EXHIBIT 4.3 AMENDED AND RESTATED SHAREHOLDERS AGREEMENT

 

Exhibit 4.3

 

AMENDED AND RESTATED

 

SHAREHOLDERS AGREEMENT

 

dated as of

 

______________, 2006

 

among

 

NTELOS HOLDINGS CORP.,

 

QUADRANGLE CAPITAL PARTNERS LP,

 

QUADRANGLE SELECT PARTNERS LP,

 

QUADRANGLE CAPITAL PARTNERS-A LP,

 

CITIGROUP VENTURE CAPITAL EQUITY PARTNERS, L.P.,

 

CVC/SSB EMPLOYEE FUND, L.P.,

 

CVC EXECUTIVE FUND LLC

 

and

 

THE MANAGEMENT SHAREHOLDERS NAMED HEREIN

 

Exhibit 4.3

 

AMENDED AND RESTATED

SHAREHOLDERS AGREEMENT

 

AMENDED AND RESTATED SHAREHOLDERS AGREEMENT (this “ Agreement ”) dated as of ______________, 2006 among (i) NTELOS Holdings Corp., a Delaware corporation (the “ Company ”), (ii) Quadrangle Capital Partners LP, a Delaware limited partnership, Quadrangle Select Partners LP, a Delaware limited partnership, and Quadrangle Capital Partners-A LP, a Delaware limited partnership (collectively, the “ Quadrangle Entities ”), (iii) Citigroup Venture Capital Equity Partners, L.P., a Delaware limited partnership (“ CVC Equity ”), CVC/SSB Employee Fund, L.P., a Delaware limited partnership, CVC Executive Fund LLC, a Delaware limited liability company and the other Persons listed on the signature pages hereof under “CVC Entities” (collectively, the “ CVC Entities ” and, together with the Quadrangle Entities, the “ Institutional Shareholders ”) and (iv) the Persons listed on the signature pages hereof under “Management Shareholders” (the “ Management Shareholders ”).

 

W I T N E S S E T H :

 

WHEREAS, pursuant to the Transaction Agreement (as defined below) certain parties hereto own or will be acquiring Company Securities (as defined below);

 

WHEREAS, the parties listed on the signature pages hereof entered into the Shareholder Agreement dated May 2, 2005 (the “ Original Agreement ”) to govern certain of their rights, duties and obligations after consummation of the transactions contemplated by the Transaction Agreement;

 

WHEREAS, in connection with the consummation of the First Public Offering (as defined herein), in accordance with Section 7.04 of the Original Agreement the parties executing the signature pages to this Agreement wish to amend and restate the Original Agreement in its entirety;

 

NOW, THEREFORE, the parties hereto agree as follows:

 

ARTICLE 1

D EFINITIONS

 

Section 1.01 . Definitions. (a) The following terms, as used herein, have the following meanings:

 

“ Adjusted Cost Price ” means, with respect to each of the Unvested Incentive Shares, the original purchase price paid by the applicable Management

Shareholder for such Unvested Incentive Shares (including any Unvested Incentive Shares which have been converted into other shares of capital of the Company, and adjusted for any stock dividend payable upon, or subdivision or combination of, the Unvested Incentive Shares).

 

“ Affiliate ” means, with respect to any Person, any other Person directly or indirectly controlling, controlled by or under common control with such Person, provided that no securityholder of the Company shall be deemed an Affiliate of any other securityholder solely by reason of any investment in the Company. For the purpose of this definition, the term “ control ” (including with correlative meanings, the terms “ controlling ”, “ controlled by ” and “ under common control with ”), as used with respect to any Person, shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise.

 

“ Aggregate Ownership ” means, with respect to any Shareholder or group of Shareholders, and with respect to any class of Company Securities, the total amount of such class of Company Securities “ beneficially owned ” (as such term is defined in Rule 13d-3 of the Exchange Act) (without duplication) by such Shareholder or group of Shareholders as of the date of such calculation, calculated on a Fully Diluted basis.

 

“ Board ” means the board of directors of the Company.

 

“ Business Day ” means any day except a Saturday, Sunday or other day on which commercial banks in New York City are authorized by law to close.

 

“ Bylaws ” means the Bylaws of the Company, as amended and restated and thereafter amended from time to time.

 

“ Cause ” shall exist with respect to a Management Shareholder if such Management Shareholder has (i) committed an act of fraud, embezzlement, misappropriation or breach of fiduciary duty against the Company or any Subsidiary of the Company or a felony involving the business, assets, customers or clients of the Company or any Subsidiary of the Company or has been convicted by a court of competent jurisdiction or has plead guilty or nolo contendere to any other felony; (ii) committed a material breach of any written confidentiality, non-compete, non-solicitation or business opportunity covenant contained in any agreement entered into by such Management Shareholder and the Company or any of its Affiliates; or (iii) substantially failed to perform such Management Shareholder’s duties to the Company or any Subsidiary, including by committing a material breach of any written covenant contained in any

 

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agreement entered into by such Management Shareholder and the Company or any Subsidiary of the Company (other than a confidentiality, non-compete, non-solicitation or business opportunity covenant) after written notice and an opportunity to cure (not to exceed 30 days) (it being understood that conduct pursuant to a Management Shareholder’s exercise of good faith business judgment should not constitute “Cause”).

 

“ Change-of-Control ” means, with respect to the Company, (i) the acquisition by any Person or any such “group” (other than the Institutional Shareholders and their Permitted Transferees) of securities of the Company representing more than 51% of the combined voting power of the Company’s then outstanding voting securities with respect to matters submitted to a vote of the stockholders generally or (ii) a sale or transfer by the Company of substantially all of the consolidated assets of the Company and its Subsidiaries to a Person that is not an Affiliate of the Company prior to such sale or transfer.

 

“ Charter ” means the Amended and Restated Certificate of Incorporation of the Company, as the same may be amended from time to time.

 

“ Class B Common Stock ” means the Class B Common Stock, par value $.01 per share, of the Company having the rights described in the Charter and any stock into which such Class B Common Stock may thereafter be converted or changed. “ Class B Common Shares ” means shares of Class B Common Stock.

 

“ Closing Date ” means May 2, 2005.

 

“ Code ” means the Internal Revenue Code of 1986.

 

“ Common Stock ” means the Common Stock, par value $.01 per share, of the Company having the rights, including voting rights, described in the Charter and any stock into which such Common Stock may thereafter be converted or changed. “ Common Shares ” means shares of Common Stock.

 

“ Company Common Stock ” means the Common Stock and the Class B Common Stock. “ Company Common Shares ” means shares of Company Common Stock.

 

“ Company Securities ” means (i) the Company Common Stock, (ii) securities convertible into or exchangeable for Company Common Stock, and (iii) options, warrants or other rights to acquire Company Common Stock or any other equity or equity-linked security issued by the Company.

 

“ Exchange Act ” means the Securities Exchange Act of 1934.

 

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“ Fair Market Value ” means, with respect to any purchase of Unvested Incentive Shares pursuant to Section 4.04, the fair market value as determined by the Board in its good faith judgment, using commonly accepted valuation techniques where applicable, based upon the amount that would be recovered by the holder of such Unvested Incentive Share if all of the capital stock of the Company were sold to a buyer in a single transaction and the proceeds from such transaction were allocated to the holders of the capital stock of the Company as if the proceeds were distributed in a liquidation of the Company pursuant to the Charter.

 

“ First Public Offering ” means the initial Public Offering being consummated in connection with the execution of this amendment and restatement to the Original Agreement.

 

“ Five Percent Shareholder ” means a Shareholder whose Aggregate Ownership of Company Common Shares divided by the Aggregate Ownership of such Company Common Shares by all Shareholders is 5% or more.

 

“ Fully Diluted ” means, with respect to any class of Company Securities, all outstanding shares of such class of Company Securities and all shares issuable in respect of securities convertible into or exchangeable for such shares, all stock appreciation rights, options, warrants and other rights to purchase or subscribe for shares of such class of Company Securities or securities convertible into or exchangeable for shares of such class of Company Securities.

 

“ GAAP ” means generally accepted accounting principles in the United States.

 

“ Incentive Shares ” means any and all of the Company Common Shares issued in respect of the Company’s formerly outstanding shares of Class A Common Stock, par value $.01 per share, and all other securities of the Company (or a successor to the Company) received on account of ownership of such Company Common Shares, including any and all securities issued in connection with any merger, consolidation, stock dividend, stock distribution, stock split, reverse stock split, stock combination, recapitalization, reclassification, subdivision, conversion or similar transaction in respect thereof.

 

“ Independent Director ” means a member of the Board who is “independent” as and to the extent defined by, and who otherwise satisfies the “independence” requirements for a member of a board of directors as set forth in, the applicable rules and regulations from time to time promulgated by the Nasdaq Stock Market, Inc. and the SEC.

 

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“ Joint Venture ” means any joint venture, partnership or other similar arrangement of which the Company or any Subsidiary is a member.

 

“ NASD ” means the National Association of Securities Dealers, Inc.

 

“ Permitted Transferee ” means

 

(i) in the case of any Quadrangle Entity, (A) any other Quadrangle Entity, (B) any general or limited partner of any Quadrangle Entity, and any corporation, partnership or other Person that is an Affiliate of any such general or limited partner (collectively, “ Quadrangle Affiliates ”), (C) any managing director, general partner, director, limited partner, officer or employee of any Quadrangle Entity or any Quadrangle Affiliate, or any spouse, lineal descendent, sibling, parent, heir, executor, administrator, testamentary trustee, legatee or beneficiary of any of the foregoing persons described in this clause (C) (collectively, “ Quadrangle Associates ”), or (D) any trust the beneficiaries of which, any charitable trust the grantor of which or any corporation, limited liability company or partnership the stockholders, members or general or limited partners of which, include only the Quadrangle Entities, Quadrangle Affiliates, Quadrangle Associates, their spouses or their lineal descendants;

 

(ii) in the case of any CVC Entity, (A) any other CVC Entity, (B) any general or limited partner of CVC Entity, and any corporation, partnership or other Person that is an Affiliate of any such general or limited partner (collectively, “ CVC Affiliates ”), (C) any managing director, general partner, director, limited partner, officer or employee of any CVC Entity or any CVC Affiliate, or any spouse, lineal descendent, sibling, parent, heir, executor, administrator, testamentary trustee, legatee or beneficiary of any of the foregoing persons described in this clause (C) (collectively, “ CVC Associates ”), or (D) any trust the beneficiaries of which, any charitable trust the grantor of which or any corporation, limited liability company or partnership the stockholders, members or general or limited partners of which, include only the CVC Entities, CVC Affiliates, CVC Associates, their spouses or their lineal descendants; and

 

(iii) in the case of any Management Shareholder, (A) a Person to whom Company Common Shares are Transferred from such Management Shareholder (1) by will or the laws of descent and distribution or (2) by gift without consideration of any kind, provided that, in the case of clause (2), such transferee is the spouse or the lineal descendant, sibling or parent of such Management Shareholder, or (B) a

 

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trust that is for the exclusive benefit of such Management Shareholder or its Permitted Transferees under (A) above.

 

“ Person ” means an individual, corporation, limited liability company, partnership, association, trust or other entity or organization, including a government or political subdivision or an agency or instrumentality thereof.

 

“ Public Offering ” means an underwritten public offering of Registrable Securities of the Company pursuant to an effective registration statement under the Securities Act, other than pursuant to a registration statement on Form S-4 or Form S-8 or any similar or successor form or a registration statement relating to a Unit Offering.

 

“ Registrable Securities ” means, at any time, any Company Common Shares until (i) a registration statement covering such Company Common Shares has been declared effective by the SEC and such Company Common Shares have been disposed of pursuant to such effective registration statement, (ii) such Company Common Shares are sold under circumstances in which all of the applicable conditions of Rule 144 (or any similar provisions then in force) under the Securities Act are met or such Company Common Shares may be sold pursuant to Rule 144(k) or (iii) such Company Common Shares are otherwise Transferred, the Company has delivered a new certificate or other evidence of ownership for such Company Common Shares not bearing the legend required pursuant to this Agreement and such Company Common Shares may be resold without subsequent registration under the Securities Act; provided that in no event shall any Unvested Incentive Shares be considered Registrable Securities.

 

“ Registration Expenses ” means any and all expenses incident to the performance of or compliance with any registration or marketing of securities, including all (i) registration and filing fees, and all other fees and expenses payable in connection with the listing of securities on any securities exchange or automated interdealer quotation system, (ii) fees and expenses of compliance with any securities or “blue sky” laws (including reasonable fees and disbursements of counsel in connection with “blue sky” qualifications of the securities registered), (iii) expenses in connection with the preparation, printing, mailing and delivery of any registration statements, prospectuses and other documents in connection therewith and any amendments or supplements thereto, (iv) security engraving and printing expenses, (v) internal expenses of the Company (including all salaries and expenses of its officers and employees performing legal or accounting duties), (vi) reasonable fees and disbursements of counsel for the Company and customary fees and expenses for independent certified public accountants retained by the Company (including the expenses relating to any comfort letters or costs associated with the delivery by independent certified

 

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public accountants of any comfort letters requested pursuant to Section 5.04(h)), (vii) reasonable fees and expenses of any special experts retained by the Company in connection with such registration, (viii) reasonable fees and expenses of the Shareholders, including one counsel for all of the Shareholders participating in the offering selected (A) by the Institutional Shareholders, in the case of any offering in which such Shareholders participate, or (B) in any other case, by the Shareholders holding the majority of the Registrable Securities to be sold for the account of all Shareholders in the offering, (ix) fees and expenses in connection with any review by the NASD of the underwriting arrangements or other terms of the offering, and all fees and expenses of any “qualified independent underwriter,” including the fees and expenses of any counsel thereto, (x) fees and disbursements of underwriters customarily paid by issuers or sellers of securities, but excluding any underwriting fees, discounts and commissions attributable to the sale of Registrable Securities, (xi) costs of printing and producing any agreements among underwriters, underwriting agreements, any “blue sky” or legal investment memoranda and any selling agreements and other documents in connection with the offering, sale or delivery of the Registrable Securities, (xii) transfer agents’ and registrars’ fees and expenses and the fees and expenses of any other agent or trustee appointed in connection with such offering, (xiii) expenses relating to any analyst or investor presentations or any “road shows” undertaken in connection with the registration, marketing or selling of the Registrable Securities, (xiv) fees and expenses payable in connection with any ratings of the Registrable Securities, including expenses relating to any presentations to rating agencies and (xv) all out-of pocket costs and expenses incurred by the Company or its appropriate officers in connection with their compliance with Section 5.04(m).

 

“ Rule 144 ” means Rule 144 (or any successor provisions) under the Securities Act.

 

“ SEC ” means the Securities and Exchange Commission.

 

“ Securities Act ” means the Securities Act of 1933.

 

“ Shareholder ” means each Person (other than the Company) who shall be a party to or bound by this Agreement, whether in connection with the execution and delivery of the Original Agreement, pursuant to Sections 3.03 or 7.03 or otherwise, so long as such Person shall “beneficially own” (as such term is defined in Rule 13d-3 of the Exchange Act) any Company Securities.

 

“ Subsidiary ” means, with respect to any Person, any entity of which securities or other ownership interests having ordinary voting power to elect a

 

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majority of the board of directors or other persons performing similar functions are at the time directly or indirectly owned by such Person.

 

“ Termination with Cause ” means termination of a Management Shareholder’s employment with the Company and all of its Subsidiaries that is determined by the Board acting in good faith to be a Termination for Cause.

 

“ Termination without Cause ” means any termination of a Management Shareholder’s employment by the Company and all of its Subsidiaries that is not determined by the Board acting in good faith to be a Termination with Cause.

 

“ Transaction Agreement ” means the Transaction Agreement dated as of January 18, 2005 by and among NTELOS Inc., Project Holdings Corp. (as predecessor to the Company), Project Merger Sub Corp. and certain shareholder signatories thereto, as amended.

 

“ Transfer ” means, with respect to any Company Security, (i) when used as a verb, to sell, assign, dispose of, exchange, pledge, encumber, hypothecate or otherwise transfer such security or any participation or interest therein, whether directly or indirectly, or agree or commit to do any of the foregoing and (ii) when used as a noun, a direct or indirect sale, assignment, disposition, exchange, pledge, encumbrance, hypothecation or other transfer of such security or any participation or interest therein or any agreement or commitment to do any of the foregoing.

 

“ Unit Offering ” shall mean a Public Offering of a combination of debt and equity securities of the Company in which (i) not more than ten percent (10%) of the gross proceeds received from the sale of such securities is attributed to such equity securities, and (ii) after giving effect to such offering, the Company does not have a class of equity securities required to be registered under the Exchange Act.

 

“ Unvested Incentive Shares ” means that portion of the aggregate Incentive Shares held by the applicable Management Shareholder that does not consist of Vested Incentive Shares.

 

“ Vested Incentive Shares ” means that portion of the aggregate Incentive Shares held by the applicable Management Shareholder equal to the following percentages: (i) after consummation of the First Public Offering and on or prior to May 2, 2007, 50%; (ii) after May 2, 2007 and on or prior to May 2, 2008, 75%; and (iii) after May 2, 2008, 100%; provided that upon (x) a Change-of-Control, 100% of the Incentive Shares held by any single Management Shareholder will become Vested Incentive Shares and (y) a Termination without Cause of such Management Shareholder after May 2, 2006, an additional portion of such

 

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Management Shareholder’s Incentive Shares scheduled to become Vested Incentive Shares by the next anniversary of the Closing Date (May 2, 2007 or May 2, 2008, as applicable) will become Vested Incentive Shares determined by multiplying the number of such Management Shareholder’s Incentive Shares that would have become Vested Incentive Shares upon the next anniversary of the Closing Date times a fraction, the numerator of which is the number of full calendar quarters that as of the date of such Management Shareholder’s termination of employment have elapsed since the last anniversary of the Closing Date and the denominator of which is four. Upon the exercise of options for Incentive Shares by a Management Shareholder, such Incentive Shares shall be considered Vested Incentive Shares for purposes of this Agreement, provided that such Incentive Shares shall not be included for purposes of determining the percentages in the immediately preceding sentence.

 

(b) The term “ Quadrangle Entities ”, to the extent such parties shall have transferred any of their Company Securities to “ Permitted Transferees ”, shall mean the Quadrangle Entities and the Permitted Transferees of the Quadrangle Entities, taken together, and any right or action that may be exercised or taken at the election of the Quadrangle Entities may be taken at the election of the Quadrangle Entities and such Permitted Transferees.

 

(c) The term “ CVC Entities ”, to the extent such parties shall have transferred any of their Company Securities to “ Permitted Transferees ”, shall mean the CVC Entities and the Permitted Transferees of the CVC Entities, taken together, and any right or action that may be exercised or taken at the election of the CVC Entities may be taken at the election of the CVC Entities and such Permitted Transferees.

 

(d) The term “ Management Shareholder ”, to the extent any such party shall have transferred any of its Company Securities to “ Permitted Transferees ”, shall mean such Management Shareholder and the Permitted Transferees of such Management Shareholder, taken together, and any right or action that may be exercised or taken at the election of such Management Shareholder may be taken at the election of such Management Shareholder and such Permitted Transferees.

 

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(e) Each of the following terms is defined in the Section set forth opposite such term:

 

 

Section 1.02 . Other Definitional and Interpretative Provisions. Unless specified otherwise, in this Agreement the obligations of any party consisting of more than one person are joint and several. The words “hereof”, “herein” and “hereunder” and words of like import used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement. The captions herein are included for convenience of reference only and shall be ignored in the construction or interpretation hereof. References to Articles, Sections, Exhibits and Schedules are to Articles, Sections, Exhibits and Schedules of this Agreement unless otherwise specified. All Exhibits and Schedules annexed hereto or referred to herein are hereby incorporated in and made a part of this Agreement as if set forth in full herein. Any capitalized terms used in any Exhibit or Schedule but not otherwise defined therein, shall have the meaning as defined in this Agreement. Any singular term in this Agreement shall be deemed to include the plural, and any plural term the singular. Whenever the words “include”, “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation”, whether or not they are in fact followed by those words or words of like import. “Writing”, “written” and

 

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comparable terms refer to printing, typing and other means of reproducing words (including electronic media) in a visible form. References to a statute are to that statute, as amended from time to time, and to the rules and regulations promulgated thereunder. References to any agreement or contract are to that agreement or contract as amended, modified or supplemented from time to time in accordance with the terms hereof and thereof. References to any Person include the successors and permitted assigns of that Person. References from or through any date mean, unless otherwise specified, from and including or through and including, respectively.

 

ARTICLE 2

C ORPORATE G OVERNANCE

 

Section 2.01 . Composition of the Board. (a) Following the consummation of the First Public Offering, the Board shall consist of seven directors, of whom:

 

(i) three directors (at least one of whom must be an Independent Director upon and following the 90 ^th day following consummation of the First Public Offering) will be designated by the Quadrangle Entities; which number shall be reduced to (x) two directors (none of whom must be an Independent Director) if the Aggregate Ownership of the Quadrangle Entities is less than 20% but equal to or greater than 10%, (y) one director (who need not be an Independent Director) if the Aggregate Ownership of the Quadrangle Entities is less than 10% but greater than or equal to 5% and (z) zero directors if the Aggregate Ownership of the Quadrangle Entities is less than 5%;

 

(ii) three directors (at least one of whom must be an Independent Director upon and following consummation of the First Public Offering) will be designated by the CVC Entities; which number shall be reduced to (x) two directors (none of whom must be an Independent Director) if the Aggregate Ownership of the CVC Entities is less than 20% but equal to or greater than 10%, (y) one director (who need not be an Independent Director) if the Aggregate Ownership of the CVC Entities is less than 10% but greater than or equal to 5% and (z) zero directors if the Aggregate Ownership of the Quadrangle Entities is less than 5%; and

 

(iii) one director will be the chief executive officer of the Company for so long as he or she is employed by the Company.

 

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Prior to the first anniversary of the First Public Offering (or earlier if requested by CVC Equity), the Board shall be expanded to eight members to include an additional Independent Director designated jointly by the Quadrangle Entities and the CVC Entities.

 

(b) Each Shareholder entitled to vote for the election of directors to the Board agrees that it will vote its Company Common Shares or execute written consents, as the case may be, and take all other necessary action (including causing the Company to call a special meeting of Shareholders) in order to ensure that the composition of the Board is as set forth in this Section 2.01.

 

(c) The Company agrees to cause each individual designated pursuant to Section 2.01(a) or 2.03 to be nominated to serve as a director on the Board, and to take all other necessary actions (including calling a special meeting of the Board and/or shareholders) to ensure that the composition of the Board is as set forth in this Section 2.01.

 

Section 2.02 . Removal. Each Shareholder agrees that if, at any time, it is then entitled to vote for the removal of directors of the Company, it will not vote any of its Company Common Shares in favor of the removal of any director who shall have been designated or nominated in accordance with Section 2.01, unless the Person or Persons entitled to designate or nominate such director shall have consented to such removal in writing, provided that if the Person or Persons entitled to designate or nominate any director pursuant to Section 2.01 shall request in writing the removal, with or without cause, of such director, each Shareholder shall vote its Company Common Shares in favor of such removal.

 

Section 2.03 . Vacancies. If, as a result of death, permanent disability, retirement, resignation, removal (with or without Cause) or otherwise, there shall exist or occur any vacancy on the Board:

 

(a) the Person or Persons entitled under Section 2.01 to designate or nominate such director whose death, permanent disability, retirement, resignation or removal resulted in such vacancy may, subject to the provisions of Section 2.01, designate another individual (the “ Replacement Nominee ”) to fill such vacancy and serve as a director of the Company; and

 

(b) subject to Section 2.01, each Shareholder then entitled to vote for the election of the Replacement Nominee as a director of the Company agrees that it will vote its Company Common Shares, or execute a proxy or written consent, as the case may be, in order to ensure that the Replacement Nominee be elected to the Board.

 

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Any vacancies resulting from an increase in the number of directors may only be filled by the directors then in office.

 

Section 2.04 . Meetings. The Board shall hold a regularly scheduled meeting at least once every calendar quarter.

 

Section 2.05 . Action by the Board. (a) A quorum of the Board shall consist of a majority of the directors, provided that such majority shall include at least one director designated by the Quadrangle Entities who is not an Independent Director and at least one director designated by the CVC Entities who is not an Independent Director, respectively, for so long as the Quadrangle Entities and CVC Entities, respectively, are entitled to designate one or more directors pursuant to Section 2.01 hereof.

 

(b) All actions of the Board shall require (i) the affirmative vote of at least a majority of the directors present at a duly convened meeting of the Board at which a quorum is present (in person or telephonically) or (ii) the unanimous written consent of the Board, provided that, in the event that there is a vacancy on the Board and an individual has been nominated to fill such vacancy, the first order of business shall be to fill such vacancy.

 

(c) The Board may create executive, compensation, audit and such other committees as it may determine. The Quadrangle Entities and the CVC Entities shall have the right to designate a number of directors comprising each such committee that is proportionate to the number of directors that such Shareholders are entitled to designate pursuant to Section 2.01; provided that no such Shareholder shall have the right to designate any member of a special committee formed in connection with any transaction, or proposed transaction, between the Company or any Subsidiary, on the one hand, and such Shareholder or an Affiliate of such Shareholder, on the other hand.

 

(d) No action by the Company (including but not limited to any action by the Board or any committee thereof) shall be taken after the date of the Original Agreement, and the Company shall not permit any action to be taken by any Subsidiary or any Joint Venture (but only, with respect to any Joint Venture, to the extent that the Company or a Subsidiary has the right pursuant to the terms of such Joint Venture to not permit such action to be taken), with respect to any of the following matters without the affirmative approval of the Board:

 

(i) (1) any merger or consolidation of the Company, any Subsidiary or any Joint Venture with or into any Person, other than a wholly owned Subsidiary, or of any Subsidiary or Joint Venture with or into any Person other than the Company or any other wholly owned

 

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Subsidiary, (2) any sale of the Company, any Subsidiary, any Joint Venture or any significant operations of the Company, any Subsidiary or any Joint Venture or (3) any acquisition or disposition of assets, business, operations or securities by the Company, any Subsidiary or any Joint Venture (in a single transaction or a series of related transactions) having a value in each case in this clause (3) in excess of $3,000,000;

 

(ii) the declaration of any dividend on or the making of any distribution with respect to, or the recapitalization, reclassification, redemption, repurchase or other acquisition of, any securities of the Company, any Subsidiary or any Joint Venture, except (i) as expressly permitted by this Agreement or the Charter and (ii) any dividend made from a Subsidiary of the Company to another Subsidiary of the Company or from a Subsidiary of the Company to the Company;

 

(iii) any liquidation, dissolution, commencement of bankruptcy, liquidation or similar proceedings with respect to the Company, any Subsidiary or any Joint Venture;

 

(iv) any incurrence, refinancing, alteration of material terms or prepayment by the Company, any Subsidiary or any Joint Venture of indebtedness for borrowed money (or the guaranty by the Company, any Subsidiary or any Joint Venture of any such indebtedness), or the issuance or registration with the SEC of any security by the Company, any Subsidiary or any Joint Venture, in each case other than (i) pursuant to the First Lien Credit Agreement dated as of February 24, 2005, among NTELOS Inc., the subsidiary guarantors named therein, the initial lenders, initial issuing bank and swing line bank each as named therein, Morgan Stanley Senior Funding, Inc., as administrative agent, Morgan Stanley & Co. Incorporated, as collateral agent and Bear Stearns Corporate Lending Inc., as syndication agent, (ii) the Second Lien Credit Agreement dated as of February 24, 2005, among NTELOS Inc., the subsidiary guarantors named therein, the lenders named therein, Morgan Stanley Senior Funding, Inc., as administrative agent, Morgan Stanley & Co. Incorporated, as collateral agent and Bear Stearns Corporate Lending Inc., as syndication agent, (iii) pursuant to any other revolving credit agreement previously approved by the Board in compliance with this Section 2.05(d), (iv) pursuant to any employee or stock option plans previously approved by the Board in compliance with this Section 2.05(d) or (v) as specifically contemplated by this Agreement;

 

(v) any individual or related series of capital expenditures or capital leases which are inconsistent in any material respect with the

 

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annual capital expenditure budget approved by the Board in compliance with this Section 2.05(d);

 

(vi) any entering into, amending or modifying in any material respect any agreement of the Company, any Subsidiary or any Joint Venture, which is made outside the ordinary course of business and is material to the Company and its Subsidiaries as a whole;

 

(vii) any entering into of any agreement, indenture or other instrument that contains any provision that would restrict either the payment of dividends on the Company Common Stock or the repurchase of Company Common Stock in accordance with Section 4.04;

 

(viii) any determination of compensation, benefits, perquisites or other incentives for executive officers of the Company, any Subsidiary or any Joint Venture or the approval or amendment of any plans or contracts in connection therewith, any approval of or amendment to any equity or other compensation or benefit plans for employees of the Company, Subsidiary or any Joint Venture or the grant of any stock option or other equity compensation to any employee of the Company, any Subsidiary or any Joint Venture, other than any such determinations, amendments or grants (i) required by law, (ii) to satisfy agreements currently in place or deliver the benefits intended thereunder or (iii) to renew insurance or administrative service contracts relating to benefits plans if such renewals come due in the ordinary course;

 

(ix) any appointment or dismissal of any of the Chief Executive Officer, President, Chief Financial Officer, Chief Operating Officer, any division head or any other executive officer in any similar capacity of the Company, any Subsidiary or any Joint Venture;

 

(x) any appointment or removal of the regular legal counsel, financial advisors, underwriters, investment bankers or, other than in connection with renewals of coverage at comparable levels in the ordinary course, company-wide insurance providers of the Company, any Subsidiary or any Joint Venture;

 

(xi) any exercise or waiver of the Company’s rights under this Agreement, any amendment to the Charter or Bylaws or any adoption of or amendment to the certificate of incorporation, bylaws or other organizational documents of any Subsidiary or Joint Venture;

 

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(xii) any approval of the annual business plan, budget, capital expenditure budget or long-term strategic plan of the Company, any Subsidiary or any Joint Venture;

 

(xiii) any modification of the long-term business strategy or scope of the business of the Company, any Subsidiary or any Joint Venture;

 

(xiv) any increase or decrease to the number of directors that comprise the entire board of directors or similar governing body of the Company, any Subsidiary or any Joint Venture;

 

(xv) any contract with, obligation to or transaction or series of transactions between, the Company, any Subsidiary or any Joint Venture, on the one hand, and one or more of its stockholders, other equityholders or their respective Affiliates, on the other hand;

 

(xvi) any initiation or settlement of any material litigation, arbitration, mediation or other dispute resolution proceeding outside of the ordinary course of business; or

 

(xvii) the entry into, or the termination, disposition or material amendment of the terms of, any Joint Venture.

 

Section 2.06 . Conflicting Charter or Bylaw Provisions. Each Shareholder shall vote its Company Common Shares or execute proxies or written consents, as the case may be, and shall take all other actions necessary, to ensure that the Company’s Charter and Bylaws (i) facilitate, and do not at any time conflict with, any provision of this Agreement and (ii) permit each Shareholder to receive the benefits to which each such Shareholder is entitled under this Agreement.

 

Section 2.07 . Notice of Meeting. Each director shall receive notice and the agenda of each meeting of the Board or any committee thereof at least five days prior to such meeting.

 

Section 2.08 . Subsidiary Governance. The Company and each Shareholder agree that the Quadrangle Entities and the CVC Entities shall have the right to designate a number of directors comprising the board of directors of each Subsidiary and each committee thereof that is proportionate to the number of directors that such Shareholders are entitled to designate pursuant to Section 2.01. Each Shareholder agrees to vote its Company Common Shares and to cause its representatives on the Board, subject to their fiduciary duties, to vote and take other appropriate action to effectuate the agreements in this Section 2.08 in respect of any Subsidiary.

 

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Section 2.09 . Affiliate Transactions. The Company shall not, and shall not permit any of its Subsidiaries to, make any payment to, or sell, lease, transfer or otherwise dispose of any of its properties or assets to, or purchase any property or assets from, or enter into or make or amend any transaction, contract, agreement, understanding, loan, advance or guarantee with or for the benefit of, any Affiliate of the Company, unless (i) such transaction is on terms that are no less favorable to the Company or such Subsidiary than those that would have been obtained in a comparable transaction by the Company or such Subsidiary with an unrelated Person, (ii) if a Quadrangle Entity or any Affiliate of a Quadrangle Entity is a party to such transaction, CVC Equity (so long as the CVC Entities maintain Aggregate Ownership of at least 5%) shall have consented to such transaction in its capacity as a stockholder of the Company and (iii) if a CVC Entity or any Affiliate of a CVC Entity is a party to such transaction, each Quadrangle Entity (so long as the Quadrangle Entities maintain Aggregate Ownership of at least 5%) shall have consented to such transaction in its capacity as stockholder of the Company.

 

Section 2.10 . Board Observers. During the periods described below in this Section 2.10, each Quadrangle Entity and each CVC Entity shall have the right to appoint a representative (collectively, the “ Board Representatives ”) to attend each meeting of the Board as a non-voting observer, whether such meeting is conducted in person or by teleconference. The Board Representatives shall have the right to present matters for consideration by the Board and to speak on matters presented by others. Subject to the confidentiality provisions of this Section 2.10, the Company shall cause the Board Representatives to be provided with all communications and materials that are provided by the Company or its consultants to the members of the Board generally, at the same time and in the same manner that such communications and materials are provided to such members, including all notices, board packages, reports, presentations, minutes and consents. The Board Representatives shall be entitled to meet and consult with the senior executive management team of the Company on a quarterly basis to discuss the quarterly and annual business plans of the Company and the Company’s Subsidiaries and to review the progress of the Company and the Company’s Subsidiaries in achieving their plans. In addition, upon request to the chief executive officer of the Company, the members of the senior executive management team of the Company shall make themselves available during normal business hours to meet with the Board Representatives on an interim basis, as the Board Representatives may reasonably request from time to time.

 

The Company shall use its reasonable best efforts to notify the Board Representatives of any significant business issues or initiatives affecting the Company or the Company’s Subsidiaries, such as changes in the Company’s capital structure, incurrence of any significant indebtedness, significant business

 

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acquisitions, dispositions or similar transactions, developments or proposals entailing a potentially significant liability, nomination of directors, appointment or election of senior management personnel, and adoption of contracts, plans or other compensation arrangements covering senior management personnel. Whenever reasonably practicable, such notice shall be provided to the Board Representatives in a manner that affords the Board Representatives an opportunity to consult with the Company prior to any significant action on such issues or initiatives. Upon reasonable request by the Board Representatives to the chief executive officer of the Company, the Board Representatives shall be entitled, at their cost and expense, to inspect the books and records and the facilities of the Company and the Company’s Subsidiaries during normal business hours and to request and receive reasonable information regarding the financial condition and operations of the Company and the Company’s Subsidiaries. The right of each Quadrangle Entity and each CVC Entity to appoint a Board Representative, and the rights of such Board Representatives described above, shall exist solely during the periods, if any, in which such entity is intended to qualify as a “ venture capital operating company ” under U.S. Department of Labor Regulation 29 C.F.R. Section 2510.3-101 and such entity does not possess the right to elect or appoint a member of the Board. Notwithstanding any other provision of this Section 2.10 to the contrary, the Board shall have the right to keep confidential from the Board Representatives for such period of time as the Board deems reasonable any information and copies of written materials the Company is required by law or agreement with a third party to keep confidential. As a condition of the exercise of their rights under this Section 2.10, the Board Representatives shall enter into such agreements or undertakings with the Company to maintain the confidentiality of information provided to them in connection with the exercise of such rights as the Company may reasonably request.

 

ARTICLE 3

R ESTRICTIONS ON T RANSFER

 

Section 3.01 . General. (a) Each Shareholder understands and agrees that the Company Securities acquired pursuant to the Transaction Agreement have not been registered under the Securities Act and are restricted securities thereunder. Each Shareholder agrees that it will not Transfer any Company Securities (or solicit any offers in respect of any Transfer of any Company Securities), except in compliance with, or pursuant to an applicable exemption from, the Securities Act, any applicable foreign or state securities or “blue sky” laws, and the terms and conditions of this Agreement.

 

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(b) Any attempt to Transfer any Company Securities not in compliance with this Agreement shall be null and void and the Company shall not, and shall cause any transfer agent not to, give any effect in the Company’s stock records to such attempted Transfer.

 

Section 3.02 . Legends. (a) In addition to any other legend that may be required, each certificate for Company Securities that is issued to any Shareholder shall bear a legend in substantially the following form:

 

“THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY FOREIGN OR STATE SECURITIES LAWS AND MAY NOT BE OFFERED OR SOLD EXCEPT IN COMPLIANCE THEREWITH. THIS SECURITY IS ALSO SUBJECT TO ADDITIONAL RESTRICTIONS ON TRANSFER AS SET FORTH IN THE AMENDED AND RESTATED SHAREHOLDERS AGREEMENT DATED AS OF                                      , 2006, COPIES OF WHICH MAY BE OBTAINED UPON REQUEST FROM NTELOS HOLDINGS CORP. OR ANY SUCCESSOR THERETO.”

 

(b) If any Company Securities shall be either (i) disposed of pursuant to a registration statement that has been declared effective by the SEC or (ii) sold under circumstances in which all of the applicable conditions of Rule 144 are met, the Company, upon the written request of the holder thereof, shall issue to such holder a new certificate evidencing such shares without the first sentence of the legend required by Section 3.02(a) endorsed thereon. If any Company Securities cease to be subject to any and all restrictions on Transfer set forth in this Agreement, the Company, upon the written request of the holder thereof, shall issue to such holder a new certificate evidencing such Company Securities without the second sentence of the legend required by Section 3.02(a) endorsed thereon.

 

Section 3.03 . Permitted Transferees. (a) Notwithstanding anything in this Agreement to the contrary, any Shareholder may at any time Transfer any or all of its Company Securities to one or more of its Permitted Transferees without the consent of the Board or any Management Shareholder or group of Shareholders and without compliance with Sections 3.04 and 3.05 so long as (a) such Permitted Transferee shall have agreed in writing to be bound by the terms of this Agreement in the form of Exhibit A attached hereto