EXHIBIT 99.1
STOCKHOLDERS AGREEMENT
AMONG
GLOBAL INTERACTIVE TECHNOLOGIES
CORPORATION
AND
THE STOCKHOLDERS IDENTIFIED ON
APPENDIX 1
NOVEMBER 30, 1998
TABLE OF CONTENTS
PAGE
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1. DIRECTORS AND OFFICERS OF THE COMPANY . . . . . . . . . . . . . . . . . . 1
1.1. Board of Directors . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2. Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2. TRANSFER OF EQUITY SECURITIES . . . . . . . . . . . . . . . . . . . . . . 3
2.1. Transfers Prohibited . . . . . . . . . . . . . . . . . . . . . . . 3
2.2. Transfer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.3. Rights of First Offer. . . . . . . . . . . . . . . . . . . . . . . 3
2.3.1. Transfer Subject to Rights of Stockholders. . . . . . . . . 3
2.3.2. Offer . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.3.3. Acceptance. . . . . . . . . . . . . . . . . . . . . . . . . 4
2.3.4. Release of Transferor from Restrictions . . . . . . . . . . 5
2.4. Tag-Along Rights . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.5. Preemptive Rights. . . . . . . . . . . . . . . . . . . . . . . . . 6
3. COVENANTS OF THE COMPANY. . . . . . . . . . . . . . . . . . . . . . . . . 7
3.1. Corporate Existence. . . . . . . . . . . . . . . . . . . . . . . . 6
3.2. Books and Records. . . . . . . . . . . . . . . . . . . . . . . . . 7
3.3. Access and Examination Rights. . . . . . . . . . . . . . . . . . . 7
3.4. Statements, Notices, and Reports . . . . . . . . . . . . . . . . . 7
3.5. Fundamental Changes. . . . . . . . . . . . . . . . . . . . . . . . 9
3.6. Transfer of Assets . . . . . . . . . . . . . . . . . . . . . . . . 9
3.7. Capitalization; Dividends. . . . . . . . . . . . . . . . . . . . . 9
3.8. Amendment of Certificate of Incorporation and Bylaws . . . . . . . 9
3.9. FCC Ownership Restrictions . . . . . . . . . . . . . . . . . . . . 10
4. REGISTRATION RIGHTS . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.1. Demand Registration Rights . . . . . . . . . . . . . . . . . . . . 10
4.1.1. Request . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.1.2. Delay by Company. . . . . . . . . . . . . . . . . . . . . . 10
4.1.3. Pro Rata Reduction. . . . . . . . . . . . . . . . . . . . . 11
4.1.4. Withdrawal. . . . . . . . . . . . . . . . . . . . . . . . . 11
4.2. Piggyback Registration Rights. . . . . . . . . . . . . . . . . . . 12
4.2.1. Request . . . . . . . . . . . . . . . . . . . . . . . . . . 12
4.2.2. Pro Rata Reduction. . . . . . . . . . . . . . . . . . . . . 12
4.3. Registration Procedures. . . . . . . . . . . . . . . . . . . . . . 12
4.4. Holdback Agreement . . . . . . . . . . . . . . . . . . . . . . . . 14
4.5. Registration Expenses. . . . . . . . . . . . . . . . . . . . . . . 14
4.5.1. Stockholder Expenses. . . . . . . . . . . . . . . . . . . . 14
4.5.2. Company Expenses. . . . . . . . . . . . . . . . . . . . . . 15
4.5.3. Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.6. Subsequent Registration Statements . . . . . . . . . . . . . . . . 17
5. COVENANTS OF STOCKHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . 17
5.1. Publicity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
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PAGE
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5.2. Confidentiality. . . . . . . . . . . . . . . . . . . . . . . . . . 17
6. REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . . . . . . . . . . . 17
6.1. Representations and Warranties of Non-Individual Stockholders. . . 17
6.1.1. Organization and Standing . . . . . . . . . . . . . . . . . 18
6.1.2. Authorization . . . . . . . . . . . . . . . . . . . . . . . 18
6.1.3. Absence of Violation. . . . . . . . . . . . . . . . . . . . 18
6.1.4. Binding Obligation. . . . . . . . . . . . . . . . . . . . . 18
6.2. Representations and Warranties of Individual Stockholders. . . . . 18
6.2.1. Power and Authority . . . . . . . . . . . . . . . . . . . . 18
6.2.2. Absence of Violation. . . . . . . . . . . . . . . . . . . . 19
6.2.3. Binding Obligation. . . . . . . . . . . . . . . . . . . . . 19
6.3. Representations and Warranties of the Company. . . . . . . . . . . 19
6.3.1. Organization and Standing . . . . . . . . . . . . . . . . . 19
6.3.2. Authorization . . . . . . . . . . . . . . . . . . . . . . . 19
6.3.3. Absence of Violation. . . . . . . . . . . . . . . . . . . . 19
6.3.4. Binding Obligation. . . . . . . . . . . . . . . . . . . . . 20
7. EFFECTIVENESS OF AGREEMENT. . . . . . . . . . . . . . . . . . . . . . . . 20
8. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
9. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
9.1. Legend . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
9.2. Additional Actions and Documents . . . . . . . . . . . . . . . . . 22
9.3. Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
9.4. Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
9.5. Entire Agreement; Amendment. . . . . . . . . . . . . . . . . . . . 23
9.6. Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
9.7. Limitation on Benefit. . . . . . . . . . . . . . . . . . . . . . . 23
9.8. Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . . 23
9.9. Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . . 23
9.10. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
9.11. Headings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
9.12. Execution in Counterparts . . . . . . . . . . . . . . . . . . . . 25
Appendix 1--Stockholders
Appendix 2--Initial Officers
Exhibit A--Certificate of Incorporation
Exhibit B--Bylaws
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STOCKHOLDERS AGREEMENT
THIS STOCKHOLDERS AGREEMENT (this "Agreement") is entered into as of
November 30, 1998 by and among Global Interactive Technologies Corporation, a
Delaware corporation (the "Company"), Shared Technologies Communications
Corporation, a Delaware corporation ("STC"), Interactive Cable Systems, Inc., a
California corporation ("ICS"), and ResNet Communications, LLC, a Delaware
limited liability company ("ResNet," and together with ICS and STC and any other
stockholders of the Company who may become parties hereto as contemplated
hereby, the "Stockholders").
WHEREAS, each of the Stockholders holds the Equity Securities (as
defined in ARTICLE 8) in the Company set forth opposite such Stockholder's name
on APPENDIX 1 hereto;
WHEREAS, the Company and the Stockholders desire to enter into this
Agreement in order to provide, among other things, for certain mutual
restrictions relating to the transfer of such Equity Securities (as hereinafter
defined) and other rights and responsibilities as set forth herein; and
WHEREAS, capitalized terms used in this Agreement shall have the
meaning ascribed to them in ARTICLE 8 hereof;
NOW, THEREFORE, for and in consideration of the foregoing and of the
mutual covenants and agreements hereinafter set forth, the parties hereto agree
as follows:
1. DIRECTORS AND OFFICERS OF THE COMPANY
1.1. BOARD OF DIRECTORS
The Company and each Stockholder (for so long as such Stockholder
owns any Equity Securities) shall take or cause to be taken all such action
within their respective power and authority (including without limitation the
voting of shares of Equity Securities held by such Stockholder or the taking of
action by consent with respect to such shares) as may be required:
1.1.1. to establish and maintain the authorized size of the
Board of Directors of the Company at seven (7) directors; to maintain the quorum
requirements for actions of the Board of Directors at four (4) directors; and to
maintain the voting requirements for actions of the Board of Directors at a
majority of directors present at a meeting at which there is a quorum, except in
respect of such matters as this Agreement, the Certificate of Incorporation, a
copy of which is attached hereto as EXHIBIT A or the Bylaws of the Company, a
copy of which are attached hereto as EXHIBIT B may impose a greater voting
requirement, and except where actions may be taken by the Board of Directors by
written consent of all directors;
1.1.2. to cause to be elected to the Board of Directors of
the Company (A) one (1) director designated by STC reasonably satisfactory to
the other Stockholders holding a
majority of the Equity Securities then held by all of such Stockholders so
long as STC owns Equity Securities with a combined voting power of not less
than 10% of the aggregate voting power of all outstanding Equity Securities,
who shall initially be ▇▇▇ ▇▇▇▇▇▇, (B) one (1) director designated by ICS
reasonably satisfactory to the other Stockholders holding a majority of the
Equity Securities then held by all of such Stockholders so long as ICS owns
Equity Securities with a combined voting power of not less than 10% of the
aggregate voting power of all outstanding Equity Securities, who shall
initially be ▇▇▇▇▇▇ ▇▇▇▇▇, (C) one (1) director designated by ResNet
reasonably satisfactory to the other Stockholders holding a majority of the
Equity Securities then held by all of such Stockholders so long as ResNet
owns Equity Securities with a combined voting power of not less than 10% of
the aggregate voting power of all outstanding Equity Securities, who shall
initially be ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, (D) the Chief Executive Officer of the Company,
who shall initially be ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇, (E) the Chief Operating Officer
of the Company, who shall initially be ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇, (F) the Chairman
of the Board of Directors, who shall initially be ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, and
(G) one (1) independent director reasonably satisfactory to the Stockholders
holding a majority of the Equity Securities then held by all of the
Stockholders;
1.1.3. to remove forthwith from the Board of Directors any
director when removal is requested for any reason by the Stockholder group
designating the election of such director pursuant to Section 1.1.2 above (each
a "Designating Group"), with or without cause;
1.1.4. in the case of death, resignation or other removal as
herein provided of such director, to elect another person designated by the
respective Designating Group to fill the vacancy created thereby;
1.1.5. to use its best efforts to prevent any action from
being taken by the Board of Directors of the Company during the pendency of any
vacancy due to death, resignation or removal of a director, unless the
Designating Group shall have failed for a period of five (5) days after written
notice of such vacancy to designate a replacement; and
1.1.6. The provisions of this SECTION 1.1 shall terminate
automatically and shall be of no further force and effect at such time as (i)
the Stockholders collectively own Equity Securities with a combined voting power
equal to less than 30% of the aggregate voting power of all outstanding Equity
Securities, or (ii) there are more than 500 holders of record of any class of
Equity Securities, or (iii) the Company consummates an Initial Public Offering.
1.2. OFFICERS
The persons named on APPENDIX 2 attached hereto have been elected
initially to the offices of the Company set forth opposite their names by the
Board of Directors of the Company. Additional and successor officers shall be
elected in the manner and upon the terms and conditions set forth in the Bylaws
of the Company.
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2. TRANSFER OF EQUITY SECURITIES
2.1. TRANSFERS PROHIBITED
Until the first anniversary of the date hereof, no Stockholder
shall (during his lifetime, in the case of an individual) make any transfer (as
defined in SECTION 2.2 hereof) of any Equity Securities now or hereafter held or
acquired by such Stockholder to any individual or entity without first obtaining
the prior written consent of the Stockholders holding at least 85% of the Equity
Securities then held by all Stockholders. Thereafter, any transfer of Equity
Securities by a Stockholder shall be subject to the provisions of SECTIONS 2.3
and 2.4 hereof, except as contemplated by the proviso to the first sentence of
SECTION 2.2 below. Any purported transfer contrary to the terms of this
SECTION 2.1 shall be null and void and of no force and effect.
2.2. TRANSFER
The term "transfer" as used in this ARTICLE 2 shall include a sale,
gift, mortgage, pledge, exchange, assignment or other disposition, or any
agreement to consummate any of the foregoing (whether with or without
consideration and whether voluntary or involuntary or by operation of law),
including a disposition under judicial order, legal process, execution,
attachment or enforcement of an encumbrance, but shall not include the following
(the "Permitted Transfers"): (i)(A) a pledge, grant of security interest or
other encumbrance effected in a bona fide transaction with a primary lender of a
Stockholder or (B) any exercise by such a lender of its rights thereunder,
including without limitation a foreclosure on any Equity Securities subject to
such pledge or security interest; (ii) any transfer by ICS to Nomura Holding
America Inc. or any Affiliate thereof in partial or full satisfaction of ICS'
indebtedness obligations to Nomura Holding America Inc.; (iii) any transfer by
ResNet to PRIMESTAR, Inc. ("PRIMESTAR") or LodgeNet Entertainment Corporation,
or any Affiliate of the foregoing, in consideration of PRIMESTAR's partial or
complete release, repurchase, exchange and/or satisfaction of its interest in
ResNet; or (iv) a transfer by a Stockholder of Equity Securities to one or more
of its Affiliates. In the case of any Permitted Transfers described in clauses
(i)(B), (ii), (iii) or (iv) of this SECTION 2.2, the transferees of such Equity
Securities and any subsequent transferees of such Equity Securities shall hold
the Equity Securities subject to the terms of this Agreement and, as a condition
precedent to such transfers, shall be required to execute and deliver this
Agreement; PROVIDED, HOWEVER, in the case of Permitted Transfers described in
clauses (i)(B) and (ii) of this SECTION 2.2, Equity Securities in the hands of
the transferees shall be not be subject to the provisions of SECTIONS 2.3 and
2.4 of this Agreement. Thereafter, the transferees of such Equity Securities
and any subsequent transferees of such Equity Securities shall be deemed to be
Stockholders for purposes of this Agreement to the extent the provisions hereof
are binding upon such transferees.
2.3. RIGHTS OF FIRST OFFER
2.3.1. TRANSFER SUBJECT TO RIGHTS OF STOCKHOLDERS
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In the event that a Stockholder (the "Transferor") at any time
after the first anniversary of the date hereof desires to transfer for value (a
"Sale of Shares") all or any Shares now or hereafter held or acquired by such
Transferor, before the Transferor may effect a Sale of Shares, the Transferor
first must make the offer(s) required by this SECTION 2.3 and such offer(s) must
not have been accepted as provided in this SECTION 2.3. Notwithstanding the
foregoing, the provisions of this SECTION 2.3 shall not apply to (i) a sale by a
Stockholder in one or a series of transactions of less than 5%, in the
aggregate, of the Equity Securities of the Company, (ii) a sale of all or
substantially all of the Equity Securities of the Company, or (iii) a Sale of
Shares by a Stockholder in a public offering of the Company's Equity Securities.
2.3.2. OFFER
Prior to effecting a Sale of Shares, the Transferor shall make to
the other Stockholders who then hold Equity Securities (the "Offerees") an offer
in writing to sell the Equity Securities proposed to be transferred by the
Offeror (the "Offer") setting forth the terms and conditions on which the
Transferor desires to effect the Sale of Shares.
2.3.3. ACCEPTANCE
Within thirty (30) days after the receipt of the Offer (the "Offer
Period"), each Offeree shall notify the Transferor whether or not it desires to
purchase any or all of the Equity Securities offered and how many of the Equity
Securities it desires to purchase (an "Offer Response"). In the event that the
aggregate number of Equity Securities that the Offerees who elected to make
purchases (the "Purchasing Offerees") desire to purchase is greater than the
total number of Equity Securities offered to them, such Equity Securities shall
be allocated among the Purchasing Offerees in proportion to their holdings, or
in such other proportions as they may agree; PROVIDED, HOWEVER, that any
Purchasing Offeree who elected in such Offeree's Offer Response to purchase less
than such Offeree's proportionate number of Equity Securities so determined
shall be allocated only the number of Equity Securities specified in such Offer
Response, and the balance of such Equity Securities shall be allocated among the
remaining Purchasing Offerees in proportion to their holdings (up to the number
of shares specified in each Purchasing Offeree's Offer Response), or in such
other proportions as they may agree, and this procedure shall be repeated until
all the Equity Securities offered to the Offerees have been allocated to a
Purchasing Offeree. The phrase "in proportion to their holdings" as used in
this SECTION 2.3.3 shall mean in the proportion which the number of Equity
Securities held by each Purchasing Offeree bears to the aggregate number of
Equity Securities held by all Purchasing Offerees among whom Equity Securities
are being allocated, determined as of the last day of the Offer Period. The
Transferor shall then fix a closing date for the sale of the Equity Securities
so subscribed to the Purchasing Offerees, which date shall be not less than
fifteen (15) nor more than thirty (30) days after expiration of the Offer
Period, unless any longer period is necessary to comply with any law, rule,
regulation or statute of any governmental entity, in which case the Transferor
shall use its best efforts to obtain such consents as soon as practicable,
provided that in no event shall the time period to receive such consents exceed
ninety (90) days without the consent of the non-transferring Stockholders.
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2.3.4. RELEASE OF TRANSFEROR FROM RESTRICTIONS
If the other Offerees shall fail to purchase all of the Equity
Securities offered by the Transferor pursuant to the terms of this SECTION 2.3,
the Transferor shall be free for a period of sixty (60) days to sell the offered
but unsold Equity Securities to any individual or entity, for the price and on
terms no more favorable to such transferee(s) than were available to the other
Offerees under the Offer. If the offered but unsold Equity Securities are not
so sold by the Transferor within such sixty (60)-day period, the Transferor
shall have no right to transfer of the Equity Securities without again complying
with the restrictions contained in this SECTION 2.3.
2.4. TAG-ALONG RIGHTS
In the event any Stockholder or Stockholders (the "Offeree
Stockholder(s)") receive a bona fide offer or related series of offers from any
person (the "Third Party Offeror") to purchase from the Offeree Stockholder(s)
not less than ten percent (10)%, by voting power, of the then outstanding
capital stock of the Company (a "Third Party Offer"), the Offeree Stockholder(s)
shall promptly forward a copy of such Third Party Offer to the Company and the
other Stockholders. The other Stockholders may elect to participate in the sale
to the Third Party Offeror at the same price per share and on the same terms by
delivering written notice to the Offeree Stockholder(s) within thirty (30) days
after delivery to all other Stockholders of such copy of the Third Party Offer.
If any other Stockholders elect to participate in the sale to the Third Party
Offeror, the Offeree Stockholder(s) and such other Stockholders shall each be
entitled to sell to the Third Party Offeror the number of shares of stock as to
which the Third Party Offer relates equal to the product of (i) the number of
shares of stock to which such Third Party Offer relates times (ii) the ratio of
the number of shares of stock owned by such Stockholder over the number of
shares of stock owned by all Stockholders electing to sell to the Third Party
Offeror. The Offeree Stockholder(s) shall not sell any such stock to the Third
Party Offeror unless the Third Party Offeror agrees to extend the Third Party
Offer to the other Stockholders in accordance with the foregoing and to purchase
from the Offeree Stockholder(s) and such other Stockholders their respective
proportionate shares as described above of the aggregate number of shares of
stock as to which the Third Party Offer relates. Each Stockholder participating
in the sale to the Third Party Offeror shall pay its pro rata share (based on
the number of shares to be sold) of the expenses incurred by the Offeree
Stockholder(s) in connection with such transfer and shall be obligated to join
on a pro rata basis (based on the number of shares to be sold) in any
indemnification or other obligations that the Offeree Stockholder(s) agree to
provide in connection with such transfer (other than any such obligations that
relate specifically to a particular Offeree Stockholder such as indemnification
with respect to representations and warranties given by a Stockholder regarding
such Stockholder's title to and ownership of the shares to be sold; PROVIDED
that no participating Stockholder shall be obligated in connection with the sale
to the Third Party Offeror to agree to indemnify or hold harmless the Third
Party Offeror with respect to an amount in excess of the net cash proceeds paid
to such Stockholder in connection with such sale).
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Equity Securities transferred pursuant to SECTIONS 2.3 AND 2.4
shall remain subject to the provisions of SECTIONS 1.1 and 9.1 of this
Agreement, and, prior to consummating any such transfer, the Transferor shall
require the purchaser to acknowledge in writing the purchaser's agreement to be
bound by such restrictions.
2.5. PREEMPTIVE RIGHTS
The Company hereby grants each Stockholder the right, without any
obligation, to purchase its pro rata share of all (or any part) of New
Securities (as hereinafter defined) that the Company may, from time to time,
propose to sell and issue on the same terms and conditions as each other
investor acquiring New Securities in such sale or issuance. A pro rata share,
for purposes of this preemptive right, is the portion of the New Securities
obtained by multiplying the total New Securities by a fraction, the numerator of
which is the number of shares of Common Stock then held by such Stockholder and
the number of shares of Common Stock into which any other Equity Securities then
held by such Stockholder may then be converted ("Conversion Shares"), and the
denominator of which is the total number of shares of Common Stock and
Conversion Shares held by all Stockholders. For purposes of this SECTION 2.5,
"New Securities" shall mean any common stock or preferred stock of the Company,
but shall not include securities issued: (i) in consideration of services
performed or to be performed for the Company; (ii) in consideration of the
transfer of property to the Company; (iii) as dividends on any Equity Securities
of the Company; (iv) upon the exercise of any option held by an officer,
director or employee of the Company; or (v) in connection with the merger or
consolidation of the Company.
3. COVENANTS OF THE COMPANY
The Company hereby covenants as set forth in this ARTICLE 3 with
each Stockholder, so long as such Stockholder owns Equity Securities with a
combined voting power equal to at least five percent (5%) of the aggregate
voting power of Equity Securities held by all Stockholders. The covenants set
forth in this ARTICLE 3 shall terminate at such time as (i) the Stockholders
collectively own Equity Securities with a combined voting power equal to less
than 30% of the aggregate voting power of all outstanding Equity Securities, or
(ii) there are more than 500 holders of record of any class of Equity
Securities, or (iii) the Company consummates an Initial Public Offering. Each
Stockholder (for so long as such Stockholder owns any capital stock of the
Company) shall take or cause to be taken all such action within such
Stockholder's power and authority (including without limitation the voting of
shares of Equity Securities held by such Stockholder or the taking of action by
consent with respect to such shares) as may be required to cause the Company to
comply with the covenants and agreements of the Company set forth in this
ARTICLE 3.
3.1. CORPORATE EXISTENCE
The Company shall preserve, maintain, and keep in full force and
effect the Company's corporate existence; shall preserve, maintain, and keep in
full force sand effect all
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rights, franchises, and privileges necessary or desirable in the normal
conduct of the Company's business; and shall qualify and remain qualified as
a foreign corporation in each jurisdiction in which such qualification is
necessary in view of the Company's business and operations and the ownership
of its properties.
3.2. BOOKS AND RECORDS
The Company shall keep and maintain adequate and proper books and
records of account, in which complete entries are made in accordance with
generally accepted accounting principles consistently applied and in accordance
with all applicable laws, rules, and regulations, reflecting all financial and
other transactions of the Company normally or customarily included in books and
records of account of companies engaged in the same or similar businesses and
activities as the Company. All financial statements that the Company shall
prepare and deliver pursuant to this Agreement (i) shall be true, correct, and
complete in all material respects, (ii) shall be in accordance with the books
and records of the Company in all material respects, (iii) subject, in the case
of quarterly financial statements, to year-end adjustments, which shall not, in
the aggregate, be material, shall present fairly the financial position of the
Company as of the respective dates and the results of operations and changes in
financial positions of the Company for the respective periods indicated, and
(iv) shall have been prepared in accordance with generally accepted accounting
principles applied on a consistent basis.
3.3. ACCESS AND EXAMINATION RIGHTS
The Company shall permit each Stockholder and any agents or
representatives thereof to visit and inspect the properties of the Company, to
examine and make abstracts from any of the Company's books and records
(including agreements, licenses, and similar documents) at any reasonable time
and as often as such Stockholder or such agents or representatives may
reasonably request, and to discuss the business, operations, prospects, assets,
properties, and condition (financial or otherwise) of the Company with any of
the officers, directors, employees, agents, or representatives of the Company;
PROVIDED, HOWEVER, that such rights of access and examination shall be subject
to such security or safety rules and regulations as the Company may have in
effect from time to time that are applicable to all visitors to its facilities
and to applicable laws and regulations, including those applying to classified
material and facilities.
3.4. STATEMENTS, NOTICES, AND REPORTS
The Company shall furnish to each Stockholder:
3.4.1. as soon as available and in any event within
seventy-five (75) days after the end of each fiscal year of the Company,
a copy of the audited balance sheet of the Company as of the end of such
fiscal year and the related audited statements of income, stockholders'
equity, and changes in financial condition for such fiscal year, all prepared
in reasonable detail and in accordance with the requirements of SECTION 3.2
hereof, and certified by independent
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certified public accountants of recognized national standing as presenting
fairly the financial position of the Company and approved by the Board of
Directors of the Company; and as soon as available and in any event within
thirty (30) days after the end of each fiscal quarter of the Company (other
than the last quarter of each fiscal year), a copy of the unaudited balance
sheet of the Company as of the end of such quarter and the related unaudited
statements of income, stockholders' equity, and changes in financial
condition of the Company for the periods commencing at the end of the
previous quarter and ending at the end of such quarter and commencing at the
beginning of the fiscal year and ending at the end of such quarter, in each
case including footnotes and setting forth in comparative form the
corresponding figures for the corresponding period of the preceding fiscal
year and the figures for such period set forth in the operating plan and
budget delivered by the Company pursuant to SECTION 3.4.5 hereof, all
prepared in reasonable detail and duly certified by the chief financial
officer of the Company as having been prepared in accordance with the
requirements of SECTION 3.2 hereof;
3.4.2. promptly after the commencement thereof, notice of all
actions, suits, and proceedings before or by any court, other governmental
authority, or arbitrator affecting the Company;
3.4.3. promptly upon the occurrence of a material adverse
change in the business, operations, prospects, assets, properties, or condition
(financial or otherwise) of the Company, a statement of the chief financial
officer of the Company setting forth the details thereof and the action that the
Company proposes to take with respect thereto;
3.4.4. promptly after the sending or filing thereof, copies
of all financial statements and reports that the Company sends to its
stockholders and copies of all regular, periodic, and special reports which the
Company files with any governmental authority;
3.4.5. as soon as available and in any event no later than
thirty (30) days after the Effective Date and forty-five (45) days prior to the
first day of each fiscal year of the Company beginning after the Effective Date,
an annual operating plan and budget (including cash flow data) for the Company
for such fiscal year, each prepared in reasonable detail, as each such operating
plan and budget has been approved by the Board of Directors of the Company;
3.4.6. as soon as available and in any event no later than
ninety (90) days after the Effective Date and no later than the sixtieth day of
each fiscal year beginning after the Effective Date, an updated five-year
business plan for the Company, each prepared in reasonable detail, as each such
updated business plan has been approved by the Board of Directors of the
Company; and
3.4.7. promptly upon receipt of a reasonable good faith
request from any Stockholder therefor, such other information respecting the
business, operations, prospects, assets, properties or condition (financial or
otherwise) of the Company as such Stockholder from time to time reasonably may
request.
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3.5. FUNDAMENTAL CHANGES
Except upon the affirmative vote of Stockholders holding Equity
Securities with a combined voting power equal to at least 85% of the aggregate
voting power of Equity Securities held by all Stockholders, the Company shall
not consolidate or merge with or into any other corporation or other legal
entity, voluntarily dissolve, liquidate or wind-up its affairs, or enter into
any business substantially different from the business currently engaged in by
the Company.
3.6. TRANSFER OF ASSETS
Except upon the affirmative vote of Stockholders holding Equity
Securities with a combined voting power equal to at least 85% of the aggregate
voting power of Equity Securities held by all Stockholders, the Company shall
not sell, lease, license, assign, pledge, transfer, or otherwise dispose of any
material part of its properties or assets (including license agreements, whether
as licensor or licensee), whether now owned or hereafter acquired, except for
such disposals as are made in the ordinary course of business and for the fair
market value of the asset so disposed.
3.7. CAPITALIZATION; DIVIDENDS
Except upon the affirmative vote of Stockholders holding Equity
Securities with a combined voting power equal to at least 85% of the aggregate
voting power of Equity Securities held by all Stockholders, the Company shall
not issue any additional capital stock or any rights, options or warrants to
purchase or subscribe for such stock, or any securities convertible into such
stock, adopt any employee stock option, stock purchase, stock bonus, or similar
benefit plan, declare or pay any dividend or distribution upon any class of its
capital stock, or purchase, redeem or otherwise acquire any of its own capital
stock or indebtedness.
3.8. AMENDMENT OF CERTIFICATE OF INCORPORATION AND BYLAWS
Except upon the affirmative vote of Stockholders holding Equity
Securities with a combined voting power equal to at least 85% of the aggregate
voting power of Equity Securities held by all Stockholders, the Company shall
not amend the Certificate of Incorporation of the Company, or the Bylaws of the
Company as set forth, respectively, in EXHIBITS A and B attached hereto.
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3.9. FCC OWNERSHIP RESTRICTIONS
The Company shall not enter into any agreement or obligation of any
kind to acquire or purchase all or substantially all of the assets of any other
entity, including shares of stock or other evidences of beneficial ownership of
other entities, if the director designated by the ICS, STC or ResNet
Stockholders, as the case may be, objects to such acquisition on the basis that
its consummation could violate the "cross-ownership" rules of the FCC with
respect to any member of such director's Designating Group.
4. REGISTRATION RIGHTS
4.1. DEMAND REGISTRATION RIGHTS
4.1.1. REQUEST
Subject to the provisions of this SECTION 4.1, at any time after
the first anniversary of the Effective Time, one or more Stockholders may
request registration for sale under the Act of all or part of the Common
Stock then held by them; PROVIDED, HOWEVER, that such Stockholders must
request registration for sale of a number of shares which represents at least
twenty-five percent (25%) of the total number of shares of Common Stock held
by all Stockholders on the date of such request. (As used in SECTIONS 4.1
through 4.6 of this Agreement, the Common Stock held by a Stockholder shall
be deemed to include Conversion Shares). Within fifteen (15) days after
receipt by the Company of such request (which request shall specify the
number of shares proposed to be registered and sold), the Company shall
promptly give written notice to all other Stockholders of the proposed demand
registration, and such other Stockholders shall have the right to join in
such proposed registration and sale, upon written request to the Company
(which request shall specify the number of shares proposed to be registered
and sold) within fifteen (15) days after receipt of such notice from the
Company. The Company shall thereafter, as expeditiously as practicable, use
its best efforts (i) to file with the SEC under the Act a registration
statement on the appropriate form concerning all Common Stock specified in
the demand request and all shares with respect to which the Company has
received such written request from the other Stockholders and (ii) to cause
such registration statement to be declared effective. The Company shall use
its best efforts to cause each offering pursuant to this SECTION 4.1 to be
managed, on a firm commitment basis, by a recognized regional or national
underwriter. The Company shall not be required to comply with more than two
(2) requests by the Stockholders, collectively, for demand registrations
pursuant to this SECTION 4.1 unless pursuant to the provisions of SECTION
4.1.3 hereof a number of shares in excess of one-third of the Common Stock
requested to be included in a registration are not included, in which event
the Company shall be obligated to comply with an additional request for a
demand registration (but in no event shall the Company be obligated to comply
with more than a total of three (3) requests for a demand registration).
4.1.2. DELAY BY COMPANY
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The Company shall not be required to effect a demand registration
under the Act pursuant to SECTION 4.1.1 above if (i) the Company receives such
request for registration within one hundred twenty (120) days preceding the
anticipated effective date of a proposed underwritten public offering of
securities of the Company approved by the Company's Board of Directors prior to
the Company's receipt of such request; (ii) within twelve (12) months prior to
any such request for registration, a registration of securities of the Company
has been effected in which the Stockholders had the right to participate
pursuant to this SECTION 4.1 or SECTION 4.2 hereof; or (iii) the Board of
Directors of the Company reasonably determines in good faith that effecting such
a demand registration at such time would have a material adverse effect upon a
proposed sale of all (or substantially all) the assets of the Company, or a
merger, reorganization, recapitalization, or similar transaction materially
affecting the capital structure or equity ownership of the Company; provided,
however, that the Company may only delay a demand registration pursuant to this
SECTION 4.1.2(iii) for a period not exceeding one hundred twenty (120) days (or
until such earlier time as such transaction is consummated or no longer
proposed); and provided further, that the Company may exercise its right to
delay a demand registration only once in any twelve-month period. The Company
shall promptly notify in writing the Stockholders requesting registration of any
decision not to effect any such request for registration pursuant to this
SECTION 4.1.2, which notice shall set forth in reasonable detail the reason for
such decision and shall include an undertaking by the Company to promptly notify
such Stockholders as soon as a demand registration may be effected.
4.1.3. PRO RATA REDUCTION
If a demand registration is an underwritten registration and the
managing underwriters advise the Company and the Stockholders participating in
the demand registration in writing that in their opinion the number of shares of
Common Stock requested to be included in such registration exceeds the number
which can be sold in such offering, then the amount of such shares that may be
included in such registration shall be allocated pro rata among all of such
participating Stockholders in proportion to the number of shares of Common Stock
such Stockholders have requested to include in the demand registration.
4.1.4. WITHDRAWAL
Stockholders participating in any demand registration pursuant to
this SECTION 4.1 may withdraw at any time before a registration statement is
declared effective, in which event the Company shall withdraw such registration
statement (and the Stockholders shall not be deemed to have requested a demand
registration for purposes of SECTION 4.1.1 hereof) unless at least 100,000
shares of Common Stock of the Company owned by the Stockholders remain covered
by such registration statement. If the Company withdraws a registration
statement under this SECTION 4.1.4 in respect of a registration for which the
Company would otherwise be required to pay expenses under SECTION 4.1.2 hereof,
the Stockholders that shall have withdrawn shall be liable to the Company for
all expenses of such registration specified in SECTION 4.1.2 hereof in
proportion to the number of shares each such withdrawing Stockholder shall have
requested to be registered.
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4.2. PIGGYBACK REGISTRATION RIGHTS
4.2.1. REQUEST
If at any time or times after the Effective Time the Company
proposes to make a registered public offering (subject to SECTION 3.7 hereof)
of any of its securities under the Act (whether to be sold by it or by one or
more third parties), other than an offering pursuant to a demand registration
under SECTION 4.1.1 hereof or an offering registered on Form ▇-▇, ▇▇▇▇ ▇-▇,
or successor or similar forms, the Company shall, not less than forty-five
(45) days prior to the proposed filing date of the registration form, give
written notice of the proposed registration to each Stockholder, and at the
written request of a Stockholder delivered to the Company within fifteen (15)
days after the receipt of such notice, shall include in such registration and
offering, and in any underwriting of such offering, all shares of Common
Stock as may have been designated in such Stockholder's request.
Notwithstanding the foregoing, the Company shall not be required to include
in the Initial Public Offering (as defined in ARTICLE 8 hereof) more than ten
percent (10%) of the aggregate number of shares of Common Stock held by all
Stockholders. In the event that Stockholders shall have requested the
inclusion of more than ten percent (10%) of the Common Stock in the Initial
Public Offering, the Company shall include the Common Stock of the
Stockholders making such requests in proportion to the number of shares of
Common Stock so requested by each of them to be included in the proposed
registration.
4.2.2. PRO RATA REDUCTION
If a registration in which any Stockholder has the right to
participate pursuant to this SECTION 4.2 is an underwritten primary
registration on behalf of the Company, and the managing underwriters advise
the Company in writing that in their opinion the number of securities
requested to be included in such registration exceeds the number which can be
sold in such offering, the Company shall include in such registration (i)
first, the securities of the Company proposed to be sold by the Company, and
(ii) second, the Common Stock proposed to be sold by such Stockholder and by
any other Stockholders proposing to sell shares of Common Stock pursuant to
such registration, in proportion to the number of shares of Common Stock so
requested by each of them to be included. If a registration in which such
Stockholder has the right to participate pursuant to this SECTION 4.2 is an
underwritten secondary registration and the managing underwriters advise the
Company in writing that in their opinion the number of securities requested
to be included in such registration exceeds the number which can be sold in
such offering, then the Company shall include in such offering the number of
shares of Common Stock owned and proposed to be sold by such Stockholder and
by any other participants (including other Stockholders) proposing (and
entitled) to sell shares pursuant to such registration, in proportion to the
number of shares of Common Stock so requested by each of them to be included.
4.3. REGISTRATION PROCEDURES
The Company shall have no obligation to file a registration
statement pursuant to SECTION 4.1 hereof, or to include shares of Common
Stock owned by any Stockholder in a
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registration statement pursuant to SECTION 4.2 hereof, unless and until such
Stockholder shall have furnished the Company with all information and
statements about or pertaining to such Stockholder in such reasonable detail
and on such timely basis as is reasonably deemed by the Company to be
necessary or appropriate with respect to the preparation of the registration
statement. Whenever any Stockholder has requested that any shares of Common
Stock be registered pursuant to SECTIONS 4.1 or 4.2 hereof, the Company
shall, as expeditiously as reasonably possible:
4.3.1 prepare and file with the SEC a registration
statement with respect to such shares and use its best efforts to cause such
registration statement to become effective as soon as reasonably practicable
thereafter (provided that before filing a registration statement or
prospectus or any amendments or supplements thereto, the Company shall
furnish counsel for such Stockholder with copies of all such documents
proposed to be filed);
4.3.2 prepare and file with the SEC such amendments and supplements
to such registration statement and prospectus used in connection therewith as
may be necessary to keep such registration statement effective for a period of
not less than nine months or until such Stockholder has completed the
distribution described in such registration statement, whichever occurs first;
4.3.3 furnish to such Stockholder such number of copies of such
registration statement, each amendment and supplement thereto, the prospectus
included in such registration statement (including each preliminary prospectus),
and such other documents as such Stockholder may reasonably request;
4.3.4 use its best efforts to register or qualify such shares under
such other securities or blue sky laws of such jurisdictions as such Stockholder
reasonably requests (and to maintain such registrations and qualifications
effective for a period of nine months or until such Stockholder has completed
the distribution of such shares, whichever occurs first), and to do any and all
other acts and things which may be reasonably necessary or advisable to enable
such Stockholder to consummate the disposition of such shares in such
jurisdictions (provided that the Company will not be required to (i) qualify
generally to do business in any jurisdiction where it would not be required but
for this SECTION 4.3.4, (ii) subject itself to taxation in any such
jurisdiction, or (iii) file any general consent to service of process in any
such jurisdiction); PROVIDED, that notwithstanding anything to the contrary in
this Agreement with respect to the bearing of expenses, if any such jurisdiction
shall require that expenses incurred in connection with the qualification of
such shares in that jurisdiction be borne in part or full by such Stockholder,
then such Stockholder shall pay such expenses to the extent required by such
jurisdiction;
4.3.5 notify such Stockholder, at any time when a prospectus
relating to such shares of Common Stock is required to be delivered under the
Act within the period that the Company is required to keep the registration
statement effective, of the happening of any event as a result of which the
prospectus included in any such registration statement contains an untrue
statement of a material fact or omits any fact necessary to make the
statements therein not
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misleading, and prepare a supplement or amendment to such prospectus so that,
as thereafter delivered to the purchasers of such shares, such prospectus
will not contain an untrue statement of a material fact or omit to state any
fact necessary to make the statements therein not misleading; provided, that
prior to the filing of the supplement or amendment, the Company will furnish
copies of the supplement or amendment to the Stockholders, any underwriters
and such Stockholder's counsel and will not file the supplement or amendment
without the prior consent of such Stockholder's counsel, which consent shall
not be unreasonably withheld;
4.3.6 cause all such shares to be listed on securities exchanges,
if any, on which similar securities issued by the Company are then listed;
4.3.7 provide a transfer agent and registrar for all such shares
(if the Company does not already have such an agent) not later than the
effective date of such registration statement;
4.3.8 enter into and perform such customary agreements (including
an underwriting agreement in customary form if the offering is proposed to be
an underwritten offering) and take all such other actions as such Stockholder
reasonably requests (and subject to the Company's reasonable approval) in
order to expedite or facilitate the disposition of such shares; and
4.3.9 make available for inspection by such Stockholder, by any
underwriter participating in any distribution pursuant to such registration
statement, and by any attorney, accountant or other agent retained by such
Stockholder or by any such underwriter, all financial and other records,
pertinent corporate documents, and properties (other than confidential
intellectual property) of the Company and any of its subsidiaries.
4.4. HOLDBACK AGREEMENT
In the event that the Company effects an underwritten public
offering of any Equity Security, each Stockholder agrees, if requested by the
managing underwriters, not to effect any public sale or distribution,
including any sale pursuant to Rule 144 under the Act, of any Equity
Securities (except as part of such underwritten offering) during the 180-day
period commencing with the effective date of the registration statement for
the Company's Initial Public Offering and the 90-day period commencing with
the effective date of the registration statement for any subsequent public
offering, provided that all officers, directors and holders of more than 5%
or more of the Company's outstanding voting securities enter into agreements
providing for similar restrictions on sales.
4.5. REGISTRATION EXPENSES
4.5.1. STOCKHOLDER EXPENSES
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If, pursuant to SECTION 4.1 or 4.2 hereof, shares of Common Stock
owned by any Stockholder are included in a registration statement, then such
Stockholder shall pay all transfer taxes, if any, relating to the sale of its
shares, the fees and expenses of its own counsel, and its pro rata portion of
any underwriting discounts or commissions or the equivalent thereof.
4.5.2. COMPANY EXPENSES
Except for the fees and expenses specified in SECTION 4.5.1 hereof
and except as provided below in this SECTION 4.5.2, the Company shall pay all
expenses incident to the registration and to the Company's performance of or
compliance with this Agreement, including, without limitation, all registration
and filing fees, fees and expenses of compliance with securities or blue sky
laws, underwriting discounts, fees and expenses (other than such Stockholder's
pro rata portion of any underwriting discounts or commissions or the equivalent
thereof), printing expenses, messenger and delivery expenses, and fees and
expenses of counsel for the Company and all independent certified public
accountants and other persons retained by the Company. If the Company shall
previously have paid, pursuant to this SECTION 4.5.2, the expenses of a demand
registration, the Stockholders requesting registration of shares of Common Stock
in any subsequent demand registration shall pay all expenses described in this
SECTION 4.5.2 (but not the internal expenses described in the following
sentence) in proportion to the number of shares each such Stockholder requests
to be included in such registration; provided, however, that if the Company
shall previously have paid the expenses of a demand registration and pursuant to
SECTION 4.1.3 hereof, more than one-third of the shares of the Common Stock
requested to be included were not included in such registration, the Company
shall pay the expenses of any subsequent demand registration in accordance with
this SECTION 4.5.2. With respect to any registration pursuant to SECTION 4.1 or
4.2 hereof, the Company shall pay its internal expenses (including, without
limitation, all salaries and expenses of its officers and employees performing
legal or accounting duties) and the expenses and fees for listing the securities
to be registered on exchanges on which similar securities issued by the Company
are then listed.
4.5.3. INDEMNITY
In the event that any shares of Common Stock owned by a Stockholder
are sold by means of a registration statement pursuant to SECTION 4.1 or 4.2
hereof, the Company agrees, to the fullest extent permitted by law, to indemnify
and hold harmless such Stockholder, each of its officers and directors, and each
person, if any, who controls or may control such Stockholder within the meaning
of the Act, from and against all demands, claims, actions or causes of action,
assessments, losses, damages, liabilities, costs, and expenses (including,
without limitation, interest, penalties, and reasonable attorneys' fees and
disbursements) (hereinafter referred to in this SECTION 4.5.3 in the singular as
a "claim" and in the plural as "claims") asserted against, resulting to, imposed
upon or incurred by such indemnified person, directly or indirectly, based upon,
arising out of or resulting from any untrue statement of a material fact
contained in the registration statement or any omission to state therein a
material fact necessary to make the statements made therein, in the light of the
circumstances under which they were made, not misleading, except insofar as such
claim is based upon, arises out of or results from information
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furnished to the Company in writing by such Stockholder expressly for use in
connection with the registration statement. Such Stockholder agrees to
indemnify and hold harmless the Company, its officers and directors, and each
person, if any, who controls or may control the Company within the meaning of
the Act, from and against all claims asserted against, resulting to, imposed
upon or incurred by such indemnified person, directly or indirectly, based
upon, arising out of or resulting from any untrue statement of a material
fact contained in the registration statement or any omission to state therein
a material fact necessary in order to make the statements made therein, in
the light of the circumstances under which they were made, not misleading, to
the extent that such claim is based upon, arises out of or results from
information furnished to the Company in writing by such Stockholder expressly
for use in connection with the registration statement. The indemnifications
set forth herein shall be in addition to any liability the Company or such
Stockholder may otherwise have to the indemnified persons. Promptly after
actually receiving definitive notice of any claim in respect of which an
indemnified person may seek indemnification under this SECTION 4.5.3, such
indemnified person shall submit written notice thereof to the indemnifying
person under this SECTION 4.5.3. The failure of such indemnified person so
to notify such indemnifying person of any such claim shall not relieve the
indemnifying person from any liability it may have hereunder except to the
extent that (a) such liability was caused or increased by such failure, or
(b) the ability of the indemnifying person to reduce such liability was
materially adversely affected by such failure. In addition, the failure of
the indemnified person so to notify the indemnifying person of any such claim
shall not relieve the indemnifying person from any liability it may have
otherwise than hereunder. The indemnifying person shall have the right to
undertake, by counsel or representatives of its own choosing, the defense,
compromise or settlement (without admitting liability of the indemnified
person) of any such claim asserted, such defense, compromise or settlement to
be undertaken at the expense and risk of the indemnifying person, and the
indemnified person shall have the right to engage separate counsel, at its
own expense, whom counsel for the indemnifying person shall keep informed and
consult with in a reasonably satisfactory manner. In the event the
indemnifying person shall elect not to undertake such defense by its own
representatives, the indemnifying person shall give prompt written notice of
such election to the indemnified person, and the indemnified person shall
undertake the defense, compromise or settlement (without admitting liability
of the indemnified person) thereof on behalf of and for the account and risk
of the indemnifying person by counsel or other representatives designated by
the indemnified person and the indemnifying party shall bear the reasonable
fees, costs and expenses of such separate counsel or representatives. In the
event that any claim shall arise out of a transaction or cover any period or
periods wherein the Company and such Stockholder shall each be liable
hereunder for part of the liability or obligation arising therefrom, then the
parties shall, each choosing its own counsel and bearing its own expenses,
defend such claim, and no settlement or compromise of such claim may be made
without the joint consent or approval of the Company and such Stockholder.
Notwithstanding the foregoing, (i) no indemnifying person shall be obligated
hereunder with resect to amounts paid in settlement of any claim if such
settlement is effected without the consent of such indemnifying person (which
consent shall not be unreasonably withheld); (ii) no Stockholder shall be
liable for indemnification in an amount in excess of the net proceeds
received by such Stockholder in connection with the sale of shares hereunder,
and (iii) no Stockholder shall be liable to the Company, any underwriter, or
any officer, director, employee or controlling person of the
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Company or such underwriter, with respect to any claim that would have been
remedied by delivery of a corrected prospectus that was available, but which
the Company and/or such underwriter failed to deliver prior to written
confirmation of such sale.
4.6. SUBSEQUENT REGISTRATION STATEMENTS
The Company shall not cause any new registration statements (except
registration statements on Forms ▇-▇, ▇-▇, or comparable forms) to become
effective during the one hundred eighty (180) days after the effective date of a
registration statement covering shares of Common Stock owned by any Stockholder.
5. COVENANTS OF STOCKHOLDERS
5.1. PUBLICITY
Each Stockholder hereby covenants and agrees that such
Stockholder shall not, directly or indirectly, make any press release or
public notice, announcement, or filing available to the public concerning the
Company, its Stockholders, or the Company's business without prior notice to
and reasonable consultation with the Company and the other Stockholders,
unless such notice and consultation is impracticable under applicable laws or
governmental regulations. It is specifically recognized that Stockholders
that are subject to the disclosure requirements of the Securities Exchange
Act of 1934 or that are making offerings or distributions subject to the
Securities Act of 1933 or other applicable securities laws governing
disclosure may, from time to time, be required to make such releases,
notices, announcements, or filings without the opportunity for prior notice
to or reasonable consultation with the Company and the other Stockholders.
5.2. CONFIDENTIALITY
Each Stockholder covenants and agrees that, unless the Company and
each other Stockholder otherwise consent in advance in writing, and except as
otherwise required by any applicable law or governmental regulation, such
Stockholder shall not, directly or indirectly, disclose to anyone other than its
counsel, accountants and other consultants, the other Stockholders or the
employees or directors of the Company any non-public information regarding this
Agreement or any of the Exhibits or Appendices hereto or the transactions
contemplated hereby or thereby or the Stockholders or business of the Company.
6. REPRESENTATIONS AND WARRANTIES
6.1. REPRESENTATIONS AND WARRANTIES OF NON-INDIVIDUAL STOCKHOLDERS
Each Stockholder that is a corporation, partnership, or limited
liability company hereby represents and warrants to the Company and to each
other Stockholder as follows:
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6.1.1. ORGANIZATION AND STANDING
Such Stockholder is duly organized, validly existing, and in good
standing under the laws of the jurisdiction in which it is organized. Such
Stockholder has the corporate, partnership, or limited liability company power
and authority to enter into this Agreement and to consummate the transactions
contemplated hereby.
6.1.2. AUTHORIZATION
Such Stockholder has taken all corporate, partnership, or limited
liability company action necessary for it to enter into this Agreement and to
consummate the transactions contemplated hereby.
6.1.3. ABSENCE OF VIOLATION
Neither the execution and delivery of this Agreement, or of any
document or instrument to be executed and delivered by such Stockholder pursuant
hereto, nor the consummation of the transactions contemplated hereby and thereby
will constitute a violation of, or default under, or conflict with, or require
any consent under (other than a violation or default that has been waived or a
consent that has been obtained), any term or provision of the certificate or
articles of incorporation or bylaws, partnership agreement, or certificate or
articles of formation or limited liability company agreement of such Stockholder
or any contract, commitment, indenture, lease, or other agreement to which such
Stockholder is a party or by which such Stockholder or any of its assets is
bound.
6.1.4. BINDING OBLIGATION
This Agreement constitutes a valid and binding obligation of such
Stockholder, enforceable in accordance with its terms, except to the extent that
such enforceability may be limited by bankruptcy, insolvency, and similar laws
affecting the rights and remedies of creditors generally, and by general
principles of equity and public policy; and each document and instrument to be
executed by such Stockholder pursuant hereto, when executed and delivered in
accordance with the provisions hereof, shall be a valid and binding obligation
of such Stockholder, enforceable in accordance with its terms (with the
aforesaid exceptions).
6.2. REPRESENTATIONS AND WARRANTIES OF INDIVIDUAL STOCKHOLDERS
Each Stockholder who is an individual hereby represents and
warrants to the Company and each other Stockholder as follows:
6.2.1. POWER AND AUTHORITY
Such Stockholder has the legal capacity and all other necessary
power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby.
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6.2.2. ABSENCE OF VIOLATION
Neither the execution and delivery of this Agreement, or of any
document or instrument to be executed and delivered by such Stockholder
pursuant hereto, nor the consummation of the transactions contemplated hereby
and thereby will constitute a violation of, or default under, or conflict
with, or require any consent under (other than a violation or default that
has been waived or a consent that has been obtained), any term or provision
of any contract, commitment, indenture, lease, or other agreement to which
such Stockholder is a party or by which such Stockholder or any of his assets
is bound.
6.2.3. BINDING OBLIGATION
This Agreement constitutes a valid and binding obligation of such
Stockholder, enforceable in accordance with its terms, except to the extent
that such enforceability may be limited by bankruptcy, insolvency, and
similar laws affecting the rights and remedies of creditors generally, and by
general principles of equity and public policy; and each document and
instrument to be executed by such Stockholder pursuant hereto, when executed
and delivered in accordance with the provisions hereof, shall be a valid and
binding obligation of such Stockholder, enforceable in accordance with its
terms (with the aforesaid exceptions).
6.3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to each Stockholder as
follows:
6.3.1. ORGANIZATION AND STANDING
The Company is a corporation duly organized, validly existing, and
in good standing under the laws of Delaware. The Company has the corporate
power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby.
6.3.2. AUTHORIZATION
The Company has taken all corporate action necessary for it to
enter into this Agreement and to consummate the transactions contemplated
hereby.
6.3.3. ABSENCE OF VIOLATION
Neither the execution and delivery of this Agreement, or of any
document or instrument to be executed and delivered by the Company pursuant
hereto, nor the consummation of the transactions contemplated hereby and thereby
will constitute a violation of, or default under, or conflict with, or require
any consent under (other than a violation or default that has been waived or a
consent that has been obtained), any term or provision of the Certificate of
Incorporation or Bylaws of the Company or any of its subsidiaries or any
contract, commitment,
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indenture, lease, or other agreement to which the Company or any of its
subsidiaries is a party or by which the Company, its subsidiaries or any of
their respective assets is bound.
6.3.4. BINDING OBLIGATION
This Agreement constitutes a valid and binding obligation of the
Company, enforceable in accordance with its terms, except to the extent that
such enforceability may be limited by bankruptcy, insolvency, and similar laws
affecting the rights and remedies of creditors generally, and by general
principles of equity and public policy; and each document and instrument to be
executed by the Company pursuant hereto, when executed and delivered in
accordance with the provisions hereof, shall be a valid and binding obligation
of the Company, enforceable in accordance with its terms (with the aforesaid
exceptions).
7. EFFECTIVENESS OF AGREEMENT
This Agreement is effective for all purposes at such time as each
Stockholder and the Company shall have executed and delivered this Agreement.
8. DEFINITIONS
Capitalized terms used in this Agreement shall have the meaning
ascribed to them as follows:
"Act" shall mean the Securities Act of 1933, as amended.
"Affiliate" shall mean: (a) with respect to a natural person, any
member of such person's immediate family; (b) with respect to an entity, any
officer, director, stockholder, partner or investor of or in such entity or of
or in any Affiliate of such entity; and (c) with respect to a legal entity, any
natural person or entity which directly or indirectly, through one or more
intermediaries, Controls, is Controlled by, or is under common Control with such
person or entity.
"Agreement" shall mean this Stockholders Agreement.
"Company" shall mean Global Interactive Technologies Corporation, a
Delaware corporation.
"Common Stock" shall mean the common stock of the Company, par
value $.01 per share.
"Control" means possession, directly or indirectly, of power to
direct or cause the direction of management or policies (whether through
ownership of voting securities, by agreement, by law or otherwise).
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"Conversion Shares" shall have the meaning ascribed to that term
in SECTION 2.5.
"Designating Group" shall have the meaning ascribed to that term in
SECTION 1.1.3.
"Effective Date" shall mean the date on which the Effective Time
shall occur.
"Effective Time" shall mean the time at which this Agreement shall
become effective in accordance with the provisions of ARTICLE 7.
"Equity Securities" shall mean any share of any class or series of
capital stock of the Company or any right or option to acquire any share of
capital stock of the Company and shall include the Common Stock.
"ICS" shall mean Interactive Cable Systems, Inc., a California
corporation.
"Initial Public Offering" shall mean the first public sale of any
securities of the Company pursuant to the registration provisions of ARTICLE 4
of, or the provisions of Regulation A under, the Act, with an aggregate public
offering price of at least $40,000,000.
"New Securities" shall have the meaning ascribed to that term in
SECTION 2.5.
"Offer" shall have the meaning ascribed to that term in
SECTION 2.3.2.
"Offer Period" shall have the meaning ascribed to that term in
SECTION 2.3.3.
"Offer Response" shall have the meaning ascribed to that term in
SECTION 2.3.3.
"Offeree" shall have the meaning ascribed to that term in
SECTION 2.3.2.
"Offeree Stockholder" shall have the meaning ascribed to that term
in SECTION 2.4.
"Purchasing Offeree" shall have the meaning ascribed to that term
in SECTION 2.3.3.
"ResNet" shall mean ResNet Communications, LLC, a Delaware limited
liability company.
"Sale of Shares" shall have the meaning ascribed to that term in
SECTION 2.3.1.
"STC" shall mean Shared Technologies Communications Corporation, a
Delaware corporation.
"Stockholder" shall have the meaning ascribed to that term in the
preamble hereof.
"Third Party Offer" shall have the meaning ascribed to that term in
SECTION 2.4.
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"Third Party Offeror" shall have the meaning ascribed to that term
in SECTION 2.4.
"Transferor" shall have the meaning ascribed to that term in
SECTION 2.3.1.
9. MISCELLANEOUS
9.1. LEGEND
The certificates or other evidence representing the Equity Securities shall
bear a legend in substantially the following form:
"The shares represented by this certificate have not been
registered under the Securities Act of 1933 (the "Act") or
state securities laws and cannot be offered, sold or
otherwise transferred in the absence of registration or the
availability of an exemption from registration under the Act
and regulations promulgated thereunder and applicable state
securities laws. The voting rights with respect to, and
transfer, sale or other disposition of the securities
represented by this certificate are restricted by and subject
to the provisions of a Stockholders' Agreement dated as of
November __, 1998 among the Company and certain of the
Company's Stockholders. A copy of such Stockholders'
Agreement is available for inspection at the offices of the
Company."
9.2. ADDITIONAL ACTIONS AND DOCUMENTS
Each of the parties hereto hereby agrees to take or cause to be
taken such further actions, to execute, deliver and file or cause to be
executed, delivered and filed such further documents and instruments, and to
obtain such consents, as may be necessary or as may be reasonably requested in
order to fully effectuate the purposes, terms and conditions of this Agreement.
9.3. EXPENSES
Each party shall pay his or its own expenses incident to the
preparation and negotiation of this Agreement and the transactions contemplated
hereunder, including all legal and accounting fees and disbursements, except as
expressly set forth in SECTION 4.5 hereof or in any other provision of this
Agreement.
9.4. ASSIGNMENT
Neither the Company nor any Stockholder shall assign this
Agreement, in whole or in part, whether by operation of law or otherwise,
(a) unless such person shall have obtained the
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prior written consent of all the other parties, or (b) unless and to the
extent that such assignment is in accordance with the transfer provisions set
forth in SECTION 2.2 of this Agreement. Any purported assignment of this
Agreement contrary to the terms hereof shall be null and void and of no force
and effect.
9.5. ENTIRE AGREEMENT; AMENDMENT
This Agreement, including the Appendices and Exhibits hereto and
other writings referred to herein or delivered pursuant hereto, constitutes the
entire agreement among the parties hereto with respect to the transactions
contemplated herein, and it supersedes all prior oral or written agreements,
commitments or understandings with respect to the matters provided for herein.
No amendment, modification or discharge of this Agreement shall be valid or
binding unless set forth in writing and duly executed by the all of the
Stockholders.
9.6. WAIVER
No delay or failure on the part of any party hereto in exercising
any right, power or privilege under this Agreement or under any other
instruments given in connection with or pursuant to this Agreement shall impair
any such right, power or privilege or be construed as a waiver of any default or
any acquiescence therein. No single or partial exercise of any such right,
power or privilege shall preclude the further exercise of such right, power or
privilege, or the exercise of any other right, power or privilege. No waiver
shall be valid against any party hereto unless made in writing and signed by the
party against whom enforcement of such waiver is sought and then only to the
extent expressly specified therein.
9.7. LIMITATION ON BENEFIT
It is the explicit intention of the parties hereto that no person
or entity other than the parties hereto is or shall be entitled to bring any
action to enforce any provision of this Agreement against any of the parties
hereto, and the covenants, undertakings and agreements set forth in this
Agreement shall be solely for the benefit of, and shall be enforceable only by,
the parties hereto or their respective successors, heirs, executors,
administrators, legal representatives and permitted assigns.
9.8. BINDING EFFECT
This Agreement shall be binding upon and shall inure to the benefit
of the parties hereto and their respective successors, heirs, executors,
administrators, legal representatives and permitted assigns.
9.9. GOVERNING LAW
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This Agreement, the rights and obligations of the parties hereto,
and any claims or disputes relating thereto, shall be governed by and construed
in accordance with the laws of New York (excluding the conflicts of law rules
thereof).
9.10. NOTICES
All notices, demands, requests, or other communications which may
be or are required to be given, served, or sent by any party to any other party
pursuant to this Agreement shall be in writing and shall be hand-delivered or
mailed by first-class, registered or certified mail, return receipt requested,
postage prepaid, or transmitted by telegram, telecopy, facsimile transmission or
telex, addressed as follows:
(i) If to the Company:
Global Interactive Technologies Corporation
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇
with a copy (which shall not constitute notice) to:
▇▇▇▇▇ & ▇▇▇▇▇▇▇ L.L.P.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
(ii) If to a Stockholder:
To such Stockholder's address on APPENDIX 1 hereto.
Each party may designate by notice in writing a new address to which any
notice, demand, request or communication may thereafter be so given, served
or sent. Each notice, demand, request, or communication which shall be
hand-delivered, mailed transmitted, telecopied or telexed in the manner
described above, or which shall be delivered to a telegraph company, shall be
deemed sufficiently given, served, sent, received or delivered for all
purposes at such time as it is delivered to the addressee (with the return
receipt, the delivery receipt, or the answerback being deemed conclusive, but
not exclusive, evidence of such delivery) or at such time as delivery is
refused by the addressee upon presentation.
9.11. HEADINGS
Article and Section headings contained in this Agreement are
inserted for convenience of reference only, shall not be deemed to be a part of
this Agreement for any
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purpose, and shall not in any way define or affect the meaning, construction
or scope of any of the provisions hereof.
9.12. EXECUTION IN COUNTERPARTS
To facilitate execution, this Agreement may be executed in as many
counterparts as may be required; and it shall not be necessary that the
signatures of, or on behalf of, each party, or that the signatures of all
persons required to bind any party, appear on each counterpart; but it shall be
sufficient that the signature of, or on behalf of, each party appear on one or
more of the counterparts. All counterparts shall collectively constitute a
single agreement. It shall not be necessary in making proof of this Agreement
to produce or account for more than a number of counterparts containing the
respective signatures of, or on behalf of, all of the parties hereto.
IN WITNESS WHEREOF, the undersigned have duly executed this
Agreement, or have caused this Agreement to be duly executed on their behalf, as
of the day and year first hereinabove set forth.
GLOBAL INTERACTIVE TECHNOLOGIES CORPORATION
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇
--------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇
President and Chief Executive Officer
SHARED TECHNOLOGIES
COMMUNICATIONS CORPORATION
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇, President
INTERACTIVE CABLE SYSTEMS, INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇
--------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇, President
RESNET COMMUNICATIONS, LLC
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, President
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APPENDIX 1
GLOBAL INTERACTIVE TECHNOLOGIES CORPORATION
LIST OF STOCKHOLDERS PARTY TO
STOCKHOLDERS AGREEMENT
NUMBER OF
SHARES OF COMMON
STOCKHOLDER STOCK OWNED
----------- ----------------
Shared Technologies Communications Corporation 1,250
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Interactive Cable Systems, Inc. 2,000
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇
ResNet Communications, LLC 1,750
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
APPENDIX 2
GLOBAL INTERACTIVE TECHNOLOGIES CORPORATION
LIST OF INITIAL OFFICERS
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ President and Chief Executive Officer
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ Executive Vice President and Chief Operating
Officer
▇▇▇ ▇▇▇▇▇▇ Senior Vice President and Treasurer
▇▇▇▇ ▇▇▇▇▇▇ Senior Vice President and Secretary
GLOBAL INTERACTIVE COMMUNICATIONS CORPORATION
LIST OF INITIAL OFFICERS
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ President and Chief Executive Officer
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ Executive Vice President and
Chief Operating Officer
▇▇▇ ▇▇▇▇▇▇ Senior Vice President and Treasurer
▇▇▇▇ ▇▇▇▇▇▇ Senior Vice President and Secretary
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ Senior Vice President, Sales and Marketing
▇▇▇▇ ▇▇▇▇▇▇▇ Vice President, Production Operations
▇▇▇▇ ▇▇▇▇▇▇▇ Vice President, Engineering
▇▇▇ ▇▇▇▇▇▇ Vice President, Field Operations
