EXHIBIT 10.39
STOCKHOLDERS AGREEMENT
THIS STOCKHOLDERS AGREEMENT (this "Agreement") is made as of
March 31, 1999, by and among [Newco] Corporation, a corporation incorporated
under the laws of Nevada (the "Company" or "TTC"), Newbridge Networks
Corporation, a corporation incorporated under the laws of Canada and TeleHub
Technologies Corporation, a corporation incorporated under the laws of Nevada.
The parties hereto desire to enter into this Agreement for
the purposes, among others, of (i) establishing the composition of the Company's
Board of Directors (the "Board of Directors"), (ii) assuring continuity in the
management and ownership of the Company, and (iii) limiting the manner and terms
by which the common stock of the Company, $.001 par value per share, may be
transferred.
NOW, THEREFORE, in consideration of the mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged. the parties to this Agreement
hereby agree as follows:
SECTION 1
Definitions.
1.1 Capitalized terms used herein shall have the meanings set forth
below.
Additional Capital - As defined in Section 4.1.
Additional Director - As defined in Section 2.1.
Affiliate - when used with respect to a specified Person, shall mean
(a) any other Person directly or indirectly controlling, controlled by, or under
common control with, such specified person, (b) any officer, director, partner,
legal representative (including a trustee for the benefit of such specified
Person) or employee of such specified Person, and (c) any Person for which such
specified Person acts as an officer, director, partner or employee. As used in
this definition of "Affiliate," the term "control" and any derivatives thereof
mean the possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through ownership
of voting securities, by contract, or otherwise.
Approve or Approval - With respect to the Stockholders, the affirmative
vote by or written consent of Stockholders owning not less than ninety percent
(90%) of the then outstanding Common Stock entitled to vote thereon except with
respect to the appointment of Directors which is governed by Section 2.1 and
with respect to the Board of Directors, Directors representing a majority of the
Board of Directors present in person or by proxy at a valid meeting or if the
action is to be taken by written consent, then the written consent must be
signed by all Directors.
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Agreement - This Stockholders Agreement, as the same may be amended,
modified, supplemented or restated after the date hereof, in accordance with its
terms.
Approved Sale - As defined in Section 7.1.
Bid - As defined in Section 5.3.
Board of Directors - As defined in the second paragraph of this
agreement.
Budget - As defined in Section 2.3.
Business Day - Any day which is neither a Saturday nor Sunday, nor
another day on which banking institutions in the City of Chicago, Illinois or
Toronto, Ontario are closed for business.
Chief Executive Officer - As defined in Section 2.5(b).
Chief Financial Officer - As defined in Section 2.5(d).
Chief Operating Officer - As defined in Section 2.5(c).
Chief Technical Officer - As defined in Section 2.5(a).
Code - The Internal Revenue Code of 1986, as amended from time to time.
Collateral Agent - State Street Bank and Trust Company, in its capacity
as collateral agent under the Pledge Agreement until a successor replaces it in
accordance with the applicable provisions thereof and the Indenture (as defined
therein).
Common Stock - Equity in the Company owned by a Stockholder which is
(i) common stock of the Company, $.001 par value per share, (ii) warrants,
options or other rights to subscribe for or to acquire, directly or indirectly,
Common Stock, whether or not then exercisable or convertible, and (iii) stock or
other securities which are convertible into or exchangeable for directly or
indirectly, Common Stock, whether or not then convertible or exchangeable. As to
any particular Common Stock, such shares shall cease to be Common Stock when
they have been disposed of in a Public Sale or Approved Sale.
Company - As defined in the first paragraph of this Agreement.
Company Indemnity Obligations As defined in Section 7.3.
Counter - As defined in Section 5.3.
Defaulting Stockholder - As defined in Section 13.2.
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Directors - The natural persons appointed by the Stockholders to the
Board of Directors pursuant to Section 2(a)(iii).
Disposition - Any sale, assignment, transfer, exchange, mortgage,
pledge, grant, hypothecation, or other transfer (including dispositions by
operation of law).
Event of Default - As defined in Section 13.2.
GAAP - U.S. generally accepted accounting principles in effect from
time to time.
Governmental Authority - Any nation or government, any state or other
political subdivision thereof, any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government,
including, without limitation, any government authority, agency, department,
board, commission or instrumentality of the United States, any State of the
United States or any political subdivision thereof, and any tribunal or
arbitrator(s) of competent jurisdiction, and any self-regulatory organization.
Independent Third Party - Any Person who, immediately prior to the
contemplated transaction, does not own in excess of fifteen percent (15%) of the
Company's equity securities on a fully-diluted basis (a " 15% Owner" ), who is
not an Affiliate of any such 15% Owner and who is not the spouse or descendent
(by birth or adoption) of any such 15% Owner or a trust for the benefit of any
such 15% Owner and/or such other Persons.
Insolvency Event - As defined in Section 13.1(iv).
Insolvent Stockholder - As defined in Section 13.1(iv).
Issued Common Stock - Common stock of the Company, $.001 par value per
share, issued to Newbridge or TeleHub.
Listed Third Party - The entities set forth on Exhibit D hereto, their
Affiliates and their respective successors and assigns.
Listed Third Party Bid - As defined in Section 5.3.
Newbridge - Newbridge Networks Corporation, a corporation incorporated
under the laws of Canada and any Transferee of any Common Stock owned by
Newbridge, acting together as a single entity for the purposes of this
Agreement.
Newbridge Directors - As defined in Section 2.1.
Newbridge Technology Director - As defined in Section 2.1.
Nondefaulting Stockholder - As defined in Section 13.2(a).
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Non-Newbridge Stockholders - As defined in Section 5.4.
Noteholders' Agent - The Agent appointed by a majority in principal
amount of outstanding Notes (as defined in the Pledge Agreement) as successor
Collateral Agent under the Pledge Agreement.
Notice of Default - As defined in Section 13.2(a).
Officers - As defined in Section 2.5.
Organizational Agreement - That certain Organizational Agreement
together with the Exhibits thereto dated as of March 31, 1999 by and among the
parties hereto.
Person - An individual, a partnership, a corporation, an association, a
limited liability company, a joint stock company, a trust, a joint venture, an
unincorporated organization or any other entity (including, without limitation,
any governmental entity or any department, agency or political subdivision
thereof).
Pledge Agreement - The Pledge Agreement, dated as of _______________,
1999, by and among TeleHub Communications Corporation (as defined in this
Section 1.1) and TeleHub Technologies Corporation on the one hand and State
Street Bank and Trust Company as Collateral Agent on the other hand.
Pro Rata Share - A percentage equal to the Issued Common Stock owned by
such Stockholder divided by the Issued Common Stock owned by all Stockholders
requesting or exercising the right to which such Pro Rata Share relates.
Proceeding - Any administrative, judicial, or other adversary
proceeding, including, without limitation, litigation, arbitration,
administrative adjudication, mediation, and appeal or review of any of the
foregoing.
Public Sale - Any sale of Common Stock to the public pursuant to an
offering registered under the Securities Act of 1933, as amended ("Securities
Act") or to the public through a broker, dealer or market maker pursuant to the
provisions of Rule 144 (or any similar provision then in effect) adopted under
the Securities Act.
Securities Act - The Securities Act of 1933, as amended from time to
time.
Solvent Stockholder - As defined in Section 13.1.
Stockholder - Newbridge and TeleHub.
Subsidiary - 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
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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 such Person or one or more of the other
Subsidiaries of such 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 such Person or entity 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
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.
Tag - Along Rights - As defined in Section 5.4.
TeleHub - TeleHub Technologies Corporation, a corporation incorporated
under the laws of Nevada and any Transferees of any Common Stock owned by
TeleHub Technologies Corporation, acting together as a single entity for the
purposes of this Agreement.
TeleHub Communications Corporation - TeleHub Communications
Corporation, a corporation incorporated under the laws of Nevada, and the parent
corporation of TeleHub Technologies Corporation.
TeleHub Directors - As defined in Section 2.1.
TeleHub Technology Director - As defined in Section 2.1.
Transferee - shall mean a Person which acquires any shares of Common
Stock from a Stockholder; provided, however, the TeleHub shall not be a
Transferee of the Newbridge and the Newbridge shall not be a Transferee of
TeleHub.
SECTION 2
Board of Directors and Officers.
2.1 Board of Directors. From and after the date hereof and until the
provisions of this Section 2 cease to be effective, each Stockholder shall vote
all of its Common Stock and any other voting securities of the Company over
which such Stockholder has voting control and will take all other necessary or
desirable actions within its control (whether in its capacity as a shareholder,
director, member of a board committee or officer of the Company or otherwise
including, without limitation, attendance at meetings in person or by proxy for
purposes of obtaining a quorum and execution of written consents in lieu of
meetings), and the Company will take all necessary and desirable actions within
its control, in order to cause the following to occur:
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(a) The Board of Directors, by its own action, or by action of
a subcommittee of the Board of Directors, by delegation to Officers or
other employees of the Company, shall have the right, power and
authority to take all actions in connection with the management of the
business and affairs of the Company, except with respect to the matters
set forth on Exhibit A hereto which are specifically reserved for
action by the Stockholders or as otherwise expressly provided in this
Agreement.
(b) The Board of Directors shall at all times be composed of
seven (7) Directors. Xxxxx X. Xxxxxx will serve as the Chairman of the
Board of Directors for a term beginning on the date hereof and ending
on the earlier to occur of the one year anniversary of such date or his
death, resignation, retirement or removal.
(c) Newbridge shall have the right to appoint three (3)
individuals to the Board of Directors (the "Newbridge Directors").
TeleHub shall have the right to appoint three (3) individuals to the
Board of Directors (the "TeleHub Directors"). Other than as set forth
in the last sentence of this Section 2.1(c), TeleHub and Newbridge by
mutual agreement shall have the right to appoint one (1) additional
individual to the Board of Directors (the "Additional Director") who
shall serve as the Chief Executive Officer of the Company. In the event
Newbridge and TeleHub are unable to agree on the Additional Director,
then for the period of time hereinafter set forth in the numbered
clauses of this sentence, the Stockholder set forth in such numbered
clause shall be entitled to elect the Additional Director: (i) for the
first 120 days immediately subsequent to the date hereof, Newbridge,
(ii) for the period from 120 days to 240 days immediately subsequent to
the date hereto, Telehub, (iii) for the period from 240 days to 300
days immediately subsequent to the date hereof, Newbridge and (iv) for
the period from 300 days to 360 days immediately subsequent to the date
hereof Telehub. Exhibit B attached hereto sets forth the initial Board
of Directors as appointed by TeleHub and Newbridge. Each such
individual shall serve until such time as he or she resigns, retires,
dies or is removed. Any Director may be removed with or without cause
by the Stockholder which appointed such Director at any time; provided,
however, except as set forth in the last sentence of this Section
2.1(c) the removal of any Additional Director requires the mutual
agreement of Newbridge and TeleHub. Upon the resignation, retirement,
death or removal of (A) any Newbridge Director, Newbridge shall
designate the replacement Director, (B) any TeleHub Director, TeleHub
shall designate the replacement Director, and (C) the Additional
Director, except as set forth in the last sentence of this Section 2.1
(c), Newbridge and TeleHub shall designate the replacement Director by
mutual agreement. Notwithstanding the foregoing, in the event that
subsequent to the exercise of the Option Agreement a Stockholder owns
in excess of fifty percent of the Issued Common Stock of the Company,
such Stockholder shall have the right to appoint the Additional
Director.
(d) The Company shall have a technology subcommittee
consisting of four (4) Directors who may also be a member of the
Company's Board of Directors. Newbridge shall have the right to appoint
two (2) individuals to the technology subcommittee (the "Newbridge
Technology Directors"). TeleHub shall have the right to appoint two (2)
individuals to the technology subcommittee (the "TeleHub Technology
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Directors"). Exhibit C attached hereto sets forth the initial members
of the technology subcommittee appointed by TeleHub and Newbridge. Each
such individual shall serve until such time as he or she resigns,
retires, dies or is removed. Any Director may be removed with or
without cause by the Stockholder which appointed such Director at any
time. Upon the resignation, retirement, death or removal of (A) any
Newbridge Technology Director, Newbridge shall designate the
replacement Director, and (B) any TeleHub Technology Director, TeleHub
shall designate the replacement Director. In the event of a tie vote by
the members of the technology subcommittee, the Chief Operating Officer
of the Company will then make the decision for the technology
subcommittee. Any decision by the technology subcommittee or any other
subcommittee of the Board of Directors may be overturned by the
Company's Board of Directors.
The Company's Board of Directors may establish additional
committees, including without limitation, an audit committee and
compensation committee, consisting of at least one Director appointed
by each of Newbridge and TeleHub. Any action by a committee or
subcommittee established by the Board of Directors shall be taken by
the affirmative vote of a majority of the Directors on such committee
or subcommittee or if taken by written consent then the consent of all
Directors of the committee or subcommittee.
2.2 Meetings and Actions of the Board of Directors.
(a) The Board of Directors shall meet (x) at least once each month at
the principal offices of the Company or at such other place as may be agreed
upon from time to time by the Board of Directors (unless such meeting shall be
waived by all of the Directors); (y) at such other times as may be determined
by the Board of Directors; or (z) upon the request of at least a majority of
the Directors upon ten (10) days' notice to all Directors. Meetings may be
held by telephone if at least a majority of the Directors consent thereto.
Written notice stating the place, day and hour of the meeting shall be
delivered not less than forty-eight (48) hours nor more than thirty (30) days
before the date of the meeting. When any notice is required to be given to any
Directors, a waiver thereof in writing signed by such Director, whether
before, at, or after the time stated therein, shall be equivalent to the
giving of such notice. A Director's attendance at a meeting shall also
constitute a waiver of notice as to such Director. If all the Directors shall
meet at any time and place, and do not object to the holding of a meeting at
such time and place, such meeting shall be valid without call or notice. The
Board of Directors shall cause written minutes to be prepared of all actions
taken by the Board of Directors and shall cause a copy thereof to be delivered
to each Director within fifteen (15) days thereof. Both Newbridge and TeleHub
may designate a member or members of their respective management who shall be
entitled to attend all meetings of the Company's Board of Directors.
(b) No action may be taken at a meeting of the Board of Directors
unless one Newbridge Director and one TeleHub Director is present.
(c) Each Director shall be entitled to cast one vote with respect to
any decision made by the Board of Directors. Any action to be taken by the
Board of Directors shall require affirmative votes from at least a majority of
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all Directors. A Director may grant a proxy entitling another Director to
exercise his voting rights. Such proxy shall be in writing and shall specify a
termination date. The other Directors shall be entitled to inspect the proxy
on demand.
(d) Any action to be taken by the Board of Directors may be taken
without a meeting if consents in writing setting forth the action to be taken
are signed by all the Directors.
2.3 Budget. Not less than sixty (60) days prior to the commencement of
each fiscal year of the Company, the Chief Executive Officer, the Chief
Operating Officer and the Chief Financial Officer shall prepare and submit to
the Board of Directors and the Stockholders for consideration a budget (the
"Budget") setting forth the estimated income and expenditures (capital,
operating and other) of the Company for such fiscal year. When Approved by
the Board of Directors and the Stockholders, the Officers shall implement the
Budget and shall be authorized to make the expenditures and incur the
obligations provided for in the Budget. The Officers shall not pursue any
activities or business on behalf of the Company which are not contemplated by
the Budget or otherwise Approved by the Board of Directors and the
Stockholders. The initial Budget for the Company is attached hereto as
Exhibit E.
2.4 Reimbursement. The Directors shall be entitled to reimbursement
from the Company for reasonable travel expenses incurred with respect to the
organization, operation, and management of the Company, including, without
limitation, the attendance of Board of Director's meetings. The Board of
Directors is authorized to obtain "directors and officers" insurance
coverage.
2.5 Officers.
(a) The Officers of the Company shall have the power and authority to
manage the day to day operations of the Company and shall make all decisions
with respect to the operations and affairs of the Company, except for the
matters the Board of Directors or any subcommittee thereof specifically reserves
for themselves and for matters reserved to the Stockholders set forth on Exhibit
A attached hereto.
(b) The Board of Directors shall appoint a chief executive officer of
the Company (the "Chief Executive Officer") as soon as practical after the
execution of this Agreement by TeleHub and Newbridge. Subject to the supervision
and authority of the Board of Directors, the Chief Executive Officer (i) shall
be the chief executive officer of the Company, (ii) shall have responsibility
and authority for management of the day-to-day operations of the Company, and
(iii) may execute agreements and contracts on behalf of the Company.
(c) The Board of Directors shall appoint a chief operating officer of
the Company (the "Chief Operating Officer"). The Chief Operating Officer shall
have such duties and responsibilities as delegated to him by the Chief Executive
Officer. The Board of Directors shall appoint Xxxx Xxxxxx as the Chief Operating
Officer of the Company to serve for a term beginning on the date hereof and
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ending on the earlier to occur of eighteen (18) months after such date and his
death, resignation, retirement or removal.
(d) The Board of Directors shall appoint a chief financial officer of
the Company (the "Chief Financial Officer"). The Chief Financial Officer shall
have the custody of the corporate funds and securities and shall keep full and
accurate accounts of receipts and disbursements in books belonging to the
Company and shall deposit all moneys and other valuable effects in the name and
to the credit of the Company in such depositories as may be designated by the
Board of Directors. The Chief Financial Officer shall render to the Chief
Executive Officer and the Board of Directors, when the Board of Directors so
requires, an account of all transactions and of the financial condition of the
Company. The Board of Directors shall appoint Xxxx Xxxxxx as the Chief Financial
Officer to serve for a term beginning on the date hereof and ending on the
earlier to occur of the first anniversary of such date and his death,
resignation, retirement or removal.
(e) The Board of Directors shall appoint a Chief Technical Officer
("Chief Technical Officer"). The Chief Technical Officer shall report to the
Chairman of the Board of Directors and shall be responsible for the Company's
advanced research. The Board of Directors shall appoint Xxxxxxx XxXxxxxxxx as
the Chief Technical Officer, to serve for a term beginning on the date hereof
and ending on the earlier to occur of eighteen (18) months after such date or
his death, resignation, retirement or removal.
(f) The Board of Directors may appoint other officers of the Company
(including, but not limited to, one or more vice presidents, secretaries, and
assistant secretaries; such Persons together with the Chief Executive Officer,
Chief Operating Officer, Chief Financial Officer and Chief Technical Officer,
the "Officers") upon terms and conditions the Board of Directors deems necessary
and appropriate. Except as otherwise provided herein, any officer shall hold his
or her respective office unless and until such officer is removed by the Board
of Directors or resigns or dies.
2.6 Termination. The provisions of this Section 2 will terminate
automatically and be of no further force and effect upon the first to occur of
(i) the Disposition by Newbridge Networks Corporation or TeleHub Technologies
Corporation (other than to Affiliates) of twenty-five percent (25%) of the
Issued Common Stock, (ii) an Approved Sale or (iii) a Public Sale.
SECTION 3
Stockholders Meetings and Decisions.
3.1 Annual Meeting. The annual meeting of the Stockholders shall be
held once a year on the date determined each year by the Board of Directors at
the Company's principal office or on such other date or place as the Board of
Directors Approve. The Board of Directors shall determine the agenda and matters
to be considered by the Stockholders at such annual meetings.
3.2 Special Meetings. Special meetings of the Stockholders, for any
purposes described in the meeting notice, may be called by the Board of
Directors.
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3.3 Notice of Meeting. Written or telephonic notice stating the place,
day and hour of the meeting and, in case of a special meeting, the purposes for
which the meeting is called, shall be delivered not less than five (5) days
before the date of the meeting, either personally, by mail, or by facsimile
transmission, to each Stockholder.
3.4 Proxies. At all meetings of Stockholders, a Stockholder may vote by
proxy executed in writing by the Stockholder or by his duly authorized
attorney-in-fact. Such proxy shall be filed with the Secretary of the Company
before or at the time of the meeting. No proxy shall be valid after three months
from date of execution, unless otherwise provided in the proxy.
3.5 Quorum. Stockholders owning not less than ninety percent (90%) of
Issued Common Stock entitled to vote thereon, represented in person or by proxy,
shall constitute a quorum at a meeting of Stockholders.
3.6 Telephonic Meeting. Stockholders of the Company may participate in
any meeting of the Stockholders by means of conference telephone or similar
communications equipment if all Persons participating in such meeting can hear
one another for the entire discussion of the matter(s) to be voted upon.
Participation in a meeting pursuant to this Section 3.6 shall constitute
presence in person at such meeting.
3.7 Written Consent. Any action to be taken by the Stockholders may be
taken without a meeting if consents in writing setting forth the action to be
taken are delivered to each Stockholder and are signed by Stockholders holding
the percentage of Common Stock required to Approve such action at a meeting.
3.8 Stockholder Decisions. Notwithstanding the provisions set forth in
Sections 2, the matters set forth on Exhibit A hereto are reserved for the
Stockholders and such actions set forth thereon may only be taken with the
Approval of the Stockholders.
3.9 Waiver. When any notice is required to be given to any Stockholder,
a waiver thereof in writing signed by the person entitled to such notice,
whether before, at, or after the time stated therein, shall be equivalent to the
giving of such notice.
3.10 Termination. The provisions of this Section 3 will terminate
automatically and be of no further force and effect upon the first to occur of
(i) the Disposition by Newbridge Networks Corporation or TeleHub Technologies
Corporation (other than to Affiliates) of twenty-five percent (25%) of the
Issued Common Stock, (ii) an Approved Sale or (iii) a Public Sale.
SECTION 4
Additional Contributions.
4.1 Additional Contributions. The Board of Directors may from time to
time determine based upon the Approval of the Board of Directors that additional
capital ("Additional Capital") is needed to enable the Company to conduct its
business. Upon a determination that Additional Capital is required, the Board of
Directors shall provide written notice to Newbridge of the amount of Additional
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Capital that is required and the date on which the Company wishes that such
Additional Capital be provided to the Company. Newbridge shall have the right,
but not the obligation, to provide such Additional Capital as a loan to the
Company upon such terms and conditions as shall be mutually acceptable to the
Company and Newbridge. The parties hereto acknowledge that it is Newbridge's
present intention, provided that no Material Adverse Change (as defined in the
Organizational Agreement) shall have occurred with respect to the Company since
the date hereof, that Newbridge will provide a loan to the Company in an
aggregate principal amount of up to Ten Million Dollars ($10,000,000) which
shall bear interest at the prime rate of interest and have such other terms and
conditions as shall be acceptable to the Company and Newbridge. In the event
that Newbridge does not make such loan, it shall guarantee up to Ten Million
Dollars ($10,000,000) of indebtedness to be provided to the Company by a
financial institution reasonably acceptable to Newbridge. Such guarantee shall
be on such terms and conditions as Newbridge typically provides to financial
institutions and shall terminate upon the earlier of (i) one year from its date
of issuance or (ii) the exercise of the Option Agreement (as defined in the
Organizational Agreement dated March 31, 1999 ("Organizational Agreement")) by
Newbridge. To the extent the need for Additional Capital shall exceed Ten
Million Dollars ($10,000,000), the Company shall, subject to the Approval of the
Stockholders, seek to raise the Additional Capital through (i) a Public Sale,
(ii) a private placement of debt or equity of the Company, (iii) a credit
facility from a financial institution satisfactory to the Board of Directors or
(iv) such other means as shall be Approved by the Board of Directors. In the
event that after pursuing all of the alternative set forth above, the Company
has not met its need for Additional Capital in full (the "Remaining Additional
Capital"), each Stockholder shall have the right, but not the obligation, to
loan to the Company its Pro Rata Share of the Remaining Additional Capital. If
both Stockholders lend their Pro Rata Share of the Remaining Capital, the
interest rate on such loans shall be the prime rate of interest. If both
Stockholders do not make such loans, the loan made by such Stockholder shall
bear interest at a rate equal to 15% per annum. All such loans shall have such
additional terms and conditions as shall be acceptable to the Company and the
Stockholder loaning such Remaining Additional Capital. Each Stockholder wishing
to exercise such right (i) must notify the Company of its intention within 30
days of the giving of notice of such determination by the Board of Directors
that Remaining Additional Capital is needed, and (ii) must loan its Pro Rata
Share of the Remaining Additional Capital within 30 days thereafter.
SECTION 5
Restrictions on Transfer of Common Stock.
5.1 Transfer of Common Stock; Other Restrictions on Stockholders. No
Stockholder shall Dispose any interest in any Common Stock, except pursuant to
or after compliance with, as applicable, (i) the provisions of this Section 5,
(ii) a Public Sale, (iii) an Approved Sale, (iv) the grant of a security
interest under the Pledge Agreement, and (v) the Pledge Agreement in connection
with an enforcement by the Collateral Agent of its rights and remedies for the
benefit of the holders of the Notes. Any Disposition or attempted Disposition of
any Common Stock in violation of any provision of this Agreement shall be void,
and the Company shall not record such transfer on its books or treat any
purported transferee of such Common Stock as the owner of such Common Stock for
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any purpose provided that, in each case, the restrictions contained in this
Agreement will continue to be applicable to the Common Stock after any
Disposition pursuant to this Section 5 and such transferor(s) shall cause such
Transferee(s) of such Common Stock to agree in writing to be bound by the
provisions of this Agreement, including without limitation, Section 14.22
hereof. Upon the Disposition of Common Stock pursuant to this Agreement, the
Transferees will deliver a written notice to the Company, which notice will
disclose in reasonable detail the identity of such transferee.
5.2 Permitted Dispositions. Notwithstanding anything to the contrary in
any other provision of this Agreement, the restrictions contained in this
Section 5 shall not apply to Dispositions by any Stockholder to or among any of
its Affiliates provided that, in each case, the restrictions contained in this
Agreement will continue to be applicable to the Common Stock after any
Disposition pursuant to this Section 5 and such transferor(s) shall cause such
Transferee(s) of such Common Stock to agree in writing to be bound by the
provisions of this Agreement. Upon the Disposition of Common Stock pursuant to
this Section 5, the Transferees will deliver a written notice to the Company,
which notice will disclose in reasonable detail the identity of such transferee.
5.3 Permitted Sales. (a) In the case any entity makes an unsolicited
bona fide offer (the "Bid") for any Common Stock of the Company, TeleHub will
notify Newbridge within forty-eight (48) hours of the Bid. TeleHub shall allow
Newbridge fifteen (15) days to make its own offer on the equivalent share of
Common Stock of the Company (the "Counter") before TeleHub shall proceed with
any transaction. In no event shall TeleHub, with respect to any individual Bid,
sell any of Common Stock in the Company to another Person for a price lower than
the Counter.
(b) In the case any Listed Third Party makes an unsolicited bona fide
offer (the "Listed Party Bid") for any Common Stock of the Company during the
first twelve months subsequent to the date hereof, TeleHub will notify Newbridge
within forty-eight (48) hours of receipt of the Listed Party Bid, accompanied
with a copy of the Listed Third Party Bid. TeleHub shall allow Newbridge fifteen
(15) days to make its own offer on the equivalent share of Common Stock of the
Company before TeleHub shall proceed with any transaction. If Newbridge does not
make such offer or Telehub rejects the offer made by Newbridge (the "Telehub
Rejection"), within fifteen (15) days after receipt of written notice of the
Telehub Rejection, Newbridge shall either exercise the Tag-Along Rights set
forth in Section 5.4 hereof or instruct TeleHub to reject the Listed Third Party
Bid. If Newbridge instructs TeleHub to reject the Listed Thirty Party Bid or
does not respond to the Listed Third Party Bid within such fifteen (15) day
period (a "Rejection"), TeleHub shall reject the Listed Third Party Bid. In the
event if a Rejection, the Stockholders agree that the Company may pursue a
Public Sale.
(c) During the first twelve months subsequent to the date hereof,
TeleHub shall not solicit, initiate, encourage or assist any entity in making an
Acquisition Proposal (as defined in the Organizational Agreement); provided,
however, the foregoing shall not restrict the Collateral Agent subsequent to a
foreclosure on the Issued Common Stock of TeleHub pursuant to the Pledge
Agreement.
12
5.4 Tag-Along Rights. (a) In the event that then Stockholders which are
not Newbridge (the "Non-Newbridge Stockholders") desire to make a Disposition of
their Issued Common Stock to a Listed Third Party in a single transaction or
series of related transactions, Newbridge shall have the right, but not the
obligation (the "Tag-Along Right"), to require the Non-Newbridge Stockholders to
require the Listed Third Party to acquire one hundred percent (100%) of the
Issued Common Stock and to sell to the proposed purchaser or purchasers, at the
price and on the other material terms established by the Non-Newbridge
Stockholders for such Disposition, either (i) all of the Issued Common Stock
owned by Newbridge or (ii) that number of shares of Issued Common Stock (or if
such number is not an integral number, the next integral number which is greater
than such number) which shall be the product of (A) the total number of shares
of Issued Common Stock owned by Newbridge, and (B) a fraction, the numerator of
which shall be the number of shares of Issued Common Stock to be sold by the
Non-Newbridge Stockholders and the denominator of which shall be the total
number of shares of Issued Common Stock owned by the Non-Newbridge Stockholders.
The Issued Common Stock held by Newbridge to be sold hereunder to the Listed
Third Party shall be sold on the same terms and conditions as those applicable
to the Non-Newbridge Stockholders, including the time of sale, form of
consideration and per share price. Newbridge's failure to exercise rights under
this Section 5.4 shall result in exclusion from sale in the transaction. If
Newbridge desires to exercise its rights under this Section 5.4, such Person
shall give written notice thereof to the Non-Newbridge Stockholders no later
than fifteen (15) days after receipt of notice provided by the Non-Newbridge
Stockholder. If Newbridge desires to exercise its rights under this Section 5.4,
it shall promptly take all necessary steps to effectuate the sale of the Issued
Common Stock covered thereby, including, but not limited to, the furnishing of
information customarily provided in connection with such a sale and the
execution of such sales and other transfer documents with such representations,
warranties, agreements, covenants and indemnities as may reasonably be required.
All references to "sell" herein shall be deemed to include transfer, dispose of
or otherwise convey in the manner in which such Disposition is proposed to be
made.
(b) If Newbridge does not exercise its right to cause the Non-Newbridge
Stockholder to require the Listed Third Party to acquire one hundred percent of
the Issued Common Stock, then if the sum of (i) the Issued Common Stock to be
sold by the Non-Newbridge Stockholders and (ii) Issued Common Stock offered for
sale pursuant to the exercise of the Tag-Along Right pursuant to Section 5.4
hereof exceeds the number of shares of Issued Common Stock that the purchaser or
purchasers described in the notice provided by the Non-Newbridge Stockholder is
willing to buy, the Stockholders shall adjust the number of shares of Issued
Common Stock to be sold by the Non-Newbridge Stockholder and by Newbridge to
ensure that the ratio of the number of shares of Issued Common Stock proposed to
be sold by each such holder to the number of shares of Issued Common Stock owned
by such holder shall be equal for each selling Non-Newbridge Stockholder and
Newbridge.
5.5 Termination of Restrictions. Except for the Tag-Along Rights set
forth in Section 5.4 above which shall terminate one year from the date hereof,
the restrictions set forth in this Section 5 will continue with respect to each
Stockholder until the earlier of (i) the Disposition by Newbridge Networks
Corporation or TeleHub Technologies Corporation (other than to its Affiliates)
of twenty-five percent (25%) the Issued Common Stock, (ii) an Approved Sale or
(iii) a Public Sale.
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SECTION 6
Representations and Warranties.
6.1 Individual Representations. Each Stockholder, severally and not
jointly, hereby represents and warrants, with respect to itself, to the Company
and the other Stockholder that:
(a) it has full organizational power to execute this Agreement and to
perform its obligations hereunder;
(b) it is acquiring (or in the case of TeleHub Technologies
Corporation, has acquired) the Common Stock in the Company for its own account
as an investment and without an intent to distribute such interest;
(c) the execution, delivery and performance of this Agreement by such
Stockholder has been duly and validly authorized by all necessary action, this
Agreement has been duly executed and delivered by such Stockholder and
constitutes a legal, valid, and binding obligation of such Stockholder
enforceable against such Stockholder in accordance with the terms hereof;
(d) no consent, waiver, approval or authorization of, filing,
registration or qualification with, or notice to, any Governmental Authority or
any other Person is required to be made, obtained or given by the Stockholder in
connection with the execution, delivery and performance of this Agreement,
except for such consents, approvals or authorizations which have been made or
obtained;
(e) none of the execution, delivery or performance of this Agreement by
the Stockholder does or will, with or without the giving of notice, lapse of
time or both, violate, conflict with or constitute a default under any term or
condition of any document, judgment, decree, order, statute, injunction, rule or
regulation to which such Stockholder is a party or by which it is bound or
applicable to its assets or properties or result in the creation of any lien or
other encumbrance upon the Common Stock of the Stockholder or any assets or
properties of the Company; and
(f) there are no Proceedings pending, or, to the best of the
Stockholder's knowledge, there are no Proceedings threatened, before any court,
Governmental Authority or any arbitrator with respect to its entering into this
Agreement or the formation, operations and activities of the Company
contemplated hereby or its assets.
6.2 No Securities Registration. Each Stockholder acknowledges, as of
the date such Stockholder executes this Agreement, that the Common Stock of the
Company has not been registered under the Securities Act or any state securities
laws and may not be resold or transferred by the Stockholder without appropriate
registration or the availability of an exemption from such requirements.
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SECTION 7
Sale of the Company.
7.1 Approved Sale. If the Stockholders Approve a sale of all or
substantially all of the Company's assets determined on a consolidated basis or
a sale of all or substantially all of the Company's outstanding capital stock
(whether by merger, recapitalization, consolidation, reorganization, combination
or otherwise) to any one or more Independent Third Parties (an "Approved Sale"),
then each Stockholder will consent to and raise no objections against the
Approved Sale. If the Approved Sale is structured as a (i) merger or
consolidation, each Stockholder shall waive any dissenters rights, appraisal
rights or similar rights in connection with such merger or consolidation or (ii)
sale of stock, each Stockholder shall agree to sell all of its Common Stock on
the terms and conditions Approved by the Stockholders. Each Stockholder shall
take all necessary or desirable actions in connection with the consummation of
the Approved Sale as requested by the Company.
7.2 Terms of Sale. The obligations of a Stockholder with respect to the
Approved Sale are subject to the satisfaction of the following conditions: (i)
upon the consummation of the Approved Sale, each Stockholder shall receive the
same form of consideration and the same portion of the aggregate consideration
such holder would have received if such aggregate consideration had been
distributed by the Company in complete liquidation pursuant to the rights and
preferences set forth in the Company's Certificate of Incorporation as in effect
immediately prior to the consummation of the Approved Sale; (ii) if any holders
of a class of Common Stock are given an option as to the form and amount of
consideration to be received, each Stockholder shall be given the same option;
and (iii) each holder of then currently convertible, exchangeable or exercisable
rights to acquire a class of Common Stock shall be given an opportunity to
either (A) exercise such rights prior to the consummation of the Approved Sale
and participate in such sale as holders of such class of Common Stock or (B) to
sell as part of such Approved Sale securities convertible, exchangeable or
exercisable for Common Stock at a price equal to the full purchase price
determined for such Common Stock issuable upon conversion, exchange or exercise
thereof as part of the Approved Sale, reduced by the aggregate exercise price
for such securities.
7.3 Sale Expenses; Indemnity. (a) Each Stockholder will bear its Pro
Rata Share of the costs of any sale of Common Stock pursuant to an Approved Sale
to the extent such costs are incurred for the benefit of all such Stockholders
and are not otherwise paid by the Company or the acquiring party. Costs incurred
by a Stockholder on its own behalf will not be considered costs of the Approved
Sale. Each Stockholder shall be obligated to join on a Pro Rata Basis in any
indemnification or other obligations that are part of the terms and conditions
of the Approved Sale (other than any such obligations that relate specifically
to a particular Stockholder, such as indemnification with respect to
representations and warranties given by a Stockholder regarding such
Stockholder's title to and ownership of Common Stock) (the "Company Indemnity
Obligations").
15
(b) In no event shall any Stockholder be obligated in connection with
any Approved Sale to agree to indemnify or hold harmless the transferees with
respect to Company Indemnity Obligations in an amount in excess of the net
proceeds paid to such holder in connection with the Approved Sale.
7.4 Termination of Restrictions. The restrictions set forth in this
Section 7 will terminate automatically and be of no further force and effect on
the first to occur of (i) the Disposition by Newbridge or TeleHub (other than to
Affiliates) of 25% of the Issued Common Stock or (ii) a Public Sale.
SECTION 8
Business Plan of the Company
8.1 Goals. Newbridge and TeleHub wish to form a new venture to further
develop the Virtual Access Services Platform ("VASP(TM)") technology and related
products that are essential to world-wide, end-to-end, service-rich
communications, as more fully described in Exhibit G hereto (the "Business") and
expand the market for the Business. The goal of the new venture will be to
establish a successful, highly profitable market position for VASP(TM),
specifically addressing narrowband switch replacement and data services,
addressing the needs of incumbent carriers and alternative carriers, in North
America and Internationally. In doing so, the new venture will meet the needs of
Newbridge and Telehub, by delivering a best of breed product that allows the
users of the technology competitive advantage in their markets. The new venture
will be implemented through the Company. Telehub and Newbridge wish the Company
to operate as a new venture with the two principal shareholders, Newbridge and
Telehub, operating in a spirit of cooperation and collaboration to address the
emerging narrowband switch replacement and data services markets and to grow a
profitable venture which leads these markets.
8.2 Schedule. In furtherance of the foregoing, the Company and
Newbridge have jointly prepared a schedule specifying the roll-out plan for,
VASP(TM), which schedule, dated as of the date hereof, is attached hereto as
Exhibit H. This Schedule will give equal priority to the use of VASP(TM) in the
TeleHub Network Services Corporation network and the requirements for the
broader market, which are necessary for the Company to achieve establish a
successful, highly profitable market position for VASP(TM), specifically
addressing narrowband switch replacement and data services, or addressing the
needs of incumbent carriers, and alternative carriers, in North America and
Internationally. TeleHub and Newbridge agree that it is imperative that TeleHub
and Newbridge collectively identify all specific requirements for the
integration of the VASP(TM) with Newbridge's MainStreetXpress(R) 36170
Multi-Service Switch and related technologies ("Newbridge Technology") for the
contribution of Newbridge's own efforts with respect to the Newbridge
Technology. TeleHub and Newbridge agree that the technical capabilities and
roll-out plan set forth in the Schedule in Exhibit H are intended to position
VASP(TM) as a viable and superior Call Control platform for domestic and
international telecommunications common carriers, and will provide for the
ability for such carriers to offer convergent network services for voice, video
and data communications. Newbridge agrees to regularly inform TeleHub on the
16
status of Newbridge Technology, and advise TeleHub and TTC of any changes in
Newbridge Technology to ensure compatibility between VASP(TM) and the Newbridge
Technology. TTC agrees to regularly inform Newbridge on the status of TTC's
VASP(TM) technology and advise Newbridge of any changes in such VASP(TM)
technology to ensure adherence to the schedule described in Exhibit H.
8.3 Milestones. TeleHub and TTC acknowledge that Newbridge's product
requirements of the VASP(TM) (feature and schedule) are a material reason for
the stock purchase by Newbridge and a primary inducement to Newbridge to assist
in the development and management of TTC. Newbridge and Telehub agree that the
following milestones must be met in order for TTC and Newbridge to establish a
successful, highly profitable market position for VASP(TM), specifically
addressing narrowband switch replacement:
(a) Reliability: The VASP(TM) shall improve failover time to
no longer than 30 seconds. No existing calls shall be dropped. Delivery
date for customer deployable functionality: See Exhibit H.
(b) European Signalling: The VASP(TM) shall support European
variants of the SS7 protocol for at least 3 countries. The initial
countries to be addressed should be United Kingdom, France and Germany.
Delivery date for customer deployable functionality: See Exhibit H.
(c) European Numbering Plan: The VASP(TM) shall support an
open numbering plan that will allow deployment in Europe. Delivery date
for customer deployable functionality: See Exhibit H.
8.4 Product Plans. Newbridge and TTC shall orient their product plans
and sales and marketing plans towards the objective of winning the following
reference customers by the end of 1999: 2 North American incumbent carrier
customers such as Xxxx Atlantic or South Western Xxxx, 2 European incumbent
carrier customers such as Deutsche Telecom or Compagnie Generale d'Eaux Telecom
(CEGETEL), and 2 alternative carriers.
8.5 Allowances. TTC shall also make allowances in the product
development schedule for unforeseen requirements of the above target customers,
while maintaining the schedules included in Exhibit H.
8.6 Distribution. Both TTC and Newbridge will participate in the
marketing of VASP(TM) and other TTC products. Newbridge and TTC will jointly
create a list of key customers and identify the customers that Newbridge will
solicit and those that TTC will solicit. TTC agrees that customers in which
Newbridge has already established a presence are better served by Newbridge than
by TTC. Notwithstanding the foregoing, this Section 8.6 does not give Newbridge
any account exclusivity with respect to TTC's other channels.
17
SECTION 9
Piggy-back Rights.
(a) Except as set forth in Section 5.3(b), no sooner than twelve months
from the date hereof, the Company may conduct a Public Sale when requested by
either TeleHub or Newbridge. Discussions regarding a Public Sale may begin if
the requesting party provides a commitment from an investment banker with a
national capability to underwrite the proposed Public Sale; provided, however,
the Company may conduct a Public Sale at any time after the date hereof if
TeleHub and Newbridge mutually agree that the Company may do so.
(b) If the Company at any time proposes to register any of the Common
Stock under the Securities Act by registration on Forms X-0, X-0 or S-3 or any
successor or similar form(s), whether or not for sale or for its own account, it
will each time give prompt written notice to the Stockholders of its intention
to do so. Upon the written request of any Stockholder made as promptly as
practicable and in any event within 15 days after the receipt of any such notice
(which request shall specify the Common Stock intended to be disposed of by such
Stockholder), the Company will use commercially reasonable efforts to effect the
registration under the Securities Act of all Common Stock which the Company has
been so requested to register by any Stockholder; provided, however, that if, at
any time after giving written notice of its intention to register any Common
Stock and prior to the effective date of the registration statement filed in
connection with such registration, the Company shall determine for any reason
not to register or to delay registration of such Common Stock, the Company may,
at its election, give written notice of such determination to the Stockholders
and (i) in the case of a determination not to register, shall be relieved of its
obligation to register any Common Stock in connection with such registration and
(ii) in the case of a determination to delay registering, shall be permitted to
delay registering any Common Stock for the same period as the delay in
registering such other Common Stock.
(c) If the managing underwriter of any underwritten offering shall
inform the Company of its belief that the Common Stock plus other Common Stock
of the Company requested to be included in such registration would materially
adversely affect such offering, then the Company will include in such
registration, to the extent of the Common Stock which the Company is so advised
by the managing underwriter can be sold in (or during the time of) such
offering, first, all Common Stock proposed by the Company to be sold for its own
account, second, such Common Stock requested to be included in such registration
by the Stockholders and other shareholders, such Common Stock to be included in
such registration pro rata among the Stockholders and other shareholders with
similar registration rights according to the total number of shares of Common
Stock requested to be included in such registration by the Stockholders or other
shareholders, as the case may be, and third, all other Common Stock requested to
be included in such registration.
(d) In the event that the Board of Directors of the Company and the
Stockholders Approve a Public Sale pursuant to an effective registration
statement under the Securities Act, the Stockholders will take all necessary or
desirable actions in connection with the consummation of the Public Sale. In the
event that such Public Sale is an underwritten offering and the managing
underwriters advise the Company in writing that in their opinion the common
18
stock structure will adversely affect the marketability of the offering, each
Stockholder will consent to and vote for a recapitalization, reorganization
and/or exchange of the Common Stock into securities that the managing
underwriters, the Board of Directors of the Company and Stockholders Approve and
will take all necessary or desirable actions in connection with the consummation
of the recapitalization, reorganization and/or exchange; provided, however, that
the resulting securities reflect and are consistent with the economic values
reflected by the rights and preferences set forth in the Company's Certificate
of Incorporation, as amended, as in effect immediately prior to such Public
Sale.
SECTION 10
Stock Certificates.
10.1 Legend. (a) A copy of this Agreement shall be filed with the
Secretary of the Company and kept with the records of the Company. Each of the
Stockholders hereby agrees that each outstanding certificate representing shares
of Common Stock shall bear an endorsement reading substantially as follows:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR THE
APPLICABLE STATE AND OTHER SECURITIES LAWS AND MAY NOT BE SOLD,
PLEDGED, HYPOTHECATED, ENCUMBERED, DISPOSED OF OR OTHERWISE
TRANSFERRED WITHOUT COMPLIANCE WITH THE SECURITIES ACT OF 1933
OR ANY EXEMPTION THEREUNDER AND APPLICABLE STATE AND OTHER
SECURITIES LAWS. THE SECURITIES REPRESENTED BY THIS CERTIFICATE
ARE SUBJECT TO THE PROVISIONS OF A STOCKHOLDERS AGREEMENT DATED
AS OF MARCH 31, 1999, BY AND AMONG NEWCO AND ITS
STOCKHOLDERS AND MAY NOT BE SOLD, PLEDGED, HYPOTHECATED,
ENCUMBERED, DISPOSED OF OR OTHERWISE TRANSFERRED EXCEPT IN
ACCORDANCE THEREWITH. A COPY OF THAT AGREEMENT IS ON FILE AT
THE PRINCIPAL EXECUTIVE OFFICES OF NEWCO.
(b) No holder of the Common Stock may sell, transfer or
dispose of any Common Stock (except pursuant to an effective registration
statement under the Securities Act) without first delivering to the Company an
opinion of counsel (reasonably acceptable in form and substance to the Company)
that neither registration nor qualification under the Securities Act and
applicable state securities laws is required in connection with such a transfer.
SECTION 11
Financial Statements and Reports.
11.1 Records to be Maintained. Proper and complete records and books of
account shall be kept by the Company, in accordance with GAAP, in which it shall
enter fully and accurately all transactions and other matters relating to the
19
Company's business as are usually entered into records and books of account
maintained by Persons engaged in businesses of a like character. The books and
records of the Company shall be kept on the accrual basis consistent with the
past practices of the Company, unless a different accounting method is permitted
under applicable law and the Board of Directors Approve the Company to employ
such method.
11.2 Audited Financial Statements. The Company's annual financial
statements shall be audited by such international accounting firm as may be
Approved by the Board of Directors.
11.3 Access to Books and Records. All Stockholders shall have the right
at all reasonable times during usual business hours to examine, and make copies
of or extracts from, the books of account of the Company and the records
required to be maintained hereunder. Such right may be exercised through any
employee of such Stockholder designated by it. Each Stockholder shall bear all
expenses incurred in any such examination made for such Stockholder's account.
11.4 Financial Statement Deliveries. The Company will deliver to each
Stockholder the financial statements and other reports described below:
(a) As soon as available and in any event within 30 days after
the end of each month after March 31, 1998, the Company will deliver to
each Stockholder: (i) the consolidated balance sheets of the Company
and its Subsidiaries as at the end of such month and the related
consolidated statements of income and shareholders' equity and cash
flows for such month and in each case for the period from the beginning
of the then current fiscal year to the end of such month, all in
reasonable detail and certified by the Chief Financial Officer of the
Company that they fairly present the financial condition of the Company
and its Subsidiaries as at the dates indicated and the results of their
operations and their cash flows for the periods indicated, subject to
changes resulting from audit and normal year-end adjustments, and (ii)
a narrative report describing the operations of the Company and its
Subsidiaries in the form prepared for presentation to senior management
for such month and for the period from the beginning of the then
current fiscal year to the end of such month;
(b) As soon as available and in any event within 90 days after
the end of each fiscal year, the Company will deliver to each
Stockholder: (i) the consolidated balance sheet of the Company and its
Subsidiaries as at the end of such year and the related consolidated
statements of income, shareholders' equity and cash flows of the
Company and its Subsidiaries for such fiscal year, all in reasonable
detail and certified by the Chief Financial Officer of the Company that
they fairly present the financial condition of the Company and its
Subsidiaries as at the dates indicated and the results of their
operations and their cash flows for the periods indicated, (ii) a
narrative report describing the operations of the Company and its
Subsidiaries in the form prepared for presentation to senior management
for such fiscal year, and (iii) in the case of such consolidated
financial statements, a report thereon of Price WaterhouseCoopers LLP
or other independent certified public accountants of recognized
national standing selected by the Company, which report states that
20
such consolidated financial statements fairly present the consolidated
financial position of the Company and its Subsidiaries as of the dates
indicated and the results of their operations, shareholders' equity and
their cash flows for the periods indicated in conformity with GAAP
applied on a basis consistent with prior years (except as otherwise
disclosed in such financial statements) and that the examination by
such accountants in connection with such consolidated financial
statements has been made in accordance with United States generally
accepted auditing standards; and
(c) Copies of such other information and data with respect to
the Company or any of its Subsidiaries as from time to time may be
reasonably requested by any Stockholder.
11.5 Termination. The provisions of this Section 11 will terminate
automatically and be of no further force and effect upon the earlier to occur of
(i) an Approved Sale or (ii) a Public Sale.
SECTION 12
Arms Length Transactions.
Without the Approval of the Stockholders, the Company will not
engage, and will not permit any Subsidiary to engage, in any transaction with
any Affiliates of a Stockholder which is not on an arms length basis or which is
on terms which are more favorable to such Affiliate than could be obtained by
the Company from an unaffiliated third party, including, without limitation, the
purchase of Company securities or the receipt of fees or other compensation from
the Company.
SECTION 13
Defaults.
13.1 Insolvency. In the event:
(a) a receiver, liquidator, assignee, custodian, trustee,
conservator, sequestrator (or other similar official) shall take possession of a
Stockholder or any substantial part of its property without its consent, or a
court having jurisdiction in the premises shall enter a decree or order for
relief in respect of a Stockholder in an involuntary case under any applicable
bankruptcy, insolvency, moratorium or other similar law now or hereafter in
effect, or appointing a receiver, liquidator, assignee, custodian, trustee,
conservator, sequestrator (or other similar official) of such Stockholder or for
any substantial part of its property, or ordering the winding-up or liquidation
of its affairs and such decree or order shall remain unstayed and in effect for
a period of 60 consecutive days; or
(b) a Stockholder shall commence a voluntary case under any
applicable bankruptcy, insolvency, moratorium or other similar law now or
hereafter in effect, or shall consent to the entry of an order for relief in an
21
involuntary case under any such law, or shall consent to the appointment of or
taking possession by a receiver, liquidator, assignee, trustee, custodian,
conservator, sequestrator (or other similar official) of such Stockholder or of
any substantial part of its property, or shall make any general assignment for
the benefit of creditors, or shall take any corporation action in furtherance of
any of the foregoing; or
(c) a Stockholder shall admit in writing its inability to pay
its debts as they mature; or
(d) (i) the insolvent stockholder (the "Insolvent
Stockholder") shall promptly notify the other Stockholder (the "Solvent
Stockholder") of the occurrence of any such Insolvency Event, which notice shall
comply with Section 14.4 hereof, and, if the Insolvent Stockholder fails to
provide such notice and the Solvent Stockholder becomes aware that the Insolvent
Stockholder has become such for purposes of this Section 13.1, then the Solvent
Stockholder shall promptly notify the Insolvent Stockholder of such fact, which
notice shall comply with Section 14.4 hereof;
(ii) after issuance of any notice referred to in clause (i), a
Stockholder (the "Selling Stockholder"), shall promptly provide notice to the
other Stockholder (the "Remaining Stockholder") when the Selling Stockholder has
received a bona fide offer by an unaffiliated third party (the "Third Party
Offeror") for the purchase of such Selling Stockholder's Issued Common Stock,
which notice shall (1) specify the number of shares of Issued Common Stock to be
sold, the name and address of the person desiring to purchase the same, and the
purchase price and terms of payment of such sale, and (2) contain an offer to
sell such Issued Common Stock to the Remaining Stockholder on the same terms and
conditions as the offer for the Issued Common Stock by the Third Party Offeror,
whereupon the Remaining Stockholder shall have thirty (30) days after receipt of
such notice, to elect by written notice to the Selling Stockholder to purchase
any portion or all of the Issued Common Stock offered for sale; and
(iii) the provisions of this Section 13.1 shall in no respect hinder,
delay or prevent the Collateral Agent from taking ownership and control of any
Collateral under the terms and conditions of the Pledge Agreement, including
assuming TeleHub Technology Corporation's rights to receive dividends, exercise
voting and other consensual rights, and declare certain Obligations to be
immediately due and payable under the terms of the Notes.
13.2 Breach of Covenants; Failure to Perform Obligations
(a) If any Stockholder fails to perform any of its obligations
or covenants or breaches any of its representations hereunder (an "Event of
Default"), then the other Stockholder (the "Nondefaulting Stockholder") shall
have the right to give such party (the "Defaulting Stockholder") a notice of
default ("Notice of Default"). The Notice of Default shall set forth the nature
of the obligations which the Defaulting Stockholder has not performed.
(b) If within the thirty (30) day period following receipt of
the Notice of Default, the Defaulting Stockholder in good faith commences to
perform such obligations and cure such default, and thereafter prosecutes to
22
completion with diligence and continuity the curing thereof and cures such
default within a reasonable time, then it shall be deemed that the Notice of
Default was not given and the Defaulting Stockholder shall lose no rights
hereunder. If, within such 30 day period, the Defaulting Stockholder does not
commence in good faith the curing of such default or does not thereafter
prosecute to completion with diligence and continuity the curing thereof and the
default is a material default hereunder, then the Nondefaulting Stockholder
shall have the rights set forth in Section 13.2(c) below.
(c) If any material default is not cured as set forth in
Section 13.2(b), the Defaulting Stockholder, shall promptly provide notice to
the Nondefaulting Stockholder when the Defaulting Stockholder has received a
bona fide offer by a Third Party Offeror for the purchase of such Defaulting
Stockholder's Issued Common Stock, which notice shall (1) specify the number of
shares of Issued Common Stock to be sold, the name and address of the person
desiring to purchase the same, and the purchase price and terms of payment of
such sale, and (2) contain an offer to sell such Issued Common Stock to the
Nondefaulting Stockholder on the same terms and conditions as the offer for the
Issued Common Stock by the Third Party Offeror, whereupon the Nondefaulting
Stockholder shall have thirty (30) days after receipt of such notice, to elect
by written notice to the Defaulting Stockholder to purchase any portion or all
of the Issued Common Stock offered for sale.
(d) The provisions of this Section 13.2 shall in no respect
hinder, delay or prevent the Collateral Agent from taking ownership and control
of any Collateral under the terms and conditions of the Pledge Agreement,
including assuming TeleHub Technology Corporation's rights to receive dividends,
exercise voting and other consensual rights, and declare certain Obligations to
be immediately due and payable under the terms of the Notes.
(e) Failure by a Nondefaulting Stockholder to give any Notice
of Default as specified herein, or any failure to insist upon strict performance
of any of the terms of this Agreement, shall not constitute a waiver of any such
breach or any of the terms of this Agreement. No breach shall be waived and no
duty to be performed shall be altered or modified except by written instrument.
One or more waivers or failures to give Notice of Default shall not be
considered as a waiver of a subsequent or continuing breach of the same
covenant.
13.3 Not Exclusive Remedy. The rights granted in Section 13.1 and
Section 13.2 above shall not be deemed an exclusive remedy of a Nondefaulting
Stockholder or a Solvent Stockholder, but all other rights and remedies, legal
and equitable, shall be available to it.
SECTION 14
Miscellaneous.
14.1 Agreement May Be Modified. This Agreement may be modified as
provided in this Section 14 (as the same may, from time to time be amended).
This Agreement may be amended or modified from time to time only by a written
instrument Approved by the Stockholders.
23
14.2 Entire Agreement. This Agreement represents the entire agreement
among all the Stockholders and between the Stockholders and the Company.
14.3 Rights of Creditors and Third Parties under Agreement. This
Agreement is entered into among the Company and the Stockholders for the
exclusive benefit of the Company, its Stockholders, and their successors and
assignees, including without limitation, in the case of TeleHub Communications
Corporation, TeleHub Technologies Corporation, the Collateral Agent and the
holders of the Notes. This Agreement is expressly not intended for the benefit
of any creditor of the Company or any other person. Except and only to the
extent provided by applicable law, no such creditor or third party shall have
any rights under this Agreement or any agreement between the Company and any
Stockholder.
14.4 Notices and Addresses. All notices required to be given under this
Agreement shall be in writing and may be delivered by certified or registered
mail, postage prepaid, by hand, by facsimile, or by any nationally recognized
private courier. Such notices shall be mailed or delivered to the Stockholders
at the addresses set forth on the signature page hereof or such other address as
a Stockholder may notify the other Stockholders of in writing. Any notices to be
sent to the Company shall be delivered to the principal place of business of the
Company or at such other address as the Company may specify in a notice sent to
all of the Stockholders. Notices shall be effective (i) if mailed, on the date
three days after the date of mailing, (ii) if hand delivered or delivered by
private courier, on the date of delivery to such courier, or (iii) if
transmitted by facsimile, on the date of transmission.
14.5 Governing Law. The validity and effectiveness of this Agreement
shall be governed by and construed and enforced in accordance with the internal
laws of the State of Illinois, without giving effect to the provisions, policies
or principles of any state law relating to choice or conflict of laws.
14.6 Arbitration of Disputes. All disputes concerning this Agreement
will be submitted to binding arbitration in Chicago, Illinois, in accordance
with the Rules of the American Arbitration Association. The Arbitrator's
decisions must be delivered in writing accompanied by written findings of fact
and conclusions of law. All documents submitted to the Arbitrator shall be
treated as confidential. The prevailing party, as part of its damages, shall be
entitled to recover its legal fees and expenses incurred in such action from the
losing party. Any competent Illinois court may enter judgment upon the
Arbitrator's awards and the parties hereto irrevocably submit to the
jurisdiction of the Illinois courts.
14.7 Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the Stockholders and their respective successors and
assigns.
14.8 Counterparts. This Agreement may be executed in multiple
counterparts, each of which may bear the signatures of less than all the
parties, but all of which together shall constitute one instrument.
24
14.9 Entire Agreement; Severability. This Agreement, the Exhibits
hereto, and the Organizational Agreement, constitutes the entire agreement among
the parties hereto with respect to the subject matter hereof. Any other prior
written agreements shall, upon the execution of this Agreement, be null and
void. The parties agree that if any term or provision of this Agreement
contravenes or is invalid under any federal, state or local law, court decision,
rule, ordinance or regulation, this Agreement shall, as to the jurisdiction
under which such legal authority is promulgated or rendered, be construed as if
it did not contain the offending term or provision, and the remaining provisions
of this Agreement shall not be affected thereby; provided, however, that if the
removal of such offending term or provision materially alters the burdens or
benefits of any of the parties under this Agreement, the parties agree to
negotiate in good faith such modifications to this Agreement as are appropriate
to ensure the burdens and benefits of each party under such modified Agreement
are reasonably comparable to the burdens and benefits originally contemplated
and expected.
14.10 Captions. The captions are inserted for convenience of reference
only and shall not affect the construction of this Agreement.
14.11 Statutory References. Each reference in this Agreement to a
particular statute or regulation, or a provision thereof, shall be deemed to
refer to such statute or regulation, or provision thereof, or to any similar or
superseding statute or regulation, or provision thereof, as is from time to time
in effect.
14.12 Waiver. The waiver by any party hereto of the breach of any term,
covenant, agreement or condition herein contained shall not be deemed a waiver
of any subsequent breach of the same or any other term, covenant, agreement or
condition herein, nor shall any custom, practice or course of dealings arising
among the parties hereto in the administration hereof be construed as a waiver
or diminution of the right of any party hereto to insist upon the strict
performance by any other party hereto of the terms, covenants, agreements and
conditions herein contained.
14.13 Remedies Not Exclusive. Unless otherwise provided in this
Agreement, any remedy contained in this Agreement for breaches of obligations
hereunder shall not be deemed to be exclusive and shall not impair the right of
any party to exercise any other right or remedy, whether for damages, injunction
or otherwise.
14.14 Remedies. The parties to this Agreement acknowledge and agree
that breach of any of the covenants of the Company or the Stockholders set forth
in this Agreement is not fully compensable by payment of money damages and,
therefore, that the covenants of the Company and/or the Stockholders set forth
in this Agreement may be enforced in equity by a decree requiring specific
performance. Without limiting the foregoing, if any dispute arises concerning
the sale or other disposition of any of the shares of Common Stock subject to
this Agreement, the parties to this Agreement agree that an injunction may be
issued restraining the sale or other disposition of such shares of Common Stock
or rescinding any such sale or other disposition, ending resolution of such
controversy. Such remedies shall be cumulative and nonexclusive and shall be in
addition to any other rights and remedies the parties may have under this
Agreement.
25
14.15 Identification. Wherever from the context it appears appropriate,
each term stated in either the singular or the plural shall include the singular
and the plural, and pronouns stated in either the masculine or the neuter gender
shall include the masculine, feminine and neuter.
14.16 No Presumption Against Drafter. The parties hereto have jointly
participated in the negotiation and drafting of this Agreement. In the event of
an ambiguity or if a question of intent or interpretation arises, this Agreement
shall be construed as if drafted jointly by all of the parties hereto and no
presumptions or burdens of proof shall arise favoring any party by virtue of the
authorship of any of the provisions of this Agreement.
14.17 Recapitalization, Exchanges, Etc. The provisions of this
Agreement shall apply, to the full extent set forth herein with respect to
shares of Common Stock, to any and all shares of capital stock of the Company or
any successor or assign of the Company (whether by merger, consolidation, sale
of assets, or otherwise) that may be issued in respect of, in exchange for, or
in substitution of the shares of Common Stock, by reason of a stock dividend,
stock split, stock issuance, reverse stock split, combination, recapitalization,
reclassification, merger, consolidation, or otherwise. Upon the occurrence of
any such events, amounts hereunder shall be appropriately adjusted.
14.18 Antidilution. The Stockholders acknowledge and understand that
the initial capitalization of the Company calculated on a fully-diluted basis
shall be as follows: Newbridge, nineteen percent (19%) of the outstanding
capital stock of the Company and Telehub, eighty-one percent (81%) of the
outstanding capital stock of the Company. The Articles and Bylaws of the Company
shall provide that the Company may not issue any additional Capital Stock or
take any other action affecting the capitalization of the Company for a period
of one year from the date hereof.
14.19 After-Acquired Common Stock. The Stockholders agree that any
Common Stock of the Company acquired after the date of this Agreement by the
Stockholders shall be subject to all terms and conditions of this Agreement, and
any reference in this Agreement to Common Stock shall include any such Common
Stock acquired after the date of this Agreement.
14.20 Reservation of Other Business Opportunities. No business
opportunities other than those actually exploited by the Company shall be deemed
to be property of the Company and any Stockholder or Director (unless otherwise
restricted by another agreement with the Company) may engage in or possess an
interest in any other business venture, independently or with others, of any
nature or description, even if such venture or opportunity is in direct
competition with the business of the Company; and (unless otherwise restricted
by another agreement with the Company) neither Stockholder or any Director nor
the Company shall have any rights or obligations by virtue hereof in and to such
other business ventures, or to the income or profits derived therefrom.
14.21 TeleHub Indemnification. (a) TeleHub Communications Corporation
and TeleHub Technologies Corporation, jointly and severally, each agrees to
defend, indemnify and hold the Company and its successors and assigns, harmless
26
from and against any loss, damage or expense (including reasonable attorneys'
fees), which relate to, be caused by or arise out of any Taxes (as defined in
the Organizational Agreement) due from TeleHub Communications Corporation,
TeleHub Technologies Corporation or any of their Affiliates or any Tax Returns
(as defined in the Organizational Agreement) filed or failed to be filed by
TeleHub Communications Corporation, TeleHub Technologies Corporation or any of
their Affiliates which arise out of or relate to that period of time during
which the Company is a part of the consolidated tax group of TeleHub
Communications Corporation or TeleHub Technologies Corporation.
(b) TeleHub Communications Corporation and TeleHub
Technologies Corporation, jointly and severally, each agrees to defend,
indemnify and hold the Company and its successors and assigns, harmless from and
against any loss, damage or expense (including reasonable attorneys' fees),
which relate to, be caused by or arise out of any Plan (as defined in the
Organizational Agreement) maintained or contributed to by TeleHub Communications
Corporation, TeleHub Technologies Corporation, or any of their Affiliates which
arise out of or relate to that period of time during which the Company is a part
of the Controlled Group (as defined in the Organizational Agreement) of TeleHub
Communications Corporation or TeleHub Technologies Corporation.
(c) Indemnity claims hereunder, if any, shall be made in the
same manner as provided in the Organizational Agreement.
14.22 Authority. Whenever the consent, vote, Approval or and any other
action is required or sought hereunder, the defined terms "Newbridge" and
"TeleHub" shall mean the initial holders of the shares, i.e. Newbridge Networks
Corporation and/or TeleHub Technologies Corporation, and each of the subsequent
Transferees of such group acting for the purposes of this Agreement as a single
entity. The other parties to this Agreement and the Company shall be entitled to
rely upon a written document signed by Xxxxx X. Xxxxxx, as the vote, consent,
Approval or action of Newbridge and a written document signed Xxxxxxx X. Xxxxxx
as the vote, consent, Approval or action of TeleHub. Newbridge and TeleHub and
each of their Transferees may change such foregoing persons by written notice to
the other party.
14.23 Management Services. TeleHub Communications Corporation will
provide the services set forth on the attached Exhibit F for the fees indicated
thereon. The Company may terminate the provision of any or all such services at
any time within its sole discretion by action of a majority vote of the Board of
Directors of the Company. The cancellation of the services shall terminate the
obligation of the Company to pay the applicable fee for the cancelled type of
service. TeleHub Communications Corporation shall indemnify, defend and hold
harmless the Company from any and all damages, costs, expenses or liabilities
suffered by the Company arising out of or related to the provision of such
services.
14.24 Pledge Agreement. (a) In the event of a foreclosure or sale by
the Collateral Agent of Issued Common Stock under the Pledge Agreement or any
other exercise of the remedies thereunder, the purchaser of such Collateral (as
defined therein) shall become a party to this Agreement and assume the
contractual obligations hereunder of TeleHub Communications Corporation and
27
TeleHub Technologies Corporation, except that in no circumstance shall (i)
TeleHub Communications Corporation or TeleHub Technologies Corporation be
released from their obligations under Section 14.21 or 14.23 of this Agreement,
(ii) such purchaser of such Collateral (or the Collateral Agent or any holder of
any Notes) assume or become obligated for the obligations and liabilties of
TeleHub Communications Corporation or TeleHub Technologies Corporation under
Section 14.21 or 14.23 of this Agreement which arise out of or relate to any
period of time prior to the date of such foreclosure of sale or liable for any
disbursements or payments of any kind under any financial arrangements,
contract, liability, loan or other indebtedness of any nature, incurred by
TeleHub Technologies Corporation or TeleHub Technologies Corporation under this
Agreement prior to the date of such foreclosure or sale.
(b) Nothing in this Agreement shall hinder, delay, preclude or restrict
the Collateral Agent, in accordance with the Pledge Agreement, from (i) taking
ownership and control of any Collateral, including Issued Common Stock, and
exercising all rights of ownership and control thereof, (ii) Disposing of such
Collateral, including Issued Common Stock, or (iii) otherwise exercising its
rights of foreclosure or sale under the Pledge Agreement, subject to (with
respect to the foregoing clauses (ii) and (iii)) (A) the Collateral Agent's
compliance with Sections 5.3(b), 5.4 (for the one year period described in
Section 5.5), 13.1 and 13.2 of this Agreement under the circumstances described
therein and (B) in all circumstances, the Collateral Agent's giving to Newbridge
rights of first refusal as provided in Section 13.1 and 13.2.
28
IN WITNESS WHEREOF, the parties hereto have executed this
Stockholders Agreement on the day and year first above written.
TELEHUB TECHNOLOGIES CORPORATION
By: /S/ Xxxxxx X. Xxxxxx
---------------------------
Name: Xxxxxx X. Xxxxxx
---------------------------
Title: CEO
---------------------------
NEWBRIDGE NETWORKS CORPORATON
By: /s/ Xxxxx X. Xxxxxx
---------------------------
Name: Xxxxx X. Xxxxxx
---------------------------
Title: E.V.P. Switching Products
---------------------------
By: /s/ Xxxx X. Xxxx
---------------------------
Name: Xxxx X. Xxxx
---------------------------
Title: President
---------------------------
[NEWCO] CORPORATION
By: /S/ Xxxxxx X. Xxxxxx
---------------------------
Name: Xxxxxx X. Xxxxxx
---------------------------
Title: CEO
---------------------------
29
Acknowledgement. TeleHub Communications Corporation hereby agrees to the
provisions of Sections 14.21 and 14.23 and further agrees that it shall not take
any action, nor allow the taking of any action, directly or indirectly,
including without limitation, the Disposition or issuance of shares or voting or
equity interests in the TeleHub Technologies Corporation to circumvent the
restrictions on transferability of the Common Stock of the Company or to
otherwise avoid the intended purposes set forth in this Agreement, provided,
however, the foregoing shall not affect the rights, obligations or remedies of
the Collateral Agent set forth in the Pledge Agreement.
TELEHUB COMMUNICATIONS CORPORATION
By: /S/ Xxxxxx X. Xxxxxx
---------------------------
Name: Xxxxxx X. Xxxxxx
---------------------------
Title: CEO
---------------------------
EXHIBIT A
Stockholder Decisions
The taking of the actions set forth below shall require the
Approval of the Stockholders of the Company
(i) the acquisition or disposition of any business or a
business division from or to any Person, whether by asset purchase, stock
purchase, merger or other business combination;
(ii) the sale, transfer and other disposition of all or
substantially all the assets of the Company in any transaction or a series of
related transactions;
(iii) any merger, consolidation or reorganization to which the
Company is a party;
(iv) the entry of the Company into any partnership, limited
liability company, joint venture or other investment in or acquisition of stock,
partnership interests or other equity securities of any Person;
(v) the declaration of dividends upon, or any distribution in
respect of, any of its
equity securities;
(vi) a Public Sale;
(viii) issuance of (a) capital stock or other equity
obligations of the Company, including, but not limited to, appreciation, phantom
stock or profit participation rights, whether now authorized or not, (b) any
rights, options, or warrants to purchase any such equity interest, securities,
obligations or rights, or to purchase any securities of any type whatsoever that
are, or may become, convertible into any such equity interest, securities,
obligations or rights and (c) any securities of any type whatsoever that are, or
may become, convertible into any such equity interest, securities, obligations
or rights;
(ix) amending the Articles of Incorporation or By-Laws of the
Company or changing the number of Directors on the Board of Directors; and
(x) the Company (a) making an assignment for the benefit of
creditors, (b) applying for, seeking, consenting to, or acquiescing in, the
appointment of a receiver, custodian, trustee, examiner, liquidator or similar
official for it or any of its property, (c) instituting any proceeding seeking
an order for relief under the Federal bankruptcy laws as now or hereafter in
effect or seeking to adjudicate it a bankrupt or insolvent, or seeking
dissolution, winding up, liquidation, reorganization, arrangement, adjustment
or composition of it or its debts under any law relating to bankruptcy,
insolvency or reorganization or relief of debtors or fail to file an answer or
other pleading denying the material allegations of any such proceeding filed
against it, (d) taking any action to authorize or effect any of the foregoing
actions or (e) failing to contest in good faith any appointment or proceeding
described above.
31
(xi) selecting the Chief Executive Officer; provided, however, that
TeleHub's and Newbridge's joint selection of the Chief Executive Officer shall
not require the Approval of the Stockholders of the Company;
(xii) approving, changing, waiving provision of or modifying the
Budget;
(xiii) making or agreeing to make expenditures for capital items,
capital goods or capital equipment (as those terms are used in United States
generally accepted accounting principles) in excess of $2,000,000 which are
not set forth in the Budget;
(xiv) entering into or becoming obligated under any contracts or
agreements with customers, suppliers, vendors which could result in
liabilities, payments or obligation in excess of $2,000,000 in any fiscal
year;
(xv) borrowing, guaranteeing, lending or becoming obligated or
committed to borrow, lend or guarantee money or obligations in excess of
$2,000,000 which are not required in the Budget;
(xvi) leasing or acquiring any real estate;
(xvii) instituting, settling or agreeing to settle any claim,
litigation, proceeding, action, mediation or arbitration which results or
could result in any restrictions or ongoing obligations of the Company or
liability in excess of $1,000,000;
(xvii) conducting any business other than the specific Business (as
defined in the Organization Agreement) for which the Company was formed.
32
EXHIBIT B
Initial Board of Directors
--------------------------- -------------------------- -----------------------
Newbridge Directors TeleHub Directors Additional Director
------------------- ----------------- -------------------
--------------------------- -------------------------- -----------------------
Xxxxx X. Xxxxxx Xxxxxxx XxXxxxxxxx
--------------------------- -------------------------- -----------------------
Xxxxx Xxxxxxxxx Xxxx Xxxxxx
--------------------------- -------------------------- -----------------------
Xxxxxxx X. Xxxxxx
--------------------------- -------------------------- -----------------------
--------------------------- -------------------------- -----------------------
---------------------------------------- -------------------------- ----------
33
EXHIBIT C
Initial Technology Committee
-------------------------------- -------------------------
Newbridge TeleHub
--------- -------
-------------------------------- -------------------------
Xxxxx Xxx Xxxxxxx XxXxxxxxxx
-------------------------------- -------------------------
Xxxxx Xxxxxxxxx Xxxx Xxxxxx
-------------------------------- -------------------------
-------------------------------- -------------------------
-------------------------------- -------------------------
34
EXHIBIT D
Listed Third Parties
CISCO SYSTEMS, INC.
35
EXHIBIT E
Initial Budget
36
EXHIBIT F
Management Services and Fees
TTC will reimburse TeleHub for actual out of pocket costs for the office leases
and equipment leases set forth in Section C on Schedule 4.24 of the
Organizational Agreement. All other services previously provided by TeleHub
shall continue to be provided with a maximum charge to TTC of $50,000 per month.
TTC shall pay each of TeleHub and Newbridge a management fee of $25,000 per
month.
37
EXHIBIT G
(BUSINESS)
TeleHub and TTC (collectively, "Company") have developed
first-to-market proprietary software, Virtual Access Services Platform
("VASP(TM)") that will enable telecommunications service providers to (i)
integrate the delivery of voice, video and data over a single platform; (ii)
seamlessly interconnect with the Public Switched Telephone Network ("PSTN");
(iii) provide real-time monitoring of telecommunications traffic; and (iv)
facilitate local exchange competition. The Company believes the VASP(TM)
platform addresses significant needs throughout the telecommunications industry
for improved systems and less reliance on legacy hardware. VASP(TM) creates
virtual switching capabilities, permits real-time network supervision and
facilitates the introduction of new service offerings. When fully deployed,
VASP(TM) will integrate voice, video and data on a single switched network and
enable the provisioning of bandwidth-on-demand services.
The Company believes the VASP(TM) platform addresses significant needs
throughout the telecommunications industry for improved systems and less
reliance on legacy hardware. While the legacy network evolved principally for
voice transmission, demand for data, video and advanced voice services has grown
rapidly over the past ten years. The legacy network, designed to handle the
lower bandwidth requirements of voice traffic, has inherent service and cost
inefficiencies when carrying data and video transmissions. Existing carriers
must develop new Operational Support Systems ("OSS") that are interoperable with
their legacy systems, not only to support initiatives like Local Number
Portability ("LNP") and the unbundling requirements of the Telecommunications
Act, but also to enable carriers to respond to increasing competitive
challenges. VASP(TM) addresses several shortcomings of legacy networks
including: (i)the inability to switch packet- and cell-based traffic into the
PSTN; (ii)the lack of real-time management, billing and monitoring capabilities;
(iii)the inflexibility of hardware-based network architectures; and (iv) the
lack of integrated OSS capabilities. VASP(TM) creates virtual switching
capabilities, permits real-time network supervision and facilitates the
introduction of new service offerings. When fully deployed, VASP(TM) will
integrate voice, video and data on a single switched network and enable the
provisioning of bandwidth-on-demand services The Company believes that its
VASP(TM) technology provides Incumbent Local Exchange Carriers ("ILECs"),
Competitive Local Exchange Carriers (CLECs), Inter-exchange Carriers ("IXCs")
and Original Equipment Manufacturers ("OEMs") with the ability to accelerate the
introduction of new products and services, to reduce costs and to enter into new
markets rapidly.
VASP(TM)'s applications are designed to administer, operate, control
and manage switching devices and network elements in the public carrier services
market. The Company believes that VASP(TM) provides telecommunications carriers
with superior billing, management and control capabilities. VASP(TM) has been
designed to be integrated with any carrier's customer care, billing,
provisioning and network management applications. VASP(TM) accumulates
information about network events for each phone call and generates a Transaction
Detail Record ("TDR"). The TDR can be converted into the standard industry call
detail record or into customized information that allows service providers to
xxxx innovatively (e.g., millisecond billing). In addition, service providers
38
can access their databases containing customer information and individual call
records in real-time to trouble shoot problems and identify customer calling
patterns. This information can be obtained by simple dial-up access from a
personal computer, as opposed to the current network process of downloading
information from each switch in the network, which can take more than a day to
complete. The carrier can use such information as a strategic advantage for
pricing and offering targeted product based upon real-time market feedback. The
Company's software can also be used as a network surveillance monitoring device.
The software has the ability to track phone calls from end-to-end and,
therefore, can locate the specific network element that may be causing a
problem. These advantages, coupled with the capability to provision circuits
electronically, will significantly reduce carriers' operating costs.
The Company expects that future releases of VASP(TM) will allow for the
replacement of the Class 4/tandem. switch and Class 5/end-office switch. Based
upon engineering studies, the Company believes that by using Asynchronous
Transfer Mode ("ATM") and VASP(TM) in place of traditional switch fabrics, the
reduction in tandem switching investment will lower the overall cost of
multi-city interconnections by 45% to 60%. The VASP(TM) open system architecture
is scalable from small sizes up to hundreds of phone calls per second, and its
underlying hardware platforms and control center designs are selected to meet
the operating objectives by accumulating no more than one hour of downtime
during each twenty year period of service (99.999% uptime service level
objective). VASP(TM) is also adaptable to other transmission mediums such as
Internet Protocol ("IP"), cable and wireless. VASP(TM) products and services
include the following:
Virtual Class 4/Tandem. The Company expects that its software, combined
with an ATM switching platform, will be capable of replacing the traditional
Class 4/tandem switch. This capability will enable data service providers to
offer voice products over their existing networks. VASP(TM), running on a Sun
Microsystems server and controlling ATM switches, offers a 30% to 40% savings
over the cost of purchasing and installing traditional tandem switches. In
addition TeleHub's VASP(TM) -based software solution offers other benefits,
including cost effective scalability, customization to specific customer
requirements and applications, and faster introduction of new products.
Local Switch Bypass. TTC is engineering solutions to identify Internet
data and other long-holding time calls (e.g., voice mail) and route them
directly to called parties, thereby bypassing end-office and tandem switches.
The Company expects this technology to address carriers' growing problem of
congestion at end-office and tandem switches caused by Internet traffic. TTC's
solution allows carriers to manage existing traffic levels and flow without
purchasing additional switch capacity.
Virtual Class 5/End-Office Switching. TeleHub is in the process of
enhancing its VASP(TM) solution to duplicate the basic functionality of a Class
5/end-office switch. TeleHub expects its virtual Class 5 solution to provide
carriers with the capability to enter the local market with a voice product at a
fraction of the cost of buying and installing a conventional Class 5/end-office
switch. The same advantages offered by TeleHub's Class 4/tandem switch solution
apply here - reduced capital expenditures, customization and faster
time-to-market for new products. As an example, many CLECs have data Points of
39
Presence ("POPs") which currently utilize ATM switches. TeleHub expects its
solution to allow CLECs to carry and switch voice traffic using their existing
ATM networks without purchasing Class 5/end-office switches.
Virtual STP/SCP Signaling). Signal Transfer Points ("STPs") and Signal
Control Points ("SCPs") are key elements of the underlying Signaling System 7
("SS7") network. Messages, such as telephone number, calling card validation,
800 number routing, and calling name delivery are transmitted to STPs that route
the messages to the proper SCPs where call processing information is stored.
Embodied within the VASP(TM) design today are both SCP and STP functionality,
thereby allowing carriers to perform their own SS7 signaling, without purchasing
signaling services or expensive equipment. VASP(TM) contains translation and
routing instructions needed to deliver advanced network services and can be
further enhanced as new services or requirements are identiRed. The necessary
STP functions are also incorporated in the VASP(TM) design to handle the
signaling and management of "on-net" traffic. Conventional STP is deployed in
VASP(TM) as an interface to other carriers in the Public Switched Telephone
Network ("PSTN") and as a firewall to protect both parties' proprietary
information from compromise.
Mediated Access Services ("MAS'). The Telecommunications Act and
subsequent FCC mandates will require service inter-operability between the
various proprietary systems of existing telecommunications carriers. Local and
long distance carriers and their current software vendors are therefore
expending significant design and software development resources trying to create
the inter- operability solutions that can be achieved through VASP(TM). TeleHub
expects many carriers to select TeleHub as a service supplier and VASP(TM) as a
standard product to integrate the various operating overlays.
TeleHub expects its MAS capability to provide neutral "third-party"
access to service management system and Operational Support system ("OSS")
databases throughout the industry. Any service provider (virtual or
facilities-based) will be able to obtain the key call treatment information
necessary to process customer calls, while the proprietary information of the
database owner is protected from compromise. The first requirement for mediation
results from the FCC's mandated LNP that requires the Regional Xxxx Operating
Companies ("RBOCs") and GTE Corporation ("GTE") to permit their customers to
switch to another competing Local Exchange Carrier ("LEC") and still retain
their same telephone number. The Company believes its MAS will encourage the
LECs to offer unbundled local service elements to other carriers as required by
the Telecommunications Act. Management believes this is currently the greatest
hurdle for the RBOCs to overcome in achieving their long standing goal of entry
into the long distance business within their regions.
Switched Virtual Circuit ("SVC'). The Company is in the process of
developing an SVC product expected to provide carriers with a cheaper
alternative to permanent virtual circuit (i.e., point-to-point) products offered
today. The advantage of a SVC is that when the circuit is not utilized, the
capacity can be allocated for another use. A permanent virtual circuit must
allocate bandwidth to the user regardless of whether there is traffic flowing
over the circuit.
40
EXHIBIT H
Newco Development Schedule
Schedule of 1999 Product Deliverables
41
1. Summary of Committed 1999 Product Roll-Out Requirements
--------------------------- ------------------------ ------------------------- ------------------------
Feature Reference Delivery to Customer Delivery to Limited
(within this document) Lab Trial Live Deployment
--------------------------- ------------------------ ------------------------- ------------------------
Reliability Model
<30 sec failover and
Preserve active calls Section 4.1 September 1999 November 1999
Dependent on Newbridge 36170 release 4.1 API
providing proxy and joint work on VASP
compliant API to required.
support failover
Hot-swapping of hardware
components
Section 4.1 October 1999 November 1999
Available on Sun
Microsystems Netra
NEBS compliant platform
--------------------------- ------------------------ ------------------------- ------------------------
--------------------------- ------------------------ ------------------------- ------------------------
TNS Commitments
Release 2.2 Section 3.1 TNS April 31 1999 TNS May 30, 1999
Release 3.0 Section 3.2 August 31, 1999 Sept. 30, 1999
--------------------------- ------------------------ ------------------------- ------------------------
--------------------------- ------------------------ ------------------------- ------------------------
Open Number Dialing Plan Section 6.2 August 1999 December 1999
(E.164) Needs agreement with
Newbridge on
specification and
requirements
--------------------------- ------------------------ ------------------------- ------------------------
--------------------------- ------------------------ ------------------------- ------------------------
Incoming Overlap Dialing Section 6.3.1 August 1999 December 1999
Needs agreement with
Newbridge on
specification and
requirements
--------------------------- ------------------------ ------------------------- ------------------------
--------------------------- ------------------------ ------------------------- ------------------------
ITU/ETSI ISUP Signalling Section 6.1 August 1999 December 1999
Variants Needs agreement with
Newbridge on
specification and
requirements
--------------------------- ------------------------ ------------------------- ------------------------
Feature Development Section 7 As jointly agreed with As jointly agreed with
Headroom reasonable notification reasonable notification
--------------------------- ------------------------ ------------------------- ------------------------
2. Customer Network Deployment Expectations
--------------------------------------- -------------------------------
Network Deployment Schedule Commitment
--------------------------------------- -------------------------------
North American Incumbents
o Lab Trials o June 99.
o Limited Live Deployment o November 99.
--------------------------------------- -------------------------------
--------------------------------------- -------------------------------
North American Alternates (CLECs)
o Lab Trials o June 1999
o Live Deployment o July 1999
--------------------------------------- -------------------------------
--------------------------------------- -------------------------------
European Incumbent
o Lab Trials o Able to start August 1999
o Limited Live Deployment o November 1999
--------------------------------------- -------------------------------
--------------------------------------- -------------------------------
Non-North American Alternates
o Lab Trials (ITU signalling) o Able to start August 1999
o Live Deployment o September 1999
--------------------------------------- -------------------------------
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3.0 Committed TNS Feature Support
VASP 2.2 supports the hybrid call model, including 600E and DS0 switching. The
600E is not required in any way to complete a DS0 ATM call.
VASP 3.0 provides Q.2931 and DS0 switching support. The hybrid call model will
not be supported.
Support for the current TNS architecture including the DSC/Alcatel 600E
switching elements will be maintained in software up to VASP Release 2.2 for
TNS.
As a general policy, Newco will support backward VASP software compatibility up
to two previous releases. However, backward software compatibility between VASP
2.x and VASP 3.x releases will not be supported.
3.1 VASP Release Plan
The following table outlines the committed Release 2.x feature rollout for TNS
and Siemens/Second Century:
------------- ----------------------------- ----------------- ----------------- -----------------
VASP Release Major Features Alpha Beta Production
------------- ----------------------------- ----------------- ----------------- -----------------
2.1 o SS7 signalling N/A N/A N/A
support
o 1+ call routing
o VRN call model for
routing
o Subscriber,
customer, and service
provisioning for 1+
through GUI and EDE
o TDR creation for
billing and network
management
o Network
engineering capabilities
------------- ----------------------------- ----------------- ----------------- -----------------
------------- ----------------------------- ----------------- ----------------- -----------------
2.1.1 o Account codes, ANI Feb. 22, 1999 Not planned Not planned
based both verified and
non-verified
o DS0 for account
codes
o Basic 8XX single
termination
o Enhanced TDR
------------- ----------------------------- ----------------- ----------------- -----------------
43
------------- ----------------------------- ----------------- ----------------- -----------------
2.1.2 o Q.2931 prototype Mar. 15 Not planned Not planned
implementation (Siemens)
(Siemens and 2nd Century Mar. 31
release) (2nd Century)
------------- ----------------------------- ----------------- ----------------- -----------------
------------- ----------------------------- ----------------- ----------------- -----------------
2.2 o DS0 switching Mar. 31, 1999 April 30, 1999 May 30, 1999
across Newbridge 36170
o ISDN PRI
signalling support and
SS7 interworking
o 1+ dedicated
service
------------- ----------------------------- ----------------- ----------------- -----------------
------------- ----------------------------- ----------------- ----------------- -----------------
3.0 o LNP using TCAP April 15, 1999 May 15, 1999 June 15, 1999
o Q.2931 proxy
signalling, remote
channel management
------------- ----------------------------- ----------------- ----------------- -----------------
3.2 TNS Features in VASP(TM) Release 3.0
The following TNS features are committed for VASP(TM) Release 3.0:
VASP(TM) Software Version Monitoring
The ability to reliably track and trace the software content of the VASP(TM)
system will be supported through software version control.
Active monitoring of software version status across all redundant VASP(TM)
components will be supported to ensure the same software is loaded into each
redundant element.
On detection of a software mismatch, a system maintenance alarm should be
raised.
Integrated Network Alarm Analysis
Network and environmental alarms must be collected and presented to the NCC in
real-time. The capability to maintain a history of alarms for analysis and
reporting will be supported.
o In this case, real-time means within a reasonable length of
time to permit manual intervention if action is required.
o Alarm reporting to NCC screens will be integrated with other
VASP(TM) displays, have color GUIs and text alarm
presentation. The system will allow technicians to
acknowledge and selectively disable individual alarms.
o Alarm histories will be maintained for event reporting and
analysis. Analysis will be aided by time, geographical and
scope of impact relational tools.
o 3.3. TNS Feature Requests
o 3.3.1. Selective Routing Options for Operator and Calling Card
Services
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o 3.3.2. Least Cost Routing for international calls with 3rd party SS7
integration based on Trunk Route tariffing.
o 3.3.3. Sub-carrier Identification Code Features
4.0 Reliability Model
4.1. VASP(TM) EM Server Redundancy Controls
Under service affecting fault conditions, a system-initiated failover should be
triggered which interrupts normal services for less than 30 seconds and
preserves all established calls. Newbridge and Newco will work together to
design and implement changes to the 36170 and the VASP(TM) software required
achieving this goal.
4.1.1. Requirements Details
o Automated detection of service impacting system fault
conditions
o When a fault is detected on active server unit:
-- System initiated switch of control to the standby
VASP(TM) server unit
-- Normal call processing interrupted for less than 30
seconds
-- Calls in process (setup phase) are lost
-- Calls in progress(talking state) are preserved,
including billing information
-- Appropriate loss of redundancy system alarms are raised
o When a fault is detected in the inactive unit:
-- Inactive unit is removed from normal operating state
-- Appropriate loss of redundancy system alarms are raised
o Sufficient call context will be shared between the active and
standby VASP(TM) servers to reliably maintain active (talking
calls) during the switch over phase.
o The fault detection system must prevent both VASP(TM)server
systems from being in the active state at the same time.
o The fault detection system must prevent the switch over of
control to the standby VASP(TM)server if the synchronization
state of the EM configuration databases is unknown or
mismatched.
o VASP(TM) will integrate the Newbridge proxy signaling API.
This API will provide uninterrupted layer 2 protocol during
the switch over phase, maintaining the established call
connections. Newbridge will cooperate with Newco on the
design, early delivery, and test of the new API.
o
4.2. Telco Environment Hardware Compliance
The VASP(TM) system will be available on a NEBS standard hardware platform.
4.2.1. Requirements Details
o Typical NEBS compliance for VASP(TM) hardware
o Ability to change the following hardware modules without
having to power cycle and reload the VASP(TM) system:
-- Disk drives
-- Redundant power supply
-- Newco will support the VASP(TM) software on a NEBS
compliant fault tolerant platform that can perform hot
swapping.
45
5.0 Design Evolution
5.1. EM Evolution
o Decoupling of EM from SMS by deploying an industry standard
MIB in the EM
o Newco will implement an SNMP interface or provide a
compliant MIB level interface to Newbridge 46020.
o Priority queuing control of essential MEM tasks
(decomposition of the main thread engine task queuing) will
be implemented.
o Incorporation of TCAP services in preparation for offboard
service introduction (e.g. X000, XXXX, XXX)
o Enhancements to support signaling variant interworking.
o Change call processing architecture to enable connection
reservation prior to forwarding Setup/IAM messages
o Capability to generate CDRs when the VASP(TM) system is being
controlled by an open management system via a standard MIB
(i.e. VASP(TM)system with SMS replaced by another management
system operated through an industry standard MIB)
o Preparation of MEM architecture to support open number dial
plan support
5.2. Service Features
The following AIN/CS1R type services are considered important to winning market
share in the 1999/2000 timeframe. Newco agrees to be able to support the
integration of third party solutions for the following:
o E800 Enhanced Freephone Services
o ACCS Automated Credit Card Services
o Prepaid Calling Cards
o LNP Local Number Portability
6. Non-North American Deployment Features
Newco will be able to deliver variants on a customer by
customer basis, given prioritization, resources, and access to
specific required information about the particular variant in
question.
6.1. Signalling Systems
o VASP(TM) will be modified for support of three European ITU
based CCS7 signaling variants to enable ISUP deployment in
England, France and Germany. Once this task is completed,
VASP(TM) will be able to support additional variants as
described below.
o Newco agrees to deliver a new national signalling variant
based on International Standards within 3 months, given
initial information sufficient for design and analysis, to AN
acceptance test level. Lab and in country testing excepted.
o National variants not based on International Standards are
excepted rom this requirement.
6.2. Open Number Dialing Plans (E.164)
o Newco agrees to support an open dialing plan, which enables
VASP(TM) system deployment in non-North American networks.
6.3. Overlap Signalling on Trunk Circuits
6.3.1. Incoming Overlap Digit Collection
o Newco agrees to support incoming overlap dialing in the
future, based on mutually agreed upon requirements.
o VASP(TM) will support routing on partial dial in the future,
based on mutually agreed upon requirements.
46
6.3.2 Outgoing Overlap Digit Signaling
o Newco agrees to prepare the call processing and signaling
architecture to facilitate deployment of overlap digit
outpulsing in 2000. 6.4. Billing Formats
o Reasonable support will be provided to support telco billing
format requirements such as call detail records (CDR)
enabling 1999 deployment
7. Development Capacity Headroom
Newco agrees to plan for the 1999 delivery of additional VASP(TM) features
necessary to win and maintain the key reference telco accounts described in this
agreement. Anticipated feature requests may include (but are not limited to):
o Additional translation and routing features o Basic network
management route controls
o OSS integration and support o Billing format alterations
o OAM&P-like feature enhancements (for example, trunk
provisioning options)
o SCP or off-board services support
8. VASP(TM) Scalability and Performance
o Newco will work with Newbridge to define performance and
capacity requirements to meet deployment requirements for a
reasonable range of small to large trunking networks.
o The primary criteria will be to deliver industry leading,
profitable system deployments to a range of customer
networks.
o The intention will be to provide upgrade mechanisms, which
support non-disruptive, smooth growth/extensions of customer
networks.
o Target upper level call processing capacity:
-- 2 million BHCA
-- 250,000 DS0 trunks
47
