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EXHIBIT 4.2
EMPLOYEE STOCKHOLDERS AGREEMENT
THIS EMPLOYEE STOCKHOLDERS AGREEMENT (the "Agreement") is entered into
as of August 1, 1997, by and among the individuals set forth on Exhibit A
attached hereto and all individuals who agree from time to time to be bound by
the terms hereof pursuant to an accession letter in the form of Exhibit B
attached hereto (the "Stockholders") and Formus Communications, Inc., a Delaware
corporation (the "Company"). The individuals from time to time party to this
Agreement are referred to collectively as the "Stockholders."
RECITALS
A. Each Stockholder now owns or may hereafter acquire shares of common
stock, par value $.001 (the "Common Stock"), of the Company, or options to
purchase Common Stock or other equity securities of the Company, whether issued
pursuant to the Company's Equity Incentive Plan or the Non-Employee Directors
Stock Option Plan or otherwise.
B. In consideration of the mutual promises and covenants hereinafter
set forth and for other good and valuable consideration, the receipt of which is
hereby acknowledged, the parties agree as follows:
SECTION 1. FIRST REFUSAL AND TRANSFER RESTRICTIONS.
SECTION 1.1 GENERAL. Except as set forth in Section 1.5 and Section 2,
the Stockholders shall not sell, transfer, gift, assign, pledge, hypothecate,
encumber or otherwise dispose of (collectively, "Transfer") any Equity
Securities without first complying on each such occasion with this Section 1. As
used herein, the term "Equity Securities" means (i) the Common Stock and any
other stock or similar equity security of the Company including any preferred
stock, (ii) any security convertible, with or without consideration, into Common
Stock or any such stock or similar security, (iii) any security carrying any
warrant or right to subscribe to or purchase any stock or similar security, or
(iv) any such warrant or right.
SECTION 1.2 NOTICE OF TRANSFERS. Should a Stockholder propose to
Transfer any of the shares of Equity Securities now owned or subsequently
acquired by such Stockholder ("Offered Securities") in one or more related
transactions, such Stockholder (the "Selling Stockholder") shall promptly
deliver a written notice to the Company including a copy of a signed offer by
the proposed transferee (the "Notice") at least 30 days prior to the
effectiveness of such Transfer. The Notice shall describe in reasonable detail
the proposed Transfer including, without limitation, the number of Offered
Securities to be Transferred, the nature of such Transfer, the consideration to
be paid, the name and address of each prospective purchaser or transferee and
evidence reasonably satisfactory to the Company that each transferee will be
permitted to acquire the Offered Securities under Section 2.1. In the event that
the Transfer is being made pursuant to the provisions of Section 1.5 hereof, the
Notice shall state under which subparagraph the Transfer is being made.
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SECTION 1.3 RIGHT OF FIRST REFUSAL. The Company shall have the right,
exercisable by delivering written notice to the Selling Stockholder within 20
days after receipt by the Company of the Notice, to purchase all or a portion of
the Offered Securities on the terms and conditions specified in the Notice. The
right of first refusal of the Company established in this Section 1.3 shall not
be diminished or affected because the exercise of such rights could or would
impair the Selling Stockholder's ability to consummate the transaction specified
in the Notice giving rise to such rights of first refusal.
SECTION 1.4 SALE OF OFFERED SECURITIES. To the extent that the Company
elects not to purchase Equity Securities pursuant to Section 1.3, then the
Selling Stockholder may consummate the Transfer of such Offered Securities to
the purchaser specified in the Notice, provided such transaction (i) is
completed within 60 days after the expiration of the Company's right of first
refusal as set forth above, (ii) is completed at the price and upon the terms
designated in the Notice, and (iii) the proposed purchaser agrees to be bound by
the terms and provisions of this Agreement and becomes a party to this Agreement
immediately upon receipt of such Offered Securities. Any proposed transfer on
terms and conditions more favorable than those described in the Notice, as well
as any subsequent proposed transfer or sale of any of the Offered Shares shall
again be subject to the rights of first refusal hereunder.
SECTION 1.5 PERMITTED TRANSACTIONS. The rights of the Company created
by Section 1.3 shall not pertain or apply to:
(a) any Transfer not prohibited by Section 2.1 to affiliates,
ancestors, siblings, in-laws, descendants or spouse or to a trust for the
benefit of such persons, provided that (i) the Stockholder making such Transfer
retains voting control over the Equity Securities so transferred and (ii) the
transferee agrees to be bound by the terms and restrictions of this Agreement;
and
(b) any Transfer not prohibited by Section 2.1 with respect to
which the Company does not elect to exercise its right of first refusal after
proper notice given in accordance with the terms hereof.
SECTION 1.6 ASSIGNMENT OF RIGHT OF FIRST REFUSAL. The Company shall
have the right to assign in whole or in part its right of first refusal granted
in Section 1.3 to one or more of the Investors, as that term is defined in the
Second Amended and Restated Investors' Rights Agreement to be executed on or
about August 13, 1997, among the Company and the Investors specified therein.
SECTION 1.7 TERMINATION OF RIGHTS AND RESTRICTIONS UNDER SECTION 1. The
rights and restrictions set forth in this Section 1 shall terminate when the
Common Stock becomes publicly traded pursuant to a registration under Section 12
of the Securities Exchange Act of 0000 (xxx "Xxxxxxxx Xxx").
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SECTION 2. PROHIBITIONS ON TRANSFER RELATING TO FCC RULES.
SECTION 2.1 PROHIBITION ON TRANSFER. Notwithstanding any provision of
this Agreement or any agreement or understanding to the contrary, no Stockholder
shall Transfer any of such Stockholder's Equity Securities without the prior
written consent of the Company setting forth the good faith determination by the
Company's board of directors that such transfer, taken alone or with any other
transfers, will not adversely affect the Company's status as a "small business"
for the purposes of the Federal Communications Commission's proceedings, rules
and regulations, as in effect from time to time, relating to the establishment
and licensing of local multipoint distribution service ("LMDS"), a fixed,
broadband, point-to-multipoint, microwave service. While a Stockholder is either
employed with the Company or serving as a director on the board of directors of
the Company or on the board of directors of a subsidiary of the Company, the
Company may withhold consent to any transfer in its sole and unfettered
discretion. Otherwise, having made such determination, such consent will not be
unreasonably withheld.
SECTION 2.2 TREATMENT OF PROHIBITED TRANSFERS. Any attempt to Transfer
shares of the Company in violation hereof shall be void ab initio and the
Company agrees it will not give effect to any such Transfer on its books and it
will not treat any alleged transferee as the holder of such shares for any
purpose.
SECTION 2.3 TERMINATION OF PROHIBITION. The restrictions set forth in
this Section 2 shall terminate when (a) the Common Stock becomes publicly traded
pursuant to a registration under Section 12 of the Exchange Act and (b) the
Company's board of directors determines that such restrictions are no longer
necessary or advisable for the purposes of the operations of the Company under
the LMDS proceedings, rules and regulations referred to in Section 2.1.
SECTION 3. MARKING OF CERTIFICATES.
SECTION 3.1 LEGEND. Each certificate representing shares of Equity
Securities subject to this Agreement shall bear the following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE AND
THE TRANSFER OF SUCH SECURITIES HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE
"SECURITIES ACT") OR ANY STATE SECURITIES LAWS. SUCH
SECURITIES MAY NOT BE SOLD, TRANSFERRED, ASSIGNED,
PLEDGED OR OTHERWISE DISPOSED OF, EXCEPT IN
COMPLIANCE WITH APPLICABLE LAW. PRIOR TO
REGISTRATION OF ANY TRANSFER, THE CORPORATION MAY
REQUIRE REASONABLE EVIDENCE THAT SUCH TRANSFER IS IN
COMPLIANCE WITH APPLICABLE STATE END FEDERAL
SECURITIES LAWS. THE SECURITIES REPRESENTED BY THIS
CERTIFICATE ARE SUBJECT TO THE RESTRICTIONS PURSUANT
TO A
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STOCKHOLDERS AGREEMENT, SUCH AGREEMENT, AMONG OTHER
THINGS, (1) RESTRICTS CERTAIN RIGHTS WITH RESPECT TO
THE SALE AND TRANSFER OF THE SECURITIES AND
OTHERWISE ENCUMBERS THE SECURITIES REPRESENTED
HEREBY AND (2) PROVIDES THAT, UPON PURCHASE OR OTHER
ACQUISITION OF THE SECURITIES REPRESENTED HEREBY,
ANY TRANSFEREE SHALL IMMEDIATELY BECOME SUBJECT TO
AND BOUND BY THE TERMS OF SUCH AGREEMENT. COPIES OF
SUCH AGREEMENT MAY BE OBTAINED UPON WRITTEN REQUEST
TO THE SECRETARY OF THE CORPORATION."
SECTION 3.2 ADDITIONAL SHARES. If any Stockholder holds or acquires any
other Equity Securities of the Company, such other Equity Securities shall be
subject to the terms of this Agreement other than the registration rights
referred to in Section 4.1.
SECTION 4. REGISTRATION RIGHTS
SECTION 4.1 If the Company enters into any agreement with any holder of
shares of capital stock of the Company (the "Company Shares") whereby the
Company grants to such purchaser(s) any demand, piggyback or other registration
rights ("Registration Rights") with respect to such Company Shares, the Company
shall grant to the Stockholders initially party hereto the same such
Registration Rights with respect to the Equity Securities owned by Stockholders;
provided that, the Registration Rights granted to the Stockholders shall provide
that the Company will bear the expenses of registration. Any Stockholder that
becomes a party hereto pursuant to an accession letter shall not be entitled to
the benefit of this Section 4.1.
SECTION 4.2 "MARKET STAND-OFF" AGREEMENT. In connection with any
registration statement registering the sale of Common Stock or other Equity
Securities of the Company under the Securities Act, each Stockholder hereby
agrees that, with respect to the Shares of Common Stock or other Equity
Securities held at the time by such Stockholder not being included in such
registration, such Stockholder shall enter into an agreement not to sell or
otherwise dispose of any such Common Stock or Equity Securities following the
effectiveness of such registration statement, for the same period, upon the same
terms and subject to the same conditions as are imposed upon or agreed to by the
Investors specified in the Second Amended and Restated Investors' Rights
Agreement to be entered into on or about August 13, 1997, among the Company and
such Investors, pursuant to or in lieu of the requirements of Section 2.13 of
the Investors' Rights Agreement.
SECTION 5. INVESTORS STOCKHOLDERS AGREEMENT
SECTION 5.1 DRAG ALONG RIGHTS. In the event that, pursuant to Section
4.1 of the Stockholders Agreement to be entered into on or about August 13,
1997, among the Company and the Investors specified therein (the "Investors'
Stockholder Agreement"), there occurs an Approved Sale (as defined in the
Investors' Stockholder Agreement), each Stockholder agrees to consent to and
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to participate in such Approved Sale upon the same terms, and subject to the
same conditions, as if said Section 4.1 as if set forth in full herein.
SECTION 5.2 VOTING. Each of the Stockholders hereby agrees to vote the
shares of Common Stock owned by such Stockholder in accordance with the
provisions of Section 2.1 of the Investors' Stockholder Agreement.
SECTION 6. MISCELLANEOUS.
SECTION 6.1 ASSIGNMENT. Subject to the transfer restrictions set forth
above, the terms and conditions of this Agreement shall inure to the benefit of
and be binding upon the respective successors and assigns of the parties.
Nothing in this Agreement, express or implied, is intended to confer upon any
party, other than the parties hereto, and their respective successors and
assigns, any rights, remedies, obligations or liabilities under or by reason of
this Agreement, except as expressly provided in this Agreement.
SECTION 6.2 GOVERNING LAW. This Agreement shall be governed by and
construed under the laws of the State of Colorado as applied to agreements
entered into solely between residents of, and to be performed entirely within,
such state.
SECTION 6.3 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
SECTION 6.4 TITLES AND SUBTITLES. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
SECTION 6.5 NOTICES.
(a) All notices, requests, demands and other communications
under this Agreement or in connection herewith shall be given to or made upon
the Stockholders to their respective addresses as set forth under their name on
Exhibit A attached hereto, and if to the Company, to Formus Communications,
Inc., 0000 X. Xxxxxx, Xxxxx 000X, Xxxxxxxxx, XX 00000, Attention: Chief
Financial Officer, with a copy to W. Xxxx Xxxxxx, Esq., Holme Xxxxxxx & Xxxx
LLP, 0000 Xxxxxxx Xxxxxx, Xxxxx 0000, Xxxxxx, XX 00000.
(b) All notices, requests, demands and other communications
given or made in accordance with the provisions of this Agreement shall be in
writing, and shall be sent by airmail, return receipt requested, or by telex or
telecopy (facsimile) with confirmation of receipt, and shall be deemed to be
given or made when receipt is so confirmed.
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(c) Any party may, by written notice to the other, alter its
address or respondent, and such notice shall be considered to have been given
five days after the airmailing, telexing or telecopying thereof.
SECTION 6.6 ATTORNEY'S FEES. If any action at law or in equity
(including arbitration) is necessary to enforce or interpret the terms of this
Agreement, the prevailing party shall be entitled to reasonable attorney's fees,
costs and necessary disbursements in addition to any other relief to which such
party may be entitled.
SECTION 6.7 SEVERABILITY. If one or more provisions of this Agreement
are held to be unenforceable under applicable law, portions of such provisions,
or such provisions in their entirety, to the extent necessary, shall be severed
from this Agreement and the balance of this Agreement shall be interpreted as if
such provision were so excluded and shall be enforceable in accordance with its
terms.
SECTION 6.8 RIGHTS OF STOCKHOLDERS. Each Stockholder shall have the
absolute right to exercise or refrain from exercising any right or rights that
such holder may have by reason of this Agreement, including, without limitation,
the right to consent to the waiver or modification of any obligation under this
Agreement, and such holder shall not incur any liability to any other holder of
any securities of the Company as a result of exercising or refraining from
exercising any such right or rights.
SECTION 6.9 DELAYS OR OMISSIONS. No delay or omission to exercise any
right, power or remedy accruing to any Stockholder, upon any breach or default
of the Company under this Agreement, shall impair any such right, power or
remedy of such Stockholder nor shall it be construed to be a waiver of any such
breach or default, or an acquiescence therein, or of or in any similar breach or
default thereafter occurring; nor shall any waiver of any single breach or
default be deemed a waiver of any other breach or default theretofore or
thereafter occurring. Any waiver, permit, consent or approval of any kind or
character on the part of any party of any holder of any breach or default under
this Agreement, or any waiver on the part of any holder of any provisions or
conditions of this Agreement, must be made in writing and shall be effective
only to the extent specifically set forth in such writing. All remedies, either
under this Agreement or by law or otherwise afforded to any holder, shall be
cumulative and not alternative.
SECTION 6.10 ENTIRE AGREEMENT. This Agreement and the documents
referred to herein constitute the entire agreement between the parties hereto
pertaining to the subject matter hereof, and any all other written or oral
agreements existing between the parties hereto are expressly canceled.
SECTION 6.11 SPECIFIC PERFORMANCE. The parties hereto hereby declare
that it is impossible to measure in money the damages which will accrue to a
party hereto or to their heirs, personal representatives or assigns by reason of
a failure to perform any of the obligations under this Agreement and agree that
the terms of this Agreement shall be specifically enforceable. If any party
hereto or his heirs, personal representatives or assigns institutes any action
or proceeding to
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specifically enforce the provisions hereof, any person against whom such action
or proceeding is brought hereby waives the claim or defense therein that such
party or such personal representative has an adequate remedy at law, and such
person shall not offer in any such action or proceeding the claim or defense
that such remedy at law exists.
IN WITNESS WHEREOF, this Agreement is hereby executed as of the date
first above written.
FORMUS COMMUNICATIONS, INC.
By:
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Name:
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Title:
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STOCKHOLDERS
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Xxxxx X. Xxxx
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Xxxxx X. Xxxxx
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Xxxxxx Xxxxxx
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Xxxxxxx Xxxxxxx
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Xxxxxx X. Xxxxx
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Xxxxxxx X. Xxxxxxxxx
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Xxxxxx X. Xxxxxx
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Xxxxx Xxxxxxxx
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EXHIBIT A
EMPLOYEE STOCKHOLDER LIST
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EXHIBIT B
[FORM OF ACCESSION LETTER]
Formus Communications, Inc.
0000 X. Xxxxxx, Xxxxx 000X
Xxxxxxxxx, XX 00000
Re: Employee Shareholders Agreement
Ladies and Gentlemen:
The undersigned hereby agrees to be bound by the terms of that certain
Employee Stockholders Agreement, dated as of August 1, 1997 (the "Agreement"),
among Formus Communications, Inc., a Delaware corporation (the "Company"), and
the several holders of the Company's Common Stock or other equity securities
from time to time signatory thereto, upon the same terms and conditions and with
the same rights and obligations as such other Stockholders. I further
acknowledge that I have received a copy of the Agreement and have been given
appropriate opportunity to ask questions about the Company and the Agreement
prior to signing this letter.
Very truly yours,
[Stockholder Signature]
