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EXHIBIT 10.3
SHAREHOLDERS' AGREEMENT
AGREEMENT, made as of the 27 day of June, 1997, by and among Let's
Talk Cellular & Wireless, Inc., a Florida corporation f/k/a Let's Talk Cellular
of America, Inc. (the "Company"), those persons listed on the signature page
hereto under Current Shareholders (together with their permitted transferees,
the "Current Shareholders") and the persons listed on the signature page hereto
under Investors (together with their permitted transferees, the "Investors"
and, with the Current Shareholders, the "Shareholders").
WHEREAS, the parties hereto desire to execute this Shareholders'
Agreement and to be bound by the provisions hereof.
NOW, THEREFORE, in consideration of the foregoing, the agreements set
forth below, and the parties' desire to provide for continuity of ownership of
the Company to further the interests of the Company and its present and future
shareholders, the parties hereby agree with each other as follows:
1. Definition of Shares. As used in this Agreement, "Shares" shall
mean and include all shares of the Company's Common Stock, now owned or
hereafter acquired by a Shareholder.
2. Prohibited Transfers. No Shareholder shall sell, assign, transfer,
pledge, hypothecate, mortgage, encumber or dispose of all or any of his Shares
except in compliance with the terms of this Agreement. Notwithstanding anything
to the contrary contained in this Agreement, (a) any Current Shareholder may
transfer without the necessity of prior approval all or any of his Shares by
way of gift to his spouse, to any of his lineal descendants or ancestors, or to
any trust for the benefit of any one or more of such Current Shareholder, his
spouse or his lineal descendants or ancestors, (b) any Current Shareholder may
transfer all or any of his Shares by will or the laws of descent and
distribution, (c) any Current Shareholder may transfer his Shares to an
Investor or to another Current Shareholder; and (d) any Investor may transfer
its Shares to an affiliate (as defined under the Securities Exchange Act of
1934) of such Investor; provided that in the event such transferee under this
Section 2 is not already a party to this Agreement, such transferee shall agree
in writing with the Company and the other Shareholders, as a condition to such
transfer, to be bound by all of the provisions of this Agreement to the same
extent as if such transferee were the Shareholder transferring such Shares.
3. Right of First Refusal on Dispositions.
(a) Except for the transfers permitted in Section 2, if at any time
a Current Shareholder (a "Selling Current Shareholder") desires to sell or
otherwise transfer all or any part of his Shares pursuant to a bona fide offer
from a third party (the "Proposed Transferee"), the Selling Current Shareholder
shall submit a written offer (the "Offer") by delivering the Offer to the
Company and the other Shareholders (the "Other Shareholders"), to sell such
Shares (the "Offered Shares") to the Other Shareholders on terms and
conditions, including price, not less favorable than those on which the Selling
Current Shareholder proposes to sell such Offered
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Shares to the Proposed Transferee. The Offer shall disclose the identity of the
Proposed Transferee, the number of Offered Shares proposed to be sold, the
total number of Shares owned by the Selling Current Shareholder, the terms and
conditions, including price, of the proposed sale, and any other material facts
relating to the proposed sale. The Offer shall further state (i) that the Other
Shareholders may acquire, in accordance with the provisions of this Agreement,
any of the Offered Shares for the price and upon the other terms and conditions
set forth therein and (ii) that if all such Offered Shares are not purchased by
the Other Shareholders, the Other Shareholders may exercise their rights
provided pursuant to Section 5 hereof.
(b) Each Other Shareholder shall have the right to purchase that
number of Offered Shares as shall be equal to the number of Offered Shares
multiplied by a fraction, the numerator of which shall be the number of Shares
of Common Stock then owned by such Other Shareholder and the denominator of
which shall be the aggregate number of shares of Common Stock then owned by all
of the Other Shareholders who elect to purchase the Offered Shares. The amount
of such Offered Shares that each Other Shareholder is entitled to purchase
under this Section 3(b) shall be referred to as its "Pro Rata Fraction."
(c) The Other Shareholders shall have a right of oversubscription
such that if any Other Shareholder fails to accept the Offer as to its full Pro
Rata Fraction, the remaining Other Shareholders shall, among them, have the
right to purchase up to the balance of such Offered Shares not so purchased.
(d) Those Other Shareholders who desire to purchase all or any part
of the Offered Shares shall communicate in writing their election to purchase
to the Selling Current Shareholder, which communication shall state the number
of Offered Shares said Other Shareholders desire to purchase and shall be
provided to the Selling Current Shareholder within 20 days of the date the
Offer was made. Such communication shall, when taken in conjunction with the
Offer, be deemed to constitute a valid, legally binding and enforceable
agreement for the sale and purchase of such Offered Shares (subject to the
aforesaid limitations as to the right of the Other Shareholders to purchase
more than their Pro Rata Fraction). Sales of such Offered Shares to be sold to
the Other Shareholders pursuant to this Section 3 shall be made at the offices
of the Company within sixty (60) days following the date the Offer was made.
(e) If the Other Shareholders do not purchase all of the Offered
Shares, the remaining Offered Shares may be sold by the Selling Current
Shareholder at any time within ninety (90) days after the date the Offer was
made, subject to the provisions of Section 5. Any such sale shall be to the
Proposed Transferee, at not less than the price and upon other terms and
conditions, if any, not more favorable to the Proposed Transferee than those
specified in the Offer. Any remaining Offered Shares not sold within such
ninety (90) day period shall continue to be subject to the requirements of a
prior offer pursuant to this Section 3. If Offered Shares are sold pursuant to
this Section 3 to any purchaser who is not a party to this Agreement, the
purchaser of such Offered Shares shall execute a counterpart of this Agreement
as a precondition of the purchase of such Offered Shares and any Offered Shares
sold to such purchaser shall continue to be subject to the provisions of this
Agreement.
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4. Right of First Offer on Investor Dispositions.
(a) Except for the transfers permitted in Section 2, if at any time
an Investor (a "Selling Investor") desires to sell or otherwise transfer all or
part of its Shares to a third party, the Selling Investor shall notify the
Other Shareholders in writing (the "Investor Offer") of the number of Shares
proposed to be sold or transferred (the "Investor Offered Shares") and the name
of any third party who has made a written offer for such Shares, if applicable.
Each Other Shareholder shall have the right to offer to acquire the Investor
Offered Shares by submitting a proposal in writing to the Selling Investor
within twenty (20) days of delivery of the Investor Offer. The proposal shall
state the number of Investor Offered Shares proposed to be purchased, the terms
and conditions, including price, of the proposed purchase and any other
material facts relating to such proposed purchase.
(b) The Selling Investor may within twenty (20) days of delivery of
the proposals select the best proposal(s) from one or more Other Shareholders
or a portion of one or more proposals from several Other Shareholders (if
permitted by such proposals) and sell the Investor Offered Shares to the Other
Shareholders who have the highest and best offer(s) as determined by the
Selling Investor (collectively, the "Best Offer"). The Best Offer shall
constitute an irrevocable, valid, legally binding and enforceable offer for the
sale and purchase of the Investor Offered Shares which shall remain outstanding
for twenty (20) days after the delivery of the Best Offer (calculated using the
date the last proposal was submitted to the Selling Investor). Sales of
Investor Offered Shares to be sold to the Other Shareholders pursuant to this
Section 4(b) shall be made at the offices of the Company within sixty (60) days
following acceptance by the Selling Investor of the Best Offer.
(c) The Selling Investor may elect not to sell the Investor Offered
Shares to the Other Shareholders pursuant to the Best Offer and proceed to
offer to sell or transfer the Investor Offered Shares to a third party. In such
event, the Selling Investor may sell its shares to a third party provided that
(a) the aggregate cash consideration to be received at the closing of such sale
exceeds the aggregate cash consideration to be received pursuant to the Best
Offer, (b) the Selling Investor must sell the Investor Offered Shares to any
third party prior to the six month anniversary of the date of the Offer or the
Selling Investor must allow the Other Shareholders to propose new offers in
accordance with Section 4(a) hereof, (c) such third party agrees to be bound by
the terms hereof and (d) the Other Shareholders may exercise their rights
provided pursuant to Section 5 hereof with respect to any such sale of the
Investor Offered Shares to a third party.
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5. Right of Participation in Sales.
(a) If at any time a Shareholder (a "Selling Shareholder") desires
to sell all or any part of the Shares owned by such Shareholder to a Proposed
Transferee, (unless the entire transfer is pursuant to Section 2) and those
Shares to be transferred have not been purchased by another Shareholder under
Section 3 or Section 4 hereof, each Other Shareholder (unless it has elected to
purchase Shares pursuant to Section 3 or has had its offer to purchase Shares
accepted pursuant to Section 4 hereof) shall have the right to sell to the
Proposed Transferee, as a condition to such sale by the Selling Shareholder at
the same price per share and on the same terms and conditions as involved in
such sale by the Selling Shareholder a pro rata portion of the amount of Shares
proposed to be sold to the Proposed Transferee. The "pro rata portion" of
Shares which each Other Shareholder shall be entitled to sell to the Proposed
Transferee shall be that number of Shares as shall equal the number of Offered
Shares proposed to be sold to the Proposed Transferee multiplied by a fraction,
the numerator of which is the aggregate of all shares of Common Stock which are
then held by the Other Shareholder, and the denominator of which is the
aggregate of all shares of Common Stock which are then held by the Selling
Shareholder and all Other Shareholders wishing to participate in any sale under
this Section 5.
(b) Each Selling Shareholder who wishes to make a sale to a
Proposed Transferee which is subject to this Section 5 shall, after
complying with the provisions of Section 3 or Section 4, as applicable, give to
each Other Shareholder notice of such proposed sale, and stating that all
Offered Shares were not purchased pursuant to the Offer or the Investor Offer
as discussed in Section 3 or Section 4, as applicable. Such notice shall be
given at least 20 days prior to the date of the proposed sale to the Proposed
Transferee. Each Other Shareholder wishing to so participate in any sale under
this Section 5 shall notify the Selling Shareholder in writing of such
intention within 15 days after such Other Shareholder's receipt of the notice
described in the preceding sentence.
(c) The Selling Shareholder and each participating Other
Shareholder shall sell to the Proposed Transferee all, or at the option of the
Proposed Transferee, any part of the Shares proposed to be sold by them at not
less than the price and upon other terms and conditions, if any, not more
favorable to the Proposed Transferee than those in the notice provided by the
Selling Shareholder under subparagraph (b) above; provided, however, that any
purchase of less than all of such Shares by the Proposed Transferee shall be
made from the Selling Shareholder and each participating Other Shareholder pro
rata based upon the relative number of the Shares that the Selling Shareholder
and each participating Other Shareholder is otherwise entitled to sell pursuant
to Section 5(a).
(d) If any Shares are sold pursuant to this Section 5 to any
purchaser who is not a party to this Agreement, the purchaser of such Shares
shall execute a counterpart of this Agreement as a precondition to the purchase
of such Shares and such Shares shall continue to be subject to the provisions
of this Agreement.
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6. Requirement of Participation in Certain Sales.
(a) In the event of an Approved Sale (as defined below), the Company
shall deliver 20 days' prior written notice thereof to each Shareholder. Each
Shareholder shall vote for, consent to and raise no objections to, bring no
claim against or contest such Approved Sale. If the Approved Sale is structured
as (i) a merger or consolidation, each Shareholder shall waive any dissenters
rights, appraisal rights or similar rights in connection with such merger or
consolidation, or (ii) a sale of stock, each Shareholder shall (A) agree to
sell all of his or its Shares of Common Stock and rights to acquire Shares of
Common Stock on the terms and conditions approved by the Board of Directors and
the holders of a majority of the outstanding Shares of Common Stock and (B)
execute such purchase agreement and other documents as executed by the holders
of a majority of the outstanding shares of Common Stock. Each Shareholder shall
take such other necessary or desirable actions in connection with the
consummation of the Approved Sale as reasonably requested by the Company. For
purposes hereof, the term "Approved Sale" shall mean a sale of the Company to
an independent third party (unaffiliated with any Shareholder who owns in
excess of 5% of the Company's Common Stock on a fully-diluted basis) approved
by the Board of Directors of the Company and both Nicolas Molina and Brett
Beveridge and the holders of a majority of the outstanding shares of Common
Stock pursuant to which such third party or parties acquires (i) capital stock
of the Company possessing the voting power under normal circumstances to elect
a majority of the Company's Board of Directors (whether by merger,
consolidation or sale or transfer of the Company's capital stock) or (ii) all
or substantially all of the Company's assets determined on a consolidated
basis.
(b) The obligations of the Shareholders with respect to the Approved
Sale of the Company are subject to the satisfaction of the following
conditions: (i) upon the consummation of the Approved Sale, each Shareholder
shall receive for his Shares of Common Stock the same form of consideration and
the same amount of consideration as each other Shareholder receives for each of
their Shares of Common Stock, (ii) if any holders of Common Stock are given an
option as to the form and amount of consideration to be received, each holder
of Common Stock shall be given the same option, and (iii) each holder of then
currently exercisable rights to acquire shares of Common Stock shall be given
an opportunity to either (A) exchange such rights prior to the consummation of
the Approved Sale or (B) receive in exchange for such rights consideration
equal to the amount determined by multiplying (1) the same amount of
consideration per Share of Common Stock received by holders of Common Stock in
connection with the Approved Sale less the exercise price per Share of Common
Stock of such rights to acquire such Common Stock by (2) the number of Shares
of Common Stock represented by such rights.
7. Board of Directors.
(a) At each annual meeting of the shareholders of the Company, and
at each special meeting of the shareholders of the Company called for the
purpose of electing directors of the Company, and at any time at which
shareholders of the Company shall have the right to, or shall, vote for
directors of the Company, then, and in each event, the Shareholders shall vote
all
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Shares owned by them for the election of a Board of Directors as follows. The
Board of Directors shall consist of seven directors, designated as follows:
(i) four directors shall be designated by HIG Fund V,
Inc. and Texas Cellular Partners, L.P.; and
(ii) three directors shall be designated by a
majority of the Current Shareholders (which designees shall initially
be Nick Molina, Brett Beveridge and Allan Sorensen).
The board of directors of the Company's subsidiaries shall consist of
Nick Molina, Brett Beveridge and one additional director designated by HIG Fund
V, Inc. and Texas Cellular Partners, L.P. In the event the Company effects a
public offering of its common stock, then, as a condition precedent to such
public offering, the parties hereto shall cause the recomposition of the Board
of Directors of the Company to a Board with three year staggered terms. Messrs.
Molina and Beveridge shall be elected to the group which is elected for an
initial term of three years.
8. Term. This Agreement shall terminate immediately prior to (a) the
consummation of the first Qualified Public Offering or (b) the tenth
anniversary of the date of this Agreement, whichever occurs first. For purposes
hereof, the term "Qualified Public Offering" shall mean an underwritten public
offering pursuant to an effective registration statement under the Securities
Act of 1933, as amended, covering the offer and sale of Common Stock for the
account of the Company in which the aggregate net proceeds to the Company is
equal to at least $10,000,000.
9. Failure to Deliver Shares. If a Current Shareholder becomes
obligated to sell any Shares to another Shareholder under this Agreement and
fails to deliver such Shares in accordance with the terms of this Agreement,
the Other Shareholders may, at their option, in addition to all other remedies
they may have, send to the defaulting Current Shareholder the purchase price
for such Shares as is herein specified. Thereupon, the Company, upon written
notice to the defaulting Current Shareholder, (a) shall cancel on its books the
certificate or certificates representing the Shares to be sold and (b) shall
issue, in lieu thereof, in the name of such other Shareholder, a new
certificate or certificates representing such Shares, and thereupon all of the
defaulting Current Shareholder's rights in and to such Shares shall terminate.
10. Liquidity Option. If an underwritten public offering by the
Company has not been consummated on or before the second anniversary of the
date of this Agreement then Messrs. Molina and Beveridge shall have the option
(the "Liquidity Option") to cause all the Shareholders to each offer 20% of
their shares of Common Stock for sale to an independent third party.
Messrs. Molina and Beveridge shall exercise the Liquidity Option by
giving the Shareholders written notice thereof at any time after the second
anniversary of the date of this Agreement and on or before the date which is
sixty days thereafter.
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Upon receipt of the notice from Messrs. Molina and Beveridge, the
Company shall, with reasonable promptness, retain a nationally recognized
investment banking firm to actively market 20% of all the Shareholders' Shares
for a period of six months. If the investment banking firm finds an independent
third party buyer for the Shares and the proposed price per share reflects a
reasonable fair market value, then all of the Shareholders of the Company shall
be required to sell 20% of their respective Shares to such buyer. The Company
shall provide customary representations and warranties to such buyer and the
Shareholders shall only be obligated to represent their title to the Shares. If
the investment banking firm does not find such a suitable buyer within such
time frame then the Liquidity Option shall expire.
In the event that any potential buyer of Shares is not willing to buy
the full 20% of the outstanding Shares, then any reduction in Shares to be
purchased shall come from all the Shareholders on a pro rata basis.
11. Option to Cause Sale of the Company. If an underwritten public
offering by the Company has not occurred on or before the fifth anniversary of
the date of this Agreement, then Messrs. Molina and Beveridge
shall have the option (the "Sale Option") to cause the sale of the Company.
Messrs. Molina and Beveridge shall exercise the Sale Option by giving
the Company written notice thereof at any time after the fifth anniversary of
the date hereof and on or before the date which is sixty days thereafter. Upon
receipt of the notice from Messrs. Molina and Beveridge, the Company shall,
with reasonable promptness, retain a nationally recognized investment banking
firm to actively market the sale of the Company. If the investment banking firm
finds an independent third party buyer for the Shares and the proposed price
per share reflects a reasonable fair market value, then the Shareholders shall
be required to sell all of their Shares to such Buyer. The obligation to sell
the Company shall continue so long as Messrs. Molina and Beveridge continue to
hold Common Stock in the Company.
12. Shareholder Loans. The Company acknowledges that it has certain
loans outstanding from Messrs. Molina and Beveridge of $129,050.00 and
$129,050.00, respectively (the "Loans") as evidenced by those two (2) certain
Renewal Promissory Notes, each dated as of June 25, 1996 (the "Notes"). The
Company agrees that if not sooner repaid, then upon the earlier of (i) the
consummation of a Qualified Public Offering or (ii) June 1, 1998, the Company
will repay the Loans, including any and all accrued and unpaid interest, and
further agrees to immediately amend, restate and replace the Notes with
replacement notes of like tenor reflecting the above-provided payment dates.
13. Specific Enforcement. Each Shareholder and the Company
expressly agrees that the other Shareholders and the Company may be irreparably
damaged if this Agreement is not specifically enforced. Upon a breach or
threatened breach of the terms, covenants and/or conditions of this Agreement
by any Shareholder, the other Shareholders and the Company shall, in addition
to all other remedies, each be entitled to apply for a temporary or permanent
injunction, and/or a decree for specific performance, in accordance with the
provisions hereof.
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14. Legend. Each certificate evidencing any of the Shares now owned
or hereafter acquired by the Current Shareholders shall bear a legend in
addition to any other required legend, substantially as follows:
"ANY SALE, ASSIGNMENT, TRANSFER OR OTHER DISPOSITION OF THE
SHARES REPRESENTED BY THIS CERTIFICATE IS RESTRICTED BY, AND
SUBJECT TO, THE TERMS AND PROVISIONS OF A CERTAIN SHAREHOLDERS'
AGREEMENT DATED AS OF JUNE __, 1997. A COPY OF SAID AGREEMENT IS
ON FILE WITH THE SECRETARY OF THE CORPORATION."
15. Notices. Notices given hereunder shall be deemed to have been
duly given on the date of personal delivery or on the date of postmark if
mailed by certified or registered mail, return receipt requested, to the party
being notified at his or its address specified on the applicable schedule
hereto or such other address as the addressee may subsequently notify the other
parties of in writing.
16. Entire Agreement and Amendments. This Agreement constitutes the
entire agreement of the parties with respect to the subject matter hereof and
neither this Agreement nor any provision hereof may be waived, modified,
amended or terminated except by a written agreement signed by the parties
hereto; provided, however, that Investor owning at least a majority of the
Shares owned by all Investors may effect any such waiver, modification,
amendment or termination on behalf of all of the Investors and 80% of the
Shares owned by all Current Shareholders may effect any such waiver,
modification, amendment or termination on behalf of all of the Current
Shareholders. Each of the Shareholders represents that he or it is not a party
to any other agreement which would prevent him or it from performing his or its
obligations hereunder. No waiver of any breach or default hereunder shall be
considered valid unless in writing, and no such waiver shall be deemed a waiver
of any subsequent breach or default of the same or similar nature.
17. Governing Law; Successors and Assigns. This Agreement shall be
governed by the internal laws of the State of Florida without giving effect to
the conflicts of laws principles thereof and, except as otherwise provided
herein, shall be binding upon the heirs, personal representatives, executors,
administrators, successors and assigns of the parties.
18. Severability. If any provision of this Agreement shall be held
to be illegal, invalid or unenforceable, such illegality, invalidity or
unenforceability shall attach only to such provision and shall not in any
manner affect or render illegal, invalid or unenforceable any other provision
of this Agreement, and this Agreement shall be carried out as if any such
illegal, invalid or unenforceable provision were not contained herein. This
Agreement supersedes that certain Shareholders Agreement, dated as of June 25,
1996, which is hereby terminated, and any and all other agreements between (a)
the Company on the one hand and any Shareholder on the other
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hand (other than the Series A Preferred Stock Purchase Agreement dated as of
June 25, 1996, the agreements which are exhibits thereto, and any amendments
and modifications thereof) and (b) any two or more Shareholders. Each
Shareholder represents and warrants that he is not subject to any agreement
which may conflict with or violate the terms of this Agreement and covenants
that he will not enter into any such agreement.
19. Captions. Captions are for convenience only and are not deemed to
be part of this Agreement.
20. 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.
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CURRENT SHAREHOLDERS: COMPANY:
LET'S TALK CELLULAR & WIRELESS,
INC.
/s/Nick Molina
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Nick Molina
By:/s/Nick Molina
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Name: Nick Molina
/s/Brett Beveridge Title: Chief Executive Officer
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Brett Beveridge
/s/Allan Sorensen INVESTORS:
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Allan Sorensen HIG FUND V, INC.
By:/s/Anthony Tamer
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Name: Anthony Tamer
Title: President
TEXAS CELLULAR PARTNERS, L.P.
By: HIG TEXAS CELLULAR
COMPANY, its General Partner
By:/s/Anthony Tamer
-----------------------------
Name: Anthony Tamer
Title: President
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