Rogers 2003 Annual Report Download - page 67

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2003 Annual ReportRogers Communications Inc. 65
Over-the-Air Activation Agreement
Wireless currently utilizes the services of AWE for automated “over-the-air” (“OTA”) programming of subscriber handsets.
The current agreement with AWE expires March 31, 2004, at which time the Company will assume responsibility for OTA
programming.
Shareholders Agreement
In connection with the JVII investment described above, the Company, Wireless, and JVII entered into a shareholders
agreement. Pursuant to the shareholders agreement, Rogers has agreed as a shareholder of Wireless to cause JVII to have
the following rights:
• various governance rights with respect to Wireless and its wholly-owned subsidiary, RWI, including the ability to nom-
inate four directors to each Board of Directors and representation on each committee of such Boards of Directors;
• the ability to nominate any Chief Technology Officer for Wireless or RWI;
• the requirement for JVII’s consent to certain transactions involving Wireless or RWI including;
• a sale of all or substantially all of its assets, including a sale of control of RWI;
• a decision by Wireless or RWI to carry on a business other than specified wireless businesses;
• certain issuances of equity securities by Wireless;
• the entering into by Wireless with certain competitors of AWE of any material contract which is outside the ordinary
course of wireless business;
• certain amalgamations, mergers or business combinations; and
• the entering into of certain related party transactions;
• the issuance of indebtedness by Wireless that would result in total indebtedness for borrowed money outstanding
in excess of five times earnings before interest, taxes, depreciation and amortization (“EBITDA”) based on 12-month
trailing EBITDA calculated on a consolidated basis;
• the grant by the Company to JVII of a right to make a first offer and a right of first negotiation in respect of that
offer if the Company wishes to transfer its shares of Wireless (other than to members of the Rogers group of compa-
nies or pursuant to other exceptions).
The shareholders agreement also provides for, among other things:
•JVII’s agreement to support any going-private transaction relating to Wireless which is initiated by RCI and which does
not dilute JVII’s equity and voting interest in Wireless, subject to certain liquidity rights in favour of AWE;
• a requirement that JVII convert all of the Class A Multiple Voting Shares owned by it into Class B Restricted Voting
Shares if any person other than AWE and permitted transferees become the beneficial owners of, directly or indirectly,
more than a majority of the equity shares of JVII, or have the power, in law or in fact, to direct the management and
policies of JVII;
• the grant by RCI to JVII of the right to make a first offer, and a right of first negotiation in respect to that offer, if RCI
wishes to sell any shares of Wireless (other than to members of the Rogers group of companies, the Rogers Family or
pursuant to other exceptions);
• the grant by JVII to RCI of the right to make a first offer, and a right of first negotiation in respect to that offer, if JVII
decides to sell any of its shares of Wireless;
• certain shotgun rights of first refusal in the event that a material competitor of AWE acquires control of the Company
at a time when, among other requirements, the Brand Licence Agreement is in effect (on March 8, 2004, Wireless will
begin transitioning its branding to Rogers Wireless from Rogers AT&T Wireless); and
• Wireless has agreed that if Wireless proposes to issue treasury shares, each of the Company and JVII has a pre-emptive
right to purchase additional shares of Wireless in order to maintain their respective voting and equity interests in
Wireless (subject to exceptions).
If JVII notifies RCI that it wishes to sell all or any portion of its shares of Wireless and if RCI does not purchase those shares
under its right of first offer and right of first negotiation, JVII may sell the shares to third parties provided, amongst other
things, that (i) any Class A Multiple Voting Shares of the Company to be sold are first converted into Class B Restricted
Voting Shares, (ii) such shares are sold to any third party at a price greater than the highest price offered to RCI under its
right of first offer and first negotiation and (iii) JVII may not sell to any one third party, shares representing more than 5% of
the equity of Wireless (or 10% in the case of certain service providers to Wireless) to any one party.
The shareholders agreement terminates in certain circumstances, including (subject to exceptions) in the event
that JVII ceases to own at least 20% of the equity shares of Wireless.
Concurrently with entering into the shareholders agreement, Wireless entered into a registration rights agreement
with JVII. Under that agreement, in connection with a sale by JVII of shares of Wireless to a third party or parties, JVII is
entitled, subject to certain limitations, to require Wireless to qualify the sale of such shares pursuant to a prospectus or
registration statement filed with Canadian or U.S. securities regulators.
Management’s Discussion and Analysis