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EXHIBIT 3.4
STOCKHOLDERS AGREEMENT
THIS STOCKHOLDERS' AGREEMENT (the "Agreement"), entered into this 26th
day of November, 1997 is made by and among (i) MGC Communications, Inc., a
Nevada corporation (the "Company"), (ii) each person listed on Exhibit A hereto
(collectively, the "Original Holders") and (iii) each person listed on Exhibit
B hereto (collectively, the "Investors").
WHEREAS, each of the Original Holders is the record and beneficial
owner of shares of Common Stock;
WHEREAS, pursuant to the Securities Purchase Agreement, dated as of
the date hereof (the "Purchase Agreement"), among the Company and the
Investors, the Company shall issue on the date hereof to the Investors
5,148,570 shares of the Company's 8% Series A Convertible Preferred Stock, par
value $.001 per share (the "Series A Preferred Stock");
WHEREAS, the parties hereto desire to set forth more fully their
agreements regarding the investment by the Investors in the Company;
NOW THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements contained herein, the receipt and sufficiency of which
are acknowledged, the parties hereto, each intending to be legally bound
hereby, agree as follows:
ARTICLE I.
DEFINITIONS
SECTION 1.1 Definitions.
As used herein, the following terms shall have the respective meanings
set forth below:
"Affiliate" shall have the meaning ascribed thereto in the Purchase
Agreement.
"Board of Directors" means the Board of Directors of the Company, as
constituted from time to time in accordance with this Agreement and the
Company's Bylaws.
"Capital Stock" means any class of capital stock of the Company
including, without limitation, the Common Stock and the Series A Preferred
Stock.
"Common Stock" means the Company's Common Stock, par value $.001 per
share.
"Conversion Price" means the then applicable Conversion Price for the
Series A Preferred Stock, as defined in the Company's Articles of
Incorporation.
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"Director" means a member of the Board of Directors.
"Family Group" means a Person's parents, spouse, descendants (whether
or not adopted) and stepchildren and any trust solely for the benefit of such
Person and/or the Person's parents, spouse, stepchildren and/or descendants.
"Holder Group" means (i) the Original Holders (as a collective group)
or (ii) the Investors (as a collective group).
"JK&B Investors" means those Investors listed as JK&B Investors on the
signature pages hereto.
"Key Original Holders" means the Original Holders listed as "Key
Original Holders" on Exhibit A.
"Majority Investor Holders" at any time means the holders of a
majority of the Registrable Securities held by all Investors.
"Market Average Price" means the volume-weighted average sales price
per share of Common Stock as reported by Bloomberg Information Systems, Inc.
during either (i) a period of 20 days consisting of the day on which the
Company consummates a Public Offering and the 19 consecutive Business Days
subsequent to such day or (ii) any period of 60 consecutive Business Days after
the expiration of such initial 20 day period but only if that the average daily
trading volume over such 60 Business Day period exceeds 3% of the outstanding
shares of Common Stock of the Company that are registered, issued and eligible
for trading. If at any time shares of the Common Stock are not listed on any
securities exchange or quoted in the Nasdaq System or the over-the-counter
market, the "Market Average Price" shall be the fair value thereof determined
by an investment bank mutually agreed between the Company and a majority of the
holders of the Series A Preferred Stock. If such parties are unable to reach
agreement within a reasonable period of time, each such party will choose and
bear the expense of an investment bank to value the shares of Common Stock and
the average of the two valuations shall be the value.
"New Securities" shall mean any Capital Stock whether now authorized
or not, and rights, options or warrants to purchase Capital Stock, and
securities of any type whatsoever that are, or may become convertible into or
exchangeable for Capital Stock; provided that the term "New Securities" does
not include (i) Series A Preferred Stock issued on the date hereof and up to
1,422,857 additional shares of Series A Preferred Stock issued within 120 days
after the date hereof on substantially the same terms and conditions as those
contained in the Purchase Agreement, (ii) Series A Preferred Stock issued as a
stock dividend to holders of Series A Preferred Stock, (iii) securities issued
in connection with an acquisition, merger or strategic financing approved by
the vote of the Board of Directors, (iv) shares of Common Stock issuable upon
exercise of stock awards granted to consultants, employees, officers, managers
or directors of the Company pursuant to a plan approved by the Board of
Directors, (v) shares of Common Stock issued pursuant to registered public
offerings, (vi) debt securities that are not, and will not
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become, convertible into or exchangeable for capital stock, (vii) shares of
Common Stock issued upon the exercise of warrants issued prior to the date
hereof and (viii) shares of Common Stock issued as a dividend on outstanding
shares of Common Stock or preferred stock.
"Person" means any individual, corporation, partnership, firm, joint
venture, association, joint-stock company, trust, unincorporated organization
or other entity.
"Public Offering" shall have the meaning ascribed to such term in the
Purchase Agreement.
"Qualified Public Offering" shall mean one or more Public Offerings in
which the cumulative gross proceeds to the Company are equal to or greater than
$25 million and either the price per share paid in the Public Offering or the
Market Average Price is greater than (i) 1.5 times the then applicable
Conversion Price, if the Public Offering is consummated within 365 days of the
date hereof, (ii) 2.0 times the then applicable Conversion Price, if the Public
Offering is consummated between 366 and 730 days of the date hereof or (c) 2.5
times the then applicable Conversion Price, if the Public Offering is
consummated after 731 days of the date hereof.
"Registrable Securities" means (i) any shares of Common Stock issued
or issuable upon exercise of the Series A Preferred Stock and (ii) any shares
of Common Stock issued or issuable directly or indirectly with respect to the
securities referred to in clause (i) by way of stock dividend or stock split or
in connection with a combination of shares, recapitalization, merger,
consolidation or other reorganization. As to any particular shares constituting
Registrable Securities, such shares will cease to be Registrable Securities
when they have been (x) effectively registered under the Securities Act and
disposed of in accordance with a registration statement covering them, or (y)
sold to the public pursuant to Rule 144 (or by similar provision under the
Securities Act).
"S-C Investors" mean those Investors listed as the S-C Investors on
the signature pages hereto.
"Securities Act" means the Securities Act of 1933, as amended, or any
similar federal law then in force.
"Securities and Exchange Commission" means the Securities and Exchange
Commission and includes any governmental body or agency succeeding to the
functions thereof.
"Securities Exchange Act" means the Securities Exchange Act of 1934,
as amended, or any similar federal law then in force.
"Stockholder Shares" means (i) all Common Stock and/or Series A
Preferred Stock issued or issuable to the Original Holders or the Investors and
(ii) Common Stock and/or Series A Preferred Stock issued or issuable directly
or indirectly with respect to the securities referred to in clause (i) above by
way of stock dividend or stock split or in connection with a combination of
shares, recapitalization, merger, conversion, consolidation or other
reorganization.
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"Third Party" means any Person that is not an Affiliate or a member of
the Family Group, as appropriate, of the Company, the Original Holders or the
Investors.
"Transfer" means to sell, transfer, assign, pledge or otherwise
dispose of any interest in any Stockholder Shares.
"Underlying Shares" means (i) any Common Stock issued or issuable to
the Investors or the Original Holders, whether directly or by conversion
securities exercisable into Common Stock, and (ii) Common Stock issued or
issuable directly or indirectly with respect to the securities referred to in
clause (i) above by way of stock dividend or stock split or in connection with
a combination of shares, recapitalization, merger, conversion, consolidation or
other reorganization. As to any particular shares constituting Underlying
Shares, such shares will cease to be Underlying Shares when they have been (x)
effectively registered under the Security Act and disposed of in accordance
with a registration statement covering them, or (y) sold to the public pursuant
to Rule 144 (or by similar provision under the Securities Act). For purposes of
this Agreement, a Person will be deemed to be a holder of Underlying Shares
whenever such Person has the right to acquire directly or indirectly such
Underlying Shares (upon conversion or exercise in connection with a transfer of
securities or otherwise, but disregarding any restrictions or limitations upon
the exercise of such right), whether or not such acquisition has actually been
effected.
"Warrant Registration Agreement" means the Warrant Registration Rights
Agreement, dated as of September 29, 1997, by and among the Company, Bear,
Xxxxxxx & Co. Inc. and Xxxxxx Xxxx LLC.
ARTICLE II.
CORPORATE GOVERNANCE; VOTING AGREEMENTS
SECTION 2.1 Board of Directors.
(a) The Company shall promptly take all necessary and
desirable actions within its control (including, without limitation, calling
special board and stockholder meetings), so that:
(i) any Investor or group of affiliated investors that
purchased at least 857,142 shares of Preferred Stock shall be granted
observation rights at all Board meetings; provided, however, that the
observation rights granted hereunder shall only continue to be
applicable to an Investor or group of affiliated Investors or a
transferee of an Investor to the extent that such Investor or group of
affiliated Investors or transferee holds at least 428,571 shares of
Preferred Stock; and provided further, that observation rights will
only be granted to a transferee engaged in the telecommunications
industry with the consent of the Company, (not to be unreasonably
withheld);
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(ii) The Board's compensation committee and audit
committee shall each have three members. For so long as they own 50%
of the Stockholder Shares issued on the date hereof, the JK&B
Investors shall have the right to elect one of the three members. All
decisions of the compensation committee with respect to the cash and
non-cash compensation of the chairman of the board and president of
the Company shall require the concurrence of the member of such
committee elected by the JK&B Investors;
(iii) the removal from the Board, the compensation
committee or the audit committee (with or without cause) of any
representative designated hereunder by the Investors shall be at the
written request of the Investors, but only upon such written request
and under no other circumstances; provided that the Board may remove
any representative for cause;
(iv) in the event that any representative designated
hereunder for any reason ceases to serve as a member of a committee of
the Board during his term of office, the resulting vacancy on such
committee shall be filled by a representative designated by the
Investors; and
(v) the Company shall pay the reasonable out-of pocket
expense incurred by each director in connection with any expenses
incurred for Company business, including attendance at meeting;
provided, however, that out-of-pocket expenses incurred by a director
other than in connection with attendance at meetings of the Board or
committees thereof shall be subject to the approval of the Company.
(b) The Investors agree that for so long as the JK&B Investors
and their Affiliates own at least 50% of the Stockholder Shares issued on the
date hereof, the JK&B Investors shall have the right to select the members of
the Board to be elected by the holders of Series A Preferred Stock. The JK&B
Investors hereby assign the right to select one such member to the S-C
Investors as long as the S-C Investors own at least 50% of the Stockholder
Shares issued to the S-C Investors on the date hereof.
(c) The rights of the Investors granted under this Section 2.1
shall terminate at such time as less than 50% of the Series A Preferred Stock
acquired under the Purchase Agreement remains outstanding.
ARTICLE III.
PREEMPTIVE RIGHTS; TRANSFER RESTRICTIONS AND OFFER PROCEDURES
SECTION 3.1 Preemptive Rights.
(a) If the Company at any time after the date hereof
authorizes the issuance or sale of any New Securities (other than as a dividend
on the outstanding Common Stock), the Company shall first offer to sell to each
Investor a portion of such New Securities or other
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securities equal to the percentage of outstanding shares of Common Stock held
by such Investor at the time of such issuance (determined on a fully diluted
basis).
(b) In order to exercise its purchase rights hereunder,
each Investor must within 20 days after receipt of written notice from the
Company describing in reasonable detail the New Securities being offered, the
purchase price thereof, the payment terms and such Investor's percentage
allotment, deliver a written notice to the Company describing its election
hereunder. In the event any Investor does not elect to purchase all of the
shares offered to such Investors, the other electing Investors may purchase
such unallocated New Securities by providing notice to the Company within such
20-day period. Any New Securities not elected to be purchased by the end of
such 20-day period shall be reoffered for an additional 5-day period by the
Company on a pro rata basis to the Investors who elected to purchase all shares
of such New Securities originally offered to such Investors.
(c) Upon the expiration of the offering periods
described above, the Company shall be entitled to sell such New Securities or
securities which the Investors have not elected to purchase during the 120 days
following such expiration on terms and conditions no more favorable to the
purchasers thereof than those offered to the Investors. Any New Securities
offered or sold by the Company to any Person after such 120-day period must be
reoffered to the Investors pursuant to the terms of this Section 3.1.
(d) Termination of Restrictions. The provisions set
forth in Section 3.1 shall terminate upon the consummation of a Qualified
Public Offering.
SECTION 3.2 Transfer Restrictions.
(a) No Key Original Holder shall transfer any interest
in any Stockholder Shares except pursuant to and in accordance with the
provisions of this Section 3.2.
(b) If, at any time, a Key Original Holder wishes to
sell anyof its Stockholder Shares to a Third Party, such sale shall be made
pursuant to the following procedures:
(i) At least 20 days prior to making any Transfer of
Stockholder Shares, any transferring Key Original Holder of
Stockholder Shares (the "Transferring Holder") shall deliver a written
notice (the "Offer Notice") to the Company and the Investors. The
Offer Notice shall disclose in reasonable detail the proposed number
of each class of Stockholder Shares to be transferred (the
"Stockholder Transfer Shares") and the proposed terms and conditions
of the Transfer (including the proposed price at which the shares are
to be transferred).
(ii) Each Investor shall be entitled to purchase all (but
not less than all) of his Pro Rata Share (as defined below) of the
Stockholder Transfer Shares specified in the Offer Notice at the price
and on the terms specified therein by delivering written notice of
such election (an "Election Notice") to the Transferring Holder as
soon as practical but in any event within 10 days after delivery of
the Offer Notice. Any Stockholder Transfer
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Shares not elected to be purchased by the end of such 10-day period shall be
reoffered for an additional 10-day period by the Transferring Holder on a pro
rata basis to the Investors who have elected to purchase their Pro Rata Share.
Each Investor's "Pro Rata Share" shall be based upon such Investor's
proportionate ownership of the Underlying Shares to the Underlying Shares owned
by all Investors. The Investors shall only have the right to purchase
Stockholder Transfer Shares if they agree to purchase all of the Stockholder
Transfer Shares being offered.
(iii) The Transfer of any Stockholder Transfer Shares to be
purchased by the Investors shall be consummated as soon as practical after the
delivery of the final Election Notice, but in any event within 15 days after
the delivery of the final Election Notice. In the event that the Investors do
not elect to purchase all of the Stockholder Transfer Shares or fail to
consummate the purchase within the time frames specified herein, the
Transferring Holder may, within 90 days after the expiration of the last 10-day
period pursuant to clause (ii) above and subject to the provisions of Section
3.4 below, transfer such remaining Stockholder Transfer Shares to one or more
third parties at a price no less than the price per share specified in the
Offer Notice for such class and on other terms no more favorable to the
transferees thereof than offered to the Investors in the Offer Notice. Any
Stockholder Transfer Shares not transferred within such 90-day period shall be
reoffered to the Investors under this Section 3.2(b) prior to any subsequent
Transfer pursuant to the terms of this Section. The purchase price specified in
any Offer Notice shall be payable solely in cash at the closing of the
transaction.
(iv) At any closing under this Section 3.2(b), each Transferring
Holder will deliver to the relevant purchaser good and valid title to the
Underlying Shares being sold by each such Transferring Holder, free and clear
of any lien.
(v) In the event the consideration for the Stockholder Shares as
disclosed in the Offer Notice is other than cash, a promissory note or a
combination thereof, the price for the Stockholder Shares shall be the value of
that consideration as agreed to by the Key Original Holder and the Investors,
or, if no agreement can be reached as to the valuation of such consideration,
the fair market value of such consideration as determined by two appraisers
(one appointed by the Key Original Holder and one appointed by the Investors).
In the event the two appraisers are unable to agree on a fair market value
within 20 days after they are appointed and further negotiations, in the
opinion of either of the appraisers, would not result in an agreement, the fair
market value of the consideration shall be the average of the appraised values
of the two appraisers; provided, however, that if the appraised values of the
two appraisers differ by more than ten percent (10%) of the higher of the two
appraised values, the two respective appointed appraisers shall select a third
appraiser who shall independently, within 20 days after his appointment, make a
determination of the value of the consideration and the average of the
appraised values of the three appraisers shall be the purchase price and shall
be binding on the parties hereto. The Key Original Holder whose Stockholder
Shares are subject to the Offer Notice and the Investors shall each bear the
cost of their respective appraisers and shall share the cost equally of the
third appraiser, if any. Notwithstanding
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anything herein to the contrary, if an appraisal is used to determine
the value of the consideration pursuant to this Section 3.2(b), the
time periods provided for in this Section 3.2(b) shall be tolled from
the time of the initial appointment of the two appraisers until a
final appraised value is determined pursuant to this Section
3.2(b)(v).
(c) Permitted Transferees. The restrictions set forth in
Section 3.2(b) shall not apply to (i) any transfer of Stockholder Shares by any
Original Holder or Investor among its Affiliates or (ii) a transfer of
Stockholder Shares by any Original Holder or Investor pursuant to the laws of
descent and distribution or among the Family Group of such Original Holder or
Investor; provided that the provisions of this Agreement will continue to be
applicable to the Stockholder Shares after any transfer pursuant to clauses (i)
and (ii) above and the transferees of such Stockholder Shares shall agree in
writing to be bound by the provisions of this Agreement.
(d) Termination of Restrictions. The restrictions set
forth in Section 3.2(b) shall terminate upon the consummation of a Qualified
Public Offering; provided, however, that, upon the consummation of a Public
Offering, the restrictions set forth in Section 3.2(b) shall not apply with
respect to sales in any 90 day period by a Key Original Holder to the extent
that such shares could be sold by such Key Original Holder pursuant to Rule 144
under the Securities Act if the volume limitations contained therein were
applicable.
SECTION 3.3 Legends. Each certificate evidencing outstanding
Stockholder Shares held by the Original Holders and the Investors 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, AS AMENDED.
THESE SHARES MAY NOT BE SOLD OR OFFERED FOR SALE UNLESS THERE
IS AN EFFECTIVE REGISTRATION STATEMENT IN EFFECT UNDER SAID
ACT, OR UNLESS AN EXCEPTION FROM REGISTRATION IS AVAILABLE.
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
RESTRICTIONS ON TRANSFER AS SET FORTH IN THE STOCKHOLDERS
AGREEMENT DATED AS OF NOVEMBER 26, 1997, COPIES OF WHICH WILL
BE FURNISHED BY MGC COMMUNICATIONS, INC. AND ANY SUCCESSOR
THERETO UPON REQUEST AND WITHOUT CHARGE.
SECTION 3.4 Tag Along Rights.
(a) If any Key Original Holder proposes to sell, in one
transaction or in a series of related transactions (a "Tag Along Sale") any
Stockholder Shares to any Third Party, the Investors shall have the right to
participate in such Tag Along Sale on the following terms:
(i) Such Key Original Holder, shall give the Investors
not less than 20 days' written notice (a "Sale Notice") of its intention,
describing the price offered, all other
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material terms and conditions of the Tag Along Sale and, if the
consideration payable pursuant to the Tag Along Sale consists in whole
or in part of consideration other than cash, such information relating
to such other consideration as Investors may reasonably request and
which is available to such selling Key Original Holder.
(ii) In connection with any Tag Along Sale, each Investor
shall have the right, in its sole discretion, to sell, for the same
price per share being paid to, and otherwise on the same terms and
conditions, as the selling Key Original Holder, its pro rata portion
of Stockholder Shares determined by multiplying the number of
Underlying Shares being sold in the Tag Along Sale by a fraction, the
numerator of which is the number of Underlying Shares held by such
Investor and the denominator of which is the number of Underlying
Shares held by all Investors and by the Key Original Holder delivering
the Sale Notice.
(iii) Investors must exercise their tag along right by
giving written notice to the selling Key Original Holder within 20
days of the delivery of a Sale Notice, specifying the number of
Stockholder Shares that each Investor desires to include in the Tag
Along Sale. At the closing for the Tag Along Sale, against payment of
purchase price for the Stockholder Shares to be sold by Investors,
Investors will deliver to the Third Party the certificate or
certificates representing such number of Investor Shares, duly
endorsed, together with all other documents which are necessary in
order to effect such Tag Along Sale. Each selling Key Original Holder
shall use its best efforts to obtain the agreement of the prospective
transferee(s) to the participation of the participating Investors in
any contemplated Tag Along Sale, and no Key Original Holder shall
transfer any of its Stockholder Shares to any prospective transferee
if such prospective transferee declines to allow the participation of
the Investors.
(b) The rights and obligations set forth in this Section
3.4 shall terminate upon the consummation of a Qualified Public Offering;
provided, however, that, upon consummation of a Public Offering, the rights and
obligations set forth in this Section 3.4 shall not apply with respect to sales
in any 90 day period by a Key Original Holder to the extent that such shares
could be sold by such Key Original Holder pursuant to Rule 144 under the
Securities Act if the volume limitations contained therein were applicable.
ARTICLE IV.
REGISTRATION RIGHTS
SECTION 4.1 Demand Registrations.
(a) Requests for Registration. The Majority Investor
Holders may request, at any time after 180 days after the Company's initial
Public Offering, registration under the Securities Act of all or part of their
Registrable Securities on Form S-1, or any similar long-form registration
("Long-form Registration"), or, if available on Form S-2 or S-3 or any similar
short-form of registration ("Short-Form Registration"); provided that the
aggregate offer price of all
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such Registrable Securities being registered is at least $10 million. Each
request for a Demand Registration shall specify the number of Registrable
Securities requested to be registered, and the proposed underwriter. Within ten
days after receipt of any such request, the Company will give written notice of
such requested registration to all other holders (if any) of Registrable
Securities and, subject to paragraph 1(e) below, will include in such
registration all Registrable Securities with respect to which the Company has
received written requests for inclusion therein within 15 days after the
receipt of the Company's notice. All registrations requested pursuant to this
paragraph 1(a) are referred to herein as "Demand Registrations."
(b) Long-Form Registrations. The Majority Investor
Holders will be entitled to request two (2) Demand Registrations in which the
Company will pay all Registration Expenses. A registration will not count as
one of such two (2) Demand Registrations until it has become effective or the
demanding Investors withdraw their request (unless such withdrawal is due to a
material adverse change in the business, operations, prospects or condition
(financial or otherwise) of the Company since the date of such demand). The
Company will pay all Registration Expenses in connection with any initiated
registration whether or not it has become effective unless the respective
Investors withdraw their request (unless such withdrawal is pursuant to the
provisions of Section 1(e) hereunder or due to a material adverse change in the
business, operations, prospects or condition (financial or otherwise) of the
Company since the date of such Demand).
(c) Short-Form Registrations. In addition to the
Long-Form Registrations provided pursuant to paragraph 1(b), the Majority
Investor Holders will be entitled to request unlimited Short-Form Registration,
provided that the aggregate offering value of the Registrable Securities
requested to be registered in any Short-Form Registration must equal at least
$500,000 and that of the Majority Investor Holders may only request two
Short-Form Registrations in any 12-month period. After the Company has become
subject to the reporting requirements of the Securities Exchange Act, the
Company will use its best efforts to make Short-Form Registrations available
for the sale of Registrable Securities. The Company will pay all Registration
Expenses with respect to Short-Form Registrations. The rights of a holder of
Registrable Securities under this Section 4.1(c) shall expire at such time as
the Registrable Securities of such holder are transferable without restriction
as to volume under Rule 144 under the Securities Act.
(d) Priority on Demand Registrations. If a Demand
Registration is an underwritten offering and the managing underwriters advise
the Company in writing that in their opinion the number of Registrable
Securities and, if permitted hereunder, other securities requested to be
included in such offering exceeds the number of Registrable Securities and
other securities, if any, which can be sold therein without adversely affecting
the marketability of the offering (the "Offering Quantity"), the Company will
include in such registration securities in the following priority:
(a) first, before including any securities
which are not Registrable Securities held by the Majority Investor
Holders, the Company will include all of the Registrable Securities
requested to be included by such holders thereof, and if the number of
Registrable Securities requested to be included exceeds the Offering
Quantity, then the
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Company shall include only each such requesting holder's pro rata
share of the Offering Quantity, based on the amount of Registrable
Securities held by such holder; and (b) second, to the extent (and
only to the extent) that the Offering Quantity exceeds the aggregate
amount of Registrable Securities which are requested to be included in
such registration, the Company shall include in such registration any
other securities requested to be included in the offering.
Any Persons other than holders of Registrable Securities who participate in
Demand Registrations which are not at the Company's expense must pay their
share of the Registration Expenses as provided in Section 5 hereof.
(e) Restrictions on Demand Registrations. The Company
will not be obligated to effect any Demand Registration within 90 days after
the effective date of a previous Demand Registration. The Company may postpone
upon one occasion in any 365 day period for up to 120 days the filing or the
effectiveness of a registration statement for a Demand Registration if the
Company determines in its good faith judgment that such Demand Registration
would reasonably be expected to have a material adverse effect on any proposal
or plan by the Company or any of its subsidiaries to engage in any acquisition
of assets or shares of unrelated companies (other than in the ordinary course
of business) or any merger, consolidation, tender offer or similar transaction
In the case such event, the holders of a majority of Registrable Securities
requesting such Demand Registration will be entitled to withdraw such request
and, if such request is withdrawn, such Demand Registration will not count as
one of the permitted Demand Registrations hereunder and the Company will pay
all Registration Expenses in connection with such registration.
(f) Selection of Underwriters. The holders of a majority
of the Registrable Securities initiating any Demand Registration will have the
right to select the investment banker(s) and manager(s) to administer the
offering, subject to the Company's approval which will not be unreasonably
withheld.
(g) Other Registration Rights. Except as provided in
this Agreement, the Company will not grant to any Persons the right to request
the Company to register any equity securities of the Company, or any securities
convertible or exchangeable into or exercisable for such securities which
contains terms or conditions more favorable than the terms or conditions
contained in this Agreement, without the prior written consent of Investors
holding a majority of the outstanding Stockholder Shares held by all Investors.
SECTION 4.2 Piggyback Registrations.
(a) Right to Piggyback. Whenever the Company proposes to
register any of its securities under the Securities Act (other than pursuant to
a Demand Registration or a registration on Form S-4 or S-8 or any successor or
similar forms) and the registration form to be used may be used for the
registration of Registrable Securities (a "Piggyback Registration"), whether or
not for sale for its own account, the Company will give prompt written notice
to all holders of Registrable Securities of its intention to effect such a
registration and will include in
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such registration all Registrable Securities with respect to which the Company
has received written requests for inclusion therein within 20 days after the
receipt of the Company's notice; provided, however, that the rights of a holder
of Registrable Securities under this Section 4.2 shall expire upon the earlier
to occur of (i) such time as the Registrable Securities of such holder are
transferable without restriction as to volume under Rule 144 under the
Securities Act and (ii) five years after a Qualified Public Offering.
(b) Piggyback Expenses. The Registration Expenses of the
holders of Registrable Securities will be paid by the Company in all Piggyback
Registrations.
(c) Priority on Registrations. If a Piggyback
Registration is an underwritten primary registration on behalf of the Company
or an underwritten offering undertaken by the Company pursuant to a demand
registration exercised by a Person other than the Investors (a "Demanding
Party"), and the managing underwriters advise the Company in writing (with a
copy to each party hereto requesting registration of Registrable Securities)
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 without
adversely affecting the marketability of such offering (the "Company Offering
Quantity"), the Company will include in such registration securities in the
following priority:
(i) first, the securities the Company proposes to sell
and the securities requested to be included by the Demanding Party in
accordance with any agreement between the Company and the Demanding
Party; and
(ii) second, the Company will include all Registrable
Securities requested to be included by any holders thereof and all
other holders of registrable securities, and if the number of such
holders' securities requested to be included exceeds the Company
Offering Quantity, then the Company shall include only each such
requesting holder's pro rata share of the Company Offering Quantity
(remaining after sales covered by (i) and (ii) above), based on the
amount of securities held by such holder.
(d) Other Registrations. If the Company has previously
filed a registration statement with respect to Registrable Securities
pursuant to Section 4.1 or pursuant to this Section 4.2, and if such
previous registration has not been withdrawn or abandoned, the Company
will not file or cause to be effected any other registration of any of
its equity securities or securities convertible or exchangeable into
or exercisable for its equity securities under the Securities Act
(except on Form S-4 or S-8 or any successor form), whether on its own
behalf or at the request of any holder or holders of such securities,
until a period of at least 90 days has elapsed from the effective date
of such previous registration.
SECTION 4.3 Holdback Agreements.
(a) To the extent not inconsistent with applicable law,
each Investor agrees not to effect any public sale or distribution
(including sales pursuant to Rule 144) of equity securities of the
Company, or any securities, options or rights convertible into or
exchangeable or
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exercisable for such securities that such Investor owns prior to the effective
date of any underwritten registration, during the seven days prior to and the
120-day period beginning on the effective date of any underwritten
registration, unless the underwriters managing the registered public offering
otherwise agree; provided that such restrictions shall not be more restrictive
in duration or scope than restrictions imposed on (i) any Person which has been
granted registration rights by the Company, (ii) any officer or director of the
Company or (iii) any 5% holder of securities of the Company.
(b) The Company agrees (i) not to effect any public sale
or distribution of its equity securities, or any securities convertible into or
exchangeable or exercisable for such securities, during the seven days prior to
and during the 120-day period beginning on the effective date of any
underwritten Demand Registration or any underwritten Piggyback Registration
(except as part of such underwritten registration or pursuant to registrations
on Form S-4 or S-8 or any successor form), unless the underwriters managing the
registered public offering otherwise agree, and (ii) to cause each holder of
its Common Stock, or any securities convertible into or exchangeable or
exercisable for Common Stock, purchased from the Company at any time after the
date of this Agreement (other than in a registered public offering or pursuant
to a stock option plan adopted by the Company or upon the exercise of warrants
outstanding as of the date of this Agreement, unless such holder is a party to
this Agreement) to agree not to effect any public sale or distribution
(including sales pursuant to Rule 144) of any such securities during such
period (except as part of such underwritten registration, if otherwise
permitted), unless the underwriters managing the registered public offering
otherwise agree.
SECTION 4.4 Registration Procedures. Whenever the Investors have
requested that any Registrable Securities be registered pursuant to this
Agreement, the Company will use its best efforts to effect the registration and
the sale of such Registrable Securities in accordance with the intended method
of disposition thereof, and pursuant thereto the Company will as expeditiously
as possible:
(a) prepare and within 60 days (or 45 days with respect to any
Short-Form Registration) after the end of the period within which requests for
registration may be given to the Company and file with the Securities and
Exchange Commission a registration statement with respect to such Registrable
Securities and thereafter use its best efforts to cause such registration
statement to become effective (provided that before filing a registration
statement or prospectus or any amendments or supplements thereto, the Company
will furnish to the counsel selected by the holders of a majority of the
Registrable Securities initiating such registration statement copies of all
such documents proposed to be filed, which documents will be subject to review
of such counsel);
(b) prepare and file with the Securities and Exchange Commission
such amendments and supplements to such registration statement and the
prospectus used in connection therewith as may be necessary to keep such
registration statement effective for a period of either (i) not less than 180
days (subject to extension pursuant to Section 4.7(b)) or, if such registration
statement relates to an underwritten offering, such longer period as in the
opinion of counsel for the underwriters a prospectus is required by law to be
delivered in
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connection with sales of Registrable Securities by an underwriter or dealer or
(ii) such shorter period as will terminate when all of the securities covered
by such registration statement have been disposed of in accordance with the
intended methods of disposition by the seller or sellers thereof set forth in
such registration statement (but in any event not before the expiration of any
longer period required under the Securities Act), and to comply with the
provisions of the Securities Act with respect to the disposition of all
securities covered by such registration statement until such time as all of
such securities have been disposed of in accordance with the intended methods
of disposition by the seller or sellers thereof set forth in such registration
statement;
(c) furnish to each seller of Registrable Securities 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 seller may reasonably
request in order to facilitate the disposition of the Registrable Securities
owned by such seller;
(d) use its best efforts to register or qualify such Registrable
Securities under such other securities or blue sky laws of such jurisdictions
as any seller reasonably requests and do any and all other acts and things
which may be reasonably necessary or advisable to enable such seller to
consummate the disposition in such jurisdictions of the Registrable Securities
owned by such seller (provided that the Company will not be required to (i)
qualify generally to do business in any jurisdiction where it would not
otherwise be required to qualify but for this subparagraph, (ii) subject itself
to taxation in any such jurisdiction or (iii) consent to general service of
process in any such jurisdiction);
(e) notify each seller of such Registrable Securities, at any
time when a prospectus relating thereto is required to be delivered under the
Securities Act, of the happening of any event (a "Changing Event") as a result
of which, the prospectus included in such registration statement contains an
untrue statement of a material fact or omits any fact necessary to make the
statements therein not misleading in the light of the circumstances under which
they were made, and, at the request of any such seller, the Company will as
soon as possible prepare and furnish to such seller (a "Correction Event") a
reasonable number of copies of a supplement or amendment to such prospectus so
that, as thereafter delivered to the purchasers of such Registrable Securities,
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 in
the light of the circumstances under which they were made;
(f) use its best efforts to cause all such Registrable Securities
to be listed on each securities exchange on which similar securities issued by
the Company are then listed and, if not so listed, to be listed on the NASD
automated quotation system;
(g) provide a transfer agent and registrar for all such
Registrable Securities not later than the effective date of such registration
statement;
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(h) enter into such customary agreements (including underwriting
agreements in customary form) and take all such other actions as the holders of
a majority of the Registrable Securities being sold or the underwriters, if
any, reasonably request in order to expedite or facilitate the disposition of
such Registrable Securities;
(i) make available for inspection by any seller of Registrable
Securities, any underwriter participating in any disposition pursuant to such
registration statement, any accountant or other agent retained by any such
seller or underwriter and one firm of attorneys representing the holders of
Registrable Securities, all financial and other records, pertinent corporate
documents and properties of the Company, and cause the Company's officers,
directors, employees and independent accountants to supply all information
reasonably requested by any such seller, underwriter, attorney, accountant or
agent in connection with such registration statement;
(j) otherwise use its best efforts to comply with all applicable
rules and regulations of the Securities and Exchange Commission, and make
available to its security holders, as soon as reasonably practicable, an
earnings statement covering the period of at least twelve months beginning with
the first day of the Company's first full calendar quarter after the effective
date of the registration statement, which earnings statement shall satisfy the
provisions of Section 11(a) of the Securities Act and Rule 158 thereunder;
(k) in the event of the issuance of any stop order suspending the
effectiveness of a registration statement, or of any order suspending or
preventing the use of any related prospectus or suspending the qualification of
any securities included in such registration statement for sale in any
jurisdiction, the Company will use its reasonable best efforts promptly to
obtain the withdrawal of such order;
(l) use its best efforts to obtain one or more comfort letters,
dated the effective date of such registration statement (and, if such
registration includes an underwritten public offering, dated the date of the
closing under the underwriting agreement), signed by the Company's independent
public accountants in customary form and covering such matters of the type
customarily covered by comfort letters as the holders of a majority of the
Registrable Securities being sold reasonably request; and
(m) use its best efforts to provide a legal opinion of the
Company's outside counsel, dated the effective date of such registration
statement (or, if such registration includes an underwritten public offering,
dated the date of the closing under the underwriting agreement), with respect
to the registration statement, each amendment and supplement thereto, the
prospectus included therein (including the preliminary prospectus) and such
other documents relating thereto in customary form and covering such matters of
the type customarily covered by legal opinions of such nature.
The Company may require each seller of Registrable Securities as to which any
registration is being effected to furnish the Company such information
regarding such seller and the
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distribution of such securities as the Company may from time to time reasonably
request in writing.
SECTION 4.5 Registration Expenses.
(a) All expenses incident 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, printing expenses, messenger and delivery expenses, and fees
and disbursements of counsel for the Company and all in-dependent certified
public accountants, underwriters (excluding discounts and commissions, which
will be paid by the sellers of Registrable Securities) and other Persons
retained by the Company (all such expenses being herein called "Registration
Expenses"), will be borne as provided in this Agreement, and the Company will,
in any event, pay its internal expenses (including, without limitation, all
salaries and expenses of its officers and employees performing legal or
accounting duties), the expense of any annual audit or quarterly review, the
expense of any liability insurance and the expenses and fees for listing the
securities to be registered on each securities exchange on which similar
securities issued by the Company are then listed or on the NASD automated
quotation system.
(b) In connection with each Demand Registration and each
Piggyback Registration, the Company will reimburse the Investors covered by
such registration for the reasonable fees and disbursements of one counsel
chosen by the holders of a majority of the Registrable Securities initiating
such registration.
SECTION 4.6 Indemnification.
(a) The Company agrees to indemnify and hold harmless,
to the extent permitted by law, each Investor, its officers and directors and
each Person who controls such Investor (within the meaning of the Securities
Act) against any losses, claims, damages, liabilities, joint or several, to
which such Investor or any such director or officer or controlling person may
become subject under the Securities Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions or proceedings, whether commenced or
threatened, in respect thereof) arise out of or are based upon (i) any untrue
or alleged untrue statement of material fact contained in any registration
statement, prospectus or preliminary prospectus or any amendment thereof or
supplement thereto or, (ii) any omission or alleged omission of a material fact
required to be stated therein or necessary to make the statements therein not
misleading, and the Company will reimburse such Investor and each such
director, officer and controlling person for any legal or any other expenses
incurred by them in connection with investigating or defending any such loss,
claim, liability, action or proceeding; provided, however, that the Company
shall not be liable in any such case to the extent that any such loss, claim,
damage, liability (or action or proceeding in respect thereof) or expense
arises out of or is based upon an untrue statement or alleged untrue statement,
or omission or alleged omission, made in such registration statement, any such
prospectus or preliminary prospectus or any amendment or supplement thereto, or
in any application, in reliance upon, and in conformity with, written
information prepared and furnished to the Company by such Investor expressly
for use therein or by such Investor's failure
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17
to deliver a copy of the registration statement or prospectus or any amendments
or supplements thereto after the Company has furnished such Investor with a
sufficient number of copies of the same. In connection with an underwritten
offering, the Company will indemnify such underwriters, their officers and
directors and each Person who controls such underwriters (within the meaning of
the Securities Act) to the same extent as provided above with respect to the
indemnification of the Investors.
(b) In connection with any registration statement in
which an Investor is participating, each such Investor will furnish to the
Company in writing such information and affidavits as the Company reasonably
requests for use in connection with any such registration statement or
prospectus and, to the extent permitted by law each such Investor, severally,
for itself only, will indemnify and hold harmless the Company, its directors
and officers and each other Person who controls the Company (within the meaning
of the Securities Act) against any losses, claims, damages, liabilities, joint
or several, to which the Company or any such director or officer or controlling
person may become subject under the Securities Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions or proceedings, whether
commenced or threatened, in respect thereof) or expenses arise out of or are
based upon (i) the purchase or sale of Registrable Securities during any period
beginning upon a Changing Event (as defined in Section 4.4(e)) and ending on a
Correction Event (as defined in Section 4.4(e)), provided such Holder received
proper written notice of such Changing Event pursuant to Section 4.4(e), (ii)
any untrue or alleged untrue statement of material fact contained in the
registration statement, prospectus or preliminary prospectus or any amendment
thereof or supplement thereto or in any application, or (iii) any omission or
alleged omission of a material fact required to be stated therein or necessary
to make the statement therein not misleading, but, with respect to clauses (ii)
and (iii) above, only to the extent that such untrue statement or omission is
made in such registration statement, any such prospectus or preliminary
prospectus or any amendment or supplement thereto, or in any application, in
reliance upon and in conformity with written information prepared and furnished
to the Company by such Investor expressly for use therein, and such Investor
will reimburse the Company and each such director, officer and controlling
Person for any legal or any other expenses incurred by them in connection with
investigating or defending any such loss, claim, liability, action or
proceeding; provided, however, that the obligation to indemnify will be
individual to each Investor and will be limited to the net amount of proceeds
received by such Investor from the sale of Registrable Securities pursuant to
such registration statement.
(c) Any Person entitled to indemnification hereunder
will (i) give prompt written notice to the indemnifying party of any claim with
respect to which it seeks indemnification (provided that the failure to give
prompt notice shall not impair any Person's right to indemnification hereunder
to the extent such failure has not materially prejudiced the indemnifying
party) and (ii) unless in such indemnified party's reasonable judgment a
conflict of interest between such indemnified and indemnifying parties may
exist with respect to such claim, permit such indemnifying party to assume the
defense of such claim with counsel reasonably satisfactory to the indemnified
party. Such indemnifying party shall not, however, enter into any settlement
with a party without obtaining an unconditional release of each indemnified
party by such party with respect to any and all claims against each indemnified
party. If such defense is
17
18
assumed, the indemnifying party will not be subject to any liability for any
settlement made by the indemnified party without its consent (but such consent
will not be unreasonably withheld). An indemnifying party who is not entitled
to, or elects not to, assume the defense of a claim will not be obligated to
pay the fees and expenses of more than one counsel for all parties indemnified
by such indemnifying party with respect to such claim, unless in the reasonable
judgment of any indemnified party a conflict of interest may exist between such
indemnified party and any other of such indemnified parties with respect to
such claim.
(d) The indemnification provided for under this
Agreement will remain in full force and effect regardless of any investigation
made by or on behalf of the indemnified party or any officer, director or
controlling Person of such indemnified party and will survive the transfer of
securities. The Company also agrees to make such provisions, as are reasonably
requested by any indemnified party, for contribution to such party in the event
the Company's indemnification is unavailable for any reason.
SECTION 4.7 Participation in Underwritten Registrations.
(a) No Person may participate in any registration
hereunder which is underwritten unless such Person (i) agrees to sell such
Person's securities on the basis provided in any underwriting arrangements
approved by the Person or Persons entitled hereunder to approve such
arrangements (including, without limitation, pursuant to the terms of any
overallotment or "green shoe" option requested by the managing underwriter(s),
provided that no Investor will be required to sell more than the number of
Registrable Securities that such holder has requested the Company to include in
any registration) and (ii) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents reasonably
required under the terms of such underwriting arrangements.
(b) Each Person that is participating in any
registration hereunder agrees that, upon receipt of any notice from the Company
of the happening of any event of the kind described in Section 4.4(e) above,
such Person will forthwith discontinue the disposition of its Registrable
Securities pursuant to the registration statement until such Person's receipt
of the copies of a supplemented or amended prospectus as contemplated by such
Section 4.4(e). In the event the Company shall give any such notice, the
applicable time period mentioned in Section 4.4(b) during which a Registration
Statement is to remain effective shall be extended by the number of days during
the period from and including the date of the giving of such notice pursuant to
this paragraph to and including the date when each seller of a Registrable
Security covered by such registration statement shall have received the copies
of the supplemented or amended prospectus contemplated by Section 4.4(e).
SECTION 4.8 Current Public Information. At all times after the
Company has filed a registration statement with the Securities and Exchange
Commission pursuant to the requirements of either the Securities Act or the
Securities Exchange Act, the Company will file all reports required to be filed
by it under the Securities Act and the Securities Exchange Act and the rules
and regulations adopted by the Securities and Exchange Commission thereunder,
and will use commercially reasonable best efforts to take such further action
as any Investor may
18
19
reasonably request, all to the extent required to enable such Investors to sell
Registrable Securities pursuant to Rule 144 adopted by the Securities and
Exchange Commission under the Securities Act (as such rule may be amended from
time to time) or any similar rule or regulation hereafter adopted by the
Securities and Exchange Commission.
SECTION 4.9 Adjustment Affecting Registrable Securities. Except as
otherwise provided herein, the Company will not take any action, or permit any
change to occur, with respect to its securities which would materially and
adversely affect the ability of the Investors to include such Registrable
Securities in a registration undertaken pursuant to this Agreement or which
would adversely affect the marketability of such Registrable Securities in any
such registration.
ARTICLE V.
MISCELLANEOUS
SECTION 5.1 Transfers in Violation of Agreement. Any transfer or
attempted transfer of any Stockholder Shares in violation of any provision of
this Agreement shall be void, and the Company shall not record such transfer on
its books or treat any purported transferee of such Stockholder Shares as the
owner of such shares for any purpose.
SECTION 5.2 Amendment and Waiver. Except as otherwise provided
herein, no modification, amendment or waiver of any provision of this Agreement
shall be effective against any party hereto unless such modification, amendment
or waiver is approved in writing by Key Original Holders holding a majority of
the outstanding Stockholder Shares held by all Key Original Holders and
Investors holding a majority of the outstanding Stockholder Shares held by all
Investors. Notwithstanding the foregoing, the Company shall cause any Person
that acquires shares of Series A Preferred Stock after the date hereof to
execute an appropriate supplement to this Agreement pursuant to which such
Person becomes an "Investor" for all purposes hereunder and such supplement
shall not require the approval of any Key Original Holder or Investor.
SECTION 5.3 Severability. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement is held to be
invalid, illegal or unenforceable in any respect under any applicable law or
rule in any jurisdiction, such invalidity, illegality or unenforceability shall
not affect any other provision or the effectiveness or validity of such
provision in any other jurisdiction, and this Agreement shall be reformed,
construed and enforced in such jurisdiction as if such invalid, illegal or
unenforceable provision had never been contained herein.
SECTION 5.4 Entire Agreement. Except as otherwise expressly set
forth herein, this document and the Purchase Agreement embody the complete
agreement and understanding among the parties hereto with respect to the
subject matter hereof and supersede and preempt any prior understandings,
agreements or representations by or among the parties, written or oral, which
may have related to the subject matter hereof in any way.
19
20
SECTION 5.5 Successors and Assigns. The provisions of this
Agreement (including the registration rights contained in Article IV) shall be
binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns, and to the extent applicable heirs,
executors, administrators and legal representatives and any subsequent holders
of Stockholder Shares and the respective successors and assigns of each of
them, so long as they hold Stockholder Shares.
SECTION 5.6 Counterparts. This Agreement may be executed in
separate counterparts each of which shall be an original and all of which taken
together shall constitute one and the same agreement.
SECTION 5.7 Remedies. The parties hereto agree and acknowledge that
money damages may not be an adequate remedy for any breach of the provisions of
this Agreement and that the parties hereto shall have the right to injunctive
relief, in addition to all of its rights and remedies at law or in equity, to
enforce the provisions of this Agreement. Nothing contained in this Agreement
shall be construed to confer upon any Person who is not a signatory hereto any
rights or benefits, as a third party beneficiary or otherwise.
SECTION 5.8 Notices. All notices, demands or other communications
to be given or delivered under or by reason of the provisions of this Agreement
shall be in writing and shall be deemed to have been given when personally
delivered or received by certified mail, return receipt requested, confirmed
telecopy or sent by guaranteed overnight courier service. Such notices, demands
and other communications will be sent to the parties as indicated below, or to
any party (including any new party) at such address or to the attention of such
other person as the recipient party has specified by prior written notice to
the sending party.
SECTION 5.9 Governing Law. The corporate law of Nevada will govern
all issues concerning the relative rights of the Company and its stockholders.
All other issues concerning this Agreement shall be governed by and construed
in accordance with the laws of the State of New York, without giving effect to
any choice of law or conflict of law provision or rule (whether of the State of
New York or any other jurisdiction) that would cause the application of the law
of any jurisdiction other than the State of New York.
SECTION 5.10 Descriptive Headings. The descriptive headings of this
Agreement are inserted for convenience only and do not constitute a part of
this Agreement.
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21
STOCKHOLDERS AGREEMENT SIGNATURE PAGES
IN WITNESS WHEREOF, the parties, by their respective officers duly
authorized, have caused this Agreement to be duly executed and delivered as of
the date hereof.
MGC COMMUNICATIONS, INC.
By:
-----------------------------------------
Name:
Title:
INVESTORS:
JK&B INVESTORS:
JK&B CAPITAL, L.P.
By: JK&B Management, L.L.C.
Its: General Partner
By:
------------------------------------
Name: Xxxxx Xxxxxxxx
Title: Manager
JK&B CAPITAL II, L.P.
By: JK&B Management, L.L.C.
Its: General Partner
By:
------------------------------------
Name: Xxxxx Xxxxxxxx
Title: Manager
X-0
00
X-X INVESTORS:
STRATEGIC INVESTMENT PARTNERS LIMITED
By:
----------------------------------------
Name:
Title: Attorney-in-Fact
S-C PHOENIX HOLDINGS, L.L.C.
By:
----------------------------------------
Name:
Title:
WINSTON PARTNERS II LDC
By:
----------------------------------------
Name:
Title: Attorney-in-Fact
WINSTON PARTNER II LLC
By: Chatterjee Advisors L.L.C.
Its: Manager
By:
----------------------------------------
Name:
Title: Manager
OTHER INVESTORS:
WIND POINT PARTNERS III, L.P.
By: WIND POINT PARTNERS, LLC
Its: General Partner
By:
----------------------------------------
Name:
Title:
X-0
00
XXXXXX XXXXXXX XXXXXXXX XXX, L.P.
By:
----------------------------------------
Name:
Title: General Partner
XXXXXX, INC.
By:
----------------------------------------
Name:
Title:
FRUIT OF THE LOOM, INC. SENIOR EXECUTIVE OFFICER
DEFERRED COMPENSATION TRUST
By:
----------------------------------------
Name:
Title:
---------------------------------------------
Xxxxxxx Xxxxxx
---------------------------------------------
Xxxxxx X. Xxxxx
S-3
24
WESTBURY CAPITAL PARTNERS, L.P.,
By: Wesbury MGP, L.P., its general partner
By: XX Xxxx & Co. Incorporated, its general partner
By:
------------------------------------------
Name:
Title:
---------------------------------------------
Xxxxxxx X. Xxxxx
---------------------------------------------
Xxxxx X. Rome
S-4
25
EXHIBIT A
ORIGINAL HOLDERS
Xxxxxxx X. Xxxxxxxxx, Xx. Key Original Holder
0000 Xxxxxxxxx Xxxxx
Xxxxx 000
Xxx Xxxxx, XX 00000
Xxxxx X. Xxxxxxxxxx Key Original Holder
0000 Xxxxx Xxxxxxx
Xxx Xxxxx, XX 00000
A-1
26
EXHIBIT B
INVESTORS
Name of Purchaser
JK&B Capital, L.P.
JK&B Capital II, L.P.
000 Xxxxx Xxxxxxxx
Xxxxx 000
Xxxxxxx, Xxx 00000
Attn: Xxxxx Xxxxxxxx
Fax No.: (000) 000-0000
Strategic Investment Partners Limited
c/o Curacao Corporation
Company, N.V.
Xxxx Xxxxxxxxx 0
Xxxxxxxxxx, Xxxxxxx
Xxxxxxxxxxx Antilles
Facsimile No.: 011-599-9-322-001
With a copy to:
Xxxxx Fund Management LLC
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxx
Facsimile No.: (000) 000-0000
S-C Phoenix Holdings, L.L.C.
c/x Xxxxx Fund Management LLC
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile No.: 000-000-0000
Attention: Xxxxxxx X. Xxxx
Xxxxxxx Partners II LDC
c/o Curacao Corporation
Company, N.V.
Xxxx Xxxxxxxxx 0
Xxxxxxxxxx, Xxxxxxx
Xxxxxxxxxxx Antilles
B-1
27
Facsimile No.: 011-599-9-322-001
With a copy to:
The Chatterjee Group
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx Xxxxxxxxxxx/Xxxxx Xxxxxxx
Facsimile No.: (000) 000-0000
Winston Partners II LLC
c/o Chatterjee Advisors L.L.C.
c/o The Chatterjee Group
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx Xxxxxxxxxxx/Xxxxx Xxxxxxx
Facsimile No.: (000) 000-0000
Wind Point Partners III, L.P.
000 X. Xxxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxx 00000
Attn: Xxxxx Tenebrook
Fax No.: (000) 000-0000
Boston Capital Ventures III, L.P.
00 Xxxxxx Xxxxxx
Xxxxxx, Xx 00000
Attn: Johan von der Xxxxx
Fax No.: (000) 000-0000
Xxxxxx, Inc.
Fruit of the Loom, Inc.
Senior Executive Officer
Deferred Compensation Trust
Xxxxxxx Xxxxxx
Xxxxxx Group
c/o Fruit of the Loom
000 Xxxxx Xxxxxx Xxxxx
5000 Sears Tower
Chicago, Ill 60606
Attn: Xxxxx Xxxxx
Fax No.: (000) 000 0000
B-2
28
Xx. Xxxxxx X. Xxxxx
00000 Xxxxxxxxx Xxxx
Xxxxxxxxx, Xxx 00000
Fax No.: (000) 000-0000
Westbury Capital Partners, L.P.
000 Xxxx Xxxxxx
Xxxxxxxx, XX 00000
Xxxxxxx X. Xxxxx
00 Xxxxx Xxx
Xxxxxx Xxxxxxx, XX 00000
Xxxxx X. Rome
Xxxx Xxxxx Xxxxxxx, XX 00000
B-3
