New York, New York 10006
Attn: Sara Markowitz
Facsimile No: (212) 669-5401 or 5414
with a copy to: Bankers Trust Company
One Bankers Trust Plaza
31st Floor, Mail Stop 2310
New York, New York 10006
Attn: Richard Coll, General Counsel
Fascimile No: (212) 250-2469
or to such other address or to the attention of such other person as the
recipient party has specified by prior written notice to the sending party.
8.15 CONSIDERATION FOR WARRANTS AND UNDERLYING WARRANT STOCK;
TREATMENT OF FEES. BTFIC, Holdings and the Company acknowledge and agree that
the fair market value of the Notes issued at the Initial Closing is
$23,500,000 and the fair market value of the Warrants issued at the Initial
Closing is $1,500,000 and that, for all purposes (including tax and
accounting), the consideration for the issuance of the Warrants shall be
allocated according to the respective fair market values. Holdings and the
Company and the Purchasers agree that all fees payable to the Purchasers, as
provided in Section 8.1 hereof, shall be reported for all tax purposes as a
reduction in the issue price of the debt issued to the Purchasers, pro rata
according to the principal treated by the parties as original issue discount
and reported as interest income and interest expense in accordance with the
applicable provisions of the Internal Revenue Code of 1996, as amended and
the regulations promulgated thereunder. BTFIC, Holdings and the Company
shall file their respective federal, state and local tax returns in a manner
which is consistent with such valuation and allocation and shall not take any
action or position (whether in preparation of tax returns, financial
statements or otherwise) which is inconsistent with any of the above.
-45-
<PAGE>
8.16 CONSTRUCTION. The parties hereto have participated jointly
in the negotiation and drafting of this Agreement, the Note, the Warrants and
the other Transaction Documents. In the event an ambiguity or question of
intent or interpretation arises, this Agreement, the Notes, the Warrants and
the other Transaction Documents shall be construed as if drafted jointly by
the parties hereto, and no presumption or burden of proof shall arise
favoring or disfavoring any party by virtue of the authorship of any of the
provisions of this Agreement. The parties intend that each representation,
warranty, and covenant contained herein and therein shall have independent
significance. If any party has breached any representation, warranty, or
covenant contained herein in any respect, the fact that there exists another
representation, warranty, or covenant relating to the same subject matter
(regardless of the relative levels of specificity) which such party has not
breached shall not detract from or mitigate the fact that such party is in
breach of the first representation, warranty, or covenant.
8.17 COMPLETE AGREEMENT. This Agreement, those documents
expressly referred to herein, other documents of even date herewith, embody
the complete agreement and understanding among the parties and supersede any
prior agreements or representations by or among the parties, written or oral,
which may have related to the subject matter hereof in any way.
8.18 INDEMNIFICATION. In consideration of each Purchaser's
execution and delivery of this Agreement and acquiring the Securities
hereunder and in addition to the Company's other obligations under this
Agreement and in addition to all other rights and remedies available at law
or in equity, the Company shall, and shall cause its Latin American Entities
that are providing Collateral or security hereunder to, jointly and
severally, defend, protect and indemnify each Purchaser and each other holder
of Securities, Underlying Warrant Stock and Ultimate Warrant Stock and all of
its officers, directors, shareholders, partners, affiliates, employees,
agents, representatives, successors and assigns (including those retained in
connection with the transactions contemplated by this Agreement)
(collectively, the "INDEMNITEES"), and save and hold each of them harmless
from and against, and pay on behalf of or reimburse such party on demand as
and when incurred, any and all actions, causes of action, suits, claims,
losses (including diminutions in value and consequential damages), costs,
penalties, fees, liabilities and damages, and expenses in connection
therewith (irrespective of whether any such Indemnitee is a party to the
action for which indemnification hereunder is sought), including reasonable
attorneys' fees and disbursements, interest and penalties and all amounts
paid in investigation, defense or settlement of any of the foregoing and
claims relating to any of the foregoing (the "INDEMNIFIED LIABILITIES"),
incurred by the Indemnitees or any of them as a result of, or arising out of,
or relating to (a) any transaction financed or to be financed in whole or in
part, directly or indirectly, with the proceeds of the issuance of the
Securities, (b) the execu-
-46-
<PAGE>
tion, delivery, performance or enforcement of, or the consummation of the
transactions contemplated by the Merger and the Merger Documents, (c) the
execution, delivery, performance or enforcement of, or the consummation of
the transactions contemplated by this Agreement and the other Transaction
Documents (other than the Merger Documents) and any other instrument,
document or agreement executed pursuant hereto by any of the Indemnitees
except and solely to the extent, in the case of this clause (c) only, any
such Indemnified Liabilities are caused by the particular Indemnitee's gross
negligence or willful misconduct, (d) such Purchaser's status as a lender to
the Company or a Latin American Entity or any Person's status as an Agent, or
(e) the breach or alleged breach of any representation, warrant, covenant or
agreement contained in any Transaction Document. To the extent that the
foregoing undertaking by the Company or any Latin American Entity that is
providing Collateral or security hereunder, may be unenforceable for any
reason, such entity shall make the maximum contribution to the payment and
satisfaction of each of the Indemnified Liabilities which is permissible
under applicable law. In addition thereto, Holdings shall indemnify the
Indemnitees for all Indemnified Liabilities incurred by the Indemnitees (a)
as a result of, or arising out of, or relating to the breach or alleged
breach of the last sentence of Section 4.10 or (b) in their or their
Affiliates' capacity (and only in their capacity) as a holder of Warrants,
Underlying Warrant Stock or Ultimate Warrant Stock and that are the result
of, or arising out of, or relating to the breach or alleged breach of any
covenant or agreement of Holdings contained herein or any representation,
warranty, covenant or agreement of Holdings contained in the Warrants.
8.19 PAYMENT SET ASIDE. To the extent that any of Holdings or
the Company or any other obligor makes a payment or payments to the
Purchasers hereunder or under the Notes or other Transaction Documents or the
Purchasers enforce their rights or exercise their right of setoff hereunder
or thereunder, and such payment or payments or the proceeds of such
enforcement or setoff or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside, recovered from,
disgorged by or are required to be refunded, repaid or otherwise restored to
any of Holdings or the Company or any other Investee, a trustee, receiver or
any other Person under any law (including any bankruptcy law, state or
federal law, common law or equitable cause of action), then to the extent of
any such restoration the obligation or part thereof originally intended to be
satisfied shall be revived and continued in full force and effect as if such
payment had not been made or such enforcement or setoff had not occurred.
8.20 JURISDICTION AND VENUE. Each of Holdings and the Company
(i) submits to the jurisdiction of any state or Federal court sitting in the
Southern District of New York, New York and appellate courts therefrom in any
legal suit, action or proceeding arising out of or relating to this
Agreement, the Notes or the Warrants, (ii) agrees that all claims in respect
of the action or proceeding may be heard or determined in any such court and
(iii) agrees not to bring any action or proceeding arising out of or relating
to this Agreement, the Notes or the Warrants
-47-
<PAGE>
in any other court. Each of the parties waives any defense of inconvenient
forum to the maintenance of any action or proceeding so brought and waives
any bond, surety or other security that might be required of any other party
with respect thereto. Any party may make service on any other party by
sending or delivering a copy of the process to the party to be served at the
address and in the manner provided for the giving of notices in Section 8.14.
Each party agrees that a final judgment in any action or proceeding so
brought shall be conclusive and may be enforced by suit on the judgment or in
any other manner provided by law. Nothing herein shall affect the right to
serve process in any other manner permitted by law or shall limit the right
of the Purchasers or holders of Underlying Warrant Stock or Ultimate Warrant
Stock to bring proceedings against any of Holdings or the Company in the
courts of any other jurisdiction. To the extent provided by law, should any
of Holdings or the Company, after being so served, fail to appear or answer
to any summons, complaint, process or papers so served within the number of
days prescribed by law after the mailing thereof, such entity shall be deemed
in default and an order and/or judgment may be entered by the court against
such entity as demanded or prayed for in such summons, complaint, process or
papers. The exclusive choice of forum for each of Holdings and the Company
set forth in this Section 8.20 shall not be deemed to preclude the enorcement
by the Purchasers or any holder of Notes or Underlying Warrant Stock or
Ultimate Warrant Stock of any judgment obtained in any other forum or the
taking by the Purchasers or any holder of Notes or Underlying Warrant Stock
or Ultimate Warrant Stock of any action to enforce the same in any other
appropriate jurisdiction, and each of Holdings and the Company hereby waives
the right to collaterally attack any such judgment or action.
8.21 WAIVER OF RIGHT TO JURY TRIAL; WAIVER OF IMMUNITY. THE
COMPANY, HOLDINGS AND EACH HOLDER OF NOTES AND WARRANTS HEREBY WAIVES, TO THE
EXTENT PERMITTED BY APPLICABLE LAW, TRIAL BY JURY IN ANY LITIGATION IN ANY
COURT WITH RESPECT TO, IN CONNECTION WITH, OR ARISING OUT OF THIS AGREEMENT,
THE NOTES, THE WARRANTS OR OTHER TRANSACTION DOCUMENTS OR THE VALIDITY,
PROTECTION, INTERPRETATION, COLLECTION OR ENFORCEMENT THEREOF. EACH OF
HOLDINGS AND THE COMPANY IRREVOCABLY WAIVES ANY IMMUNITY FROM THE
JURISDICTION OF ANY COURT OF FROM ANY LEGAL PROCESS THAT IT MAY NOW HAVE OR
MAY HEREAFTER ACQUIRE. HOLDINGS AND THE COMPANY AGREES THAT THIS SECTION
8.21 IS A SPECIFIC AND MATERIAL ASPECT OF THIS AGREEMENT AND ACKNOWLEDGES
THAT THE PURCHASERS WOULD NOT PURCHASE THE NOTES OR WARRANTS HEREUNDER IF
THIS SECTION 8.21 WERE NOT PART OF THIS AGREEMENT.
8.22 CERTAIN WAIVERS. The Company hereby waives diligence,
presentment, protest and demand and notice of protest and demand, dishonor
and nonpayment of the Notes,
-48-
<PAGE>
and expressly agrees that the Notes, or any payment thereunder, may be
extended from time to time and that the holder thereof may accept security
for the Notes or release security for the Notes, all without in any way
affecting the liability of the Company thereunder.
8.23 FURTHER ASSURANCES. The Company shall execute and deliver
(or cause to be executed and delivered) such further instruments of
conveyance, transfer and perfection and take such additional actions as any
Purchaser may reasonably request to further the purposes of the Transaction
Documents.
8.24 CONFIDENTIALITY. Each Purchaser and the Collateral Agent
agree to maintain the confidentiality of all non-public, proprietary
information concerning Holdings, Company and their respective Subsidiaries
and Investees that such Purchaser or the Collateral Agent should know is
confidential at the time of such submission to such Purchaser ("CONFIDENTIAL
INFORMATION"); provided that "Confidential Information" shall not include any
information which (i) is or becomes generally available to the public, (ii)
was available to a Purchaser or an Affiliate thereof, on a non-confidential
basis prior to its disclosure by the Company or its Subsidiaries to the
Purchasers, (iii) becomes available to a Purchaser or an Affiliate thereof on
a non-confidential basis from a Person other than the Company or its
Subsidiaries or (iv) which a Purchaser or an Affiliate thereof discloses
during the course of any legal, administrative or regulatory request or
proceeding or in furtherance of pursuing its rights and remedies under the
Transaction Documents. In addition thereto, such Purchaser may disclose
Confidential Information to their advisors, employees, agents and its and
their Affiliates on a need-to-know basis and to prospective Purchasers whom
are instructed to keep such information confidential.
Section 9. THE AGENT
9.1 APPOINTMENT AND AUTHORIZATION. Each Purchaser hereby
irrevocably appoints, designates and authorizes BTFIC (the "COLLATERAL
AGENT") to take such action on its behalf under the provisions of this
Agreement and each other Security Document and to exercise such powers and
perform such duties as are expressly delegated to it by the terms of this
Agreement or any other Security Document, together with such powers as are
reasonably incidental thereto. Notwithstanding any provision to the contrary
contained elsewhere in this Agreement or in any other Security Document, the
Collateral Agent shall not have any duties or responsibilities, except those
expressly set forth herein, nor shall the Collateral Agent have or be deemed
to have any fiduciary relationship with any Purchaser, and no implied
covenants, functions, responsibilities, duties, obligations or liabilities
shall be read into this Agreement or any other Security Document or otherwise
exist against the Collateral Agent.
-49-
<PAGE>
9.2 DELEGATION OF DUTIES. The Collateral Agent may execute any of
its duties under this Agreement or any other Security Document by or through
designees, agents, employees or attorneys-in-fact ("AGENT-RELATED PERSONS")
and shall be entitled to advice of counsel concerning all matters pertaining
to such duties. The Collateral Agent shall not be responsible to the
Purchasers for the negligence or misconduct of any agent or attorney-in-fact
that it selects with reasonable care.
9.3 LIABILITY OF COLLATERAL AGENT. None of the Agent-Related
Persons shall (i) be liable to any of the Purchasers for any action taken or
omitted to be taken by any of them under or in connection with this Agreement
or any other Security Document (except for its own bad faith), or (ii) be
responsible in any manner to any of the Purchasers for any recital,
statement, representation or warranty made by Holdings, the Company or any
Subsidiary or Affiliate or Investee of Holdings or the Company, or any
officer thereof, contained in this Agreement or in any other Security
Document, or in any certificate, report, statement or other document referred
to or provided for in, or received by the Collateral Agent under or in
connection with, this Agreement or any other Security Document, or for the
value of any Collateral or the validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement or any other Security
Document, or for any failure of Holdings or the Company or any other party to
any Security Document to perform its obligations hereunder or thereunder. No
Agent-Related Person shall be under any obligation to any Purchaser to
ascertain or to inquire as to the observance or performance of any of the
agreements contained in, or conditions of, this Agreement or any other
Security Document, or to inspect the properties, books or records of
Holdings, the Company or any of Holdings' or the Company's Subsidiaries or
Affiliates or Investees.
9.4 RELIANCE BY COLLATERAL AGENT. The Collateral Agent shall be
entitled to rely, and shall be fully protected in relying, upon any writing,
resolution, notice, consent, certificate, affidavit, letter, telegram,
facsimile, or telephone message, statement or other document or conversation
believed by it to be genuine and to have been signed, sent or made by the
proper person or persons, and upon advice and statements of legal counsel
(including counsel to Holdings or the Company), independent accountants and
other experts selected by the Collateral Agent. The Collateral Agent shall
be fully justified in failing or refusing to take any action under this
Agreement or any other Security Document unless it shall first receive such
advice or concurrence of the Purchasers as it deems appropriate and, if it so
requests, it shall first be indemnified to its satisfaction by the Purchasers
against any and all liability and expense which may be incurred by it by
reason of taking or continuing to take any such action. The Collateral Agent
shall in all cases be fully protected in acting, or in refraining from
acting, under this Agreement or any other Security Document in accordance
with a request or consent of the Purchasers and such request and any action
taken or failure to act pursuant thereto shall be binding upon all of the
Purchasers.
-50-
<PAGE>
9.5 NO NOTICE OF EVENT OF DEFAULT. The Collateral Agent shall not
be deemed to have knowledge or notice of the occurrence of any Event of
Default, except with respect to defaults in the payment of principal,
interest and fees required to be paid to the Collateral Agent for the account
of the Purchasers, unless the Collateral Agent shall have received written
notice from a Purchaser or Holdings or the Company referring to this
Agreement, describing such Event of Default and stating that such notice is a
"notice of default". In the event that the Collateral Agent receives such a
notice, the Collateral Agent shall give notice thereof to the Purchasers.
The Collateral Agent shall take such action with respect to such Event of
Default as shall be requested by the Purchasers, provided, however, that
unless and until the Collateral Agent shall have received any such request,
the Collateral Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Event of Default as it
shall deem advisable or in the best interest of the Purchasers.
9.6 CREDIT DECISION. Each Purchaser expressly acknowledges that
none of the Agent-Related Persons has made any representation or warranty to
it and that no act by the Collateral Agent hereinafter taken, including any
review of the affairs of Holdings, the Company and its Subsidiaries and
Investees shall be deemed to constitute any representation or warranty by the
Collateral Agent to any Purchaser. Each Purchaser represents to the
Collateral Agent that it has, independently and without reliance upon the
Collateral Agent and based on such documents and information as it has deemed
appropriate, made its own appraisal of and investigation into the business,
prospects, operations, property, financial and other condition and
creditworthiness of Holdings, the Company and its Subsidiaries and Investees,
and all applicable bank regulatory laws relating to the transactions
contemplated thereby, and made its own decision to enter into this Agreement
and extend credit to the Company hereunder. Each Purchaser also represents
that it will, independently and without reliance upon the Collateral Agent
and based on such documents and information as it shall deem appropriate at
the time, continue to make its own credit analysis, appraisals and decisions
in taking or not taking action under this Agreement and the other Security
Documents, and to make such investigations as it deems necessary to inform
itself as to the business, prospects, operations, property, financial and
other condition and creditworthiness of the Company. Except for notices,
reports and other documents expressly herein required to be furnished to the
Purchasers by the Collateral Agent, the Collateral Agent shall not have any
duty or responsibility to provide any Purchaser with any credit or other
information concerning the business, prospects, operations, property,
financial and other condition or creditworthiness of the Company which may
come into the possession of the Collateral Agent.
9.7 INDEMNIFICATION. Whether or not the transactions contemplated
hereby shall be consummated, upon demand therefor the Purchasers shall
indemnify the Collateral
-51-
<PAGE>
Agent (to the extent not reimbursed by or on behalf of Holdings or the
Company and without limiting the obligation of Holdings or the Company to do
so), ratably from and against any and all Indemnified Liabilities which may
at any time (including at any time following the repayment of the Obligations
and the termination or resignation of the Collateral Agent) be imposed on,
incurred by or asserted against the Collateral Agent in any way relating to
or arising out of this Agreement or any Transaction Document or the
transactions contemplated hereby or thereby or any action taken or omitted by
the Collateral Agent under or in connection with any of the foregoing;
provided, however, that no Purchaser shall be liable for the payment to the
Collateral Agent of any portion of such Indemnified Liabilities resulting
solely from the Collateral Agent's bad faith. In addition, each Purchaser
shall reimburse the Collateral Agent upon demand for its ratable share of
fees, costs and expenses (including attorney costs and fees) incurred by the
Collateral Agent and described in Section 8.1 to the extent that the
Collateral Agent is not reimbursed for such expenses by or on behalf of the
Company or Holdings. Without limiting the generality of the foregoing, if
the Internal Revenue Service or any other governmental authority of the
United States or other jurisdiction asserts a claim that the Collateral Agent
did not properly withhold Tax from amounts paid to or for the account of any
Purchaser (because the appropriate form was not delivered, was not properly
executed, or because such Purchaser failed to notify the Collateral Agent of
a change in circumstances which rendered the exemption from, or reduction of,
withholding Tax ineffective, or for any other reason) such Purchaser shall
indemnify the Collateral Agent fully for all amounts paid, directly or
indirectly, by the Collateral Agen as tax or otherwise, including penalties
and interest, and including any Taxes imposed by any jurisdiction on the
amounts payable to the Collateral Agent under this Section 8.6, together with
all related costs and expenses (including attorney costs). The obligation of
the Purchasers in this Section 9.7 shall survive the payment of all
Obligations hereunder.
9.8 COLLATERAL AGENT IN INDIVIDUAL CAPACITY. BTFIC and its
Affiliates may make loans to, issue letters of credit for the account of,
accept deposits from, acquire equity interests in and generally engage in any
kind of banking, trust, financial advisory or other business with Holdings,
the Company and its Subsidiaries and Affiliates and Investees as though BTFIC
were not the Collateral Agent hereunder and without notice to or consent of
the Purchasers. With respect to the Obligations owing to BTFIC, BTFIC shall
have the same rights and powers under this Agreement as any other Purchaser
and may exercise the same as though it were not the Collateral Agent, and the
terms "Purchaser" and "Purchasers" shall include BTFIC in its individual
capacity.
9.9 SUCCESSOR COLLATERAL AGENT. The Collateral Agent may resign as
Collateral Agent upon thirty (30) days' prior written notice to the
Purchasers. If the Collateral Agent shall resign as Collateral Agent under
this Agreement, the Purchasers shall appoint from among the Purchasers a
successor Collateral Agent for the Purchasers. If no successor Collateral
Agent is
-52-
<PAGE>
appointed prior to the effective date of the resignation of the Collateral
Agent, the Collateral Agent may thereupon appoint a successor Collateral
Agent from among the Purchasers. Upon the acceptance of its appointment as
successor Collateral Agent hereunder, such successor Collateral Agent shall
succeed to all the rights, powers and duties of the retiring Collateral Agent
and the term "Collateral Agent" shall mean such successor Collateral Agent
and the retiring Collateral Agent's appointment, powers and duties as
Collateral Agent shall be terminated. After any retiring Collateral Agent's
resignation hereunder as Collateral Agent, the provisions of this Section 9.9
shall inure to its benefit as to any actions taken or omitted to be taken by
it while it was Collateral Agent under this Agreement. If no successor
Collateral Agent has accepted appointment as Collateral Agent by the date
which is thirty (30) days following a retiring Collateral Agent's notice of
resignation (or, if later, ten (10) days after the date upon which the
Collateral Agent designates a successor Collateral Agent), the retiring
Collateral Agent's resignation shall nevertheless thereupon become effective
and the Purchasers shall perform all of the duties of the Collateral Agent
hereunder until such time, if any, as the Purchasers appoint a successor
Collateral Agent as provided for above. Until such time, if any, as the
Purchasers shall appoint a successor Collateral Agent, all financial
statements, certificates, reports and other similar items required to be
delivered by Holdings or the Company to Collateral Agent shall instead be
delivered to all Purchasers.
9.10 COLLATERAL MATTERS. The Collateral Agent is hereby designated
by each of the Purchasers to serve as the agent and representative of the
Purchasers with respect to all matters of or relating to the Collateral and
the Security Documents, including with respect to the taking of any action,
the execution of any agreement, document or instrument, the creation,
establishment, perfection, maintenance, enforcement, disposition of any
Collateral and Liens granted thereon, and the distribution of any proceeds
received on the Purchasers' behalf, in each case, as determined by the
Collateral Agent in its sole discretion in accordance with the terms of the
Agreement and the Security Documents. Except as expressly set forth herein
or therein, the Purchasers shall exercise all of their rights with respect to
the Collateral and the Security Documents through the Collateral Agent as
provided in this Section 9.
* * * *
-53-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
on the date first written above.
INTERNATIONAL WIRELESS
COMMUNICATIONS HOLDINGS, INC.
By
Its
RADIO MOVIL DIGITAL AMERICAS, INC.
By
Its
BT FOREIGN INVESTMENT CORPORATION
By
Its
<PAGE>
STATE OF CALIFORNIA )
COUNTY )
I, the undersigned authority, a Notary public in and for said County and
State, hereby certify that _______________________, whose name as of
INTERNATIONAL WIRELESS COMMUNICATIONS HOLDINGS, INC. a Delaware corporation,
is signed to the foregoing instrument, and who is known to me, acknowledge
before me on this day that, being informed of the contents of the instrument,
he/she, as such officer and with full authority, executed the same
voluntarily for and as the act of said corporation.
Given under my hand and official seal this _____ day of January, 1998
Notary Public
Commission Expires:
-----------------------
<PAGE>
STATE OF CALIFORNIA )
COUNTY )
I, the undersigned authority, a Notary public in and for said County and
State, hereby certify that _______________________, whose name as of RADIO
MOVIL DIGITAL AMERICAS, INC. a Delaware corporation, is signed to the
foregoing instrument, and who is known to me, acknowledge before me on this
day that, being informed of the contents of the instrument, he/she, as such
officer and with full authority, executed the same voluntarily for and as the
act of said corporation.
Given under my hand and official seal this _____ day of January, 1998
Notary Public
Commission Expires:
-----------------------
STATE OF CALIFORNIA )
COUNTY )
I, the undersigned authority, a Notary public in and for said County and
State, hereby certify that _______________________, whose name as of BT
FOREIGN INVESTMENT CORPORATION, a Delaware corporation, is signed to the
foregoing instrument, and who is known to me, acknowledge before me on this
day that, being informed of the contents of the instrument, he/she, as such
officer and with full authority, executed the same voluntarily for and as the
act of said corporation.
Given under my hand and official seal this _____ day of January, 1998
Notary Public
Commission Expires:
-----------------------
<PAGE>
Exhibit 10.30B
The security represented by this certificate was originally
issued on January 23, 1998, and has not been registered under
the Securities Act of 1933, as amended. The transfer of such
security is subject to the conditions specified in the Amended
and Restated Senior Secured Note and Warrant Purchase Agreement,
dated as of January 23, 1998 (as amended and modified from
time to time), between the issuer hereof (the "COMPANY"), Radio
Movil Digital Americas, Inc., the initial holder hereof and
certain other investors from time to time a party thereto, and
the Company reserves the right to refuse the transfer of such
security until such conditions have been fulfilled with respect
to such transfer. Upon written request, a copy of such
agreement shall be furnished by the Company to the holder hereof
without charge.
INTERNATIONAL WIRELESS COMMUNICATIONS HOLDINGS, INC.
STOCK PURCHASE WARRANT
Date of Issuance: January 23, 1998 Certificate No. W-RMD1
FOR VALUE RECEIVED, International Wireless Communications Holdings,
Inc., a Delaware corporation (the "COMPANY"), hereby grants to BT Foreign
Investment Corporation, a Delaware corporation (the "PURCHASER"), or its
assigns (the Purchaser and/or any Person or Persons to whom the Purchaser or
an assignee has assigned this Warrant pursuant to Section 8 hereof is
referred to as the "HOLDER") the right to purchase from the Company at any
time during the Exercise Period (as defined below) the number of shares of
each class of Warrant Stock that represents the Cumulative Warrant Percentage
of such Class of Warrant Stock Deemed Outstanding as of close of business on
the Date of Issuance at a price per share of $0.01 (the "EXERCISE PRICE").
This Warrant is one of several warrants (collectively, the "WARRANTS") issued
pursuant to the terms of the Amended and Restated Senior Secured Note and
Warrant Purchase Agreement, dated as of January 23, 1998 (the "PURCHASE
AGREEMENT"), among the Company, Radio Movil Digital Americas, Inc. and
certain investors from time to time a party thereto. Certain capitalized
terms used herein are defined in Section 5 hereof. Other capitalized terms
used in this Warrant but not defined herein shall have the meanings set forth
in the Purchase Agreement.
The amount and kind of securities obtainable pursuant to the rights
granted hereunder and the purchase price for such securities are subject to
adjustment pursuant to the provisions contained in this Warrant.
<PAGE>
This Warrant is subject to the following provisions:
Section 1. EXERCISE OF WARRANT.
1A. EXERCISE PERIOD. The Holder may exercise, in whole or in part,
the purchase rights represented by this Warrant at any time and from time to
time after the Date of Issuance (the "EARLIEST EXERCISE DATE") to and
including the later of (i) the tenth anniversary of the Earliest Exercise
Date and (ii) the date on which all principal, interest, premiums (if any)
and other Obligations due in respect of the Notes has been paid in full (the
"EXERCISE PERIOD"). The Company shall give the Holder written notice of the
expiration of the Exercise Period at least 10 days but not more than 30 days
prior to the end of the Exercise Period.
1B. EXERCISE PROCEDURE.
(i) This Warrant shall be deemed to have been exercised when the
Company has received all of the following items (the "EXERCISE TIME"):
(a) a completed Exercise Agreement, as described in Section 1C
below, executed by the Person exercising all or part of the purchase rights
represented by this Warrant;
(b) this Warrant;
(c) if this Warrant is not registered in the name of the Purchaser,
an Assignment or Assignments in the form set forth in EXHIBIT II hereto
evidencing the assignment of this Warrant to the Holder, in which case the
Holder shall have complied with the provisions set forth in Section 8
hereof; and
(d) either (1) a check payable to the Company in an amount equal to
the product of the Exercise Price multiplied by the number of shares of
Warrant Stock being purchased upon such exercise (the "AGGREGATE EXERCISE
PRICE") or (2) a written notice to the Company that the Holder is exercising
the Warrant (or a portion thereof) by authorizing the Company to withhold
from issuance a number of shares of Warrant Stock issuable upon such
exercise of the Warrant which when multiplied by the Market Price of the
Warrant Stock is equal to the Aggregate Exercise Price (and such withheld
shares shall no longer be issuable under this Warrant).
(ii) Certificates for shares of Warrant Stock purchased upon
exercise of this Warrant shall be delivered by the Company to the Holder
within ten business days after the date of the Exercise Time. Unless this
Warrant has expired or all of the purchase rights represented hereby have
been exercised, the Company shall prepare a new Warrant, substantially
identical hereto, representing the rights formerly represented by this
Warrant which have not expired or been exercised and shall, within such
ten-day period, deliver such new Warrant to the Person designated for
delivery in the Exercise Agreement.
2
<PAGE>
(iii) The Warrant Stock issuable upon the exercise of this Warrant
shall be deemed to have been issued to the Holder at the Exercise Time, and
the Holder shall be deemed for all purposes to have become the record holder
of such Warrant Stock at the Exercise Time.
(iv) The issuance of certificates for shares of Warrant Stock upon
exercise of this Warrant shall be made without charge to the Holder for any
issuance tax in respect thereof or other cost incurred by the Company in
connection with such exercise and the related issuance of shares of Warrant
Stock. Each share of Warrant Stock issuable upon exercise of this Warrant
shall, upon payment of the Exercise Price therefor, be fully paid and
nonassessable and free from all taxes and Liens (except for Liens created
pursuant to the Investor Rights Agreement).
(v) The Company shall not close its books against the transfer of
this Warrant or of any share of Warrant Stock issued or issuable upon the
exercise of this Warrant in any manner which interferes with the timely
exercise of this Warrant. The Company shall from time to time take all such
action as may be necessary to assure that the par value per share of the
unissued Warrant Stock acquirable upon exercise of this Warrant is at all
times equal to or less than the Exercise Price then in effect.
(vi) The Company shall assist and cooperate with any Holder
required to make any governmental filings or obtain any governmental
approvals prior to or in connection with any exercise of this Warrant
(including, without limitation, making any filings required to be made by the
Company).
(vii) Notwithstanding any other provision hereof, if an exercise of
any portion of this Warrant is to be made in connection with a registered
public offering or the sale of the Company, the exercise of any portion of
this Warrant may, at the election of the holder hereof, be conditioned upon
the consummation of the public offering or the sale of the Company in which
case such exercise shall not be deemed to be effective until the consummation
of such transaction.
(viii) The Company shall at all times reserve and keep available out
of its authorized but unissued shares of Warrant Stock solely for the purpose
of issuance upon the exercise of the Warrants, such number of shares of
Warrant Stock issuable upon the exercise of all outstanding Warrants. The
Company shall take all such actions as may be necessary to assure that all
such shares of Warrant Stock may be so issued without violation of any
applicable law or governmental regulation or any requirements of any domestic
securities exchange upon which shares of Warrant Stock may be listed (except
for official notice of issuance which shall be immediately delivered by the
Company upon each such issuance). The Company shall not take any action
which would cause the number of authorized but unissued shares of Warrant
Stock to be less than the number of such shares required to be reserved
hereunder for issuance upon exercise of the Warrant.
(ix) If the shares of Warrant Stock issuable by reason of exercise
of this Warrant are convertible into or exchangeable for any other stock or
securities of the Company, the Company shall, at the exercising holder's
option and upon surrender of this Warrant by such
3
<PAGE>
holder as provided above together with any notice, statement or payment
required to effect such conversion or exchange of Warrant Stock, deliver to
such holder (or as otherwise specified by such holder) a certificate or
certificates representing the stock or securities into which the shares of
Warrant Stock issuable by reason of such conversion are convertible or
exchangeable, registered in such name or names and in such denomination or
denominations as such holder has specified.
1C. EXERCISE AGREEMENT. Upon any exercise of this Warrant, the
Exercise Agreement shall be substantially in the form set forth in EXHIBIT I
hereto, except that if the shares of Warrant Stock are not to be issued in
the name of the Person in whose name this Warrant is registered, the Exercise
Agreement shall also state the name of the Person to whom the certificates
for the shares of Warrant Stock are to be issued, and if the number of shares
of Warrant Stock to be issued does not include all the shares of Warrant
Stock purchasable hereunder, it shall also state the name of the Person to
whom a new Warrant for the unexercised portion of the rights hereunder is to
be delivered. Such Exercise Agreement shall be dated the actual date of
execution thereof.
Section 2. ORGANIC CHANGE; NOTICES
2A. REORGANIZATION, RECLASSIFICATION, CONSOLIDATION, MERGER OR
SALE. Any recapitalization, reorganization, reclassification, consolidation,
merger, sale of all or substantially all of the Company's assets or other
transaction, which in each case is effected in such a way that the holders of
capital stock are entitled to receive (either directly or upon subsequent
liquidation) stock, securities or assets with respect to or in exchange for
capital stock is referred to herein as "ORGANIC CHANGE." Prior to the
consummation of any Organic Change, the Company shall make appropriate
provision (in form and substance satisfactory to the Majority Warrant
Holders) to insure that each of the Holders of the Warrants shall thereafter
have the right to acquire and receive, in lieu of or addition to (as the case
may be) the shares of Warrant Stock immediately theretofore acquirable and
receivable upon the exercise of such holder's Warrant, such shares of stock,
securities or assets as may be issued or payable with respect to or in
exchange for the number of shares of Underlying Warrant Stock and (if would
yield more to the Holders) Ultimate Warrant Stock immediately theretofore
acquirable and receivable upon exercise of such holder's Warrant had such
Organic Change not taken place. In any such case, the Company shall make
appropriate provision (in form and substance satisfactory to the Majority
Warrant Holders which shall not be unreasonably withheld) with respect to
such holders' rights and interests to insure that the provisions of this
Sections 2 and 3 hereof shall thereafter be applicable to the Warrants. The
Company shall not effect any such consolidation, merger or sale, unless prior
to the consummation thereof, the successor entity (if other than the Company)
resulting from consolidation or merger or the entity purchasing such assets
assumes by written instrument (in form and substance satisfactory to the
Majority Warrant Holders which shall not be unreasonably withheld), the
obligation to deliver to each such holder such shares of stock, securities or
assets as, in accordance with the foregoing provisions, such holder may be
entitled to acquire provided the aggregate purchase price shall remain the
same.
2B. NO AVOIDANCE. In the event the Company shall enter into any
transaction
4
<PAGE>
for the purpose of avoiding the provisions of this Section 2, the benefits
provided by such provision shall nevertheless apply and be preserved.
2C. NOTICES.
(i) The Company shall give written notice to the Holder at least
20 days prior to the date on which the Company closes its books or takes a
record (a) with respect to any dividend or distribution upon the any of its
capital stock, (b) with respect to any pro rata subscription offer to holders
of any of its capital stock or (c) for determining rights to vote with
respect to any Organic Change, dissolution or liquidation.
(ii) The Company shall also give written notice to the Holders at
least 20 days prior to the date on which any Organic Change, dissolution or
liquidation shall take place.
Section 3. SUBDIVISION OR COMBINATION OF WARRANT STOCK. If the
Company at any time subdivides (by any stock split, stock dividend,
recapitalization or otherwise) one or more classes of its outstanding shares
of Warrant Stock into a greater number of shares, the Exercise Price in
effect immediately prior to such subdivision shall be proportionately reduced
and the number of shares of Warrant Stock obtainable upon exercise of this
Warrant shall be proportionately increased. If the Company at any time
combines (by reverse stock split or otherwise) one or more classes of its
outstanding shares of Warrant Stock into a smaller number of shares, the
Exercise Price in effect immediately prior to such combination shall be
proportionately increased and the number of shares of Warrant Stock
obtainable upon exercise of this Warrant shall be proportionately decreased.
The Company shall promptly notify the Holder of any adjustment pursuant to
this Section 3.
Section 4. NO FRACTIONAL SHARE OR SCRIP. No fractional shares or
scrip representing fractional shares shall be issued upon the exercise of
this Warrant, but in lieu of such fractional shares the Company shall make a
cash payment therefor on the basis of the Market Price of one share of
Warrant Stock of the type in question.
Section 5. DEFINITIONS. The following terms have meanings set
forth below:
"BHC ACT" means the Bank Holding Company Act of 1956, as amended, or
any similar or successor federal statute, and the rules and regulations
promulgated thereunder, all as the same shall be in effect from time to time.
"CUMULATIVE WARRANT PERCENTAGE" means .5%, as adjusted pursuant to
Section 15 hereof.
"CONVERTIBLE SECURITIES" means any stock or securities (directly or
indirectly) convertible into or exchangeable for capital stock of Holdings.
"MAJORITY WARRANT HOLDERS" means (a) with respect to Section 2
hereof, holders (including BTFIC and its Affiliates, to the extent any such
entity is a holder) representing the
5
<PAGE>
right to purchase a majority of the shares of Warrant Stock obtainable upon
exercise of all Warrants then outstanding, and (b) in all other respects,
holders (including BTFIC and its Affiliates, to the extent any such entity
is a holder) representing in the aggregate more than 50% of all Underlying
Warrant Stock (assuming, for purposes of this determination, that any holder
of Underlying Warrant Stock that now holds Ultimate Warrant Stock continues
to hold Underlying Warrant Stock). For purposes hereof, neither the Company
nor any Affiliate thereof shall be considered a "holder" with respect to any
Underlying Common Stock held by them.
"MARKET PRICE" means as to any security (other than the Warrants)
the average of the closing prices of such security's sales on all domestic
securities exchanges on which such security may at the time be listed or
quoted, including for this purpose, The Nasdaq Stock Market, or, if there
have been no sales on any such exchange on any day, the average of the
highest bid and lowest asked prices on all such exchanges at the end of such
day, or, if on any day such security is not so listed or quoted, the average
of the highest bid and lowest asked prices on such day in the domestic
over-the-counter market as reported by the National Quotation Bureau,
Incorporated, or any similar successor organization, in each such case
averaged over a period of 21 days consisting of the day as of which "MARKET
PRICE" is being determined and the 20 consecutive business days prior to such
day; provided that if such security is listed on any domestic securities
exchange the term "business days" as used in this sentence means business
days on which such exchange is open for trading. If at any time such
security is not listed on any domestic securities exchange or quoted on The
Nasdaq Stock Market or the domestic over-the-counter market, the "MARKET
PRICE" shall be the fair value thereof as determined by the Company and the
Majority Warrant Holders; provided that if such parties are unable to reach
agreement within a reasonable period of time, such fair value shall be
determined by an appraiser jointly selected by the Company and the Majority
Warrant Holders. The determination of such appraiser shall be final and
binding on the Company and all Holders of the Warrants and the fees and
expenses of such appraiser shall be paid by the Company. Any determination
of Market Price of a security will be made without giving effect to any
discount for any lack of liquidity attributable to a lack of a public market
for such security, any block discount or discount attributable to the size of
any Person's holdings of such security, any minority interest or any voting
rights thereof or lack thereof and shall be determined on the basis of the
value of the Company as a going concern and using the assumption that
immediately prior to such determination all "in the money" Options and
Convertible Securities were exercised, converted or exchanged. The "MARKET
PRICE" of a Warrant means the excess of (i) the Market Price of the shares of
Warrant Stock obtainable upon exercise thereof over (ii) the Aggregate
Exercise Price of the Warrant Stock payable in connection with such exercise.
For purposes of Section 1B(i)(d)(2) above, the "MARKET PRICE" of any debt
security or any preferred stock of the Company or any of its Wholly-Owned
Subsidiaries shall be deemed to be equal to the aggregate outstanding
principal amount or liquidation value thereof (as applicable) plus all
accrued and unpaid interest or dividends thereon (as applicable) plus all
premium and other amounts owing with respect thereto.
"OPTIONS" means any rights or options to subscribe for or purchase
capital stock of Holdings or Convertible Securities.
6
<PAGE>
"PUBLIC OFFERING" means a public offering of shares of Warrant Stock
of the Company registered under the Securities Act.
"ULTIMATE WARRANT STOCK" means any shares of capital stock issued or
issuable upon exercise, conversion or exchange of any shares of Underlying
Warrant Stock that consist of Convertible Securities.
"UNDERLYING WARRANT STOCK" means, as to any class of Warrant Stock,
(i) such class of Warrant Stock issued or issuable upon exercise of the
Warrants and (ii) any capital stock issued or issuable with respect to the
securities referred to in clause (i) above by way of stock dividend or stock
split or in connection with an exchange, a combination of shares,
recapitalization, merger, consolidation or other reorganization. For
purposes of the Purchase Agreement and this Warrant, any Person who holds
Warrants shall be deemed to be the holder of the Underlying Warrant Stock
obtainable upon exercise of the Warrants in connection with the transfer
thereof or otherwise regardless of any restriction or limitation on the
exercise of the Warrants, such Underlying Warrant Stock shall be deemed to be
in existence, and such Person shall be entitled to exercise the rights of a
holder of Underlying Warrant Stock hereunder and thereunder. As to any
particular shares of Underlying Warrant Stock, such shares shall cease to be
Underlying Warrant Stock when they have been (a) effectively registered under
the Securities Act and disposed of in accordance with the registration
statement covering them, (b) distributed to the public through a broker,
dealer or market maker pursuant to Rule 144 under the Securities Act (or any
similar provision then in force) or (c) repurchased by the Company or any of
its Subsidiaries.
"WARRANT STOCK" means the Company's Class 1 Common Stock, par value
$.01 per share; provided that if there is a change such that the securities
issuable upon exercise of the Warrants are issued by an entity other than the
Company or there is a change in the type or class of securities so issuable,
then the term "Warrant Stock" shall include one share of the security
issuable upon exercise of the Warrants if such security is issuable in
shares, or shall mean the smallest unit in which such security is issuable if
such security is not issuable in shares.
"WARRANT STOCK DEEMED OUTSTANDING" means, at any given time, (a)
with respect to any class of Warrant Stock that does not consist of
Convertible Securities, the number of shares of such class of Underlying
Warrant Stock outstanding at such time, plus the number of shares of any
other capital stock that is substantially identical to such Underlying
Warrant Stock except with respect to voting rights and as otherwise required
by applicable law, which in the case of the Company's Class 1 Common Stock,
shall be the Company's Class 2 Common Stock ("PARALLEL UNDERLYING WARRANT
STOCK") that is outstanding at such time, plus the maximum number of shares
of Underlying Warrant Stock and Parallel Underlying Warrant Stock that would
be outstanding at such time upon the exercise, conversion or exchange of all
Options and Convertible Securities outstanding at such time with respect to
shares of such class of Underlying Warrant Stock and Parallel Underlying
Warrant Stock, regardless of whether the Options or Convertible Securities
are actually exercisable at such time and (b) with respect to any class of
Warrant Stock that consists of Convertible Securities, the number of shares
of such class of Ultimate Warrant Stock outstanding or deemed outstanding at
such time, plus the
7
<PAGE>
number of shares of any other capital stock that is substantially identical
to such Ultimate Warrant Stock except with respect to voting rights and as
otherwise required by applicable law ("PARALLEL ULTIMATE WARRANT STOCK") that
is outstanding at such time, plus the maximum number of shares of Ultimate
Warrant Stock and Parallel Ultimate Warrant Stock that would be outstanding
upon the exercise, conversion or exchange of all Options and Convertible
Securities in existence at such time with respect to shares of such class of
Ultimate Warrant Stock and Parallel Ultimate Warrant Stock, regardless of
whether the Options or Convertible Securities are actually exercisable at
such time.
Section 6. NO VOTING RIGHTS; LIMITATIONS OF LIABILITY; TAX MATTERS.
This Warrant shall not entitle the holder hereof to any voting rights or
other rights as a stockholder of the Company. No provision hereof, in the
absence of affirmative action by the Holder to purchase Warrant Stock, and no
enumeration herein of the rights or privileges of the Holder shall give rise
to any liability of such holder for the Exercise Price of Warrant Stock
acquirable by exercise hereof or as a stockholder of the Company. If the
Holder incurs any tax liability as a result of being treated as a stockholder
of the Company prior to exercise of this Warrant, the Company will
immediately make payment to the Holder equal to the amount of such tax
liability together with any other costs (including, without limitation,
interest and penalties) associated therewith.
Section 7. WARRANT TRANSFERABLE. Subject to the transfer
conditions referred to in the legend endorsed hereon and the Purchase
Agreement, this Warrant and all rights hereunder are transferable, in whole
or in part, without charge to the Holder, upon surrender of this Warrant with
a properly executed Assignment (in the form of EXHIBIT II hereto) at the
principal office of the Company.
Section 8. WARRANT EXCHANGEABLE FOR DIFFERENT DENOMINATIONS. This
Warrant is exchangeable, upon the surrender hereof by the Holder at the
principal office of the Company, for new Warrants of like tenor representing
in the aggregate the purchase rights hereunder, and each of such new Warrants
shall represent such portion of such rights as is designated by the Holder at
the time of such surrender. The date the Company initially issues this
Warrant shall be deemed to be the "DATE OF ISSUANCE" hereof regardless of the
number of times new certificates representing the unexpired and unexercised
rights formerly represented by this Warrant shall be issued. All Warrants
representing portions of the rights hereunder are referred to herein as the
"WARRANTS."
Section 9. REPLACEMENT. Upon receipt of evidence reasonably
satisfactory to the Company (an affidavit of the Holder shall be
satisfactory) of the ownership and the loss, theft, destruction or mutilation
of any certificate evidencing this Warrant, and in the case of any such loss,
theft or destruction, upon receipt of indemnity reasonably satisfactory to
the Company (provided that if the holder is a financial institution or other
institutional investor or an Affiliate thereof its own agreement shall be
satisfactory), or, in the case of any such mutilation upon surrender of such
certificate, the Company shall (at its expense) execute and deliver, in lieu
thereof, a new certificate of like kind representing the same rights
represented by such lost, stolen, destroyed or mutilated certificate and
dated the date of such lost, stolen, destroyed or mutilated certificate.
8
<PAGE>
Section 10. NOTICES. Except as otherwise expressly provided
herein, all notices referred to in this Warrant shall be in writing and shall
be delivered personally, sent by reputable overnight courier service (charges
prepaid) or sent by registered or certified mail, return receipt requested,
postage prepaid and shall be deemed to have been given when so delivered,
sent or deposited in the U.S. Mail (i) to the Company, at its principal
executive offices and (ii) to the Holder of this Warrant, at such holder's
address as it appears in the records of the Company (unless otherwise
indicated by any such holder).
Section 11. AMENDMENT AND WAIVER. Except as otherwise provided
herein, the provisions of the Warrants may be amended and the Company may
take any action herein prohibited, or omit to perform any act herein required
to be performed by it, only if the Company has obtained the written consent
of the Majority Warrant Holders; provided that no such action may change the
Exercise Price of this Warrant or the number of shares or class of stock
obtainable upon exercise of this Warrant without the written consent of the
Holder of this Warrant.
Section 12. GOVERNING LAW. THE CORPORATE LAWS OF THE STATE OF
DELAWARE SHALL GOVERN ALL ISSUES CONCERNING THE RELATIVE RIGHTS OF THE
COMPANY AND ITS STOCKHOLDERS. ALL OTHER QUESTIONS CONCERNING THE
CONSTRUCTION, VALIDITY, ENFORCEMENT AND INTERPRETATION OF THIS WARRANT SHALL
BE GOVERNED BY THE INTERNAL LAW OF THE STATE OF NEW YORK, WITHOUT GIVING
EFFECT TO ANY CHOICE OF LAW OR CONFLICT OF LAW PROVISION OR RULE (WHETHER OF
THE STATE OF NEW YORK OR ANY OTHER JURISDICTIONS) THAT WOULD CAUSE THE
APPLICATION OF THE LAWS OF ANY JURISDICTIONS OTHER THAN THE STATE OF NEW
YORK. IN FURTHERANCE OF THE FOREGOING, THE INTERNAL LAW OF THE STATE OF NEW
YORK SHALL CONTROL THE INTERPRETATION AND CONSTRUCTION OF THIS WARRANT EVEN
THOUGH UNDER THAT JURISDICTION'S CHOICE OF LAW OR CONFLICT OF LAW ANALYSIS,
THE SUBSTANTIVE LAW OF SOME OTHER JURISDICTION WOULD NORMALLY APPLY.
Section 13. BHC ACT LIMITATIONS. If any Holder is prevented by the
BHC Act from receiving any payment, dividend, distribution or other
consideration that the Company is required or permitted to make such Holder
under any provision of this Warrant, then, notwithstanding anything to the
contrary contained or implied herein, the Company shall (unless the
applicable provision of this Warrant provides an alternative to such payment,
dividend, distribution or other consideration at the Company's option and the
Company elects such alternative) structure the transaction described in such
Section so that such Holder receives substantially equivalent consideration
that is in a form not prohibited by the BHC Act (as determined in good faith
by the Board of Directors and such Holders).
Section 14. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. In
connection with the issuance of this Warrant, the Company hereby represents
and represents that the representations and warranties contained in Sections
6.1, 6.2, 6.3, 6.4 (as such representation and warranties relates to the
Purchase Agreement, as it pertains to Holdings, the Certificate of
Incorporation, the Warrants, and the fulfillment and compliance with
Holdings' obligations contained in the Purchase Agreement and the Warrants,
including the offering, sale and issuance of the Warrant and the issuance of
capital stock upon the direct or indirect exercise of the
9
<PAGE>
Warrants only), 6.9 and the first two sentences of Section 6.10.
Section 15. REGISTRATION RIGHTS; RELATED MATTERS. Within 45 days
after the Date of Issuance hereof, the Company shall cause the Investor
Rights Agreement to be amended in the form of Annex A attached hereto. If
the Company fails to so amend the Investor Rights Agreement within such
45-day period, the Cumulative Warrant Percentage shall be 50% higher than the
percentage it would otherwise be without giving effect to this paragraph and
shall increase by an additional 25% at the end of each 45-day period
thereafter, if at the end of such period, this Section 15 has not been fully
complied with.
* * * *
10
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed
and attested by its duly authorized officers under its corporate seal and to
be dated the Date of Issuance hereof.
INTERNATIONAL WIRELESS
COMMUNICATIONS HOLDINGS, INC.
By
Its
[CORPORATE SEAL]
Attest:
____________________________
Secretary
STATE OF CALIFORNIA )
COUNTY )
I, the undersigned authority, a Notary public in and for said County and
State, hereby certify that _______________________, whose name as of
INTERNATIONAL WIRELESS COMMUNICATIONS HOLDINGS, INC. a Delaware corporation,
is signed to the foregoing instrument, and who is known to me, acknowledge
before me on this day that, being informed of the contents of the instrument,
he/she, as such officer and with full authority, executed the same
voluntarily for and as the act of said corporation.
Given under my hand and official seal this _____ day of January, 1998
Notary Public
Commission Expires:______________________
<PAGE>
EXHIBIT I
EXERCISE AGREEMENT
To: Dated:
The undersigned, pursuant to the provisions set forth in the
attached Warrant (Certificate No. W-____), hereby agrees to subscribe for the
purchase of ______ shares of the Warrant Stock covered by such Warrant and
makes payment herewith in full therefor at the price per share provided by
such Warrant.
Signature ____________________
Address ______________________
E-1
<PAGE>
EXHIBIT II
ASSIGNMENT
FOR VALUE RECEIVED, _________________________________ hereby sells,
assigns and transfers all of the rights of the undersigned under the attached
Warrant (Certificate No. W-_____) with respect to the number of shares of the
Warrant Stock covered thereby set forth below, unto:
NAMES OF ASSIGNEE ADDRESS NO. OF SHARES
Dated: Signature _______________________
_______________________
Witness _______________________
E-2
<PAGE>
The security represented by this certificate was originally issued
on January 23, 1998, and has not been registered under the
Securities Act of 1933, as amended. The transfer of such security
is subject to the conditions specified in the Amended and Restated
Senior Secured Note and Warrant Purchase Agreement, dated as of
January 23, 1998 (as amended and modified from time to time),
between the issuer hereof (the "COMPANY"), Radio Movil Digital
Americas, Inc., the initial holder hereof and certain other
investors from time to time a party thereto, and the Company
reserves the right to refuse the transfer of such security until
such conditions have been fulfilled with respect to such transfer.
Upon written request, a copy of such agreement shall be furnished
by the Company to the holder hereof without charge.
INTERNATIONAL WIRELESS COMMUNICATIONS HOLDINGS, INC.
STOCK PURCHASE WARRANT
Date of Issuance: January 23, 1998 Certificate No. W-RMD2
FOR VALUE RECEIVED, International Wireless Communications Holdings,
Inc., a Delaware corporation (the "COMPANY"), hereby grants to BT Foreign
Investment Corporation, a Delaware corporation (the "PURCHASER"), or its
assigns (the Purchaser and/or any Person or Persons to whom the Purchaser or
an assignee has assigned this Warrant pursuant to Section 8 hereof is
referred to as the "HOLDER") the right to purchase from the Company at any
time during the Exercise Period (as defined below) the number of shares of
each class of Warrant Stock that represents the Cumulative Warrant Percentage
of such Class of Warrant Stock Deemed Outstanding as of the close of business
on the Date of Issuance at a price per share of $0.01 (the "EXERCISE PRICE").
This Warrant is one of several warrants (collectively, the "WARRANTS")
issued pursuant to the terms of the Amended and Restated Senior Secured Note
and Warrant Purchase Agreement, dated as of January 23, 1998 (the "PURCHASE
AGREEMENT"), among the Company, Radio Movil Digital Americas, Inc. and
certain investors from time to time a party thereto. Certain capitalized
terms used herein are defined in Section 5 hereof. Other capitalized terms
used in this Warrant but not defined herein shall have the meanings set forth
in the Purchase Agreement.
The amount and kind of securities obtainable pursuant to the rights
granted hereunder and the purchase price for such securities are subject to
adjustment pursuant to the provisions contained in this Warrant.
This Warrant is subject to the following provisions:
<PAGE>
Section 1. EXERCISE OF WARRANT.
1A. EXERCISE PERIOD. The Holder may exercise, in whole or in
part, the purchase rights represented by this Warrant at any time and from
time to time after the Date of Issuance (the "EARLIEST EXERCISE DATE") to and
including the later of (i) the tenth anniversary of the Earliest Exercise
Date and (ii) the date on which all principal, interest, premiums (if any)
and other Obligations due in respect of the Notes has been paid in full (the
"EXERCISE PERIOD"). The Company shall give the Holder written notice of the
expiration of the Exercise Period at least 10 days but not more than 30 days
prior to the end of the Exercise Period.
1B. EXERCISE PROCEDURE.
(i) This Warrant shall be deemed to have been exercised when the
Company has received all of the following items (the "EXERCISE TIME"):
(a) a completed Exercise Agreement, as described in Section 1C
below, executed by the Person exercising all or part of the purchase rights
represented by this Warrant;
(b) this Warrant;
(c) if this Warrant is not registered in the name of the
Purchaser, an Assignment or Assignments in the form set forth in EXHIBIT II
hereto evidencing the assignment of this Warrant to the Holder, in which case
the Holder shall have complied with the provisions set forth in Section 8
hereof; and
(d) either (1) a check payable to the Company in an amount equal
to the product of the Exercise Price multiplied by the number of shares of
Warrant Stock being purchased upon such exercise (the "AGGREGATE EXERCISE
PRICE") or (2) a written notice to the Company that the Holder is exercising
the Warrant (or a portion thereof) by authorizing the Company to withhold
from issuance a number of shares of Warrant Stock issuable upon such exercise
of the Warrant which when multiplied by the Market Price of the Warrant Stock
is equal to the Aggregate Exercise Price (and such withheld shares shall no
longer be issuable under this Warrant).
(ii) Certificates for shares of Warrant Stock purchased upon
exercise of this Warrant shall be delivered by the Company to the Holder
within ten business days after the date of the Exercise Time. Unless this
Warrant has expired or all of the purchase rights represented hereby have
been exercised, the Company shall prepare a new Warrant, substantially
identical hereto, representing the rights formerly represented by this
Warrant which have not expired or been exercised and shall, within such
ten-day period, deliver such new Warrant to the Person designated for
delivery in the Exercise Agreement.
(iii) The Warrant Stock issuable upon the exercise of this
Warrant shall be
2
<PAGE>
deemed to have been issued to the Holder at the Exercise Time, and the Holder
shall be deemed for all purposes to have become the record holder of such
Warrant Stock at the Exercise Time.
(iv) The issuance of certificates for shares of Warrant Stock upon
exercise of this Warrant shall be made without charge to the Holder for any
issuance tax in respect thereof or other cost incurred by the Company in
connection with such exercise and the related issuance of shares of Warrant
Stock. Each share of Warrant Stock issuable upon exercise of this Warrant
shall, upon payment of the Exercise Price therefor, be fully paid and
nonassessable and free from all taxes and Liens (except for Liens created
pursuant to the Investor Rights Agreement).
(v) The Company shall not close its books against the transfer of
this Warrant or of any share of Warrant Stock issued or issuable upon the
exercise of this Warrant in any manner which interferes with the timely
exercise of this Warrant. The Company shall from time to time take all such
action as may be necessary to assure that the par value per share of the
unissued Warrant Stock acquirable upon exercise of this Warrant is at all
times equal to or less than the Exercise Price then in effect.
(vi) The Company shall assist and cooperate with any Holder
required to make any governmental filings or obtain any governmental
approvals prior to or in connection with any exercise of this Warrant
(including, without limitation, making any filings required to be made by the
Company).
(vii) Notwithstanding any other provision hereof, if an exercise
of any portion of this Warrant is to be made in connection with a registered
public offering or the sale of the Company, the exercise of any portion of
this Warrant may, at the election of the holder hereof, be conditioned upon
the consummation of the public offering or the sale of the Company in which
case such exercise shall not be deemed to be effective until the consummation
of such transaction.
(viii) The Company shall at all times reserve and keep available
out of its authorized but unissued shares of Warrant Stock solely for the
purpose of issuance upon the exercise of the Warrants, such number of shares
of Warrant Stock issuable upon the exercise of all outstanding Warrants. The
Company shall take all such actions as may be necessary to assure that all
such shares of Warrant Stock may be so issued without violation of any
applicable law or governmental regulation or any requirements of any domestic
securities exchange upon which shares of Warrant Stock may be listed (except
for official notice of issuance which shall be immediately delivered by the
Company upon each such issuance). The Company shall not take any action
which would cause the number of authorized but unissued shares of Warrant
Stock to be less than the number of such shares required to be reserved
hereunder for issuance upon exercise of the Warrant.
(ix) If the shares of Warrant Stock issuable by reason of exercise
of this Warrant are convertible into or exchangeable for any other stock or
securities of the Company, the Company shall, at the exercising holder's
option and upon surrender of this Warrant by such holder as provided above
together with any notice, statement or payment required to effect such
3
<PAGE>
conversion or exchange of Warrant Stock, deliver to such holder (or as
otherwise specified by such holder) a certificate or certificates
representing the stock or securities into which the shares of Warrant Stock
issuable by reason of such conversion are convertible or exchangeable,
registered in such name or names and in such denomination or denominations as
such holder has specified.
1C. EXERCISE AGREEMENT. Upon any exercise of this Warrant, the
Exercise Agreement shall be substantially in the form set forth in EXHIBIT I
hereto, except that if the shares of Warrant Stock are not to be issued in
the name of the Person in whose name this Warrant is registered, the Exercise
Agreement shall also state the name of the Person to whom the certificates
for the shares of Warrant Stock are to be issued, and if the number of shares
of Warrant Stock to be issued does not include all the shares of Warrant
Stock purchasable hereunder, it shall also state the name of the Person to
whom a new Warrant for the unexercised portion of the rights hereunder is to
be delivered. Such Exercise Agreement shall be dated the actual date of
execution thereof.
Section 2. ORGANIC CHANGE; NOTICES
2A. REORGANIZATION, RECLASSIFICATION, CONSOLIDATION, MERGER OR
SALE. Any recapitalization, reorganization, reclassification, consolidation,
merger, sale of all or substantially all of the Company's assets or other
transaction, which in each case is effected in such a way that the holders of
capital stock are entitled to receive (either directly or upon subsequent
liquidation) stock, securities or assets with respect to or in exchange for
capital stock is referred to herein as "ORGANIC CHANGE." Prior to the
consummation of any Organic Change, the Company shall make appropriate
provision (in form and substance satisfactory to the Majority Warrant
Holders) to insure that each of the Holders of the Warrants shall thereafter
have the right to acquire and receive, in lieu of or addition to (as the case
may be) the shares of Warrant Stock immediately theretofore acquirable and
receivable upon the exercise of such holder's Warrant, such shares of stock,
securities or assets as may be issued or payable with respect to or in
exchange for the number of shares of Underlying Warrant Stock and (if would
yield more to the Holders) Ultimate Warrant Stock immediately theretofore
acquirable and receivable upon exercise of such holder's Warrant had such
Organic Change not taken place. In any such case, the Company shall make
appropriate provision (in form and substance satisfactory to the Majority
Warrant Holders which shall not be unreasonably withheld) with respect to
such holders' rights and interests to insure that the provisions of this
Sections 2 and 3 hereof shall thereafter be applicable to the Warrants. The
Company shall not effect any such consolidation, merger or sale, unless prior
to the consummation thereof, the successor entity (if other than the Company)
resulting from consolidation or merger or the entity purchasing such assets
assumes by written instrument (in form and substance satisfactory to the
Majority Warrant Holders which shall not be unreasonably withheld), the
obligation to deliver to each such holder such shares of stock, securities or
assets as, in accordance with the foregoing provisions, such holder may be
entitled to acquire provided the aggregate purchase price shall remain the
same.
2B. NO AVOIDANCE. In the event the Company shall enter into any
transaction for the purpose of avoiding the provisions of this Section 2, the
benefits provided by such
4
<PAGE>
provision shall nevertheless apply and be preserved.
2C. NOTICES.
(i) The Company shall give written notice to the Holder at least
20 days prior to the date on which the Company closes its books or takes a
record (a) with respect to any dividend or distribution upon the any of its
capital stock, (b) with respect to any pro rata subscription offer to holders
of any of its capital stock or (c) for determining rights to vote with
respect to any Organic Change, dissolution or liquidation.
(ii) The Company shall also give written notice to the Holders at
least 20 days prior to the date on which any Organic Change, dissolution or
liquidation shall take place.
Section 3. SUBDIVISION OR COMBINATION OF WARRANT STOCK. If the
Company at any time subdivides (by any stock split, stock dividend,
recapitalization or otherwise) one or more classes of its outstanding shares
of Warrant Stock into a greater number of shares, the Exercise Price in
effect immediately prior to such subdivision shall be proportionately reduced
and the number of shares of Warrant Stock obtainable upon exercise of this
Warrant shall be proportionately increased. If the Company at any time
combines (by reverse stock split or otherwise) one or more classes of its
outstanding shares of Warrant Stock into a smaller number of shares, the
Exercise Price in effect immediately prior to such combination shall be
proportionately increased and the number of shares of Warrant Stock
obtainable upon exercise of this Warrant shall be proportionately decreased.
The Company shall promptly notify the Holder of any adjustment pursuant to
this Section 3.
Section 4. NO FRACTIONAL SHARE OR SCRIP. No fractional shares or
scrip representing fractional shares shall be issued upon the exercise of
this Warrant, but in lieu of such fractional shares the Company shall make a
cash payment therefor on the basis of the Market Price of one share of
Warrant Stock of the type in question.
Section 5. DEFINITIONS. The following terms have meanings set
forth below:
"BHC ACT" means the Bank Holding Company Act of 1956, as amended,
or any similar or successor federal statute, and the rules and regulations
promulgated thereunder, all as the same shall be in effect from time to time.
"CUMULATIVE WARRANT PERCENTAGE" means the lesser of (i) 1% and (ii)
the sum of the Daily Warrant Percentages for each day from and including the
Date of Issuance through and including the Exercise Time, as adjusted
pursuant to Section 15 hereof.
"DAILY WARRANT PERCENTAGE" means, for any day, the amount,
expressed as a percentage, equal to the product of 1/180 multiplied by the
aggregate unpaid principal amount of the Notes divided by 25 Million.
"CONVERTIBLE SECURITIES" means any stock or securities (directly or
indirectly)
5
<PAGE>
convertible into or exchangeable for capital stock of Holdings.
"MAJORITY WARRANT HOLDERS" means (a) with respect to Section 2
hereof, holders (including BTFIC and its Affiliates, to the extent any such
entity is a holder) representing the right to purchase a majority of the
shares of Warrant Stock obtainable upon exercise of all Warrants then
outstanding, and (b) in all other respects, holders (including BTFIC and its
Affiliates, to the extent any such entity is a holder) representing in the
aggregate more than 50% of all Underlying Warrant Stock (assuming, for
purposes of this determination, that any holder of Underlying Warrant Stock
that now holds Ultimate Warrant Stock continues to hold Underlying Warrant
Stock). For purposes hereof, neither the Company nor any Affiliate thereof
shall be considered a "holder" with respect to any Underlying Common Stock
held by them.
"MARKET PRICE" means as to any security (other than the Warrants) the average
of the closing prices of such security's sales on all domestic securities
exchanges on which such security may at the time be listed or quoted,
including for this purpose, The Nasdaq Stock Market, or, if there have been
no sales on any such exchange on any day, the average of the highest bid and
lowest asked prices on all such exchanges at the end of such day, or, if on
any day such security is not so listed or quoted, the average of the highest
bid and lowest asked prices on such day in the domestic over-the-counter
market as reported by the National Quotation Bureau, Incorporated, or any
similar successor organization, in each such case averaged over a period of
21 days consisting of the day as of which "MARKET PRICE" is being determined
and the 20 consecutive business days prior to such day; provided that if such
security is listed on any domestic securities exchange the term "business
days" as used in this sentence means business days on which such exchange is
open for trading. If at any time such security is not listed on any domestic
securities exchange or quoted on The Nasdaq Stock Market or the domestic
over-the-counter market, the "MARKET PRICE" shall be the fair value thereof
as determined by the Company and the Majority Warrant Holders; provided that
if such parties are unable to reach agreement within a reasonable period of
time, such fair value shall be determined by an appraiser jointly selected by
the Company and the Majority Warrant Holders. The determination of such
appraiser shall be final and binding on the Company and all Holders of the
Warrants and the fees and expenses of such appraiser shall be paid by the
Company. Any determination of Market Price of a security will be made
without giving effect to any discount for any lack of liquidity attributable
to a lack of a public market for such security, any block discount or
discount attributable to the size of any Person's holdings of such security,
any minority interest or any voting rights thereof or lack thereof and shall
be determined on the basis of the value of the Company as a going concern and
using the assumption that immediately prior to such determination all "in the
money" Options and Convertible Securities were exercised, converted or
exchanged. The "MARKET PRICE" of a Warrant means the excess of (i) the
Market Price of the shares of Warrant Stock obtainable upon exercise thereof
over (ii) the Aggregate Exercise Price of the Warrant Stock payable in
connection with such exercise. For purposes of Section 1B(i)(d)(2) above, the
"MARKET PRICE" of any debt security or any preferred stock of the Company or
any of its Wholly-Owned Subsidiaries shall be deemed to be equal to the
aggregate outstanding principal amount or liquidation value thereof (as
applicable) plus all accrued and unpaid interest or dividends thereon (as
applicable) plus all premium and other amounts owing with respect thereto.
6
<PAGE>
"OPTIONS" means any rights or options to subscribe for or purchase
capital stock of Holdings or Convertible Securities.
"PUBLIC OFFERING" means a public offering of shares of Warrant
Stock of the Company registered under the Securities Act.
"ULTIMATE WARRANT STOCK" means any shares of capital stock issued
or issuable upon exercise, conversion or exchange of any shares of Underlying
Warrant Stock that consist of Convertible Securities.
"UNDERLYING WARRANT STOCK" means, as to any class of Warrant Stock,
(i) such class of Warrant Stock issued or issuable upon exercise of the
Warrants and (ii) any capital stock issued or issuable with respect to the
securities referred to in clause (i) above by way of stock dividend or stock
split or in connection with an exchange, a combination of shares,
recapitalization, merger, consolidation or other reorganization. For
purposes of the Purchase Agreement and this Warrant, any Person who holds
Warrants shall be deemed to be the holder of the Underlying Warrant Stock
obtainable upon exercise of the Warrants in connection with the transfer
thereof or otherwise regardless of any restriction or limitation on the
exercise of the Warrants, such Underlying Warrant Stock shall be deemed to be
in existence, and such Person shall be entitled to exercise the rights of a
holder of Underlying Warrant Stock hereunder and thereunder. As to any
particular shares of Underlying Warrant Stock, such shares shall cease to be
Underlying Warrant Stock when they have been (a) effectively registered under
the Securities Act and disposed of in accordance with the registration
statement covering them, (b) distributed to the public through a broker,
dealer or market maker pursuant to Rule 144 under the Securities Act (or any
similar provision then in force) or (c) repurchased by the Company or any of
its Subsidiaries.
"WARRANT STOCK" means the Company's Class 1 Common Stock , par
value $.01 per share; provided that if there is a change such that the
securities issuable upon exercise of the Warrants are issued by an entity
other than the Company or there is a change in the type or class of
securities so issuable, then the term "Warrant Stock" shall include one share
of the security issuable upon exercise of the Warrants if such security is
issuable in shares, or shall mean the smallest unit in which such security is
issuable if such security is not issuable in shares.
"WARRANT STOCK DEEMED OUTSTANDING" means, at any given time, (a)
with respect to any class of Warrant Stock that does not consist of
Convertible Securities, the number of shares of such class of Underlying
Warrant Stock outstanding at such time, plus the number of shares of any
other capital stock that is substantially identical to such Underlying
Warrant Stock except with respect to voting rights and as otherwise required
by applicable law, which in the case of the Company's Class 1 Common Stock,
shall be the Company's Class 2 Common Stock ("PARALLEL UNDERLYING WARRANT
STOCK") that is outstanding at such time, plus the maximum number of shares
of Underlying Warrant Stock and Parallel Underlying Warrant Stock that would
be outstanding at such time upon the exercise, conversion or exchange of all
Options and Convertible Securities outstanding at such time with respect to
shares of such class of
7
<PAGE>
Underlying Warrant Stock and Parallel Underlying Warrant Stock, regardless of
whether the Options or Convertible Securities are actually exercisable at
such time and (b) with respect to any class of Warrant Stock that consists of
Convertible Securities, the number of shares of such class of Ultimate
Warrant Stock outstanding or deemed outstanding at such time, plus the number
of shares of any other capital stock that is substantially identical to such
Ultimate Warrant Stock except with respect to voting rights and as otherwise
required by applicable law ("PARALLEL ULTIMATE WARRANT STOCK") that is
outstanding at such time, plus the maximum number of shares of Ultimate
Warrant Stock and Parallel Ultimate Warrant Stock that would be outstanding
upon the exercise, conversion or exchange of all Options and Convertible
Securities in existence at such time with respect to shares of such class of
Ultimate Warrant Stock and Parallel Ultimate Warrant Stock, regardless of
whether the Options or Convertible Securities are actually exercisable at
such time.
Section 6. NO VOTING RIGHTS; LIMITATIONS OF LIABILITY; TAX
MATTERS. This Warrant shall not entitle the holder hereof to any voting
rights or other rights as a stockholder of the Company. No provision hereof,
in the absence of affirmative action by the Holder to purchase Warrant Stock,
and no enumeration herein of the rights or privileges of the Holder shall
give rise to any liability of such holder for the Exercise Price of Warrant
Stock acquirable by exercise hereof or as a stockholder of the Company. If
the Holder incurs any tax liability as a result of being treated as a
stockholder of the Company prior to exercise of this Warrant, the Company
will immediately make payment to the Holder equal to the amount of such tax
liability together with any other costs (including, without limitation,
interest and penalties) associated therewith.
Section 7. WARRANT TRANSFERABLE. Subject to the transfer
conditions referred to in the legend endorsed hereon and the Purchase
Agreement, this Warrant and all rights hereunder are transferable, in whole
or in part, without charge to the Holder, upon surrender of this Warrant with
a properly executed Assignment (in the form of EXHIBIT II hereto) at the
principal office of the Company.
Section 8. WARRANT EXCHANGEABLE FOR DIFFERENT DENOMINATIONS. This
Warrant is exchangeable, upon the surrender hereof by the Holder at the
principal office of the Company, for new Warrants of like tenor representing
in the aggregate the purchase rights hereunder, and each of such new Warrants
shall represent such portion of such rights as is designated by the Holder at
the time of such surrender. The date the Company initially issues this
Warrant shall be deemed to be the "DATE OF ISSUANCE" hereof regardless of the
number of times new certificates representing the unexpired and unexercised
rights formerly represented by this Warrant shall be issued. All Warrants
representing portions of the rights hereunder are referred to herein as the
"WARRANTS."
Section 9. REPLACEMENT. Upon receipt of evidence reasonably
satisfactory to the Company (an affidavit of the Holder shall be
satisfactory) of the ownership and the loss, theft, destruction or mutilation
of any certificate evidencing this Warrant, and in the case of any such loss,
theft or destruction, upon receipt of indemnity reasonably satisfactory to
the Company (provided that if the holder is a financial institution or other
institutional investor or an Affiliate thereof its own agreement shall be
satisfactory), or, in the case of any such mutilation upon sur-
8
<PAGE>
render of such certificate, the Company shall (at its expense) execute and
deliver, in lieu thereof, a new certificate of like kind representing the
same rights represented by such lost, stolen, destroyed or mutilated
certificate and dated the date of such lost, stolen, destroyed or mutilated
certificate.
Section 10. NOTICES. Except as otherwise expressly provided
herein, all notices referred to in this Warrant shall be in writing and shall
be delivered personally, sent by reputable overnight courier service (charges
prepaid) or sent by registered or certified mail, return receipt requested,
postage prepaid and shall be deemed to have been given when so delivered,
sent or deposited in the U.S. Mail (i) to the Company, at its principal
executive offices and (ii) to the Holder of this Warrant, at such holder's
address as it appears in the records of the Company (unless otherwise
indicated by any such holder).
Section 11. AMENDMENT AND WAIVER. Except as otherwise provided
herein, the provisions of the Warrants may be amended and the Company may
take any action herein prohibited, or omit to perform any act herein required
to be performed by it, only if the Company has obtained the written consent
of the Majority Warrant Holders; provided that no such action may change the
Exercise Price of this Warrant or the number of shares or class of stock
obtainable upon exercise of this Warrant without the written consent of the
Holder of this Warrant.
Section 12. GOVERNING LAW. THE CORPORATE LAWS OF THE STATE OF
DELAWARE SHALL GOVERN ALL ISSUES CONCERNING THE RELATIVE RIGHTS OF THE
COMPANY AND ITS STOCKHOLDERS. ALL OTHER QUESTIONS CONCERNING THE
CONSTRUCTION, VALIDITY, ENFORCEMENT AND INTERPRETATION OF THIS WARRANT SHALL
BE GOVERNED BY THE INTERNAL LAW OF THE STATE OF NEW YORK, WITHOUT GIVING
EFFECT TO ANY CHOICE OF LAW OR CONFLICT OF LAW PROVISION OR RULE (WHETHER OF
THE STATE OF NEW YORK OR ANY OTHER JURISDICTIONS) THAT WOULD CAUSE THE
APPLICATION OF THE LAWS OF ANY JURISDICTIONS OTHER THAN THE STATE OF NEW
YORK. IN FURTHERANCE OF THE FOREGOING, THE INTERNAL LAW OF THE STATE OF NEW
YORK SHALL CONTROL THE INTERPRETATION AND CONSTRUCTION OF THIS WARRANT EVEN
THOUGH UNDER THAT JURISDICTION'S CHOICE OF LAW OR CONFLICT OF LAW ANALYSIS,
THE SUBSTANTIVE LAW OF SOME OTHER JURISDICTION WOULD NORMALLY APPLY.
Section 13. BHC ACT LIMITATIONS. If any Holder is prevented by
the BHC Act from receiving any payment, dividend, distribution or other
consideration that the Company is required or permitted to make such Holder
under any provision of this Warrant, then, notwithstanding anything to the
contrary contained or implied herein, the Company shall (unless the
applicable provision of this Warrant provides an alternative to such payment,
dividend, distribution or other consideration at the Company's option and the
Company elects such alternative) structure the transaction described in such
Section so that such Holder receives substantially equivalent consideration
that is in a form not prohibited by the BHC Act (as determined in good faith
by the Board of Directors and such Holders).
Section 14. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. In
connection with the issuance of this Warrant, the Company hereby represents
and represents that the representations and warranties contained in Sections
6.1, 6.2, 6.3, 6.4 (as such representation and
9
<PAGE>
warranties relates to the Purchase Agreement, as it pertains to Holdings, the
Certificate of Incorporation, the Warrants, and the fulfillment and
compliance with Holdings' obligations contained in the Purchase Agreement and
the Warrants, including the offering, sale and issuance of the Warrant and
the issuance of capital stock upon the direct or indirect exercise of the
Warrants only), 6.9 and the first two sentences of Section 6.10.
Section 15. REGISTRATION RIGHTS; RELATED MATTERS. Within 45
days after the Date of Issuance hereof, the Company shall cause the Investor
Rights Agreement to be amended in the form of Annex A attached hereto. If
the Company fails to so amend the Investor Rights Agreement within such
45-day period, the Cumulative Warrant Percentage shall be 50% higher than the
percentage it would otherwise be without giving effect to this paragraph and
shall increase by an additional 25% at the end of each 45-day period
thereafter, if at the end of such period, this Section 15 has not been fully
complied with.
* * * *
10
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Warrant to be
signed and attested by its duly authorized officers under its corporate seal
and to be dated the Date of Issuance hereof.
INTERNATIONAL WIRELESS
COMMUNICATIONS HOLDINGS, INC.
By_____________________________
Its____________________________
[CORPORATE SEAL]
Attest:
____________________________
Secretary
STATE OF CALIFORNIA )
COUNTY )
I, the undersigned authority, a Notary public in and for said County
and State, hereby certify that _______________________, whose name as of
INTERNATIONAL WIRELESS COMMUNICATIONS HOLDINGS, INC. a Delaware corporation,
is signed to the foregoing instrument, and who is known to me, acknowledge
before me on this day that, being informed of the contents of the instrument,
he/she, as such officer and with full authority, executed the same
voluntarily for and as the act of said corporation.
Given under my hand and official seal this _____ day of January, 1998
____________________________
Notary Public
Commission Expires:_________
<PAGE>
EXHIBIT I
EXERCISE AGREEMENT
To: Dated:
The undersigned, pursuant to the provisions set forth in the
attached Warrant (Certificate No. W-____), hereby agrees to subscribe for the
purchase of ______ shares of the Warrant Stock covered by such Warrant and
makes payment herewith in full therefor at the price per share provided by
such Warrant.
Signature ____________________
Address ______________________
E-1
<PAGE>
EXHIBIT II
ASSIGNMENT
FOR VALUE RECEIVED, _________________________________ hereby sells,
assigns and transfers all of the rights of the undersigned under the attached
Warrant (Certificate No. W-_____) with respect to the number of shares of the
Warrant Stock covered thereby set forth below, unto:
Names of Assignee Address No. of Shares
- ----------------- ------- -------------
Dated: Signature _______________________
_______________________
Witness _______________________
E-2
<PAGE>
The security represented by this certificate was originally
issued on January 23, 1998, and has not been registered under
the Securities Act of 1933, as amended. The transfer of such
security is subject to the conditions specified in the Amended
and Restated Senior Secured Note and Warrant Purchase Agreement,
dated as of January 23, 1998 (as amended and modified from time
to time), between the issuer hereof (the "COMPANY"), Radio Movil
Digital Americas, Inc., the initial holder hereof and certain
other investors from time to time a party thereto, and the
Company reserves the right to refuse the transfer of such
security until such conditions have been fulfilled with respect
to such transfer. Upon written request, a copy of such agreement
shall be furnished by the Company to the holder hereof without
charge.
INTERNATIONAL WIRELESS COMMUNICATIONS HOLDINGS, INC.
STOCK PURCHASE WARRANT
Date of Issuance: January 23, 1998 Certificate No. W-RMD3
FOR VALUE RECEIVED, International Wireless Communications Holdings,
Inc., a Delaware corporation (the "COMPANY"), hereby grants to BT Foreign
Investment Corporation, a Delaware corporation (the "PURCHASER"), or its
assigns (the Purchaser and/or any Person or Persons to whom the Purchaser or
an assignee has assigned this Warrant pursuant to Section 8 hereof is
referred to as the "HOLDER") the right to purchase from the Company at any
time during the Exercise Period (as defined below) the number of shares of
each class of Warrant Stock that represents the Cumulative Warrant Percentage
of such Class of Warrant Stock Deemed Outstanding as of close of business on
the Date of Issuance at a price per share of $0.01 (the "EXERCISE PRICE").
This Warrant is one of several warrants (collectively, the "WARRANTS") issued
pursuant to the terms of the Amended and Restated Senior Secured Note and
Warrant Purchase Agreement, dated as of January 23, 1998 (the "PURCHASE
AGREEMENT"), among the Company, Radio Movil Digital Americas, Inc. and
certain investors from time to time a party thereto. Certain capitalized
terms used herein are defined in Section 5 hereof. Other capitalized terms
used in this Warrant but not defined herein shall have the meanings set forth
in the Purchase Agreement.
The amount and kind of securities obtainable pursuant to the rights
granted hereunder and the purchase price for such securities are subject to
adjustment pursuant to the provisions contained in this Warrant.
This Warrant is subject to the following provisions:
<PAGE>
Section 1. EXERCISE OF WARRANT.
1A. EXERCISE PERIOD. The Holder may exercise, in whole or in part,
the purchase rights represented by this Warrant at any time and from time to
time after the Date of Issuance (the "EARLIEST EXERCISE DATE") to and
including the later of (i) the tenth anniversary of the Earliest Exercise
Date and (ii) the date on which all principal, interest, premiums (if any)
and other Obligations due in respect of the Notes has been paid in full (the
"EXERCISE PERIOD"). The Company shall give the Holder written notice of the
expiration of the Exercise Period at least 10 days but not more than 30 days
prior to the end of the Exercise Period.
1B. EXERCISE PROCEDURE.
(i) This Warrant shall be deemed to have been exercised when the
Company has received all of the following items (the "EXERCISE TIME"):
(a) a completed Exercise Agreement, as described in Section 1C
below, executed by the Person exercising all or part of the purchase
rights represented by this Warrant;
(b) this Warrant;
(c) if this Warrant is not registered in the name of the Purchaser,
an Assignment or Assignments in the form set forth in EXHIBIT II hereto
evidencing the assignment of this Warrant to the Holder, in which case the
Holder shall have complied with the provisions set forth in Section 8
hereof; and
(d) either (1) a check payable to the Company in an amount equal to
the product of the Exercise Price multiplied by the number of shares of
Warrant Stock being purchased upon such exercise (the "AGGREGATE EXERCISE
PRICE") or (2) a written notice to the Company that the Holder is
exercising the Warrant (or a portion thereof) by authorizing the Company
to withhold from issuance a number of shares of Warrant Stock issuable
upon such exercise of the Warrant which when multiplied by the Market
Price of the Warrant Stock is equal to the Aggregate Exercise Price
(and such withheld shares shall no longer be issuable under this Warrant).
(ii) Certificates for shares of Warrant Stock purchased upon
exercise of this Warrant shall be delivered by the Company to the Holder
within ten business days after the date of the Exercise Time. Unless this
Warrant has expired or all of the purchase rights represented hereby have
been exercised, the Company shall prepare a new Warrant, substantially
identical hereto, representing the rights formerly represented by this
Warrant which have not expired or been exercised and shall, within such
ten-day period, deliver such new Warrant to the Person designated for
delivery in the Exercise Agreement.
(iii) The Warrant Stock issuable upon the exercise of this Warrant
shall be
2
<PAGE>
deemed to have been issued to the Holder at the Exercise Time, and the Holder
shall be deemed for all purposes to have become the record holder of such
Warrant Stock at the Exercise Time.
(iv) The issuance of certificates for shares of Warrant Stock upon
exercise of this Warrant shall be made without charge to the Holder for any
issuance tax in respect thereof or other cost incurred by the Company in
connection with such exercise and the related issuance of shares of Warrant
Stock. Each share of Warrant Stock issuable upon exercise of this Warrant
shall, upon payment of the Exercise Price therefor, be fully paid and
nonassessable and free from all taxes and Liens (except for Liens created
pursuant to the Investor Rights Agreement).
(v) The Company shall not close its books against the transfer of
this Warrant or of any share of Warrant Stock issued or issuable upon the
exercise of this Warrant in any manner which interferes with the timely
exercise of this Warrant. The Company shall from time to time take all such
action as may be necessary to assure that the par value per share of the
unissued Warrant Stock acquirable upon exercise of this Warrant is at all
times equal to or less than the Exercise Price then in effect.
(vi) The Company shall assist and cooperate with any Holder
required to make any governmental filings or obtain any governmental
approvals prior to or in connection with any exercise of this Warrant
(including, without limitation, making any filings required to be made by the
Company).
(vii) Notwithstanding any other provision hereof, if an exercise of
any portion of this Warrant is to be made in connection with a registered
public offering or the sale of the Company, the exercise of any portion of
this Warrant may, at the election of the holder hereof, be conditioned upon
the consummation of the public offering or the sale of the Company in which
case such exercise shall not be deemed to be effective until the consummation
of such transaction.
(viii) The Company shall at all times reserve and keep available out
of its authorized but unissued shares of Warrant Stock solely for the purpose
of issuance upon the exercise of the Warrants, such number of shares of
Warrant Stock issuable upon the exercise of all outstanding Warrants. The
Company shall take all such actions as may be necessary to assure that all
such shares of Warrant Stock may be so issued without violation of any
applicable law or governmental regulation or any requirements of any domestic
securities exchange upon which shares of Warrant Stock may be listed (except
for official notice of issuance which shall be immediately delivered by the
Company upon each such issuance). The Company shall not take any action
which would cause the number of authorized but unissued shares of Warrant
Stock to be less than the number of such shares required to be reserved
hereunder for issuance upon exercise of the Warrant.
(ix) If the shares of Warrant Stock issuable by reason of exercise
of this Warrant are convertible into or exchangeable for any other stock or
securities of the Company, the Company shall, at the exercising holder's
option and upon surrender of this Warrant by such holder as provided above
together with any notice, statement or payment required to effect such
3
<PAGE>
conversion or exchange of Warrant Stock, deliver to such holder (or as
otherwise specified by such holder) a certificate or certificates
representing the stock or securities into which the shares of Warrant Stock
issuable by reason of such conversion are convertible or exchangeable,
registered in such name or names and in such denomination or denominations as
such holder has specified.
1C. EXERCISE AGREEMENT. Upon any exercise of this Warrant, the
Exercise Agreement shall be substantially in the form set forth in EXHIBIT I
hereto, except that if the shares of Warrant Stock are not to be issued in
the name of the Person in whose name this Warrant is registered, the Exercise
Agreement shall also state the name of the Person to whom the certificates
for the shares of Warrant Stock are to be issued, and if the number of shares
of Warrant Stock to be issued does not include all the shares of Warrant
Stock purchasable hereunder, it shall also state the name of the Person to
whom a new Warrant for the unexercised portion of the rights hereunder is to
be delivered. Such Exercise Agreement shall be dated the actual date of
execution thereof.
Section 2. ORGANIC CHANGE; NOTICES
2A. REORGANIZATION, RECLASSIFICATION, CONSOLIDATION, MERGER OR
SALE. Any recapitalization, reorganization, reclassification, consolidation,
merger, sale of all or substantially all of the Company's assets or other
transaction, which in each case is effected in such a way that the holders of
capital stock are entitled to receive (either directly or upon subsequent
liquidation) stock, securities or assets with respect to or in exchange for
capital stock is referred to herein as "ORGANIC CHANGE." Prior to the
consummation of any Organic Change, the Company shall make appropriate
provision (in form and substance satisfactory to the Majority Warrant
Holders) to insure that each of the Holders of the Warrants shall thereafter
have the right to acquire and receive, in lieu of or addition to (as the case
may be) the shares of Warrant Stock immediately theretofore acquirable and
receivable upon the exercise of such holder's Warrant, such shares of stock,
securities or assets as may be issued or payable with respect to or in
exchange for the number of shares of Underlying Warrant Stock and (if would
yield more to the Holders) Ultimate Warrant Stock immediately theretofore
acquirable and receivable upon exercise of such holder's Warrant had such
Organic Change not taken place. In any such case, the Company shall make
appropriate provision (in form and substance satisfactory to the Majority
Warrant Holders which shall not be unreasonably withheld) with respect to
such holders' rights and interests to insure that the provisions of this
Sections 2 and 3 hereof shall thereafter be applicable to the Warrants. The
Company shall not effect any such consolidation, merger or sale, unless prior
to the consummation thereof, the successor entity (if other than the Company)
resulting from consolidation or merger or the entity purchasing such assets
assumes by written instrument (in form and substance satisfactory to the
Majority Warrant Holders which shall not be unreasonably withheld), the
obligation to deliver to each such holder such shares of stock, securities or
assets as, in accordance with the foregoing provisions, such holder may be
entitled to acquire provided the aggregate purchase price shall remain the
same.
2B. NO AVOIDANCE. In the event the Company shall enter into any
transaction for the purpose of avoiding the provisions of this Section 2, the
benefits provided by such
4
<PAGE>
provision shall nevertheless apply and be preserved.
2C. NOTICES.
(i) The Company shall give written notice to the Holder at least 20
days prior to the date on which the Company closes its books or takes a
record (a) with respect to any dividend or distribution upon the any of its
capital stock, (b) with respect to any pro rata subscription offer to holders
of any of its capital stock or (c) for determining rights to vote with
respect to any Organic Change, dissolution or liquidation.
(ii) The Company shall also give written notice to the Holders at
least 20 days prior to the date on which any Organic Change, dissolution or
liquidation shall take place.
Section 3. SUBDIVISION OR COMBINATION OF WARRANT STOCK. If the
Company at any time subdivides (by any stock split, stock dividend,
recapitalization or otherwise) one or more classes of its outstanding shares
of Warrant Stock into a greater number of shares, the Exercise Price in
effect immediately prior to such subdivision shall be proportionately reduced
and the number of shares of Warrant Stock obtainable upon exercise of this
Warrant shall be proportionately increased. If the Company at any time
combines (by reverse stock split or otherwise) one or more classes of its
outstanding shares of Warrant Stock into a smaller number of shares, the
Exercise Price in effect immediately prior to such combination shall be
proportionately increased and the number of shares of Warrant Stock
obtainable upon exercise of this Warrant shall be proportionately decreased.
The Company shall promptly notify the Holder of any adjustment pursuant to
this Section 3.
Section 4. NO FRACTIONAL SHARE OR SCRIP. No fractional shares or
scrip representing fractional shares shall be issued upon the exercise of
this Warrant, but in lieu of such fractional shares the Company shall make a
cash payment therefor on the basis of the Market Price of one share of
Warrant Stock of the type in question.
Section 5. DEFINITIONS. The following terms have meanings set
forth below:
"BHC ACT" means the Bank Holding Company Act of 1956, as amended, or
any similar or successor federal statute, and the rules and regulations
promulgated thereunder, all as the same shall be in effect from time to time.
"CUMULATIVE WARRANT PERCENTAGE" means the lesser of (i) 1% and (ii)
the sum of the Daily Warrant Percentages for each day from and including the
Date of Issuance through and including the Exercise Time, as adjusted
pursuant to Section 15 hereof.
"DAILY WARRANT PERCENTAGE" means, for any day, the amount, expressed
as a percentage, equal to the product of 1/360 multiplied by the aggregate
unpaid principal amount of the Notes divided by 25 Million.
"CONVERTIBLE SECURITIES" means any stock or securities (directly or
indirectly)
5
<PAGE>
convertible into or exchangeable for capital stock of Holdings.
"MAJORITY WARRANT HOLDERS" means (a) with respect to Section 2
hereof, holders (including BTFIC and its Affiliates, to the extent any such
entity is a holder) representing the right to purchase a majority of the
shares of Warrant Stock obtainable upon exercise of all Warrants then
outstanding, and (b) in all other respects, holders (including BTFIC and its
Affiliates, to the extent any such entity is a holder) representing in the
aggregate more than 50% of all Underlying Warrant Stock (assuming, for
purposes of this determination, that any holder of Underlying Warrant Stock
that now holds Ultimate Warrant Stock continues to hold Underlying Warrant
Stock). For purposes hereof, neither the Company nor any Affiliate thereof
shall be considered a "holder" with respect to any Underlying Common Stock
held by them.
"MARKET PRICE" means as to any security (other than the Warrants)
the average of the closing prices of such security's sales on all domestic
securities exchanges on which such security may at the time be listed or
quoted, including for this purpose, The Nasdaq Stock Market, or, if there
have been no sales on any such exchange on any day, the average of the
highest bid and lowest asked prices on all such exchanges at the end of such
day, or, if on any day such security is not so listed or quoted, the average
of the highest bid and lowest asked prices on such day in the domestic
over-the-counter market as reported by the National Quotation Bureau,
Incorporated, or any similar successor organization, in each such case
averaged over a period of 21 days consisting of the day as of which "MARKET
PRICE" is being determined and the 20 consecutive business days prior to such
day; provided that if such security is listed on any domestic securities
exchange the term "business days" as used in this sentence means business
days on which such exchange is open for trading. If at any time such
security is not listed on any domestic securities exchange or quoted on The
Nasdaq Stock Market or the domestic over-the-counter market, the "MARKET
PRICE" shall be the fair value thereof as determined by the Company and the
Majority Warrant Holders; provided that if such parties are unable to reach
agreement within a reasonable period of time, such fair value shall be
determined by an appraiser jointly selected by the Company and the Majority
Warrant Holders. The determination of such appraiser shall be final and
binding on the Company and all Holders of the Warrants and the fees and
expenses of such appraiser shall be paid by the Company. Any determination
of Market Price of a security will be made without giving effect to any
discount for any lack of liquidity attributable to a lack of a public market
for such security, any block discount or discount attributable to the size of
any Person's holdings of such security, any minority interest or any voting
rights thereof or lack thereof and shall be determined on the basis of the
value of the Company as a going concern and using the assumption that
immediately prior to such determination all "in the money" Options and
Convertible Securities were exercised, converted or exchanged. The "MARKET
PRICE" of a Warrant means the excess of (i) the Market Price of the shares of
Warrant Stock obtainable upon exercise thereof over (ii) the Aggregate
Exercise Price of the Warrant Stock payable in connection with such exercise.
For purposes of Section 1B(i)(d)(2) above, the "MARKET PRICE" of any debt
security or any preferred stock of the Company or any of its Wholly-Owned
Subsidiaries shall be deemed to be equal to the aggregate outstanding
principal amount or liquidation value thereof (as applicable) plus all
accrued and unpaid interest or dividends thereon (as applicable) plus all
premium and other amounts owing with respect thereto.
6
<PAGE>
"OPTIONS" means any rights or options to subscribe for or purchase
capital stock of Holdings or Convertible Securities.
"PUBLIC OFFERING" means a public offering of shares of Warrant Stock
of the Company registered under the Securities Act.
"ULTIMATE WARRANT STOCK" means any shares of capital stock issued or
issuable upon exercise, conversion or exchange of any shares of Underlying
Warrant Stock that consist of Convertible Securities.
"UNDERLYING WARRANT STOCK" means, as to any class of Warrant Stock,
(i) such class of Warrant Stock issued or issuable upon exercise of the
Warrants and (ii) any capital stock issued or issuable with respect to the
securities referred to in clause (i) above by way of stock dividend or stock
split or in connection with an exchange, a combination of shares,
recapitalization, merger, consolidation or other reorganization. For
purposes of the Purchase Agreement and this Warrant, any Person who holds
Warrants shall be deemed to be the holder of the Underlying Warrant Stock
obtainable upon exercise of the Warrants in connection with the transfer
thereof or otherwise regardless of any restriction or limitation on the
exercise of the Warrants, such Underlying Warrant Stock shall be deemed to be
in existence, and such Person shall be entitled to exercise the rights of a
holder of Underlying Warrant Stock hereunder and thereunder. As to any
particular shares of Underlying Warrant Stock, such shares shall cease to be
Underlying Warrant Stock when they have been (a) effectively registered under
the Securities Act and disposed of in accordance with the registration
statement covering them, (b) distributed to the public through a broker,
dealer or market maker pursuant to Rule 144 under the Securities Act (or any
similar provision then in force) or (c) repurchased by the Company or any of
its Subsidiaries.
"WARRANT STOCK" means the Company's Class 1 Common Stock , par value
$.01 per share; provided that if there is a change such that the securities
issuable upon exercise of the Warrants are issued by an entity other than the
Company or there is a change in the type or class of securities so issuable,
then the term "Warrant Stock" shall include one share of the security
issuable upon exercise of the Warrants if such security is issuable in
shares, or shall mean the smallest unit in which such security is issuable if
such security is not issuable in shares.
"WARRANT STOCK DEEMED OUTSTANDING" means, at any given time, (a)
with respect to any class of Warrant Stock that does not consist of
Convertible Securities, the number of shares of such class of Underlying
Warrant Stock outstanding at such time, plus the number of shares of any
other capital stock that is substantially identical to such Underlying
Warrant Stock except with respect to voting rights and as otherwise required
by applicable law, which in the case of the Company's Class 1 Common Stock,
shall be the Company's Class 2 Common Stock ("PARALLEL UNDERLYING WARRANT
STOCK") that is outstanding at such time, plus the maximum number of shares
of Underlying Warrant Stock and Parallel Underlying Warrant Stock that would
be outstanding at such time upon the exercise, conversion or exchange of all
Options and Convertible Securities outstanding at such time with respect to
shares of such class of
7
<PAGE>
Underlying Warrant Stock and Parallel Underlying Warrant Stock, regardless of
whether the Options or Convertible Securities are actually exercisable at
such time and (b) with respect to any class of Warrant Stock that consists of
Convertible Securities, the number of shares of such class of Ultimate
Warrant Stock outstanding or deemed outstanding at such time, plus the number
of shares of any other capital stock that is substantially identical to such
Ultimate Warrant Stock except with respect to voting rights and as otherwise
required by applicable law ("PARALLEL ULTIMATE WARRANT STOCK") that is
outstanding at such time, plus the maximum number of shares of Ultimate
Warrant Stock and Parallel Ultimate Warrant Stock that would be outstanding
upon the exercise, conversion or exchange of all Options and Convertible
Securities in existence at such time with respect to shares of such class of
Ultimate Warrant Stock and Parallel Ultimate Warrant Stock, regardless of
whether the Options or Convertible Securities are actually exercisable at
such time.
Section 6. NO VOTING RIGHTS; LIMITATIONS OF LIABILITY; TAX MATTERS.
This Warrant shall not entitle the holder hereof to any voting rights or
other rights as a stockholder of the Company. No provision hereof, in the
absence of affirmative action by the Holder to purchase Warrant Stock, and no
enumeration herein of the rights or privileges of the Holder shall give rise
to any liability of such holder for the Exercise Price of Warrant Stock
acquirable by exercise hereof or as a stockholder of the Company. If the
Holder incurs any tax liability as a result of being treated as a stockholder
of the Company prior to exercise of this Warrant, the Company will
immediately make payment to the Holder equal to the amount of such tax
liability together with any other costs (including, without limitation,
interest and penalties) associated therewith.
Section 7. WARRANT TRANSFERABLE. Subject to the transfer
conditions referred to in the legend endorsed hereon and the Purchase
Agreement, this Warrant and all rights hereunder are transferable, in whole
or in part, without charge to the Holder, upon surrender of this Warrant with
a properly executed Assignment (in the form of EXHIBIT II hereto) at the
principal office of the Company.
Section 8. WARRANT EXCHANGEABLE FOR DIFFERENT DENOMINATIONS. This
Warrant is exchangeable, upon the surrender hereof by the Holder at the
principal office of the Company, for new Warrants of like tenor representing
in the aggregate the purchase rights hereunder, and each of such new Warrants
shall represent such portion of such rights as is designated by the Holder at
the time of such surrender. The date the Company initially issues this
Warrant shall be deemed to be the "DATE OF ISSUANCE" hereof regardless of the
number of times new certificates representing the unexpired and unexercised
rights formerly represented by this Warrant shall be issued. All Warrants
representing portions of the rights hereunder are referred to herein as the
"WARRANTS."
Section 9. REPLACEMENT. Upon receipt of evidence reasonably
satisfactory to the Company (an affidavit of the Holder shall be
satisfactory) of the ownership and the loss, theft, destruction or mutilation
of any certificate evidencing this Warrant, and in the case of any such loss,
theft or destruction, upon receipt of indemnity reasonably satisfactory to
the Company (provided that if the holder is a financial institution or other
institutional investor or an Affiliate thereof its own agreement shall be
satisfactory), or, in the case of any such mutilation upon sur-
8
<PAGE>
render of such certificate, the Company shall (at its expense) execute and
deliver, in lieu thereof, a new certificate of like kind representing the
same rights represented by such lost, stolen, destroyed or mutilated
certificate and dated the date of such lost, stolen, destroyed or mutilated
certificate.
Section 10. NOTICES. Except as otherwise expressly provided
herein, all notices referred to in this Warrant shall be in writing and shall
be delivered personally, sent by reputable overnight courier service (charges
prepaid) or sent by registered or certified mail, return receipt requested,
postage prepaid and shall be deemed to have been given when so delivered,
sent or deposited in the U.S. Mail (i) to the Company, at its principal
executive offices and (ii) to the Holder of this Warrant, at such holder's
address as it appears in the records of the Company (unless otherwise
indicated by any such holder).
Section 11. AMENDMENT AND WAIVER. Except as otherwise provided
herein, the provisions of the Warrants may be amended and the Company may
take any action herein prohibited, or omit to perform any act herein required
to be performed by it, only if the Company has obtained the written consent
of the Majority Warrant Holders; provided that no such action may change the
Exercise Price of this Warrant or the number of shares or class of stock
obtainable upon exercise of this Warrant without the written consent of the
Holder of this Warrant.
Section 12. GOVERNING LAW. THE CORPORATE LAWS OF THE STATE OF
DELAWARE SHALL GOVERN ALL ISSUES CONCERNING THE RELATIVE RIGHTS OF THE
COMPANY AND ITS STOCKHOLDERS. ALL OTHER QUESTIONS CONCERNING THE
CONSTRUCTION, VALIDITY, ENFORCEMENT AND INTERPRETATION OF THIS WARRANT SHALL
BE GOVERNED BY THE INTERNAL LAW OF THE STATE OF NEW YORK, WITHOUT GIVING
EFFECT TO ANY CHOICE OF LAW OR CONFLICT OF LAW PROVISION OR RULE (WHETHER OF
THE STATE OF NEW YORK OR ANY OTHER JURISDICTIONS) THAT WOULD CAUSE THE
APPLICATION OF THE LAWS OF ANY JURISDICTIONS OTHER THAN THE STATE OF NEW
YORK. IN FURTHERANCE OF THE FOREGOING, THE INTERNAL LAW OF THE STATE OF NEW
YORK SHALL CONTROL THE INTERPRETATION AND CONSTRUCTION OF THIS WARRANT EVEN
THOUGH UNDER THAT JURISDICTION'S CHOICE OF LAW OR CONFLICT OF LAW ANALYSIS,
THE SUBSTANTIVE LAW OF SOME OTHER JURISDICTION WOULD NORMALLY APPLY.
Section 13. BHC ACT LIMITATIONS. If any Holder is prevented by
the BHC Act from receiving any payment, dividend, distribution or other
consideration that the Company is required or permitted to make such Holder
under any provision of this Warrant, then, notwithstanding anything to the
contrary contained or implied herein, the Company shall (unless the
applicable provision of this Warrant provides an alternative to such payment,
dividend, distribution or other consideration at the Company's option and the
Company elects such alternative) structure the transaction described in such
Section so that such Holder receives substantially equivalent consideration
that is in a form not prohibited by the BHC Act (as determined in good faith
by the Board of Directors and such Holders).
Section 14. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. In
connection with the issuance of this Warrant, the Company hereby represents
and represents that the representations and warranties contained in Sections
6.1, 6.2, 6.3, 6.4 (as such representation and
9
<PAGE>
warranties relates to the Purchase Agreement, as it pertains to Holdings, the
Certificate of Incorporation, the Warrants, and the fulfillment and
compliance with Holdings' obligations contained in the Purchase Agreement and
the Warrants, including the offering, sale and issuance of the Warrant and
the issuance of capital stock upon the direct or indirect exercise of the
Warrants only), 6.9 and the first two sentences of Section 6.10.
Section 15. REGISTRATION RIGHTS; RELATED MATTERS. Within 45 days
after the Date of Issuance hereof, the Company shall cause the Investor
Rights Agreement to be amended in the form of Annex A attached hereto. If
the Company fails to so amend the Investor Rights Agreement within such
45-day period, the Cumulative Warrant Percentage shall be 50% higher than the
percentage it would otherwise be without giving effect to this paragraph and
shall increase by an additional 25% at the end of each 45-day period
thereafter, if at the end of such period, this Section 15 has not been fully
complied with.
* * * *
10
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed
and attested by its duly authorized officers under its corporate seal and to
be dated the Date of Issuance hereof.
INTERNATIONAL WIRELESS
COMMUNICATIONS HOLDINGS, INC.
By
-------------------------------------------
Its
------------------------------------------
[CORPORATE SEAL]
Attest:
____________________________
Secretary
STATE OF CALIFORNIA )
COUNTY )
I, the undersigned authority, a Notary public in and for said County and
State, hereby certify that _______________________, whose name as of
INTERNATIONAL WIRELESS COMMUNICATIONS HOLDINGS, INC. a Delaware corporation,
is signed to the foregoing instrument, and who is known to me, acknowledge
before me on this day that, being informed of the contents of the instrument,
he/she, as such officer and with full authority, executed the same
voluntarily for and as the act of said corporation.
Given under my hand and official seal this _____ day of January, 1998
--------------------------------------
Notary Public
Commission Expires:
-------------------
<PAGE>
EXHIBIT I
EXERCISE AGREEMENT
------------------
To: Dated:
The undersigned, pursuant to the provisions set forth in the
attached Warrant (Certificate No. W-____), hereby agrees to subscribe for the
purchase of ______ shares of the Warrant Stock covered by such Warrant and
makes payment herewith in full therefor at the price per share provided by
such Warrant.
Signature ____________________
Address ______________________
E-1
<PAGE>
EXHIBIT II
ASSIGNMENT
FOR VALUE RECEIVED, _________________________________ hereby sells,
assigns and transfers all of the rights of the undersigned under the attached
Warrant (Certificate No. W-_____) with respect to the number of shares of the
Warrant Stock covered thereby set forth below, unto:
NAMES OF ASSIGNEE ADDRESS NO. OF SHARES
----------------- ------- -------------
Dated: Signature _______________________
_______________________
Witness _______________________
E-2
<PAGE>
Exhibit 10.30C
The security represented by this instrument has not been
registered under the Securities Act of 1933, as amended. The
transfer of such security is subject to the conditions specified
in the Amended and Restated Senior Secured Note and Warrant
Purchase Agreement, dated as of January 23, 1998, as amended and
modified from time to time, between the issuer (the "COMPANY"),
International Wireless Communications Holdings, Inc. and certain
investors from time to time a party thereto, and the Company
reserves the right to refuse the transfer of such security until
such conditions have been fulfilled with respect to such
transfer. Upon written request, a copy of such conditions shall
be furnished by the Company to the holder hereof without charge.
This Note has been issued with original issue discount, and as
required by treasury regulation Section 1.1275-3(b)(1),
information regarding the issue price, the amount of original
issue discount, the issue date and the yield to maturity may be
obtained from the Company.
RADIO MOVIL DIGITAL AMERICAS, INC.
AMENDED AND RESTATED
SENIOR SECURED PROMISSORY NOTE
Date of Issuance: $25,000,000
January 23, 1998
Radio Movil Digital Americas, Inc. a Delaware corporation (the
"COMPANY"), hereby promises to pay to the order of BT Foreign Investment
Corporation, a Delaware corporation ("BTFIC"), the principal amount of
$25,000,000, together with interest thereon on the unpaid principal amount of
each issuance of principal evidenced by this Note calculated from the date of
such issuance in accordance with the provisions of this Note and all other
amounts owing hereunder.
On July 23, 1996, the Company issued a Convertible Secured Promissory
Note to BTFIC, dated July 23, 1996, and payable to the order of BTFIC in the
original principal amount equal to $14,000,000 (the "$14,000,000 NOTE")
pursuant to a Note Purchase Agreement dated as of July 23, 1996, as amended
July 23, 1997 and September 30, 1997 (as so amended, the "$14,000,000
PURCHASE AGREEMENT").
On July 23, 1997, the Company issued a Convertible Secured Promissory
Note to BTFIC, dated July 23, 1997, and payable to BTFIC in the original
principal amount equal to $1,000,000 (the "$1,000,000 NOTE") pursuant to a
Note Purchase Agreement dated as of July 23, 1997, as amended September 30,
1997 (as so amended, the "$1,000,000 PURCHASE AGREEMENT").
<PAGE>
The Company and BTFIC have agreed that additional issuances of principal
will be made to the Company under this Note, that all prior issuances of
principal made by BTFIC pursuant to the $14,000,000 Purchase Agreement and
the $1,000,000 Purchase Agreement will be evidenced by this Note and both
parties desire to amend and restate the Original Note to read as set forth in
this Note. The Company and BTFIC each agree that the indebtedness evidenced
by this Note, is, in part a restatement of the indebtedness previously
evidenced by, and this Note is issued in replacement and substitution for,
but not in payment of, the undersigned's $14,000,000 Note and $1,000,000
Note. The execution and delivery of this Note and all other documents and
instruments in connection herewith shall not be construed to (i) deem to have
repaid any amount of principal of or interest on the $14,000,000 Note or
$1,000,000 Note or (ii) release, cancel terminate or otherwise adversely
prejudice all or any part of the Lien granted to secure the Obligations or
any guaranty thereof.
This Note was issued pursuant to an Amended and Restated Senior Secured
Note and Warrant Purchase Agreement, dated as of January 23, 1998 (as amended
and modified from time to time, the "PURCHASE AGREEMENT"), among the Company,
International Wireless Communications Holdings, Inc. and certain investors
from time to time a party thereto, and this Note is the "Note" referred to in
the Purchase Agreement. As of the date hereof, no other "NOTES" have been
issued pursuant to the Purchase Agreement. The Purchase Agreement contains
terms governing the rights of the holder of this Note, and all provisions of
the Purchase Agreement are hereby incorporated herein in full by reference.
Except as otherwise indicated herein, capitalized terms used in this Note
have the same meanings set forth in the Purchase Agreement.
1. PAYMENT OF INTEREST. Except as otherwise expressly provided herein
or in the Purchase Agreement, interest has accrued at the rate of 9% per
annum through July 23, 1997, 11.5% per annum thereafter through January 23,
1998 and 14.5% per annum thereafter (computed on the basis of a 360-day year
and the actual number of days elapsed in any year) on the unpaid principal
amount of this Note (including any predecessors thereof) outstanding from
time to time until the date paid, or (if less) at the highest rate then
permitted under applicable law. The Company shall pay to the holder of this
Note all accrued interest on the 23rd day of each February, May, August and
November and the Stated Maturity Date, beginning May 23rd, 1998. Unless
prohibited under applicable law, any accrued interest which is not paid on
the date on which it is due and payable shall bear interest at the same rate
at which interest is then accruing on the principal amount of this Note until
such time as payment therefor is actually delivered to the holder of this
Note. Any accrued interest which for any reason has not theretofore been
paid shall be paid in full on the date on which the final principal payment
on this Note is made.
2. PAYMENT OF PRINCIPAL ON NOTE.
(a) STATED MATURITY DATE. On the Stated Maturity Date, the Company
shall pay the principal amount of $25,000,000 (or such lesser principal
amount then outstanding) to the holder of this Note, together with all
accrued and unpaid interest on the principal amount
2
<PAGE>
being repaid and all other Obligations owing hereunder in accordance with
Section 8.6 of the Purchase Agreement.
(b) OPTIONAL PREPAYMENTS. Subject to subsection 3(c) below, the Company
may, at any time and from time to time, prepay all or any portion (in whole
number multiples of $5,000,000 only or such lesser amount as then outstanding
or as necessary to comply with subsection 3(c) hereof) of the outstanding
principal amount of the Notes, pro rata among the holders of the Notes on the
basis of the outstanding principal amount of the Note held by each holder. In
connection with each prepayment of principal hereunder, the Company shall
also pay all accrued and unpaid interest on the Notes and all other amounts
that are required to be repaid prior to or concurrently with principal in
accordance with Section 8.6 of the Purchase Agreement (which in certain
instances includes a premium on the Notes). A prepayment of less than all of
the outstanding principal amount of each of the Notes shall not relieve the
Company of its obligation to make the scheduled payment of the Note on the
scheduled payment date pursuant to Section 2(a) above.
(c) MANDATORY PREPAYMENTS, ETC..
(i) MANDATORY PREPAYMENT. The Company shall make a mandatory
prepayment of Obligations in accordance with Section 8.6 of the Purchase
Agreement (which in certain instances includes a premium on the Notes) in an
aggregate amount equal to (w) 100% of the aggregate amount of cash proceeds
(and the fair market value of all other proceeds) (net of reasonable selling
expenses, estimated taxes, any amounts applied to repay Indebtedness secured
by such assets and any reserve for adjustment in respect of the sale price of
the assets sold; it being understood that any reserves that are released
shall become a part of the Net Proceeds and the Company shall be obligated to
make a mandatory prepayment in an aggregate amount equal to the amount of
such reserves at the time that such reserves are released), including by
recovery of insurance proceeds in excess of $100,000 (except to the extent
that such insurance proceeds are promptly used to replace the assets giving
rise to the insurance proceeds and BTFIC in its discretion (such discretion
not to be unreasonable) determines to exclude such amounts from Net
Proceeds), received or to be received by it or any Affiliate ("NET PROCEEDS")
from any sale or disposition (whether voluntary or involuntary, including by
casualty loss) or series of related sales or dispositions (other than sales
of inventory in the ordinary course of business and sales expressly
contemplated by the Post Merger Reorganization that do not give rise to any
cash proceeds) of any assets of a Brazilian Entity or any equity interests of
a Brazilian Entity, (x) 100% until the conditions set forth in Section 4.10
of the Purchase Agreement have been fully satisfied, and thereafter 50% (or
30% after the aggregate unpaid principal amount of the Notes is less than
$20,000,000) of the aggregate amount of Net Proceeds from any sale or
disposition of any assets or equity interests ("LATIN AMERICAN NON-BRAZILIAN
ASSETS") of a Latin American Non-Brazilian Entity remaining after subtracting
from such Net Proceeds an aggregate amount, not to exceed $3,000,000 less the
then outstanding amount of the BTCO Fee, which shall be re-invested in a
Brazilian Entity and such amount will be used for no other purpose (and the
holder of this Note has been provided satisfactory evidence to such effect
and, in addition, no such reduction shall occur if the BTCO Fee has not been
fully paid), and to the extent not already covered by clauses (w) and (x)
above, (y) 100% of the aggregate amount of Dividends and
3
<PAGE>
intercompany Indebtedness paid by a Brazilian Holding Entity, and (z) 50% (or
30% after the aggregate unpaid principal amount of the Notes is less than
$20,000,000) of the aggregate amount of Dividends and intercompany
Indebtedness paid by a Latin American Non-Brazilian Entity. Notwithstanding
the foregoing, in lieu of making a prepayment of the principal amount of the
Notes as otherwise required above, upon concurrent notice to the holder
hereof, and, if and only if, the conditions set forth in this subsection
2(c)(i) are fully satisfied and all Obligations other than the unpaid
principal amount of the Notes have been paid in full, the Company may
immediately deposit or cause to be deposited an aggregate amount equal to the
aggregate amount of its prepayment obligation into a bank account maintained
with an entity designated by the holder or holders of at least a majority of
the outstanding principal amount of the Notes (which entity may be an
Affiliate of BTFIC) in which the holders of Notes have (and the Company has
delivered satisfactory evidence to the holder hereof that the holders of
Notes have, which satisfactory evidence will include the delivery of an
acceptable opinion to such effect, other than with respect to priority) a
first priority Lien on such account and the funds contained therein, to be
held as collateral for the prompt payment and performance of the Obligations
(the "SALES RESERVE ACCOUNT"). Notwithstanding the foregoing, after the
requirements set forth in Section 4.10 of the Purchase Agreement have been
fully satisfied, any principal amounts held in the Sales Reserve Account in
excess of the principal amounts that would be held in such account had the
requirements set forth in Section 4.10 been fully satisfied as of the date of
issuance, shall be released from the Sales Reserve Account and delivered to
the Company or its designee.
(ii) MANNER OF PAYMENT. Except as otherwise provided herein, all such
prepayments of the Notes under this subsection 2(c) shall be made within five
(5) business days of the consummation of the particular event or transaction
giving rise to such payment obligation, and the Company shall deliver to the
holder a certificate of its chief financial officer showing the calculation
of the amount of such prepayment. Each prepayment shall be applied to the
payment of Obligations in the manner, and order in which payments are made
pursuant to Section 8.6 of the Purchase Agreement.
(d) NOTICE. The Company shall give notice to the holder of this Note of
any event or transaction which the Company reasonably believes will trigger a
prepayment under subsection 2(c) not later than 12:00 noon, New York time, on
the tenth Business Day preceding the date of payment (but in no event later
than the occurrence of such event or transaction), specifying the aggregate
principal amount it expects to be prepaid and the payment date (or,
alternatively, if applicable, the aggregate amount to be deposited into the
Sales Reserve Account).
3. TRANSFER AND EXCHANGE; REPLACEMENT; CANCELLATION.
(a) TRANSFER AND EXCHANGE. Upon surrender of any Note for transfer or
for exchange to the Company at its principal office, the Company at its
expense will (subject to the conditions set forth herein and in the Purchase
Agreement) execute and deliver in exchange therefor a new Note or Notes, as
the case may be, as requested by the holder or transferee, which aggregate
the unpaid principal amount of such Note, issued as such holder or transferee
may request, dated so that there will be no gain or loss of interest on such
surrendered Note and
4
<PAGE>
otherwise of like tenor. The issuance of new Notes shall be made without
charge to the holder(s) of the surrendered Note for any issuance tax in
respect thereof or other cost incurred by the Company in connection with such
issuance.
(b) REPLACEMENT. Upon receipt of evidence reasonably satisfactory to
the Company (an affidavit of the holder of this Note shall be satisfactory)
of the ownership and the loss, theft, destruction or mutilation of any Note
and, in the case of any such loss, theft or destruction, upon receipt of an
indemnity reasonably satisfactory to the Company (provided that if the holder
is a financial institution or other institutional investor, its own agreement
shall be satisfactory), or, in the case of any such mutilation, upon the
surrender of such Note to the Company at its principal office, the Company
shall (at its expense) execute and deliver, in lieu thereof, a new Note of
the same class and representing the same rights represented by such lost,
stolen, destroyed or mutilated Note and dated so that there will be no loss
of interest on such Note. Any Note in lieu of which any such new Note has
been so executed and delivered by the Company shall not be deemed to be an
outstanding Note for any purpose of the Purchase Agreement.
(c) CANCELLATION. Subject to (and without prejudice to) Section 8.19 of
the Purchase Agreement, after all principal accrued interest, premium and all
other Obligations which may be owing on this Note have been paid in full in
cash, this Note shall be surrendered to the Company for cancellation.
4. PAYMENTS. All payments to be made to the holders of the Notes shall
be made in the lawful money of the United States of America in immediately
available funds. Any payment received by the holder of this Note after 12:00
noon (New York time) on any day, will be deemed to have been received on the
next following Business Day.
5. PLACE OF PAYMENT. Payments of principal, interest, premium and other
amounts shall be delivered to the holder hereof at the following address:
Bankers Trust Company
New York, New York
ABA: 021001033
Credit: BT Foreign Investment Corporation
Account: 04807274
Further Reference: D951355/D974278
Attention: Shoba Mohan
or to such other address or to the attention of such other Person as
specified by prior written notice to the Company.
6. BUSINESS DAYS. If any payment is due, or any time period for giving
notice or taking action expires, on a day which is not a Business Day, the
payment shall be due and payable on, and the time period shall automatically
be shortened to, the immediately preceding Business Day.
5
<PAGE>
7. GOVERNING LAW. THIS NOTE SHALL BE GOVERNED AND CONSTRUED IN
ACCORDANCE WITH THE DOMESTIC LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING
EFFECT TO ANY CHOICE OF LAW OR CONFLICT OF LAW PROVISION OR RULE (WHETHER OF
THE STATE OF NEW YORK OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE
APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF NEW YORK.
8. USURY LAWS. It is the intention of the Company and the holder of
this Note to conform strictly to all applicable usury laws now or hereafter
in force, and any interest payable under this Note shall be subject to
reduction to the amount not in excess of the maximum legal amount allowed
under the applicable usury laws as now or hereafter construed by the courts
having jurisdiction over such matters. If the maturity of this Note is
accelerated by reason of an election by the holder hereof resulting from an
Event of Default, voluntary prepayment by the Company or otherwise, then
earned interest may never include more than the maximum amount permitted by
law, computed from the date hereof until payment, and any interest in excess
of the maximum amount permitted by law shall be canceled automatically and,
if theretofore paid, shall at the option of the holder hereof either be
rebated to the Company or credited on the principal amount of this Note, or
if this Note has been paid, then the excess shall be rebated to the Company.
The aggregate of all interest (whether designated as interest, service
charges, points or otherwise) contracted for, chargeable, or receivable under
this Note shall under no circumstances exceed the maximum legal rate upon the
unpaid principal balance of this Note remaining unpaid from time to time. If
such interest does exceed the maximum legal rate, it shall be deemed a
mistake and such excess shall be canceled automatically and, if theretofore
paid, rebated to the Company or credited on the principal amount of this
Note, or if this Note has been repaid, then such excess shall be rebated to
the Company.
9. COLLATERAL. The obligations of the Company under this Note are
secured by the Collateral and the Security Documents.
* * * *
6
<PAGE>
IN WITNESS WHEREOF, the Company has executed and delivered this Note on
the Date of Issuance.
RADIO MOVIL DIGITAL AMERICAS, INC.
By __________________________________
Its __________________________________
Attest:
_________________________
Secretary
STATE OF CALIFORNIA )
COUNTY )
I, the undersigned authority, a Notary public in and for said County and
State, hereby certify that _______________________, whose name as of RADIO
MOVIL DIGITAL AMERICAS, INC. a Delaware corporation, is signed to the
foregoing instrument, and who is known to me, acknowledge before me on this
day that, being informed of the contents of the instrument, he/she, as such
officer and with full authority, executed the same voluntarily for and as the
act of said corporation.
Given under my hand and official seal this _____ day of January, 1998
______________________________________
Notary Public
Commission Expires: __________________
<PAGE>
Exhibit 10.30D
PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT (this "AGREEMENT") is made and entered into as of
January 23, 1998 by INTERNATIONAL WIRELESS COMMUNICATIONS, INC., a Delaware
corporation (the "COMPANY"), in favor of BT FOREIGN INVESTMENT CORPORATION,
in its capacity as collateral agent under the Note Purchase Agreement, as
hereinafter defined (in such capacity, the "COLLATERAL AGENT").
W I T N E S S E T H:
WHEREAS, the Purchasers, as defined in the Note Purchase Agreement, are
committed to extending a credit facility (the "CREDIT FACILITY") to RADIO
MOVIL DIGITAL AMERICAS, INC., a Delaware corporation (the "BORROWER"),
provided that, among other things, the Company secures performance of the
Borrower's obligations relating to the Credit Facility by pledging all of the
Company's right, title and interest in (i) all of the issued and outstanding
shares of Borrower that the Company now owns, as set forth on SCHEDULE I
hereto, and acquires during the term of the Credit Facility and while any of
the Secured Indebtedness is outstanding (the "PLEDGED SHARES") and (ii) loans
and advances now made to Borrower, and all such loans and advances made
during the term of the Credit Facility and while any of Secured Indebtedness
is outstanding (the "PLEDGED LOANS");
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. DEFINITIONS. For all purposes of this Agreement, except as otherwise
expressly provided or unless the context otherwise requires, the following
terms shall have the meanings set forth below:
(a) The term "CAPITAL STOCK" as used herein shall mean any and all
shares, interests, participations, rights or other equivalents (however
designated) of corporate stock.
(b) The term "EQUITY INTERESTS" as used herein shall mean (i)
Capital Stock and (ii) all warrants, options or other rights to acquire
Capital Stock.
(c) The term "NOTE PURCHASE AGREEMENT" as used herein shall mean the
Amended and Restated Senior Secured Note Purchase Agreement, dated as of the
date hereof, by and among International Wireless Communications Holdings,
Inc., the Borrower and the Collateral Agent and the Purchasers, as defined
therein, as amended, supplemented, extended and modified from time to time
during the term hereof.
(d) The term "SECURED INDEBTEDNESS" as used herein shall mean the
Obligations, as defined in the Note Purchase Agreement.
(e) The term "SECURED PARTIES" as used herein shall mean the
Collateral Agent for itself and on behalf of the Purchasers.
1
<PAGE>
(f) Other capitalized terms not defined herein which are defined in
the Note Purchase Agreement shall have the meanings ascribed thereto in the
Note Purchase Agreement.
2. PLEDGE. The Company hereby pledges to the Collateral Agent, on
behalf of and for the benefit of the Secured Parties, and grants to the
Collateral Agent, on behalf of and for the benefit of the Secured Parties, a
continuing first priority security interest in all of its right, title and
interest in the following (the "COLLATERAL"):
(a) the Pledged Shares described in SCHEDULE I hereto and the
certificates representing the Pledged Shares, and all products and proceeds
of any of the Pledged Shares, including, without limitation, all dividends,
cash, options, warrants, rights, instruments, subscriptions and other
property or proceeds from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of the Pledged Shares
or any of the foregoing; and
(b) all additional shares of, and all securities convertible into
and all warrants, options or other rights to purchase, Capital Stock of, or
other Equity Interests in, the Borrower from time to time acquired by the
Company in any manner, and the certificates representing such additional
shares and Equity Interests (any such additional shares and Equity Interests
and other items shall constitute part of the Pledged Shares under and as
defined in this Agreement), and all products and proceeds of any of the
foregoing, including, without limitation, all dividends, cash, options,
warrants, rights, instruments, subscriptions, and other proceeds from time to
time received, receivable or otherwise distributed in respect of or in
exchange for any or all of the foregoing; and
(c) the Pledged Loans and all notes and other instruments
representing the Pledged Loans, and all products and proceeds of the Pledged
Loans, including, without limitation, all interest, principal and premium
payments, and all instruments and other property from time to time received,
receivable or otherwise distributed in respect of or in exchange for the
Pledged Loans or any of the foregoing; and
(d) all additional loans and advances from time to time made by the
Company to the Borrower and held by the Company in any manner (any such
additional loans and advances shall constitute part of the Pledged Loans
under and as defined in this Agreement) and all products and proceeds of any
of such additional Pledged Loans, including, without limitation, all interest
and principal payments, instruments and other property from time to time
received, receivable or otherwise distributed in respect of or in exchange
for any or all of such additional Pledged Loans or any of the foregoing.
3. SECURITY FOR OBLIGATIONS. This Agreement secures the prompt and
complete payment and performance when due (whether at stated maturity, by
acceleration, by repurchase or otherwise) of all Secured Indebtedness
(including, without limitation, the obligations accruing after the date of
any filing by the Company of any petition in bankruptcy or the commencement
of any bankruptcy, insolvency or similar proceeding with respect to the
Company).
2
<PAGE>
4. DELIVERY OF COLLATERAL. The Company hereby agrees that all
certificates, notes or instruments representing or evidencing the Collateral
shall be immediately delivered to and held at all times by the Collateral
Agent pursuant hereto at the Collateral Agent's office in the State of New
York and shall be in suitable form for transfer by delivery, or issued in the
name of the Company and accompanied by instruments of transfer or assignment
duly executed in blank and undated, and in either case having attached
thereto all requisite federal or state stock transfer tax stamps, all in form
and substance satisfactory to the Collateral Agent. All securities and all
Pledged Loans, whether certificated, uncertificated or book entry, if any,
representing or evidencing the Collateral shall be registered in the name of
the Collateral Agent or any of its nominees by book entry or in any other
appropriate manner that is acceptable to the Collateral Agent, so as to
properly identify the interest of the Collateral Agent therein. In addition,
the Collateral Agent shall have the right, at any time following the
occurrence of an Event of Default, in its discretion, to transfer to or to
register in the name of the Collateral Agent or any of its nominees or agents
any or all of the Collateral. The Collateral Agent shall have the right at
any time to exchange certificates, notes or other instruments representing or
evidencing all or any portion of the Collateral for certificates, notes or
other instruments of smaller or larger denominations or principal amounts in
the same aggregate amount.
5. REPRESENTATIONS AND WARRANTIES. The Company represents and warrants
that:
(a) The execution, delivery and performance by the Company of this
Agreement are within the Company's corporate powers, have been duly
authorized by all necessary corporate action, and do not contravene, or
constitute a default under, any provision of applicable law or regulation or
of the certificate of incorporation or bylaws of the Company or of any
agreement, judgment, injunction, order, decree or other instrument binding
upon the Company, or result in the creation or imposition of any Lien on any
assets of the Company, other than the Lien contemplated hereby.
(b) The Pledged Shares have been duly authorized and validly issued
and are fully paid and non-assessable.
(c) The Pledged Shares constitute all of the authorized, issued and
outstanding capital stock of the Borrower.
(d) Each Pledged Loan has been duly authorized and entered into by
the Borrower and constitutes a legal, valid and binding obligation of
Borrower, enforceable against Borrower in accordance with its terms.
(e) The Company is the legal, record and beneficial owner of the
Collateral, free and clear of any Lien or claims of any Person except for the
security interest created by this Agreement.
3
<PAGE>
(f) The Company has full power and authority to enter into this
Agreement and has the right to vote, pledge and grant a security interest in
the Collateral as provided by this Agreement, as applicable.
(g) This Agreement has been duly executed and delivered by the
Company and constitutes a legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms.
(h) Upon the delivery to the Collateral Agent of the Collateral to
the extent that the Collateral consists of certificates, notes and other
instruments and the filing of a Uniform Commercial Code ("UCC") financing
statement with the California Secretary of State's office, the pledge of the
Collateral pursuant to this Agreement creates a valid and perfected first
priority security interest in the Collateral, securing the payment of the
Secured Indebtedness for the benefit of the Secured Parties, and is
enforceable as such against all creditors of the Company and any Persons
purporting to purchase any of the Collateral from the Company.
(i) Except as has been already obtained, no consent of any other
Person and no consent, authorization, approval, or other action by, and no
notice to or filing with, any governmental authority or regulatory body is
required either (i) for the pledge by the Company of the Collateral pursuant
to this Agreement or for the execution, delivery or performance of this
Agreement by the Company or (ii) for the exercise by the Collateral Agent of
the voting or other rights provided for in this Agreement or the remedies in
respect of the Collateral pursuant to this Agreement (except as may be
required in connection with such disposition by laws affecting the offering
and sale of securities).
(j) No litigation, investigation or proceeding of or before any
arbitrator or governmental authority is pending or, to the best knowledge of
the Company, threatened by or against the Company or against any of its
properties or revenues with respect to this Agreement or any of the
transactions contemplated hereby.
(k) The pledge of the Collateral pursuant to this Agreement is not
prohibited by any applicable law or governmental regulation, release,
interpretation or opinion of the Board of Governors of the Federal Reserve
System or other regulatory agency (including, without limitation, Regulations
G, T, U and X of the Board of Governors of the Federal Reserve System).
(l) All information set forth herein relating to the Collateral is
accurate and complete in all material respects.
6. FURTHER ASSURANCE. The Company will at all times cause the security
interests granted pursuant to this Agreement to constitute valid perfected
first priority security interests in the Collateral, enforceable as such
against all creditors of the Company and (except as otherwise specifically
provided herein) any Persons purporting to purchase any Collateral from the
Company. The Company will, promptly upon request by the Collateral Agent,
execute and deliver or cause to be executed and delivered, or use its best
efforts to procure, all stock powers, proxies, tax stamps, assignments,
instruments and other documents, all in form and substance
4
<PAGE>
satisfactory to the Collateral Agent, deliver any instruments to the
Collateral Agent and take any other actions that are necessary or, in the
reasonable opinion of the Collateral Agent, desirable to perfect, continue
the perfection of, or protect the first priority of the Collateral Agent's
security interest in, the Collateral, to protect the Collateral against the
rights, claims, or interests of third persons, to enable the Collateral Agent
to exercise or enforce its rights and remedies hereunder, or otherwise to
effect the purposes of this Agreement. The Company also hereby authorizes
the Collateral Agent to file any financing or continuation statements with
respect to the Collateral without the signature of the Company to the extent
permitted by applicable law (although the Collateral Agent has no obligation
to do so). The Company will pay all costs incurred in connection with any of
the foregoing. Promptly, upon request by the Collateral Agent, the Company
will provide the Collateral Agent with all documents, instruments or
information necessary, in the sole discretion of the Collateral Agent, to
satisfy its obligations under this Agreement.
7. VOTING RIGHTS; DIVIDENDS; ETC.
(a) So long as no Event of Default or Potential Event of Default
shall have occurred and be continuing, the Company shall be entitled to
exercise any and all voting and other consensual rights pertaining to the
Collateral or any part thereof for any purpose not inconsistent with the
terms of this Agreement; PROVIDED, HOWEVER, that the Company shall not
exercise or shall refrain from exercising any such right if such action would
violate any provisions of this Agreement or the Note Purchase Agreement.
(b) So long as no Event of Default or Potential Event of Default
shall have occurred and be continuing but subject to compliance with the
Credit Facility and the Notes, the Company shall be entitled to receive, and
to utilize free and clear of the Lien of this Agreement, all cash payments of
principal, interest and dividends paid from time to time in respect of the
Collateral so long as the Collateral Agent is provided with evidence that the
sole source of the payments in respect of the Collateral are derived from the
Latin American Non-Brazilian Entities.
(c) Any and all (i) dividends, other distributions, interest and
principal payments paid or payable in the form of instruments and/or other
property (other than cash payments permitted under Section 7(b) hereof)
received, receivable or otherwise distributed in respect of, or in exchange
for, any Collateral, (ii) dividends and other distributions paid or payable
in cash in respect of any Collateral in connection with a partial or total
liquidation or dissolution or in connection with a reduction of capital,
capital surplus or paid-in-surplus, and (iii) cash paid, payable or otherwise
distributed in redemption of, or in exchange for any Collateral, shall, in
each case, be forthwith delivered to the Collateral Agent to hold as
Collateral and shall be, if received by the Company, held in trust for the
benefit of the Collateral Agent and the Secured Parties, be segregated from
the other property and funds of the Company and be forthwith delivered to the
Collateral Agent as Collateral in the same form as so received (with any
necessary endorsements) and may, in the Collateral Agent's sole discretion,
be applied to repayment of the Secured Indebtedness in accordance with
Section 17 hereof.
5
<PAGE>
(d) The Collateral Agent shall execute and deliver (or cause to be
executed and delivered) to the Company all such proxies and other instruments
as the Company may reasonably request for the purpose of enabling the Company
to exercise the voting and other rights that it is entitled to exercise
pursuant to Section 7(a) and 7(b) above.
(e) Upon the occurrence and during the continuance of an Event of
Default or Potential Event of Default, (i) all rights of the Company to
exercise the voting and other consensual rights that it would otherwise be
entitled to exercise pursuant to Section 7(a) shall cease, and all such
rights shall there upon become vested in the Collateral Agent, which, to the
extent permitted by law, shall there upon have the sole right to exercise
such voting and other consensual rights, and (ii) all cash payments and other
distributions payable in respect of the Collateral shall be paid to the
Collateral Agent and the Company's right to receive such cash payments
pursuant to Section 7(b) hereof shall immediately cease.
(f) Upon the occurrence and during the continuance of an Event of
Default or a Potential Event of Default, the Company shall execute and
deliver (or cause to be executed and delivered) to the Collateral Agent all
such proxies, dividend payment orders and other instruments as Collateral
Agent may reasonably request for the purpose of enabling the Collateral Agent
to exercise the voting and other rights that it is entitled to exercise
pursuant to Section 7(e) above.
(g) All payments of interest, principal or premium and all dividends
and other distributions that are received by the Company contrary to the
provisions of this Section 7 shall be received in trust for the benefit of
the Collateral Agent and the Secured Parties, shall be segregated from the
other property or funds of the Company and shall be forthwith delivered to
the Collateral Agent as Collateral in the same form as so received (with any
necessary endorsements).
8. COVENANTS. The Company covenants and agrees, from and after the date
of this Agreement and until the Secured Indebtedness has been paid in full,
as follows:
(a) The Company agrees that it will not (i) sell, assign, transfer,
convey or otherwise dispose of, or grant any option or warrant with respect
to, any of the Collateral without the prior written consent of the Collateral
Agent, (ii) create or permit to exist any Lien upon or with respect to any of
the Collateral, except for the security interest granted under this
Agreement, and at all times will be the sole beneficial owner of the
Collateral, (iii) enter into any agreement or understanding that purports to
or that may restrict or inhibit the Collateral Agent's rights or remedies
hereunder, including, without limitation, the Collateral Agent's right to
sell or otherwise dispose of the Collateral, (iv) take any action, or permit
the taking of any action by the Borrower, with respect to the Collateral the
taking of which would result in a violation of the Note Purchase Agreement or
this Agreement, including, without limitation, the issuance by the Borrower
of any additional Equity Interests to Persons other than the Company (except
as permitted by the Note Purchase Agreement), (v) permit the Borrower to
merge or consolidate with or into another Person or sell or transfer all or
substantially all of its assets to another Person to the extent that such
merger, consolidation, sale or transfer is prohibited under the Note
6
<PAGE>
Purchase Agreement, or (vii) fail to pay or discharge any tax, assessment or
levy of any nature not later than five days prior to the date of any proposed
sale under any judgment, writ or warrant of attachment with regard to the
Collateral.
(b) The Company agrees that immediately upon becoming the beneficial
owner of any additional shares of Capital Stock or other securities or Equity
Interests of the Borrower (including as a result of the merger or
consolidation of the Borrower with or into another Person) or any additional
Pledged Loans, whether or not evidenced by notes or other instruments, it
will pledge and deliver to the Collateral Agent for its benefit and the
ratable benefit of the Secured Parties and grant to the Collateral Agent for
its benefit and the ratable benefit of the Secured Parties, a continuing
first priority security interest in such shares, other securities, Equity
Interests or Pledged Loans (as well as instruments of transfer or assignment
duly executed in blank and undated and any necessary stock transfer tax
stamps, all in form and substance satisfactory to the Collateral Agent).
9. POWER OF ATTORNEY. In addition to all of the powers granted to the
Collateral Agent pursuant to the Note Purchase Agreement, the Company hereby
appoints and constitutes the Collateral Agent as the Company's
attorney-in-fact to exercise all of the following powers upon and at any time
after the occurrence of an Event of Default or, with respect to Section 7
hereof, a Potential Event of Default: (i) collection of proceeds of any
Collateral; (ii) conveyance of any item of Collateral to any purchaser
thereof; (iii) giving of any notices or recording of any Liens under Section
6 hereof; (iv) making of any payments or taking any acts under Section 10
hereof; and (v) paying or discharging taxes or Liens levied or placed upon or
threatened against the Collateral, the legality or validity thereof and the
amounts necessary to discharge the same to be determined by the Collateral
Agent in its sole discretion, and such payments made by the Collateral Agent
to become the obligations of the Company to the Collateral Agent, due and
payable immediately without demand. The Collateral Agent's authority
hereunder shall include, without limitation, the authority to endorse and
negotiate, for the Collateral Agent's own account, any checks or instruments
in the name of the Company, execute and give receipt for any certificate of
ownership or any document, transfer title to any item of Collateral, sign the
Company's name on all financing statements or any other documents deemed
necessary or appropriate to preserve, protect or perfect the security
interest in the Collateral and to file the same, prepare, file and sign the
Company's name on any notice of Lien, and prepare, file and sign the
Company's name on a proof of claim in bankruptcy or similar document against
any creditor of the Company, and to take any other actions arising from or
incident to the powers granted to the Collateral Agent in this Agreement.
This power of attorney is coupled with an interest and is irrevocable by the
Company.
10. COLLATERAL AGENT MAY PERFORM. If the Company fails to perform any
agreement contained herein, the Collateral Agent may itself perform, or cause
the performance of, such agreement, and the reasonable expenses of the
Collateral Agent incurred in connection therewith shall be payable by the
Company under Section 15 hereof; PROVIDED, HOWEVER, that the Collateral Agent
shall not be obligated to take any action under this Section 10 unless it is
instructed to do so by the Purchasers and it is indemnified against any
liability or loss in connection with taking such action by the Purchasers.
7
<PAGE>
11. NO ASSUMPTION OF DUTIES; REASONABLE CARE. The right and powers
granted to the Collateral Agent hereunder are being granted in order to
preserve and protect the Collateral Agent's and the Secured Parties' security
interest in and to the Collateral granted hereby and shall not be interpreted
to, and shall not, impose any duties on the Collateral Agent in connection
therewith. The Collateral Agent shall be deemed to have exercised reasonable
care in the custody and preservation of the Collateral in its possession if
the Collateral is accorded treatment substantially equal to that which the
Collateral Agent accords its own property, it being understood that the
Collateral Agent shall not have any responsibility for (i) ascertaining or
taking action with respect to calls, conversions, exchanges, maturities,
tenders or other matters relative to any Collateral, whether or not the
Collateral Agent has or is deemed to have knowledge of such matters, or (ii)
taking any necessary steps to preserve rights against any parties with
respect to any Collateral.
12. SUBSEQUENT CHANGES AFFECTING COLLATERAL. The Company represents to
the Collateral Agent and the Secured Parties that the Company has made its
own arrangements for keeping informed of changes or potential changes
affecting the Collateral (including, but not limited to, rights to convert,
rights to subscribe, payment of dividends, payments of interest and/or
principal, reorganization or other exchanges, tender offers and voting
rights), and the Company agrees that the Collateral Agent and the Secured
Parties shall have no responsibility or liability for informing the Company
of any such changes or potential changes or for taking any action or omitting
to take any action with respect thereto. The Company covenants that it will
not, without the prior written consent of the Collateral Agent, vote to
enable, or take any other action to permit, the Borrower to issue any capital
stock or other securities or to sell or otherwise dispose of, or grant any
option with respect to, any of the Collateral, except for the security
interests granted under this Agreement. The Company will defend the right,
title and interest of the Collateral Agent and the Secured Parties in and to
the Collateral against the claims and demands of all Persons.
13. REMEDIES UPON DEFAULT
(a) If any Event of Default shall have occurred and be continuing,
the Collateral Agent and the Secured Parties shall have, in addition to all
other rights given by law or by this Agreement or the Note Purchase
Agreement, all of the rights and remedies with respect to the Collateral of a
secured party under the UCC as in effect in the State of New York at that
time. The Collateral Agent may, without notice and at its option, transfer or
register, and the Company shall register or cause to be registered upon
request therefor by the Collateral Agent, the Collateral or any part thereof
on the books of the Borrower into the name of the Collateral Agent or the
Collateral Agent's nominee(s) or agent(s), with or without any indication
that such Collateral is subject to the security interest hereunder. In
addition, with respect to any Collateral that shall then be in or shall
thereafter come into the possession or custody of the Collateral Agent, the
Collateral Agent may sell or cause the same to be sold at any broker's board
or at a public or private sale, in one or more sales or lots, at such price
or prices as the Collateral Agent may deem best, for cash or on credit or for
future delivery, without assumption of any credit risk. The purchaser of any
or all Collateral so sold shall thereafter hold the same absolutely, free
from
8
<PAGE>
any claim, encumbrance or right of any kind whatsoever. Unless any of the
Collateral threatens to decline speedily in value or is or becomes of a type
sold on a recognized market, the Collateral Agent will give the Company
reasonable notice of the time and place of any public sale thereof, or of the
time after which any private sale or other intended disposition is to be
made. Any sale of the Collateral conducted in conformity with reasonable
commercial practices of banks, insurance companies, commercial finance
companies, or other financial institutions disposing of property similar to
the Collateral shall be deemed to be commercially reasonable. Any
requirements of reasonable notice shall be met if such notice is mailed to
the Company as provided below in Section 19.1, at least ten days before the
time of the sale or disposition. Any other requirement of notice, demand or
advertisement for sale is, to the extent permitted by law, waived. The
Collateral Agent or any Secured Party may, in its own name or in the name of
a designee or nominee, buy any of the Collateral at any public sale and, if
permitted by applicable law, at any private sale. All expenses (including
court costs and reasonable attorneys' fees and disbursements) of, or incident
to, the enforcement of any of the provisions hereof shall be recoverable from
the proceeds of the sale or other disposition of the Collateral.
(b) In view of the fact that federal and state securities laws may
impose certain restrictions on the method by which a sale of the Collateral
may be effected after an Event of Default, the Company agrees that upon the
occurrence or existence of any Event of Default, the Collateral Agent may,
from time to time, attempt to sell all or any part of the Collateral by means
of a private placement, restricting the prospective purchasers to those who
will represent and agree that they are purchasing for investment only and not
for distribution. In so doing, the Collateral Agent may solicit offers to
buy the Collateral, or any part of it, for cash, from a limited number of
investors who might be interested in purchasing the Collateral. The Company
acknowledges and agrees that any such private sale may result in prices and
terms less favorable than if such sale were a public sale and,
notwithstanding such circumstances, agrees that any such private sale shall
not be deemed to have been made in a commercially unreasonable manner. The
Collateral Agent shall be under no obligation to delay a sale of any of the
Collateral for the period of time necessary to permit the Borrower to
register such securities for public sale under the Securities Act, or under
applicable state securities laws, even if the Borrower agrees to do so.
(c) The Company further agrees to use its best efforts to do or
cause to be done all such other acts as may be necessary to make such sale or
sales of all or any portion of the Collateral pursuant to this Section 13
valid and binding and in compliance with any and all other applicable
requirements of law. The Company further agrees that a breach of any of the
covenants contained in this Section 13 will cause irreparable injury to the
Collateral Agent and the Secured Parties, that the Collateral Agent and the
Secured Parties have no adequate remedy at law in respect of such breach and,
as a consequence, that each and every covenant contained in this Section 13
shall be specifically enforceable against the Company, and the Company hereby
waives and agrees not to assert any defenses against an action for specific
performance of such covenants except for a defense that no Event of Default
has occurred.
(d) If the Collateral Agent deems it appropriate, the Collateral
Agent shall retain an investment bank or any other agent to perform or to
assist it in performing the
9
<PAGE>
obligations set forth in Section 13(b) hereof, whose usual and customary fees
and expenses shall be paid by the Company in accordance with Section 15
hereof.
14. IRREVOCABLE AUTHORIZATION AND INSTRUCTION TO THE BORROWER. The
Company hereby authorizes and instructs the Borrower to comply with any
instruction received by the Borrower from the Collateral Agent that (i)
states that an Event of Default has occurred and (ii) is otherwise in
accordance with the terms of this Agreement, without any other or further
instructions from the Company, and the Company agrees that the Borrower shall
be fully protected in so complying.
15. FEES AND EXPENSES. The Company will upon demand pay to the
Collateral Agent the amount of any and all reasonable fees and expenses
(including, without limitation, the reasonable fees and disbursements of its
counsel, of any investment banking firm, business broker or other selling
agent and of any other experts and agents retained by the Collateral Agent)
that the Collateral Agent may incur in connection with (i) the administration
of this Agreement, (ii) the custody or preservation of, or the sale of,
collection from, or other realization upon, any of the Collateral, (iii) the
exercise or enforcement of any of the rights of the Collateral Agent and the
Secured Parties hereunder or (iv) the failure by the Company to perform or
observe any of the provisions hereof.
16. INTEREST ABSOLUTE. All rights of the Collateral Agent and the
Secured Parties and the security interests created hereunder, and all
obligations of the Company hereunder, shall be absolute and unconditional
irrespective of:
(a) any lack of validity or enforceability of the Note Purchase
Agreement or any other agreement or instrument evidencing or governing the
Secured Indebtedness;
(b) any change in the time, manner or place or payment of, or in
any other term of, all or any of the Secured Indebtedness, or any other
amendment or waiver of or any consent to any departure from the Note Purchase
Agreement;
(c) any exchange, surrender, release or non-perfection of any other
collateral, or any release or amendment or waiver of or consent to departure
from any guarantee, for all or any of the Secured Indebtedness; or
(d) any other circumstances that might otherwise constitute a
defense available to, or a discharge of, the Company in respect of the
Secured Indebtedness or of this Agreement.
17. APPLICATION OF PROCEEDS. Upon the occurrence and during the
continuance of an Event of Default, the proceeds of any sale of, or other
realization upon, all or any part of the Collateral and any cash held shall
be applied by the Collateral Agent in the following order of priorities:
10
<PAGE>
FIRST, to the Collateral Agent for the payment of the Secured
Indebtedness in the manner set forth in Section 8.6 of the Note Purchase
Agreement (which Secured Indebtedness shall include all of the expenses of
such sale or other realization, including reasonable compensation to agents
and counsel for the Collateral Agent, and all reasonable expenses,
liabilities and advances incurred or made by the Collateral Agent in
connection therewith, and any other unreimbursed fees and expenses for which
the Collateral Agent is to be reimbursed pursuant to Section 15 hereof); and
SECOND, to payment to the Company or its successors or assigns, or
as a court of competent jurisdiction may direct, of any surplus then
remaining from such proceeds.
18. UNCERTIFICATED SECURITIES. Notwithstanding anything to the contrary
contained herein, if any Collateral (whether now owned or hereafter acquired)
is in the form of an uncertificated security, the Company shall promptly
notify the Collateral Agent, and shall promptly take all actions required to
perfect the security interest of the Collateral Agent under applicable law
(including, in any event, under Section 8-313 and 8-321 of the New York
Uniform Commercial Code) and shall certify to the Collateral Agent that such
security interest is perfected. The Company further agrees to take such
actions as the Collateral Agent deems necessary or desirable to effect the
foregoing and to permit the Collateral Agent to exercise any of its rights
and remedies hereunder, and agrees to provide an Opinion of Counsel
satisfactory to the Collateral Agent with respect to any such pledge of
uncertificated Collateral promptly upon request of the Collateral Agent.
19. MISCELLANEOUS PROVISIONS.
19.1 NOTICES. All notices, demands, and other communications required or
desired to be given hereunder shall be in writing and shall be deemed to have
been given when delivered personally to the recipient, sent to the recipient
by reputable overnight courier service (charges prepaid) or mailed to the
recipient by certified or registered mail, return receipt requested and
postage prepaid. Such notices, demands and other communications shall be sent
to the Collateral Agent and to each Purchaser at the addresses set forth in
Section 8.13 of the Note Purchase Agreement and to the Company at the address
indicated below:
International Wireless Communications, Inc.
400 South El Camino Real
Suite 1275
San Mateo, California 94402
19.2 NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS. This Agreement may
not be used to interpret another pledge, security or debt agreement of the
Company, the Borrower or any subsidiary thereof. No such pledge, security or
debt agreement may be used to interpret this Agreement.
19.3 SEVERABILITY. The provisions of this Agreement are severable, and
if any clause or provision shall be held invalid or unenforceable in whole or
in part in any jurisdiction, then such
11
<PAGE>
invalidity or unenforceability shall affect in that jurisdiction only such
clause or provision, or part thereof, and shall not in any manner affect such
clause or provision in any other jurisdiction or any other clause or
provision of this Agreement in any jurisdiction.
19.4 NO RECOURSE AGAINST OTHERS. No director, officer, employee,
stockholder or affiliate, solely in such capacity, of the Company or the
Borrower shall have any liability for any obligations of the Company under
this Agreement or for any claim based on, in respect of or by reason of such
obligations or their creation. Each Secured Party hereby waives and releases
all such liability.
19.5 HEADINGS. The headings of the Articles and Sections of this
Agreement have been inserted for convenience of reference only, are not to be
considered a part hereof and shall in no way modify or restrict any of the
terms or provisions hereof.
19.6 COUNTERPART ORIGINALS. This Agreement may be signed in two or more
counterparts. Each signed copy shall be an original, but all of them
together represent one and the same agreement. Each counterpart may be
executed and delivered by telecopy, if such delivery is promptly followed by
the original manually signed copy sent by overnight courier.
19.7 BENEFITS OF AGREEMENT. Nothing in this Agreement, express or
implied, shall give to any Person, other than the parties hereto and their
successors hereunder, and the Secured Parties, any benefit or any legal or
equitable right, remedy or claim under this Agreement.
19.8 AMENDMENTS, WAIVERS AND CONSENTS. Any amendment or waiver of any
provision of this Agreement and any consent to any departure by the Company
from any provision of this Agreement shall be effective only if the Company
has obtained the written consent of the holders of a majority of the
outstanding principal amount of the Notes (which majority shall include BTFIC
as long as it holds any Notes). Failure of the Collateral Agent or any
Secured Party to exercise, or delay in exercising, any right, power or
privilege hereunder shall not operate as a waiver thereof. No single or
partial exercise of any right, power or privilege hereunder shall preclude
any other or further exercise thereof or the exercise of any other right,
power or privilege. A waiver by the Collateral Agent or any Secured Party of
any right or remedy hereunder on any one occasion shall not be construed as a
bar to any right or remedy that the Collateral Agent or such Secured Party
would otherwise have on any future occasion. The rights and remedies herein
provided are cumulative, may be exercised singly or concurrently and are not
exclusive of any rights or remedies provided by law.
19.9 INTERPRETATION OF AGREEMENT. Time is of the essence in each
provision of this Agreement of which time is an element. To the extent a
term or provision of this Agreement conflicts with the Note Purchase
Agreement and is not dealt with herein with more specificity, the Note
Purchase Agreement shall control with respect to the subject matter of such
term or provision. Acceptance of or acquiescence in a course of performance
rendered under this Agreement shall not be relevant to determine the meaning
of this Agreement even though the accepting or acquiescing party had
knowledge of the nature of the performance and opportunity for objection.
12
<PAGE>
19.10 CONTINUING SECURITY INTEREST; TRANSFER OF SECURITIES. This
Agreement shall create a continuing security interest in the Collateral and
shall (i) remain in full force and effect until the payment in full of all
the Secured Indebtedness, (ii) be binding upon the Company, its successors
and assigns, and (iii) inure, together with the rights and remedies of the
Collateral Agent hereunder, to the benefit of the Collateral Agent, the
Secured Parties and their respective successors, transferees and assigns.
19.11 REINSTATEMENT. This Agreement shall continue to be effective or be
reinstated if at any time any amount received by the Collateral Agent or any
Secured Party in respect of the Secured Indebtedness is rescinded or must
otherwise be restored or returned by the Collateral Agent or any Secured
Party upon the insolvency, bankruptcy, dissolution, liquidation or
reorganization of the Company or upon the appointment of any receiver,
intervenor, conservator, trustee or similar official for the Company or any
substantial part of its assets, or otherwise, all as though such payments had
not been made.
19.12 SURVIVAL OF PROVISIONS. All representations, warranties and
covenants of the Company contained herein shall survive the execution and
delivery of this Agreement, and shall terminate only upon the full and final
payment and performance by the Company of the Secured Indebtedness.
19.13 WAIVERS. The Company waives presentment and demand for payment of
any of the Secured Indebtedness, protest and notice of dishonor or default
with respect to any of the Secured Indebtedness, and all other notices to
which the Company might otherwise be entitled, except as otherwise expressly
provided herein.
19.14 AUTHORITY OF THE COLLATERAL AGENT.
(a) The Collateral Agent shall have and be entitled to exercise
all powers hereunder that are specifically granted to the Collateral Agent by
the terms hereof, together with such powers as are reasonably incident
thereto. The Collateral Agent may perform any of its duties hereunder or in
connection with the Collateral by or through agents or employees and shall be
entitled to retain counsel and to act in reliance upon the advice of counsel
concerning all such matters. Neither the Collateral Agent nor any director,
officer, employee, attorney or agent of the Collateral Agent shall be
responsible for the validity, effectiveness or sufficiency hereof or of any
document or security furnished pursuant hereto. The Collateral Agent and its
directors, officers, employees, attorneys and agents shall be entitled to
rely on any communication, instrument or document believed by it or them to
be genuine and correct and to have been signed or sent by the proper person
or persons. The Company agrees to indemnify and hold harmless the Collateral
Agent, the Secured Parties and any other Person specified above from and
against any and all costs, expenses (including the reasonable fees and
disbursements of counsel (including, the allocated costs of counsel)), claims
and liabilities incurred by the Collateral Agent, the Secured Parties or any
such Person hereunder, unless such claim or liability shall be due to willful
misconduct or gross negligence on the part of the Collateral Agent, the
Secured Parties or such Person.
13
<PAGE>
(b) The Company acknowledges that the rights and responsibilities of
the Collateral Agent under this Agreement with respect to any action taken by
the Collateral Agent or the exercise or non-exercise by the Collateral Agent
of any option, right, request, judgment or other right or remedy provided for
herein or resulting or arising out of this Agreement shall, as between the
Collateral Agent and the Secured Parties, be governed by the Note Purchase
Agreement and by such other agreements with respect thereto as may exist form
time to time among them, but, as between the Collateral Agent and the
Company, the Collateral Agent shall be conclusively presumed to be acting as
agent for the Secured Parties with full and valid authority so to act or
refrain from acting, and the Company shall not be obligated or entitled to
make any inquiry respecting such authority.
19.15 RESIGNATION OR REMOVAL OF THE COLLATERAL AGENT. Until such time as
the Secured Indebtedness shall have been paid in full, the Collateral Agent
may at any time, by giving written notice to the Company and Secured Parties,
resign and be discharged of the responsibilities hereby created, such
resignation to become effective upon (i) the appointment of a successor
Collateral Agent and (ii) the acceptance of such appointment by such
successor Collateral Agent. As promptly as practicable after the giving of
any such notice, the Secured Parties shall appoint a successor Collateral
Agent, which successor Collateral Agent shall be reasonably acceptable to the
Company. If no successor Collateral Agent shall be appointed and shall have
accepted such appointment within 90 days after the Collateral Agent gives the
aforesaid notice of resignation, the Collateral Agent may apply to any court
of competent jurisdiction to appoint a successor Collateral Agent to act
until such time, if any, as a successor shall have been appointed as provided
in this Section 19.15. Any successor so appointed by such court shall
immediately and without further act be superseded by any successor Collateral
Agent appointed by the Secured Parties, as provided in this Section 19.15.
Simultaneously with its replacement as Collateral Agent hereunder, the
Collateral Agent so replaced shall deliver to its successor all documents,
instruments, certificates and other items of whatever kind (including,
without limitation, the certificates and instruments evidencing the
Collateral and all instruments of transfer or assignment) held by it pursuant
to the terms hereof. The Collateral Agent that has resigned shall be
entitled to fees, costs and expenses to the extent incurred or arising, or
relating to events occurring, before its resignation or removal.
19.16 RELEASE OF COLLATERAL; TERMINATION OF AGREEMENT.
(a) Subject to the provisions of Section 19.11 hereof, this
Agreement shall terminate upon the full and final payment and performance of
the Secured Indebtedness (and upon receipt by the Collateral Agent of the
Company's written certification that all such Secured Indebtedness has been
satisfied) and payment in full of all fees and expenses owing by the Company
to the Collateral Agent. At such time, the Collateral Agent shall, at the
request of the Company, reassign and redeliver to the Company all of the
Collateral hereunder that has not been sold, disposed of, retained or applied
by the Collateral Agent in accordance with the terms hereof. Such
reassignment and redelivery shall be without warranty by or recourse to the
Collateral Agent, except as to the absence of any prior assignments by the
Collateral Agent of its interest in the Collateral, and shall be at the
expense of the Company.
14
<PAGE>
(b) The Company agrees that it will not, except as permitted by the
Note Purchase Agreement, sell or dispose of, or grant any option or warrant
with respect to, any of the Collateral.
19.17 FINAL EXPRESSION. This Agreement, together with any other
agreement executed in connection herewith, is intended by the parties as a
final expression of their agreement and is intended as a complete and
exclusive statement of the terms and conditions thereof.
19.18 GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL;
WAIVER OF DAMAGES.
(i) THIS AGREEMENT SHALL BE GOVERNED BY AND INTERPRETED UNDER
THE LAWS OF THE STATE OF NEW YORK, AND ANY DISPUTE ARISING OUT OF, CONNECTED
WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN THE
COMPANY, THE COLLATERAL AGENT AND THE SECURED PARTIES IN CONNECTION WITH THIS
AGREEMENT, AND WHETHER ARISING IN CONTRACT, TORT, EQUITY OR OTHERWISE, SHALL
BE RESOLVED IN ACCORDANCE WITH THE INTERNAL LAWS (AS OPPOSED TO THE CONFLICTS
OF LAWS PROVISIONS) AND DECISIONS OF THE STATE OF NEW YORK.
(ii) EXCEPT AS PROVIDED IN THE NEXT PARAGRAPH AND IN
PARAGRAPH (vi) BELOW, THE COMPANY, THE COLLATERAL AGENT AND THE SECURED
PARTIES AGREE THAT ALL DISPUTES BETWEEN OR AMONG THEM ARISING OUT OF,
CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED
BETWEEN THEM IN CONNECTION WITH THIS AGREEMENT, AND WHETHER ARISING IN
CONTRACT, TORT, EQUITY, OR OTHERWISE, SHALL BE RESOLVED ONLY BY STATE OR
FEDERAL COURTS LOCATED IN NEW YORK, NEW YORK. THE COMPANY WAIVES IN ALL
DISPUTES ANY OBJECTION THAT IT MAY HAVE TO THE LOCATION OF THE COURT
CONSIDERING THE DISPUTE INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO THE
LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS.
(iii) THE COMPANY AGREES THAT THE COLLATERAL AGENT SHALL, IN
ITS OWN NAME OR IN THE NAME AND ON BEHALF OF ANY SECURED PARTY, HAVE THE
RIGHT, TO THE EXTENT PERMITTED BY APPLICABLE LAW, TO PROCEED AGAINST THE
COMPANY OR ITS PROPERTY IN A COURT IN ANY LOCATION REASONABLY SELECTED IN
GOOD FAITH TO ENABLE THE COLLATERAL AGENT TO REALIZE ON SUCH PROPERTY, OR TO
ENFORCE A JUDGMENT OR OTHER COURT ORDER ENTERED IN FAVOR OF THE COLLATERAL
AGENT. THE COMPANY WAIVES ANY OBJECTION THAT IT MAY HAVE TO THE LOCATION OF
THE COURT IN WHICH THE COLLATERAL AGENT HAS COMMENCED A PROCEEDING DESCRIBED
IN THIS PARAGRAPH INCLUDING,
15
<PAGE>
WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE
GROUNDS OF FORUM NON CONVENIENS.
(iv) THE COMPANY, THE COLLATERAL AGENT AND THE SECURED
PARTIES EACH WAIVE ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY
DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE ARISING OUT OF,
CONNECTED WITH, RELATED TO OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED
BETWEEN THEM IN CONNECTION WITH THIS AGREEMENT. INSTEAD, ANY DISPUTES
RESOLVED IN COURT WILL BE RESOLVED IN A BENCH TRIAL WITHOUT A JURY.
(v) THE COMPANY IRREVOCABLY CONSENTS TO THE SERVICE OF
PROCESS OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY
THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID,
TO THE COMPANY AT ITS ADDRESS SET FORTH IN SECTION 19.1 HEREOF, SUCH SERVICE TO
BECOME EFFECTIVE FIVE (5) BUSINESS DAYS AFTER SUCH MAILING.
(vi) NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE COLLATERAL
AGENT OR ANY SECURED PARTY TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY
LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST THE COMPANY
IN ANY OTHER JURISDICTION.
(vii) THE COMPANY HEREBY AGREES THAT NEITHER THE COLLATERAL
AGENT NOR ANY SECURED PARTY SHALL HAVE ANY LIABILITY TO THE COMPANY (WHETHER
SOUNDING IN TORT, CONTRACT OR OTHERWISE) FOR LOSSES SUFFERED BY THE COMPANY
IN CONNECTION WITH, ARISING OUT OF, OR IN ANY WAY RELATED TO, THE
TRANSACTIONS CONTEMPLATED AND THE RELATIONSHIP ESTABLISHED BY THIS AGREEMENT,
OR ANY ACT, OMISSION OR EVENT OCCURRING IN CONNECTION THEREWITH, UNLESS IT IS
DETERMINED BY A FINAL AND NONAPPEALABLE JUDGMENT OF A COURT THAT IS BINDING
ON THE COLLATERAL AGENT OR SUCH SECURED PARTY, AS THE CASE MAY BE, THAT SUCH
LOSSES WERE THE RESULT OF ACTS OR OMISSIONS ON THE PART OF THE COLLATERAL
AGENT OR SUCH SECURED PARTY, AS THE CASE MAY BE, CONSTITUTING GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT.
(viii) THE COMPANY WAIVES ALL RIGHTS OF NOTICE AND HEARING OF
ANY KIND PRIOR TO THE EXERCISE BY THE COLLATERAL AGENT OR ANY SECURED PARTY
OF ITS RIGHTS DURING THE CONTINUANCE OF AN EVENT OF DEFAULT TO REPOSSESS THE
COLLATERAL WITH JUDICIAL PROCESS OR TO REPLEVY, ATTACH OR LEVY UPON THE
COLLATERAL OR OTHER SECURITY FOR THE OBLIGATIONS. THE COMPANY WAIVES THE
POSTING OF ANY BOND OTHERWISE REQUIRED OF THE COLLATERAL AGENT OR ANY SECURED
PARTY DURING THE CONTINUANCE OF AN EVENT OF DEFAULT IN CONNECTION WITH ANY
JUDICIAL PROCESS OR PROCEEDING TO OBTAIN POSSESSION OF,
16
<PAGE>
REPLEVY, ATTACH OR LEVY UPON COLLATERAL OR OTHER SECURITY FOR THE
OBLIGATIONS, TO ENFORCE ANY JUDGMENT OR OTHER COURT ORDER ENTERED IN FAVOR OF
THE COLLATERAL AGENT OR ANY SECURED PARTY, OR TO ENFORCE BY SPECIFIC
PERFORMANCE, TEMPORARY RESTRAINING ORDER OR PRELIMINARY OR PERMANENT
INJUNCTION THIS AGREEMENT OR ANY OTHER AGREEMENT OR DOCUMENT BETWEEN THE
COMPANY, THE COLLATERAL AGENT AND THE SECURED PARTIES.
19.19 ACKNOWLEDGMENTS OF COMPANY. The Company hereby acknowledges that:
(a) it has been advised by counsel in the negotiation, execution
and delivery of this Agreement;
(b) neither the Collateral Agent nor any Secured Party has any
fiduciary relationship to the Company, and the relationship between the
Collateral Agent and the Secured Parties, on the one hand, and the Company,
on the other hand, is solely that of a secured party and a creditor; and
(c) no joint venture exists among the Secured Parties or among the
Company and the Secured Parties.
ACKNOWLEDGMENTS OF THE BORROWER. The Borrower, by executing the
acknowledgment and agreement below, hereby acknowledges and agrees to be
bound by this Agreement and to comply with the terms thereof insofar as such
terms are applicable to it. The Borrower, by executing the acknowledgment
and agreement below, further agrees to notify the Collateral Agent promptly
in writing of the occurrence of any of the events described in Section 8(b)
of this Agreement.
17
<PAGE>
[Pledge Agreement Signature Page]
IN WITNESS WHEREOF, the Company and the Collateral Agent have each
caused this Agreement to be duly executed and delivered as of the date first
above written.
INTERNATIONAL WIRELESS COMMUNICATIONS,
INC., a Delaware corporation
By: _________________________________
Name:
Title:
COLLATERAL AGENT:
BT FOREIGN INVESTMENT CORPORATION,
as Collateral Agent
By: _________________________________
Name:
Title:
Reviewed, Acknowledged and Agreed to:
RADIO MOVIL DIGITAL AMERICAS, INC.,
a Delaware corporation
By: ___________________________________
Name:
Title:
18
<PAGE>
SCHEDULE I
PLEDGED SHARES
<TABLE>
<CAPTION>
Number of Share Percentage
Pledged Shares Certificate Number of Outstanding
- -------------- ------------------ --------------
<S> <C> <C>
Shares 100%
</TABLE>
19
<PAGE>
Exhibit 10.30E
PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT (this "AGREEMENT") is made and entered into as of
January 23, 1998 by RADIO MOVIL DIGITAL AMERICAS, INC, a Delaware corporation
(the "COMPANY"), in favor of BT FOREIGN INVESTMENT CORPORATION, in its
capacity as collateral agent under the Note Purchase Agreement, as
hereinafter defined (in such capacity, the "COLLATERAL AGENT").
W I T N E S S E T H:
WHEREAS, the Purchasers, as defined in the Note Purchase Agreement, are
committed to extending a credit facility (the "CREDIT FACILITY") to the
Company, provided that, among other things, the Company secures performance
of its obligations relating to the Credit Facility by pledging all of the
Company's right, title and interest in all of the loans and advances now made
to Brazilian Entities, as defined in the Purchase Agreement, and all such
loans and advances made during the term of the Credit Facility and while any
of the Secured Indebtedness is outstanding (the "PLEDGED LOANS");
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. DEFINITIONS. For all purposes of this Agreement, except as otherwise
expressly provided or unless the context otherwise requires, the following
terms shall have the meanings set forth below:
(a) The term "NOTE PURCHASE AGREEMENT" as used herein shall mean the
Amended and Restated Senior Secured Note Purchase Agreement, dated as of the
date hereof, by and among International Wireless Communications Holdings,
Inc., the Company and the Collateral Agent and the Purchasers, as defined
therein, as amended, supplemented, extended and modified from time to time
during the term hereof.
(b) The term "OBLIGOR" as used herein shall mean any Brazilian
Entity that is the obligor with respect to a Pledged Loan.
(c) The term "SECURED INDEBTEDNESS" as used herein shall mean the
Obligations, as defined in the Note Purchase Agreement.
(d) The term "SECURED PARTIES" as used herein shall mean the
Collateral Agent for itself and on behalf of the Purchasers.
(e) Other capitalized terms not defined herein which are defined in
the Note Purchase Agreement shall have the meanings ascribed thereto in the
Note Purchase Agreement.
2. PLEDGE. Company hereby pledges to the Collateral Agent, on behalf of
and for the benefit of the Secured Parties, and grants to the Collateral
Agent, on behalf of and for the
1
<PAGE>
benefit of the Secured Parties, a continuing first priority security interest
in all of its right, title and interest in the following (the "COLLATERAL"):
(a) the Pledged Loans and all notes and other instruments
representing the Pledged Loans, and all products and proceeds of any of the
Pledged Loans, including, without limitation, all interest, principal and
premium payments, instruments and other property from time to time received,
receivable or otherwise distributed in respect of or in exchange for any or
all of the Pledged Loans or any of the foregoing; and
(b) all additional loans and advances from time to time made by the
Company to the Brazilian Entities and held by the Company in any manner (any
such additional loans and advances shall constitute part of the Pledged Loans
under and as defined in this Agreement) and all products and proceeds of any
of such additional Pledged Notes, including, without limitation, all interest
and principal payments, instruments and other property from time to time
received, receivable or otherwise distributed in respect of or in exchange
for any or all of such additional Pledged Loans or any of the foregoing.
3. SECURITY FOR OBLIGATIONS. This Agreement secures the prompt and
complete payment and performance when due (whether at stated maturity, by
acceleration, by repurchase or otherwise) of all Secured Indebtedness
(including, without limitation, the obligations accruing after the date of
any filing by the Company of any petition in bankruptcy or the commencement
of any bankruptcy, insolvency or similar proceeding with respect to the
Company).
4. DELIVERY OF COLLATERAL. The Company hereby agrees that all notes or
other instruments representing or evidencing the Collateral shall be
immediately delivered to and held at all times by the Collateral Agent
pursuant hereto at the Collateral Agent's office in the State of New York and
shall be in suitable form for transfer by delivery accompanied by instruments
of transfer or assignment duly executed in blank and undated, all in form and
substance satisfactory to the Collateral Agent. For all Pledged Loans that
are not evidenced by a note or other instrument, but are instead evidenced by
book entry in the Company's books and records, the Collateral Agent's
security interest therein shall be notated by book entry or in any other
appropriate manner that is acceptable to the Collateral Agent, so as to
properly identify the interest of the Collateral Agent therein. The
Collateral Agent shall have the right at any time to exchange notes or other
instruments representing or evidencing all or any portion of the Collateral
for notes or other instruments of smaller or larger principal amounts in the
same aggregate principal amount.
5. REPRESENTATIONS AND WARRANTIES. The Company represents and warrants
that:
(a) The execution, delivery and performance by the Company of this
Agreement are within the Company's corporate powers, have been duly
authorized by all necessary corporate action, and do not contravene, or
constitute a default under, any provision of applicable law or regulation or
of the certificate of incorporation or bylaws of the Company or of any
agreement, judgment, injunction, order, decree or other instrument binding
upon the
2
<PAGE>
Company, or result in the creation or imposition of any Lien on any assets of
the Company, other than the Lien contemplated hereby.
(b) Each Pledged Loan has been duly authorized and entered into by
the Obligor thereof and constitutes a legal, valid and binding obligation of
such Obligor, enforceable against such Obligor in accordance with its terms.
(c) The Company is the legal, record and beneficial owner of the
Collateral, free and clear of any Lien or claims of any Person except for the
security interest created by this Agreement.
(d) The Company has full power and authority to enter into this
Agreement and has the right to pledge and grant a security interest in the
Collateral as provided by this Agreement.
(e) This Agreement has been duly executed and delivered by the
Company and constitutes a legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms.
(f) Upon (i) the delivery to the Collateral Agent of the Collateral
to the extent that the Collateral consists of notes and other instruments and
(ii) the filing of a Uniform Commercial Code (the "UCC") financing statement
with the California Secretary of State's office, the pledge of the Collateral
pursuant to this Agreement creates a valid and perfected first priority
security interest in the Collateral, securing the payment of the Secured
Indebtedness for the benefit of the Secured Parties, and is enforceable as
such against all creditors of the Company and any Persons purporting to
purchase any of the Collateral from the Company.
(g) Except as has been already obtained, no consent of any other
Person and no consent, authorization, approval, or other action by, and no
notice to or filing with, any governmental authority or regulatory body is
required either (i) for the pledge by the Company of the Collateral pursuant
to this Agreement or for the execution, delivery or performance of this
Agreement by the Company or (ii) for the exercise by the Collateral Agent of
the rights provided for in this Agreement or the remedies in respect of the
Collateral pursuant to this Agreement.
(h) No litigation, investigation or proceeding of or before any
arbitrator or governmental authority is pending or, to the best knowledge of
the Company, threatened by or against the Company or against any of its
properties or revenues with respect to this Agreement or any of the
transactions contemplated hereby.
(i) The pledge of the Collateral pursuant to this Agreement is not
prohibited by any applicable law or governmental regulation, release,
interpretation or opinion of the Board of Governors of the Federal Reserve
System or other regulatory agency (including, without limitation, Regulations
G, T, U and X of the Board of Governors of the Federal Reserve System).
3
<PAGE>
(j) All information set forth herein relating to the Collateral is
accurate and complete in all material respects.
6. FURTHER ASSURANCE. The Company will at all times cause the security
interests granted pursuant to this Agreement to constitute valid perfected
first priority security interests in the Collateral, enforceable as such
against all creditors of the Company and (except as otherwise specifically
provided herein) any Persons purporting to purchase any Collateral from the
Company. The Company will, promptly upon request by the Collateral Agent,
execute and deliver or cause to be executed and delivered, or use its best
efforts to procure, all assignments, instruments and other documents, all in
form and substance satisfactory to the Collateral Agent, deliver any
instruments to the Collateral Agent and take any other actions that are
necessary or, in the reasonable opinion of the Collateral Agent, desirable to
perfect, continue the perfection of, or protect the first priority of the
Collateral Agent's security interest in, the Collateral, to protect the
Collateral against the rights, claims, or interests of third persons, to
enable the Collateral Agent to exercise or enforce its rights and remedies
hereunder, or otherwise to effect the purposes of this Agreement. The
Company also hereby authorizes the Collateral Agent to file any financing or
continuation statements with respect to the Collateral without the signature
of the Company to the extent permitted by applicable law (although the
Collateral Agent has no obligation to do so). The Company will pay all costs
incurred in connection with any of the foregoing. Promptly, upon request by
the Collateral Agent, the Company will provide the Collateral Agent with all
documents, instruments or information necessary, in the sole discretion of
the Collateral Agent, to satisfy its obligations under this Agreement.
7. PRINCIPAL AND INTEREST PAYMENTS.
(a) So long as no Event of Default or Potential Event of Default
shall have occurred and be continuing, but subject to compliance with the
Credit Facility and the Notes, the Company shall be entitled to receive, and
to utilize free and clear of the Lien of this Agreement, all cash payments of
principal and interest paid from time to time in respect of the Collateral so
long as the Collateral Agent is provided with evidence that the sole source
of the payments in respect of the Collateral are derived solely from Latin
American Non-Brazilian Entities.
(b) Upon the occurrence and during the continuance of an Event of
Default or a Potential Event of Default, all cash principal, interest and
other payments payable in respect of the Collateral shall be paid to the
Collateral Agent and the Company's right to receive such cash payments
pursuant to Section 7(a) hereof shall immediately cease.
(c) All payments that are received by the Company contrary to the
provisions of this Section 7 shall be received in trust for the benefit of
the Collateral Agent and the Secured Parties, shall be segregated from the
other property or funds of the Company and shall be forthwith delivered to
the Collateral Agent as Collateral in the same form as so received (with any
necessary endorsements) and may, in the Collateral Agent's sole discretion,
be applied to repayment of the Secured Indebtedness in accordance with
Section 15 hereof.
4
<PAGE>
8. COVENANTS. The Company covenants and agrees, from and after the date
of this Agreement and until the Secured Indebtedness has been paid in full,
as follows:
(a) The Company agrees that it will not (i) sell, assign, transfer,
convey or otherwise dispose of, or grant any option or warrant with respect
to, any of the Collateral without the prior written consent of the Collateral
Agent, (ii) create or permit to exist any Lien upon or with respect to any of
the Collateral, except for the security interest granted under this
Agreement, and at all times will be the sole beneficial owner of the
Collateral, (iii) enter into any agreement or understanding that purports to
or that may restrict or inhibit the Collateral Agent's rights or remedies
hereunder, including, without limitation, the Collateral Agent's right to
sell or otherwise dispose of the Collateral, (iv) take any action with
respect to the Collateral the taking of which would result in a violation of
the Note Purchase Agreement or this Agreement, or (v) fail to pay or
discharge any tax, assessment or levy of any nature not later than five days
prior to the date of any proposed sale under any judgment, writ or warrant of
attachment with regard to the Collateral.
(b) The Company agrees that immediately upon becoming the beneficial
owner of any Pledged Loans, whether or not evidenced by notes or other
instruments, it will pledge and deliver to the Collateral Agent for its
benefit and the ratable benefit of the Secured Parties and grant to the
Collateral Agent for its benefit and the ratable benefit of the Secured
Parties, a continuing first priority security interest in such Pledged Loans
(as well as instruments of transfer or assignment duly executed in blank and
undated, all in form and substance satisfactory to the Collateral Agent).
9. POWER OF ATTORNEY. In addition to all of the powers granted to the
Collateral Agent pursuant to the Note Purchase Agreement, the Company hereby
appoints and constitutes the Collateral Agent as the Company's
attorney-in-fact to exercise all of the following powers upon and at any time
after the occurrence of an Event of Default or, with respect to Section 7
hereof, a Potential Event of Default: (i) collection of proceeds of any
Collateral; (ii) conveyance of any item of Collateral to any purchaser
thereof; (iii) giving of any notices or recording of any Liens under Section
6 hereof; (iv) making of any payments or taking any acts under Section 10
hereof; and (v) paying or discharging taxes or Liens levied or placed upon or
threatened against the Collateral, the legality or validity thereof and the
amounts necessary to discharge the same to be determined by the Collateral
Agent in its sole discretion, and such payments made by the Collateral Agent
to become the obligations of the Company to the Collateral Agent, due and
payable immediately without demand. The Collateral Agent's authority
hereunder shall include, without limitation, the authority to endorse and
negotiate, for the Collateral Agent's own account, any checks or instruments
in the name of the Company, execute and give receipt for any certificate of
ownership or any document, transfer title to any item of Collateral, sign the
Company's name on all financing statements or any other documents deemed
necessary or appropriate to preserve, protect or perfect the security
interest in the Collateral and to file the same, prepare, file and sign the
Company's name on any notice of Lien, and prepare, file and sign the
Company's name on a proof of claim in bankruptcy or similar document against
any creditor of the Company, and to take any other actions arising from or
incident to the powers granted to
5
<PAGE>
the Collateral Agent in this Agreement. This power of attorney is coupled
with an interest and is irrevocable by the Company.
10. COLLATERAL AGENT MAY PERFORM. If the Company fails to perform any
agreement contained herein, the Collateral Agent may itself perform, or cause
the performance of, such agreement, and the reasonable expenses of the
Collateral Agent incurred in connection therewith shall be payable by the
Company under Section 15 hereof; PROVIDED, HOWEVER, that the Collateral Agent
shall not be obligated to take any action under this Section 10 unless it is
instructed to do so by the Purchasers and it is indemnified against any
liability or loss in connection with taking such action by the Purchasers.
11. NO ASSUMPTION OF DUTIES; REASONABLE CARE. The right and powers
granted to the Collateral Agent hereunder are being granted in order to
preserve and protect the Collateral Agent's and the Secured Parties' security
interest in and to the Collateral granted hereby and shall not be interpreted
to, and shall not, impose any duties on the Collateral Agent in connection
therewith. The Collateral Agent shall be deemed to have exercised reasonable
care in the custody and preservation of the Collateral in its possession if
the Collateral is accorded treatment substantially equal to that which the
Collateral Agent accords its own property, it being understood that the
Collateral Agent shall not have any responsibility for (i) ascertaining or
taking action with respect to calls, conversions, exchanges, maturities,
tenders or other matters relative to any Collateral, whether or not the
Collateral Agent has or is deemed to have knowledge of such matters, or (ii)
taking any necessary steps to preserve rights against any parties with
respect to any Collateral.
12. REMEDIES UPON DEFAULT
(a) If any Event of Default shall have occurred and be continuing,
the Collateral Agent and the Secured Parties shall have, in addition to all
other rights given by law or by this Agreement or the Note Purchase
Agreement, all of the rights and remedies with respect to the Collateral of a
secured party under the UCC as in effect in the State of New York at that
time. In addition, with respect to any Collateral that shall then be in or
shall thereafter come into the possession or custody of the Collateral Agent,
the Collateral Agent may sell or cause the same to be sold at any public or
private sale, in one or more sales or lots, at such price or prices as the
Collateral Agent may deem best, for cash or on credit or for future delivery,
without assumption of any credit risk. The purchaser of any or all
Collateral so sold shall thereafter hold the same absolutely, free from any
claim, encumbrance or right of any kind whatsoever. Unless any of the
Collateral threatens to decline speedily in value or is or becomes of a type
sold on a recognized market, the Collateral Agent will give the Company
reasonable notice of the time and place of any public sale thereof, or of the
time after which any private sale or other intended disposition is to be
made. Any sale of the Collateral conducted in conformity with reasonable
commercial practices of banks, insurance companies, commercial finance
companies, or other financial institutions disposing of property similar to
the Collateral shall be deemed to be commercially reasonable. Any
requirements of reasonable notice shall be met if such notice is mailed to
the Company as provided below in Section 17.1, at least ten days before the
time of the sale or disposition. Any other requirement of notice, demand or
advertisement for sale is, to the extent
6
<PAGE>
permitted by law, waived. The Collateral Agent or any Secured Party may, in
its own name or in the name of a designee or nominee, buy any of the
Collateral at any public sale and, if permitted by applicable law, at any
private sale. All expenses (including court costs and reasonable attorneys'
fees and disbursements) of, or incident to, the enforcement of any of the
provisions hereof shall be recoverable from the proceeds of the sale or other
disposition of the Collateral.
(b) The Company further agrees to use its best efforts to do or
cause to be done all such other acts as may be necessary to make such sale or
sales of all or any portion of the Collateral pursuant to this Section 12
valid and binding and in compliance with any and all other applicable
requirements of law. The Company further agrees that a breach of any of the
covenants contained in this Section 12 will cause irreparable injury to the
Collateral Agent and the Secured Parties, that the Collateral Agent and the
Secured Parties have no adequate remedy at law in respect of such breach and,
as a consequence, that each and every covenant contained in this Section 12
shall be specifically enforceable against the Company, and the Company hereby
waives and agrees not to assert any defenses against an action for specific
performance of such covenants except for a defense that no Event of Default
has occurred.
13. IRREVOCABLE AUTHORIZATION AND INSTRUCTION TO THE OBLIGORS. The
Company hereby authorizes and instructs each Obligor to comply with any
instruction received by the Obligor from the Collateral Agent that (i) states
that an Event of Default has occurred and (ii) is otherwise in accordance
with the terms of this Agreement, without any other or further instructions
from the Company, and the Company agrees that each Obligor shall be fully
protected in so complying.
14. FEES AND EXPENSES. The Company will upon demand pay to the
Collateral Agent the amount of any and all reasonable fees and expenses
(including, without limitation, the reasonable fees and disbursements of its
counsel, of any investment banking firm, business broker or other selling
agent and of any other experts and agents retained by the Collateral Agent)
that the Collateral Agent may incur in connection with (i) the administration
of this Agreement, (ii) the custody or preservation of, or the sale of,
collection from, or other realization upon, any of the Collateral, (iii) the
exercise or enforcement of any of the rights of the Collateral Agent and the
Secured Parties hereunder or (iv) the failure by the Company to perform or
observe any of the provisions hereof.
15. APPLICATION OF PROCEEDS. Upon the occurrence and during the
continuance of an Event of Default, the proceeds of any sale of, or other
realization upon, all or any part of the Collateral and any cash held shall
be applied by the Collateral Agent in the following order of priorities:
FIRST, to the Collateral Agent for the payment of the Secured
Indebtedness in the manner set forth in Section 8.6 of the Note Purchase
Agreement (which Secured Indebtedness shall include all of the expenses of
such sale or other realization, including reasonable compensation to agents
and counsel for the Collateral Agent, and all reasonable expenses,
liabilities and advances incurred or made by the Collateral Agent in
connection therewith, and
7
<PAGE>
any other unreimbursed fees and expenses for which the Collateral Agent is to
be reimbursed pursuant to Section 14 hereof); and
SECOND, to payment to the Company or its successors or assigns, or
as a court of competent jurisdiction may direct, of any surplus then
remaining from such proceeds.
16. INTEREST ABSOLUTE. All rights of the Collateral Agent and the
Secured Parties and the security interests created hereunder, and all
obligations of the Company hereunder, shall be absolute and unconditional
irrespective of:
(a) any lack of validity or enforceability of the Note Purchase
Agreement or any other agreement or instrument evidencing or governing the
Secured Indebtedness;
(b) any change in the time, manner or place or payment of, or in
any other term of, all or any of the Secured Indebtedness, or any other
amendment or waiver of or any consent to any departure from the Note Purchase
Agreement;
(c) any exchange, surrender, release or non-perfection of any other
collateral, or any release or amendment or waiver of or consent to departure
from any guarantee, for all or any of the Secured Indebtedness; or
(d) any other circumstances that might otherwise constitute a
defense available to, or a discharge of, the Company in respect of the
Secured Indebtedness or of this Agreement.
17. SUBORDINATION.
17.1 SUBORDINATION TO SENIOR INDEBTEDNESS.
(a) PAYMENT LIMITATIONS. The Company agrees for itself and its
successors and assigns that payment of the Pledged Loans is subordinated in
right of payment to the prior payment in full of the Secured Indebtedness on
the terms set forth herein.
(b) PERMITTED PAYMENTS. Notwithstanding the subordination of the
Pledged Loans to the Secured Indebtedness hereunder, (i) principal
installments of the Pledged Loans may be paid to the Company as they become
due and payable, without acceleration, in accordance with their terms, (ii)
accrued interest with respect to the Pledged Loans may be paid to the Company
as such interest becomes due and payable in accordance with their terms, and
(iii) other fees, expenses or other amounts payable under or with respect to
the Pledged Loans may be paid to the Company as such fees, expenses and
amounts become due and payable, without acceleration, in accordance with the
terms hereof, as amended from time to time in accordance with their terms,
provided that, in the case of each such Pledged Loans payment, on the date of
payment such payments are not prohibited pursuant to Section 17.3 and/or
Section 17.4.
8
<PAGE>
17.2 SUBORDINATION ON DISSOLUTION, LIQUIDATION OR REORGANIZATION OF AN
OBLIGOR.
(a) PRIORITY OF PAYMENT UPON DISTRIBUTION OF ASSETS. Upon any
Distribution of Assets in the event of any dissolution or winding up or total
or partial liquidation or reorganization, whether voluntary or involuntary,
or adjustment or protection or relief or composition of an Obligor or an
Obligor's debts, or in any bankruptcy, insolvency, receivership, arrangement,
reorganization, relief or other proceeding of an Obligor or upon an
arrangement for the benefit of creditors of an Obligor or any other
marshalling of the assets and liabilities of an Obligor:
(i) all amounts payable under or on account of the Secured
Indebtedness shall first be paid in full, in cash or payment provided for in
cash or Cash Equivalents, before the Company shall be entitled to receive any
Distribution of Assets with respect to the Pledged Loans; and
(ii) before any payment may be made on account of the Pledged
Loans, any such Distribution of Assets to which the Company would be
entitled, except for the provisions of this Section 17.2(a), shall be made
directly to Collateral Agent, for the Secured Parties, to the extent
necessary to pay all Secured Indebtedness in full, in cash or Cash
Equivalents, after giving effect to any concurrent payment or distribution to
the Collateral Agent and the Secured Parties. In the case of a non-cash
Distribution of Assets with respect to the Pledged Loans which is delivered
to Collateral Agent under this Section 17.2(a), the Secured Indebtedness
shall be deemed satisfied in the amount equal to the cash realized upon
disposition of such Distribution of Assets; until such disposition, the
non-cash Distribution of Assets shall be held as security for the Secured
Indebtedness.
(b) AUTHORIZATION OF COLLATERAL AGENT AND SECURED PARTIES. The
Collateral Agent and the Secured Parties are hereby irrevocably authorized
and empowered (in their own name or in the name of the Company or otherwise),
but shall have no obligation, to demand, sue for, collect and receive every
Distribution of Assets and give acquittance therefor and to file claims and
proofs of claim in respect of the Pledged Loans and take such other action
(including, without limitation, voting the Pledged Loans) on behalf of the
Company as they may reasonably deem necessary or advisable for the exercise
or enforcement of any of their rights or interests hereunder if the Company
does not take such actions within a reasonable period of time after the
Collateral Agent's or the Secured Parties' request. The Company shall duly
and promptly take such action as the Collateral Agent or the Secured Parties
may reasonably request (A) to collect the Pledged Loans for the account of
Secured Parties and to file appropriate claims or proofs of claim in respect
of the Pledged Loans, (B) to execute and deliver to the Collateral Agent and
the Secured Parties such powers of attorney, assignments, or other
instruments as they may request in order to enable them to enforce any and
all claims with respect to the Pledged Loans, and (C) to collect and receive
any and all Distribution of Assets which may be payable or deliverable upon
or with respect to the Pledged Loans.
17.3 SUBORDINATION ON EVENT OF DEFAULT. If there has occurred and is
continuing an Event of Default, the Company may not receive payment under or
on account of the Pledged
9
<PAGE>
Loans, directly or indirectly, in cash or other property or by set-off or in
any other manner, for the period commencing on the date of occurrence of such
Event of Default and continuing until the earlier of (1) the waiver of the
Event of Default, or (2) the cure of the Event of Default (the "STANDSTILL
PERIOD"). Immediately following the expiration of any such Standstill
Period, all payments of Pledged Loans which, but for such suspension, the
Company would have been entitled to receive, shall be immediately due and
payable.
17.4 FORBEARANCE BY THE COMPANY. Until the Secured Indebtedness is paid
in full, in cash or Cash Equivalents, and the Note Purchase Agreement is
terminated or expires, or unless requested by the Collateral Agent, the
Company shall not, without Collateral Agent's prior written consent, given in
its sole discretion: (i) accelerate the maturity of the Pledged Loans, (ii)
assert, collect or enforce the Pledged Loans or exercise any right of
set-off, or (iii) commence, or cause to commence, prosecute or participate in
(other than participate in an action, once commenced, to protect and pursue
its rights and remedies as, for example, exercising its rights in a
bankruptcy proceeding or state receivership proceeding) any administrative,
legal or equitable action against an Obligor or any administrative, legal or
equitable action that might adversely affect an Obligor or its interest,
including, but not limited to, the entry of a decree or order for relief in
respect of an Obligor under the Bankruptcy Code or any applicable bankruptcy,
insolvency or other similar law now or hereafter in effect or the appointment
of a receiver, liquidator, assignee, custodian, trustee, sequestrator or
similar official of an Obligor or for any substantial part of an Obligor's
assets.
17.5 SUBROGATION. Subject to the payment in full of all Secured
Indebtedness in cash or Cash Equivalents, the Company shall be subrogated to
the Secured Parties' rights (to the extent of the payments or distributions
made to the Secured Parties pursuant to the provisions of this Section 17) to
receive payments and Distributions of Assets applicable to the Secured
Indebtedness. No such payments or Distributions of Assets applicable to the
Secured Indebtedness shall, as between an Obligor and its creditors, other
than the Secured Parties and the Company, be deemed to be a payment by an
Obligor to or on account of the Secured Indebtedness; and for purposes of
such subrogation, no payments or Distributions of Assets to the Secured
Parties to which the Company would be entitled except for the provisions of
this Section 17 shall, as between an Obligor and its creditors, other than
the Secured Parties and the Company, be deemed to be a payment by an Obligor
to or on account of the Secured Indebtedness.
17.6 NO IMPAIRMENT. Nothing contained in this Section 17 shall impair,
as between an Obligor and the Company, the obligation of such Obligor,
subject to the terms and conditions of this Section 17, to pay to the Company
the Pledged Loans of such Obligor as and when the same become due and payable.
17.7 NO IMPAIRMENT OF SUBORDINATION. No right of any present or future
Secured Parties to enforce the subordination provisions of this Section 17
shall at any time in any way be prejudiced or impaired by any act or failure
to act on an Obligor's part or by any act or failure to act, in good faith,
by such Secured Parties, or by any noncompliance by an Obligor with the
10
<PAGE>
terms, provisions and covenants of this Note or the Purchase Agreement,
regardless of any knowledge thereof which such Secured Parties may have or
otherwise be charged with.
17.8 DISGORGEMENT. If, at any time after payment in full of the Secured
Indebtedness any payments of the Secured Indebtedness must be disgorged by
the Secured Parties for any reason (including, without limitation, an
Obligor's bankruptcy), the relative rights and priorities set forth herein
shall be reinstated as to all such disgorged payments as though such payments
had not been made and the Company shall immediately pay over to the
Collateral Agent, for the Secured Parties, all payments received with respect
to the Pledged Loans to the extent that such payments would have been
prohibited hereunder.
17.9 DEFINITIONS. For purposes of this Section 17, the following terms
shall have the following meanings:
"CASH EQUIVALENTS": the net current cash value of (i) obligations issued
or guaranteed by the United States of America; (ii) certificates of deposit,
bankers' acceptances and other "money market instruments" issued by any bank
or trust company organized under the laws of the United States of America or
any state thereof and having capital and surplus of an aggregate amount not
less than One Hundred Million Dollars ($100,000,000); (iii) open market
commercial paper bearing the highest credit rating issued by Standard &
Poor's Corp. or by another nationally recognized credit rating firm; and (iv)
shares of "money market funds," each having net assets of not less than Five
Hundred Million Dollars ($500,000,000).
"DISTRIBUTION OF ASSETS": any distribution of an Obligor's assets of any
kind or character, whether in cash, property, or securities, and whether in
respect of repayment of indebtedness or otherwise, including, but not limited
to, adequate protection payments under the Bankruptcy Code.
18. MISCELLANEOUS PROVISIONS.
18.1 NOTICES. All notices, demands, and other communications required or
desired to be given hereunder shall be in writing and shall be deemed to have
been given when delivered personally to the recipient, sent to the recipient
by reputable overnight courier service (charges prepaid) or mailed to the
recipient by certified or registered mail, return receipt requested and
postage prepaid. Such notices, demands and other communications shall be sent
to the Company, the Collateral Agent and to each Purchaser at the addresses
set forth in Section 8.13 of the Note Purchase Agreement.
18.2 NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS. This Agreement may
not be used to interpret another pledge, security or debt agreement of the
Company or any subsidiary thereof. No such pledge, security or debt
agreement may be used to interpret this Agreement.
18.3 SEVERABILITY. The provisions of this Agreement are severable, and
if any clause or provision shall be held invalid or unenforceable in whole or
in part in any jurisdiction, then such invalidity or unenforceability shall
affect in that jurisdiction only such clause or provision, or
11
<PAGE>
part thereof, and shall not in any manner affect such clause or provision in
any other jurisdiction or any other clause or provision of this Agreement in
any jurisdiction.
18.4 NO RECOURSE AGAINST OTHERS. No director, officer, employee,
stockholder or affiliate, solely in such capacity, of the Company or any an
Obligor shall have any liability for any obligations of the Company under
this Agreement or for any claim based on, in respect of or by reason of such
obligations or their creation. Each Secured Party hereby waives and releases
all such liability.
18.5 HEADINGS. The headings of the Articles and Sections of this
Agreement have been inserted for convenience of reference only, are not to be
considered a part hereof and shall in no way modify or restrict any of the
terms or provisions hereof.
18.6 COUNTERPART ORIGINALS. This Agreement may be signed in two or more
counterparts. Each signed copy shall be an original, but all of them
together represent one and the same agreement. Each counterpart may be
executed and delivered by telecopy, if such delivery is promptly followed by
the original manually signed copy sent by overnight courier.
18.7 BENEFITS OF AGREEMENT. Nothing in this Agreement, express or
implied, shall give to any Person, other than the parties hereto and their
successors hereunder, and the Secured Parties, any benefit or any legal or
equitable right, remedy or claim under this Agreement.
18.8 AMENDMENTS, WAIVERS AND CONSENTS. Any amendment or waiver of any
provision of this Agreement and any consent to any departure by the Company
from any provision of this Agreement shall be effective only if the Company
has obtained the written consent of the holders of a majority of the
outstanding principal amount of the Notes (which majority shall include BTFIC
as long as it holds any Notes). Failure of the Collateral Agent or any
Secured Party to exercise, or delay in exercising, any right, power or
privilege hereunder shall not operate as a waiver thereof. No single or
partial exercise of any right, power or privilege hereunder shall preclude
any other or further exercise thereof or the exercise of any other right,
power or privilege. A waiver by the Collateral Agent or any Secured Party of
any right or remedy hereunder on any one occasion shall not be construed as a
bar to any right or remedy that the Collateral Agent or such Secured Party
would otherwise have on any future occasion. The rights and remedies herein
provided are cumulative, may be exercised singly or concurrently and are not
exclusive of any rights or remedies provided by law.
18.9 INTERPRETATION OF AGREEMENT. Time is of the essence in each
provision of this Agreement of which time is an element. To the extent a
term or provision of this Agreement conflicts with the Note Purchase
Agreement and is not dealt with herein with more specificity, the Note
Purchase Agreement shall control with respect to the subject matter of such
term or provision. Acceptance of or acquiescence in a course of performance
rendered under this Agreement shall not be relevant to determine the meaning
of this Agreement even though the accepting or acquiescing party had
knowledge of the nature of the performance and opportunity for objection.
12
<PAGE>
18.10 CONTINUING SECURITY INTEREST; TRANSFER OF SECURITIES. This
Agreement shall create a continuing security interest in the Collateral and
shall (i) remain in full force and effect until the payment in full of all
the Secured Indebtedness, (ii) be binding upon the Company, its successors
and assigns, and (iii) inure, together with the rights and remedies of the
Collateral Agent hereunder, to the benefit of the Collateral Agent, the
Secured Parties and their respective successors, transferees and assigns.
18.11 REINSTATEMENT. This Agreement shall continue to be effective or be
reinstated if at any time any amount received by the Collateral Agent or any
Secured Party in respect of the Secured Indebtedness is rescinded or must
otherwise be restored or returned by the Collateral Agent or any Secured
Party upon the insolvency, bankruptcy, dissolution, liquidation or
reorganization of the Company or upon the appointment of any receiver,
intervenor, conservator, trustee or similar official for the Company or any
substantial part of its assets, or otherwise, all as though such payments had
not been made.
18.12 SURVIVAL OF PROVISIONS. All representations, warranties and
covenants of the Company contained herein shall survive the execution and
delivery of this Agreement, and shall terminate only upon the full and final
payment and performance by the Company of the Secured Indebtedness.
18.13 WAIVERS. The Company waives presentment and demand for payment of
any of the Secured Indebtedness, protest and notice of dishonor or default
with respect to any of the Secured Indebtedness, and all other notices to
which the Company might otherwise be entitled, except as otherwise expressly
provided herein.
18.14 AUTHORITY OF THE COLLATERAL AGENT.
(a) The Collateral Agent shall have and be entitled to exercise
all powers hereunder that are specifically granted to the Collateral Agent by
the terms hereof, together with such powers as are reasonably incident
thereto. The Collateral Agent may perform any of its duties hereunder or in
connection with the Collateral by or through agents or employees and shall be
entitled to retain counsel and to act in reliance upon the advice of counsel
concerning all such matters. Neither the Collateral Agent nor any director,
officer, employee, attorney or agent of the Collateral Agent shall be
responsible for the validity, effectiveness or sufficiency hereof or of any
document or security furnished pursuant hereto. The Collateral Agent and its
directors, officers, employees, attorneys and agents shall be entitled to
rely on any communication, instrument or document believed by it or them to
be genuine and correct and to have been signed or sent by the proper person
or persons. The Company agrees to indemnify and hold harmless the Collateral
Agent, the Secured Parties and any other Person specified above from and
against any and all costs, expenses (including the reasonable fees and
disbursements of counsel (including, the allocated costs of counsel)), claims
and liabilities incurred by the Collateral Agent, the Secured Parties or any
such Person hereunder, unless such claim or liability shall be due to willful
misconduct or gross negligence on the part of the Collateral Agent, the
Secured Parties or such Person.
13
<PAGE>
(b) The Company acknowledges that the rights and responsibilities
of the Collateral Agent under this Agreement with respect to any action taken
by the Collateral Agent or the exercise or non-exercise by the Collateral
Agent of any option, right, request, judgment or other right or remedy
provided for herein or resulting or arising out of this Agreement shall, as
between the Collateral Agent and the Secured Parties, be governed by the Note
Purchase Agreement and by such other agreements with respect thereto as may
exist form time to time among them, but, as between the Collateral Agent and
the Company, the Collateral Agent shall be conclusively presumed to be acting
as agent for the Secured Parties with full and valid authority so to act or
refrain from acting, and the Company shall not be obligated or entitled to
make any inquiry respecting such authority.
18.15 RESIGNATION OR REMOVAL OF THE COLLATERAL AGENT. Until such time
as the Secured Indebtedness shall have been paid in full, the Collateral
Agent may at any time, by giving written notice to the Company and Secured
Parties, resign and be discharged of the responsibilities hereby created,
such resignation to become effective upon (i) the appointment of a successor
Collateral Agent and (ii) the acceptance of such appointment by such
successor Collateral Agent. As promptly as practicable after the giving of
any such notice, the Secured Parties shall appoint a successor Collateral
Agent, which successor Collateral Agent shall be reasonably acceptable to the
Company. If no successor Collateral Agent shall be appointed and shall have
accepted such appointment within 90 days after the Collateral Agent gives the
aforesaid notice of resignation, the Collateral Agent may apply to any court
of competent jurisdiction to appoint a successor Collateral Agent to act
until such time, if any, as a successor shall have been appointed as provided
in this Section 18.15. Any successor so appointed by such court shall
immediately and without further act be superseded by any successor Collateral
Agent appointed by the Secured Parties, as provided in this Section 18.15.
Simultaneously with its replacement as Collateral Agent hereunder, the
Collateral Agent so replaced shall deliver to its successor all documents,
instruments, certificates and other items of whatever kind (including,
without limitation, the certificates and instruments evidencing the
Collateral and all instruments of transfer or assignment) held by it pursuant
to the terms hereof. The Collateral Agent that has resigned shall be
entitled to fees, costs and expenses to the extent incurred or arising, or
relating to events occurring, before its resignation or removal.
18.16 RELEASE OF COLLATERAL; TERMINATION OF AGREEMENT.
(a) Subject to the provisions of Section 18.11 hereof, this
Agreement shall terminate upon the full and final payment and performance of
the Secured Indebtedness (and upon receipt by the Collateral Agent of the
Company's written certification that all such Secured Indebtedness has been
satisfied) and payment in full of all fees and expenses owing by the Company
to the Collateral Agent. At such time, the Collateral Agent shall, at the
request of the Company, reassign and redeliver to the Company all of the
Collateral hereunder that has not been sold, disposed of, retained or applied
by the Collateral Agent in accordance with the terms hereof. Such
reassignment and redelivery shall be without warranty by or recourse to the
Collateral Agent, except as to the absence of any prior assignments by the
Collateral Agent of its interest in the Collateral, and shall be at the
expense of the Company.
14
<PAGE>
(b) The Company agrees that it will not, except as permitted by
the Note Purchase Agreement, sell or dispose of, or grant any option or
warrant with respect to, any of the Collateral.
18.17 FINAL EXPRESSION. This Agreement, together with any other
agreement executed in connection herewith, is intended by the parties as a
final expression of their agreement and is intended as a complete and
exclusive statement of the terms and conditions thereof.
18.18 GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL;
WAIVER OF DAMAGES.
(i) THIS AGREEMENT SHALL BE GOVERNED BY AND INTERPRETED UNDER
THE LAWS OF THE STATE OF NEW YORK, AND ANY DISPUTE ARISING OUT OF, CONNECTED
WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN THE
COMPANY, THE COLLATERAL AGENT AND THE SECURED PARTIES IN CONNECTION WITH THIS
AGREEMENT, AND WHETHER ARISING IN CONTRACT, TORT, EQUITY OR OTHERWISE, SHALL
BE RESOLVED IN ACCORDANCE WITH THE INTERNAL LAWS (AS OPPOSED TO THE CONFLICTS
OF LAWS PROVISIONS) AND DECISIONS OF THE STATE OF NEW YORK.
(ii) EXCEPT AS PROVIDED IN THE NEXT PARAGRAPH AND IN
PARAGRAPH (vi) BELOW, THE COMPANY, THE COLLATERAL AGENT AND THE SECURED
PARTIES AGREE THAT ALL DISPUTES BETWEEN OR AMONG THEM ARISING OUT OF,
CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED
BETWEEN THEM IN CONNECTION WITH THIS AGREEMENT, AND WHETHER ARISING IN
CONTRACT, TORT, EQUITY, OR OTHERWISE, SHALL BE RESOLVED ONLY BY STATE OR
FEDERAL COURTS LOCATED IN NEW YORK, NEW YORK. THE COMPANY WAIVES IN ALL
DISPUTES ANY OBJECTION THAT IT MAY HAVE TO THE LOCATION OF THE COURT
CONSIDERING THE DISPUTE INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO THE
LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS.
(iii) THE COMPANY AGREES THAT THE COLLATERAL AGENT SHALL, IN
ITS OWN NAME OR IN THE NAME AND ON BEHALF OF ANY SECURED PARTY, HAVE THE
RIGHT, TO THE EXTENT PERMITTED BY APPLICABLE LAW, TO PROCEED AGAINST THE
COMPANY OR ITS PROPERTY IN A COURT IN ANY LOCATION REASONABLY SELECTED IN
GOOD FAITH TO ENABLE THE COLLATERAL AGENT TO REALIZE ON SUCH PROPERTY, OR TO
ENFORCE A JUDGMENT OR OTHER COURT ORDER ENTERED IN FAVOR OF THE COLLATERAL
AGENT. THE COMPANY WAIVES ANY OBJECTION THAT IT MAY HAVE TO THE LOCATION OF
THE COURT IN WHICH THE COLLATERAL AGENT HAS COMMENCED A PROCEEDING DESCRIBED
IN THIS PARAGRAPH INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING
OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS.
15
<PAGE>
(iv) THE COMPANY, THE COLLATERAL AGENT AND THE SECURED
PARTIES EACH WAIVE ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY
DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE ARISING OUT OF,
CONNECTED WITH, RELATED TO OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED
BETWEEN THEM IN CONNECTION WITH THIS AGREEMENT. INSTEAD, ANY DISPUTES
RESOLVED IN COURT WILL BE RESOLVED IN A BENCH TRIAL WITHOUT A JURY.
(v) THE COMPANY IRREVOCABLY CONSENTS TO THE SERVICE OF
PROCESS OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING
BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE
PREPAID, TO THE COMPANY AT ITS ADDRESS SET FORTH IN SECTION 18.1 HEREOF, SUCH
SERVICE TO BECOME EFFECTIVE FIVE (5) BUSINESS DAYS AFTER SUCH MAILING.
(vi) NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE COLLATERAL
AGENT OR ANY SECURED PARTY TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY
LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST THE COMPANY
IN ANY OTHER JURISDICTION.
(vii) THE COMPANY HEREBY AGREES THAT NEITHER THE COLLATERAL
AGENT NOR ANY SECURED PARTY SHALL HAVE ANY LIABILITY TO THE COMPANY (WHETHER
SOUNDING IN TORT, CONTRACT OR OTHERWISE) FOR LOSSES SUFFERED BY THE COMPANY
IN CONNECTION WITH, ARISING OUT OF, OR IN ANY WAY RELATED TO, THE
TRANSACTIONS CONTEMPLATED AND THE RELATIONSHIP ESTABLISHED BY THIS AGREEMENT,
OR ANY ACT, OMISSION OR EVENT OCCURRING IN CONNECTION THEREWITH, UNLESS IT IS
DETERMINED BY A FINAL AND NONAPPEALABLE JUDGMENT OF A COURT THAT IS BINDING
ON THE COLLATERAL AGENT OR SUCH SECURED PARTY, AS THE CASE MAY BE, THAT SUCH
LOSSES WERE THE RESULT OF ACTS OR OMISSIONS ON THE PART OF THE COLLATERAL
AGENT OR SUCH SECURED PARTY, AS THE CASE MAY BE, CONSTITUTING GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT.
(viii) THE COMPANY WAIVES ALL RIGHTS OF NOTICE AND HEARING OF
ANY KIND PRIOR TO THE EXERCISE BY THE COLLATERAL AGENT OR ANY SECURED PARTY
OF ITS RIGHTS DURING THE CONTINUANCE OF AN EVENT OF DEFAULT TO REPOSSESS THE
COLLATERAL WITH JUDICIAL PROCESS OR TO REPLEVY, ATTACH OR LEVY UPON THE
COLLATERAL OR OTHER SECURITY FOR THE OBLIGATIONS. THE COMPANY WAIVES THE
POSTING OF ANY BOND OTHERWISE REQUIRED OF THE COLLATERAL AGENT OR ANY SECURED
PARTY DURING THE CONTINUANCE OF AN EVENT OF DEFAULT IN CONNECTION WITH ANY
JUDICIAL PROCESS OR PROCEEDING TO OBTAIN POSSESSION OF, REPLEVY, ATTACH OR
LEVY UPON COLLATERAL OR OTHER SECURITY FOR THE OBLIGATIONS, TO ENFORCE ANY
JUDGMENT OR OTHER COURT ORDER ENTERED
16
<PAGE>
IN FAVOR OF THE COLLATERAL AGENT OR ANY SECURED PARTY, OR TO ENFORCE BY
SPECIFIC PERFORMANCE, TEMPORARY RESTRAINING ORDER OR PRELIMINARY OR PERMANENT
INJUNCTION THIS AGREEMENT OR ANY OTHER AGREEMENT OR DOCUMENT BETWEEN THE
COMPANY, THE COLLATERAL AGENT AND THE SECURED PARTIES.
18.19 ACKNOWLEDGMENTS OF COMPANY. The Company hereby acknowledges that:
(a) it has been advised by counsel in the negotiation, execution
and delivery of this Agreement;
(b) neither the Collateral Agent nor any Secured Party has any
fiduciary relationship to the Company, and the relationship between the
Collateral Agent and the Secured Parties, on the one hand, and the Company,
on the other hand, is solely that of a secured party and a creditor; and
(c) no joint venture exists among the Secured Parties or among the
Company and the Secured Parties.
17
<PAGE>
[Pledge Agreement Signature Page]
IN WITNESS WHEREOF, the Company and the Collateral Agent have each
caused this Agreement to be duly executed and delivered as of the date first
above written.
RADIO MOVIL DIGITAL AMERICAS, INC.,
a Delaware corporation
By: _________________________________
Name:
Title:
COLLATERAL AGENT:
BT FOREIGN INVESTMENT CORPORATION,
as Collateral Agent
By: _________________________________
Name:
Title:
18
<PAGE>
Exhibit 10.30F
International Wireless Communications Holdings, Inc.
400 South El Camino Real, Suite 1275
San Mateo, California 94402
January 23, 1998
BT Foreign Investment Corporation
130 Liberty Street
New York, NY 10006
This letter agreement is to confirm certain understandings between
International Wireless Communications Holdings, Inc., a Delaware corporation
("IWCH"), Radio Movil Digital Americas, Inc., a Delaware corporation ("RMD"),
and BT Foreign Investment Corporation, a subsidiary of Bankers Trust New York
Corporation, a bank holding company ("BTFIC") (the "Letter Agreement").
Capitalized terms used but not defined herein shall have the respective
meanings assigned to them in the Amended and Restated Senior Secured Note and
Warrant Purchase Agreement, dated as of the date hereof, between IWCH, RMD
and BTFIC (the "Purchase Agreement").
The parties hereby agree as follows:
1. BTFIC (or its Affiliate) shall have the right, but not the
obligation, to purchase up to its Portion (as defined below) of equity
securities (including securities containing options or rights to acquire
equity securities), that are to be issued by RMD or any Brazilian Entity
primarily for equity financing purposes to any Person that is not an equity
holder of RMD as of the date hereof. IWCH and RMD shall promptly apprise
BTFIC (or its Affiliate) of all such potential issuances, and shall provide
BTFIC (or its Affiliate) with copies of all such related documentation and
drafts thereof, including without limitation, copies of term sheets,
correspondence and drafts of agreements. In addition, BTFIC (or its
Affiliate) shall receive execution copies of all financing documents
regarding such potential issuance as soon as such items are available, and be
entitled to purchase such securities at the most favorable price and on the
most favorable terms as such securities are offered to any other Persons;
provided that, at the request of BTFIC (or its Affiliate), RMD shall offer to
BTFIC (or its Affiliate) securities which have no voting rights (other than
required by applicable law) and which are convertible into voting securities
at the request of the holder thereof, subject to applicable requirements of
law; and provided further that, the purchase price for all such securities
offered to BTFIC (or its Affiliate) may be structured in a manner (as BTFIC
elects in its sole discretion) so that it will involve a reduction in the
unpaid principal amount of the Notes as consideration for the purchase price.
2. IWCH and RMD shall not, and shall not permit any Brazilian Entity to,
consummate any equity issuance described in paragraph 1 above until BTFIC
notifies RMD that
<PAGE>
it does not desire to so participate on the terms described above (provided
that if BTFIC shall be deemed to have so notified RMD if it does not notify
RMD whether or not it (or its Affiliate) wants to participate within 30 days
after receiving execution copies from RMD pursuant to Section 1 above.
3. If BTFIC (or its Affiliate) has not acquired any equity interest in
RMD or any other Brazilian Entity within six (6) months after the Closing
Date, BTFIC (or its Affiliate) shall have the right, but not the obligation,
to propose a purchase price and other material terms and conditions upon
which, BTFIC (or its Affiliate), would acquire up to its Portion of equity
from RMD or another Brazilian Entity. IWCH and RMD shall, and shall cause
the appropriate Brazilian Entity to, use commercially reasonable best efforts
to agree upon the price and other terms (which other terms will be customary
terms for transactions of this type by an institutional private equity
investor, and shall include the terms set forth in the provisos set forth in
paragraph 1 above) for BTFIC's (or its Affiliate's) purchase of such equity
securities, and upon such agreement, such transaction will be consummated;
provided, however, that in any event the purchase price shall be acceptable
to RMD and BTFIC at their sole discretion.
4. BTFIC's (or its Affiliate's) "Portion" means, with respect to any
class of equity securities, the number of such equity securities that would
be obtained by dividing the lesser of (x) the aggregate unpaid principal
amount of the Notes or (y) $12,000,000; provided, however, that in the case
of an equity issuance described in the first sentence of paragraph 1 above,
such amount shall not be greater than 50% of the total amount of securities
being purchased in connection with such equity issuance.
This Letter Agreement is a Transaction Document and, accordingly, the
appropriate provisions of the Purchase Agreement are hereby incorporated
herein by reference.
This Letter Agreement shall be governed by and construed in accordance
with the laws of the State of New York, without regard to the conflicts of
law provisions thereof.
<PAGE>
If the foregoing reflects your understanding of our arrangement, please
countersign where indicated below and return the enclosed duplicate original
of this letter to me at your earliest convenience.
Sincerely,
INTERNATIONAL WIRELESS
COMMUNICATIONS HOLDINGS, INC.
By: ________________________________
John D. Lockton, President
ACCEPTED AND AGREED:
RADIO MOVIL DIGITAL AMERICAS, INC.
BY: ______________________________________
Name:
Title:
BT FOREIGN INVESTMENT CORPORATION
BY: ______________________________________
Name:
Title:
