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EXHIBIT 10.84
STOCKHOLDERS AGREEMENT
This Stockholders Agreement (this "Agreement") is entered into as of
February 7, 2000 by and among:
(i) KNOLOGY, Inc., a Delaware corporation (the "Company");
(ii) certain holders of the Company's Series A Preferred Stock
identified on the signature pages hereto who received their shares of Series A
Preferred Stock pursuant to an exchange offer ("Series A Exchange Holders");
(iii) holders of the Company's Series B Preferred Stock identified on
the signature pages hereto ("Series B Investors");
(iv) holders of other securities issued by the Company who execute
joinder agreements to this Agreement as contemplated by Section 6.01 hereof
("Other Investors" and collectively with Series A Exchange Holders and Series B
Investors, "Investors");
(v) members of the Company's management that have agreed and that
subsequently agree to be bound by the provisions hereof ("Management Holders");
and
(vi) certain other holders of the Company's Series A Preferred Stock
identified on Exhibit A to this Agreement who received such shares pursuant to
the Company's Registration Statement on Form S-1 (SEC File No. 333-89179) (the
"Additional Stockholders").
NOW, THEREFORE, in consideration of the mutual promises and
covenants set forth herein, the parties agree as follows:
ARTICLE 1
CERTAIN DEFINITIONS
As used in this Agreement, the following terms shall have the following
respective meanings:
1.01 "Affiliate" of a person shall mean any other person that controls,
is controlled by, or is under common control with, such person.
1.02 "Commission" shall mean the Securities and Exchange Commission or
any other federal agency at the time administering the Securities Act.
1.03 "Common Stock" shall mean the Company's Common Stock, $0.01 par
value per share.
1.04 "Exchange Act" shall mean the Securities Exchange Act of 1934 (or
any similar successor federal statute), as amended, and the rules and
regulations thereunder, all as the same shall be in effect from time to time.
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1.05 "Holder" shall mean any holder of Registrable Securities.
1.06 "Initiating Holders" shall mean, (i) prior to such time as the
Company becomes eligible to utilize Form S-3 ("S-3 Eligible"), Holders of
Investor Stock representing not less than 25% of the then-outstanding Investor
Stock on a fully-diluted, as-converted, as-exercised basis and (ii) after such
time as the Company becomes S-3 Eligible, Holders of Investor Stock representing
not less than an aggregate of 5% of the then-outstanding Common Stock of the
Company on a fully-diluted, as-converted, as-exercised basis.
1.07 "Investor Stock" shall mean (i) shares of Common Stock issued or
issuable upon the conversion or exercise of any stock (including, without
limitation, the Series A Preferred Stock, the Series B Preferred Stock or any
other convertible preferred or common stock of the Company issued from time to
time), warrants, options or other securities of the Company owned by the
Investors or any Permitted Transferee thereof; and (ii) any shares of Common
Stock issued as a dividend or other distribution with respect to or in exchange
for or in replacement of the shares referenced in (i) above.
1.08 "Management Stock" shall mean (i) shares of Common Stock issued or
issuable upon the conversion or exercise of any stock (including, without
limitation, the Series A Preferred Stock, the Series B Preferred Stock or any
other convertible preferred or common stock of the Company issued from time to
time), warrants options or other securities of the Company owned from time to
time by the Management Holders or any Permitted Transferee thereof; and (ii) any
shares of Common Stock issued as a dividend or other distribution with respect
to or in exchange for or in replacement of the shares referenced in (i) above.
1.09 "Permitted Transferee" shall mean, (i) with respect to a
Management Holder, a member of such Management Holder's immediate family, a
trust established for the benefit of members of such Management Holder's
immediate family, or a transferee of such Management Holder by will or the laws
of intestate succession and (ii) with respect to a holder of Investor Stock, any
Affiliate of such holder or any partner or retired partner, the estates and
family members of any such partners and retired partners and of their spouses,
and trusts for the benefit of any of the foregoing persons, or a shareholder or
other equity owner of such holder (including, with respect to X. X. Xxxxxxx XX,
L.P., any investment fund also managed by X. X. Xxxxxxx & Co.).
1.10 "Preferred Stock" shall mean together the Series A Preferred Stock
and the Series B Preferred Stock.
1.11 "Qualified Public Offering" shall mean an underwritten public
offering of Common Stock resulting in gross proceeds to the Company of not less
than $50 million (prior to expenses and underwriting commissions) and at an
offering price per share equal to at least $6.00 (as appropriately adjusted for
future stock splits, stock dividends, recapitalizations and similar transactions
affecting the Common Stock) and the Common Stock shall be listed for quotation
on the Nasdaq National Market or on a national securities exchange.
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1.12 "Registrable Securities" shall mean Management Stock and Investor
Stock; provided, however, that Registrable Securities shall not include any
shares of Management Stock or Investor Stock that previously have been
registered under the Securities Act or that have otherwise been sold to the
public in an open-market transaction under Rule 144.
1.13 The terms "registers", "registered" and "registration" shall refer
to a registration effected by preparing and filing a registration statement in
compliance with the Securities Act and the declaration or ordering of the
effectiveness of such registration statement by the Commission.
1.14 "Registration Expenses" shall mean all expenses incurred in
effecting any registration pursuant to this Agreement, including without
limitation all registration, qualification and filing fees, printing expenses,
escrow fees, fees and disbursements of counsel for the Company, blue sky fees
and expenses, expenses of any regular or special audits incident to or required
by any such registration, and the fees and expenses of one counsel for the
selling Holders, but excluding Selling Expenses.
1.15 "Rule 144" shall mean Rule 144 as promulgated by the Commission
under the Securities Act, as such Rule may be amended from time to time, or any
similar successor rule that may be promulgated by the Commission.
1.16 "Securities Act" shall mean the Securities Act of 1933 (or any
similar successor federal statute), as amended, and the rule and regulations
thereunder, all as the same shall be in effect from time to time.
1.17 "Selling Expenses" shall mean all underwriting discounts and
selling commissions applicable to the sale of Registrable Securities and all
fees and disbursements of counsel for each of the Holders other than fees and
expenses of one counsel for all the selling Holders.
1.18 "Series A Preferred Stock" shall mean the Company's Series A
Preferred Stock, $0.01 par value per share.
1.19 "Series B Preferred Stock" shall mean the Company's Series B
Preferred Stock, $0.01 par value per share.
1.20 "Significant Stockholder" shall mean each Investor, Management
Holder and Additional Stockholder who holds 5% or more of the outstanding Common
Stock of the Company on a fully-diluted, as-converted, as-exercised basis as of
the date hereof, provided that a Significant Stockholder will no longer be
deemed a Significant Stockholder when such Significant Stockholder no longer
holds at least 5% of the outstanding Common Stock of the Company on a
fully-diluted, as-converted, as-exercised basis; provided that for the purposes
of Article 3, the term "Significant Stockholder" shall include X. X. Xxxxxxx (as
defined in Section 4.01) and Blackstone (as defined in Section 4.03), as
applicable, so long as X. X. Xxxxxxx or Blackstone, as applicable, has the right
to elect a director to the board of directors of the Company as provided in
Article 4.
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1.21 "Significant Stockholder Stock" shall mean (i) shares of Common
Stock or Preferred Stock owned, from time to time, by any Significant
Stockholder or any transferee thereof; (ii) shares of Common Stock or Preferred
Stock issued or issuable upon the conversion or exercise of any stock
(including, without limitation, the Series A Preferred Stock, the Series B
Preferred Stock or any other convertible preferred or common stock of the
Company issued from time to time), warrants, options or other securities of the
Company owned by the Significant Stockholder or any transferee thereof; and
(iii) any shares of Common Stock or Preferred Stock issued as a dividend or
other distribution with respect to or in exchange for or in replacement of the
shares referenced in (i) and (ii) above.
ARTICLE 2
REGISTRATION RIGHTS
2.01 Demand Registrations.
(a) Request for Registration. At any time or times after the
effective date of the first registration statement filed by the Company under
Section 12 of the Exchange Act, the Initiating Holders may require that the
Company effect a registration under the Securities Act (i) up to two times, in
the case of a requested registration on Form S-1 or any similar form (a "Long
Form Registration"), with respect to at least twenty-five percent (25%) of the
Registrable Securities, other than Management Stock, then outstanding on a
fully-diluted, as-converted, as-exercised basis, or (ii) as many times as
requested, in the case of a requested registration on Form S-3 or any similar
form, if available (a "Short-Form Registration"), with respect to at least
twenty-five percent (25%) of the Registrable Securities then held by such
Initiating Holders (each a "Demand Registration"); provided that the Company
shall not be obligated to effect, or take any action to effect, any such
registration pursuant to this Section 2.01:
(w) Solely with respect to underwritten registrations
requested pursuant to this Agreement, if the Company shall have
previously effected an underwritten registration with respect to
Registrable Securities pursuant to Section 2.01 or 2.02 hereof, then the
Company shall not be required to effect any underwritten registration
pursuant to this Section 2.01 until a period of 180 days shall have
elapsed from the effective date of the most recent such previous
registration;
(x) If, upon receipt of a registration request pursuant
to this Section 2.01, the Company is advised in writing (with a copy to
each Initiating Holder) by a recognized national independent investment
banking firm selected by the Company that, in such firm's opinion, a
registration at the time and on the terms requested would adversely
affect any public offering of securities of the Company by the Company
(other than in connection with benefit and similar plans) (a "Company
Offering") with respect to which the Company has commenced preparations
for a registration prior to the receipt of a registration request
pursuant to this Section 2.01, the Company shall not be required to
effect a registration pursuant to this Section 2.01 until the earlier of
(i) 90 days after the completion of such Company Offering, (ii) promptly
after any abandonment of such
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Company Offering or (iii) 60 days after the date of receipt of a
registration request pursuant to this Section 2.01;
(y) In any particular jurisdiction in which the Company
would be required to execute a general consent to service of process in
effecting such registration, qualification or compliance, unless the
Company is already subject to service in such jurisdiction and except as
may be required by the Securities Act or applicable rules or regulations
thereunder;
(z) In the case of a Long-Form Registration, after the
Company has effected two such registrations pursuant to this Section 2.01
(in the aggregate for all Holders) and such registrations have been
declared or ordered effective and the sales of such Registrable
Securities shall have closed.
Upon receipt of written notice of such demand, the Company will promptly give
written notice of the proposed registration to all other Holders, and will
include in such registration all Registrable Securities specified in such
demand, together with any Registrable Securities of any other Holder joining in
such demand as are specified in a written request received by the Company within
20 days after delivery of the Company's notice.
(b) Deferral of Demand Registration. The Company shall file a
registration statement with respect to each Demand Registration requested
pursuant to Section 2.01(a) as soon as reasonably practicable after receipt of
the demand of the Initiating Holders; provided, however, that if in the good
faith judgment of the Board of Directors of the Company, such registration would
be seriously detrimental to the Company in that such registration would
interfere with any material corporate transaction by the Company, or require
disclosure of facts surrounding any proposed or pending acquisition,
disposition, strategic alliance or financing transaction or other material
development involving the Company, and the Board of Directors concludes, as a
result, that it is advisable to defer the filing or effectiveness of such
registration statement at such time (as evidenced by an appropriate resolution
of the Board), then the Company shall have the right to defer such filing for
the period during which such registration would be seriously detrimental;
provided, however, that (i) the Company may not defer the filing or
effectiveness for a period of more than 180 days, (ii) the Company may not take
such option to defer filing or effectiveness of such registration(s) for more
than 180 days in any 12-month period, and (iii) the Company shall not exercise
its right to defer a Demand Registration more than three times.
(c) Underwriting. The Investors shall be entitled to two
underwritten Demand Registrations. If the Initiating Holders intend to
distribute the Registrable Securities covered by a Demand Registration by means
of an underwriting, they shall so advise the Company as part of their demand
made pursuant to Section 2.01, and the Company shall include such information in
its written notice to Holders. The Initiating Holders shall have the right to
select the managing underwriter(s) for an underwritten Demand Registration,
subject to the approval of the Company's Board of Directors (which will not be
unreasonably withheld or delayed). The right of any Holder to participate in an
underwritten Demand Registration shall be conditioned upon
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such Holder's participation in such underwriting in accordance with the terms
and conditions thereof, and the Company and such Holders will enter into an
underwriting agreement in customary form.
(d) Priorities. The Investors who hold Registrable Securities
will have absolute priority over any other securities included in a Demand
Registration. If other securities are included in any Demand Registration that
is an underwritten offering, and the managing underwriter for such offering
advises the Company that in its opinion the amount of securities to be included
exceeds the amount of securities which can be sold in such offering without
adversely affecting the marketability thereof, notwithstanding any other
provision of this Section 2.01(d), if the managing underwriter advises the
Holders in writing that marketing factors require a limitation on the number of
shares to be underwritten, the securities of the Company held by persons who are
not Holders shall be excluded from such registration to the extent so required
by such limitation. If, after the exclusion of such shares, still further
reductions are required, the number of shares included in the registration by
each Holder of Management Stock shall be reduced on a pro rata basis (based on
the percentage of the outstanding Common Stock held by each such Holder,
assuming the conversion of the Preferred Stock and any other convertible
preferred or common stock and the exercise of any options, warrants and similar
rights held by such Holder), by such minimum number of shares as is necessary to
comply with such request. If, after the exclusion of such shares, still further
reductions are required, the number of shares included in the registration by
each Holder of Investor Stock shall be reduced on a pro rata basis (based on the
percentage of the outstanding Common Stock held by each such Holder, assuming
the conversion of the Preferred Stock and any other convertible preferred or
common stock and the exercise of any options, warrants and similar rights held
by such Holder), by such minimum number of shares as is necessary to comply with
such request. No Registrable Securities or any other securities excluded from
the underwriting by reason of the underwriter's marketing limitation shall be
included in such registration. If the underwriter has not limited the number of
Registrable Securities or other securities to be underwritten, the Company and
officers and directors of the Company who are not Management Holders may include
its or their securities for its or their own account in such registration if the
underwriters so agree and if the number of Registrable Securities and other
securities which would otherwise have been included in such registration and
underwriting will not thereby be limited.
2.02 Piggyback Registrations.
(a) Request for Inclusion. If the Company shall determine to
register any of its securities for its own account or for the account of other
security holders of the Company on any registration form (other than a
registration relating solely to benefit plans, or a registration relating solely
to a Rule 145 transaction, or a registration on any registration form which does
not permit secondary sales or does not include substantially the same
information as would be required to be included in a registration statement
covering the sale of Registrable Securities) which permits the inclusion of
Registrable Securities (a "Piggyback Registration"), the Company will promptly
give each Holder written notice thereof and, subject to Section 2.02(c), shall
include in such registration all the Registrable Securities requested to be
included therein pursuant to the written requests of Holders received within 10
days after the delivery of the Company's notice.
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Notwithstanding the foregoing, if, at any time after giving such written notice
of its intention to effect such registration and prior to the effective date of
the registration statement filed in connection with such registration, the
Company shall determine for any reason not to register such securities, the
Company may, at its election, give written notice of such determination to the
Holders and thereupon the Company shall be relieved of its obligation to
register such Holders' Registrable Securities in connection with the
registration of such securities (but not from its obligation to pay Registration
Expenses to the extent incurred in connection therewith as provided herein),
without prejudice, however, to the rights (if any) of Initiating Holders
immediately to request that such registration be effected as a registration
under Section 2.01(a) hereof.
(b) Underwriting. If the Piggyback Registration relates to an
underwritten public offering, the Company shall so advise the holders of
Registrable Securities as a part of the written notice given pursuant to Section
2.02(a). The Company shall have the right to select the managing underwriter(s)
for an underwritten Piggyback Registration. In the event of an underwritten
public offering, the right of any Holder to participate in such registration
shall be conditioned upon such Holder's participation in such underwriting in
accordance with the terms and conditions thereof. All Holders proposing to
distribute their Registrable Securities through such underwriting shall
(together with the Company) enter into an underwriting agreement in customary
form with the representative of the underwriter or underwriters selected by the
Company.
(c) Priorities. If such proposed Piggyback Registration is an
underwritten offering and the managing underwriter for such offering advised the
Company that the securities requested to be included therein exceed the amount
of securities that can be sold in such offering without adversely affecting the
marketability thereof, the Company shall so advise all holders of securities
requesting registration, and the number of shares of securities that are
entitled to be included in the registration and underwriting shall be allocated
in the following manner: The securities of the Company held by persons who are
not Holders shall be excluded from such registration and underwriting to the
extent required by such limitation, and, if a further limitation on the number
of shares is still required, the number of shares that may be included in the
registration and underwriting by each Holder of Management Stock shall be
reduced, on a pro rata basis (based on the percentage of the outstanding Common
Stock held by each such Holder, assuming the conversion of the Preferred Stock
and any other convertible preferred or common stock and the exercise of any
options, warrants and similar rights held by such Holder), by such minimum
number of shares as is necessary to comply with such limitation, and, if a
further limitation on the number of shares is still required, the number of
shares that may be included in the registration and underwriting by each Holder
of Investor Stock shall be reduced, on a pro rata basis (based on the percentage
of the outstanding Common Stock held by each such Holder, assuming the
conversion of the Preferred Stock and any other convertible preferred or common
stock and the exercise of any options, warrants and similar rights held by such
Holder), by such minimum number of shares as is necessary to comply with such
limitation. Any Registrable Securities or other securities excluded or withdrawn
from such underwriting shall be withdrawn from such registration. The Company
shall not grant any registration rights that entitle the holders of other
securities to any priority over the Registrable Securities in any Piggyback
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Registration without the prior consent of the holders of at least sixty percent
(60%) of the combined then-outstanding Registrable Securities.
2.03 Expenses of Registration.
All Registration Expenses incurred in connection with all Demand
Registrations and all Piggyback Registrations shall be borne by the Company. All
Selling Expenses relating to Registrable Securities included in any Demand
Registration or Piggyback Registration shall be borne by such Holders pro rata
on the basis of the number of shares sold by them.
2.04 Registration Procedures.
In the case of each registration effected by the Company pursuant to this
Article 2, the Company will keep each Holder advised in writing as to the
initiation of such registration and as to the completion thereof. At its
expense, the Company will use its best efforts to:
(a) cause such registration to be declared effective by the
Commission and, in the case of a Demand Registration, keep such registration
effective for a period of 270 days or until the holders of Registrable
Securities included therein have completed the distribution described in the
registration statement relating thereto, whichever first occurs;
(b) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in connection
with such registration statement (including post-effective amendments) as may be
necessary to comply with the provisions of the Securities Act with respect to
the disposition of all securities covered by such registration statement;
(c) to the extent practicable, promptly prior to the filing of
any document that is to be incorporated by reference into any registration
statement or prospectus forming a part thereof subsequent to the effectiveness
thereof, and in any event no later than the date such document is filed with the
Commission, provide copies of such document to the Holders, if requested, and to
any underwriter, and make representatives of the Company available for
discussion of such document and other customary due diligence matters, and
include in such document prior to the filing thereof such information as any
Holder or any such underwriter reasonably may request;
(d) obtain appropriate qualifications of the securities covered
by such registration under state securities or "blue sky" laws in such
jurisdictions as may be requested by the holders of Registrable Securities;
provided, however, that the Company shall not be required to file a general
consent to service of process in any jurisdiction in which it is not otherwise
subject to service in order to obtain any such qualification;
(e) furnish such number of prospectuses and other documents
incident thereto, including any amendment of or supplement to the prospectus, as
a Holder from time to time may reasonably request;
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(f) notify each Holder of Registrable Securities covered by
such registration statement, at any time when a prospectus relating thereto is
required to be delivered under the Securities Act, of the happening of any event
as a result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading or incomplete in the light of the
circumstances then existing, and at the request of any such Holder, prepare and
furnish to such Holder a reasonable number of copies of a supplement to or an
amendment of such prospectus as may be necessary so that, as thereafter
delivered to the purchasers of such shares, such prospectus shall not include an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not misleading or
incomplete in the light of the circumstances then existing;
(g) cause all Registrable Securities covered by such
registration to be listed on each securities exchange or inter-dealer quotation
system on which similar securities issued by the Company are then listed;
(h) provide a transfer agent and registrar for all Registrable
Securities covered by such registration and a CUSIP number for all such
Registrable Securities, in each case not later than the effective date of such
registration;
(i) furnish to the Holders of Registrable Securities covered by
such registration, addressed to them, an opinion of counsel for the Company,
dated the date of the closing under the underwriting agreement, if any, or the
date of effectiveness of the registration statement if such registration is not
an underwritten offering, and use its reasonable best efforts to furnish to the
Holders of Registrable Securities covered by such registration, addressed to
them, a "cold comfort" letter signed by the independent certified public
accountants who have certified the Company's financial statements included in
such registration, covering substantially the same matters with respect to such
registration (and the prospectus included therein) and, in the case of such
accountants' letter, with respect to events subsequent to the date of such
financial statements, as are customarily covered in opinions of issuer's counsel
and in accountants' letters delivered to underwriters in underwritten public
offerings of securities and such other matters as such Holders may reasonably
request;
(j) otherwise comply with all applicable rules and regulations
of the Commission, and make available to its security holders, as soon as
reasonably practicable, an earnings statement covering the period of at least 12
months, but not more than 18 months, beginning with the first month after the
effective date of the registration statement, which earnings statement shall
satisfy the provisions of Section 11(a) of the Securities Act;
(k) in connection with any underwritten Demand Registration,
the Company will enter into an underwriting agreement reasonably satisfactory to
the Initiating Holders containing customary underwriting provisions, including
indemnification and contribution provisions; and
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(l) in the case of an underwritten Demand Registration,
participate in customary "roadshow" presentations in connection with such
registration.
2.05 Indemnification.
(a) The Company will indemnify each underwriter of Registrable
Securities, each Holder, each of such Holders' officers, directors, partners,
agents, employees and representatives, and each person controlling such
underwriter or Holder within the meaning of Section 15 of the Securities Act,
with respect to each registration, qualification or compliance effected pursuant
to this Article 2, against all expenses, claims, losses, damages and liabilities
(or actions, proceedings or settlements in respect thereof) arising out of or
based on any untrue statement (or alleged untrue statement) of a material fact
contained in any prospectus, offering circular or any other document (including
any related registration statement, notification or the like) incident to any
such registration, qualification or compliance, or based on any omission (or
alleged omission) to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, or any violation by
the Company of the Securities Act or any rule or regulation thereunder
applicable to the Company and relating to action or inaction required of the
Company in connection with any such registration, qualification or compliance,
and will reimburse each such indemnified person for any legal and any other
expenses reasonably incurred in connection with investigating and defending or
settling any such claim, loss, damage, liability or action; provided, however,
that the Company will not be liable in any such case to the extent that any such
claim, loss, damage, liability or expense arises out of or is based on any
untrue statement or omission based upon written information furnished to the
Company by such Holder or such underwriter and stated to be specifically for use
therein. It is agreed that the indemnity agreement contained in this Section
2.05(a) shall not apply to amounts paid in settlement of any such loss, claim,
damage, liability or action if such settlement is effected without the consent
of the Company (which consent has not been unreasonably withheld).
(b) Each Holder of Registrable Securities included in any
registration effected pursuant to this Article 2 shall indemnify the Company,
each of its directors, officers, agents, employees and representatives, each
underwriter, and each person who controls the Company or such underwriter within
the meaning of Section 15 of the Securities Act, each other participating Holder
and each of their officers, directors and partners, and each person controlling
such holders, against all claims, losses, damages and liabilities (or actions in
respect thereof) arising out of or based on any untrue statement (or alleged
untrue statement) of a material fact contained in any such registration
statement, prospectus, offering circular or other document, or any omission (or
alleged omission) to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, and will reimburse
such indemnified persons for any legal or any other expenses reasonably incurred
in connection with investigating or defending any such claim, loss, damage,
liability or action, in each case to the extent, but only to the extent, that
such untrue statement (or alleged untrue statement) or omission (or alleged
omission) is made in such registration statement, prospectus, offering circular
or other document in reliance upon and in strict conformity with written
information furnished to the Company by such Holder or such underwriter;
provided, however, that (x) no Holder shall be liable hereunder for any amounts
in excess of the net proceeds received by such Holder pursuant to such
registration, and (y) the
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obligations of such Holder hereunder shall not apply to amounts paid in
settlement of any such claims, losses, damages or liabilities (or actions in
respect thereof) if such settlement is effected without the consent of such
Holder (which consent has not been unreasonably withheld).
(c) Each party entitled to indemnification under this Section
2.05 (the "Indemnified Party") shall give notice to the party required to
provide indemnification (the "Indemnifying Party") promptly after such
Indemnified Party has actual knowledge of any claim as to which indemnity may be
sought, and shall permit the Indemnifying Party to assume the defense of any
such claim or any litigation resulting therefrom through counsel approved by the
Indemnified Party (whose approval shall not unreasonably be withheld), and the
Indemnified Party may participate in such defense but the fees and disbursements
of counsel to an Indemnified Party so choosing to participate shall be at the
expense of such party, unless (i) the Indemnifying Party shall have failed to
retain counsel for the Indemnified Party as aforesaid, or (ii) the Indemnified
Party shall have reasonably concluded that there may be reasonable defenses
available to it which are different from or additional to those available to the
Indemnifying Party or that the interests of the Indemnified Party conflict with
the interests of the Indemnifying Party; provided, however, that the failure of
any Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations under this Section 2.05 to the extent such
failure is not prejudicial. No Indemnifying Party in the defense of any such
claim or litigation shall, except with the consent of each Indemnified Party,
consent to entry of any judgment or enter into any settlement which does not
include an unconditional release of such Indemnified Party from all liability in
respect to such claim or litigation. Each Indemnified Party shall furnish such
information regarding itself or the claim in question as an Indemnifying Party
may reasonably request in writing and as shall be reasonably required in
connection with defense of such claim and litigation resulting therefrom.
(d) If the indemnification provided for in this Section 2.05 is
held by a court of competent jurisdiction to be unavailable to an Indemnified
Party with respect to any loss, liability, claim, damage or expense referred to
therein, then the Indemnifying Party, in lieu of indemnifying such Indemnified
Party hereunder, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such loss, liability, claim, damage or expense
in such proportion as is appropriate to reflect the relative fault of the
Indemnifying Party on the one hand and of the Indemnified Party on the other in
connection with the statements or omissions which resulted in such loss,
liability, claim, damage or expense as well as any other relevant equitable
considerations; provided, however, that in any case, no Indemnifying Party shall
be required to contribute an amount in excess of the net proceeds received by it
from all Registrable Securities sold in the transactions related to such
statements or omissions. The relative fault of the Indemnifying Party and of the
Indemnified Party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission to state a material fact relates to information supplied by the
Indemnifying Party or by the Indemnified Party and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
(e) Notwithstanding the foregoing, to the extent that the
provisions on indemnification and contribution contained in an underwriting
agreement entered into in
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connection with an underwritten public offering are in conflict with the
foregoing provisions, the provisions in the underwriting agreement shall
control.
2.06 Other Obligations. With a view to making available the benefits of
certain rules and regulations of the Commission which may effectuate the
registration of Registrable Securities or permit the sale of Registrable
Securities to the public without registration, the Company agrees to:
(a) after the effective date of the first registration
statement filed by the Company under Section 12 of the Exchange Act, exercise
reasonable efforts to cause the Company become and remain S-3 Eligible;
(b) at such time as any Registrable Securities are eligible for
transfer under Rule 144(k), upon the request of the Holder of such Registrable
Securities, remove any restrictive legend from the certificates evidencing such
securities at no cost to such Holder;
(c) make and keep available public information as defined in
Rule 144 under the Securities Act at all times from and after 90 days following
its initial registration under the Section 12 of the Exchange Act;
(d) file with the Commission in a timely manner all reports and
other documents required of the Company under the Securities Act and the
Exchange Act at any time after it has become subject to such reporting
requirements; and
(e) furnish any Holder upon request a written statement by the
Company as to its compliance with the reporting requirements of Rule 144 (at any
time from and after 90 days following the effective date of the first
registration statement filed by the Company under Section 12 of the Exchange
Act), and of the Securities Act and the Exchange Act (at any time after it has
become subject to such reporting requirements), a copy of the most recent annual
or quarterly report of the Company, and such other reports and documents as a
Holder may reasonably request in availing itself of any rule or regulation of
the Commission (including Rule 144A) allowing a Holder to sell any such
securities without registration.
2.07 Hold-Back Agreements. If requested by the Company or any
underwriter of any Common Stock or other equity securities of the Company, no
Holder shall sell or otherwise transfer or dispose of any Common Stock or other
equity securities of the Company (other than pursuant to such registration)
during (a) in the case of the Company's first underwritten public offering of
Common Stock or other equity securities of the Company for its own account, the
180-day period following the effective date of such registration statement, and
(b) in the case of all subsequent registrations of the Company's Common Stock or
other equity securities of the Company, the 90-day period following the
effective date of such registration statement; provided, however, that if any
holder of Management Stock or any Significant Stockholder is subject to
hold-back restrictions of shorter duration, such shorter periods shall apply to
all Holders. The obligations described in this Section 2.07 shall not apply to a
registration on Form S-4 or Form S-8 or similar forms which may be promulgated
in the future and, except in the case of the
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Company's first underwritten public offering, shall not apply to a Holder of
Registrable Securities representing less than 1% of the then-outstanding Common
Stock (on an as-converted basis).
2.08 Other Agreements. Notwithstanding the provisions of this Article
2, to the extent there is any conflict between the terms of this Agreement and
that certain Warrant Registration Rights Agreement between the Company and
United States Trust Company of New York, as Warrant Agent, dated as of December
3, 1999 (the Warrant Registration Rights Agreement"), the terms of the Warrant
Registration Rights Agreement shall control; provided however that the Company
shall not amend the terms of the Warrant Registration Rights Agreement in a
manner that is materially adverse to the Holders without the prior consent of
the holders of at least sixty percent (60%) of the combined then-outstanding
Registrable Securities.
2.09 Termination of Registration Rights. The right of any Holder to
request inclusion of Registrable Securities in any registration pursuant to this
Article 2 shall terminate when (i) all Registrable Securities beneficially owned
by such Holder immediately may be sold under Rule 144(k) and (ii) the Company's
Common Stock is listed on a national securities exchange or traded in The Nasdaq
Stock Market. Notwithstanding the foregoing or anything else to the contrary set
forth in this Agreement, each of X. X. Xxxxxxx and Blackstone shall have the
right to demand registration pursuant to Section 2.01 of the Registrable
Securities held by them so long as the fair market value of the amount requested
to be registered is at least $50 million and so long as the participating
Holders pay all Registration Expenses and Selling Expenses for such demand
registration. The Company shall not be obligated to effect or take any action to
effect any registration pursuant to this section 2.09 (a) on more than one
occasion or (b) following the third anniversary of a Qualified Public Offering.
If other securities are included in the Demand Registration provided by this
Section 2.09 that is an underwritten offering, and the managing underwriter for
such offering advises the Company that in its opinion the amount of securities
to be included exceeds the amount of securities which can be sold in such
offering without adversely affecting the marketability thereof, notwithstanding
any other provision of this Agreement to the contrary, if the managing
underwriter advises the Holders in writing that marketing factors require a
limitation on the number of shares to be underwritten, the securities of the
Company held by persons who are not Holders shall be excluded from such
registration to the extent so required by such limitation. If, after the
exclusion of such shares, still further reductions are required, the number of
shares included in the registration by each Holder of Management Stock shall be
reduced on a pro rata basis (based on the percentage of the outstanding Common
Stock held by each such Holder, assuming the conversion of the Preferred Stock
and any other convertible preferred or common stock and the exercise of any
options, warrants and similar rights held by such Holder), by such minimum
number of shares as is necessary to comply with such request. Notwithstanding
anything herein to the contrary, if, after the exclusion of such shares held by
persons who are not Holders and each Holder of Management Stock, further
reductions are required, the number of shares included in the registration by
each Holder of Investor Stock (excluding X. X. Xxxxxxx and Blackstone) shall be
reduced on a pro rata basis (based on the percentage of the outstanding Common
Stock held by each such Holder, assuming the conversion of the Preferred Stock
and any other convertible preferred or common stock and the exercise of any
options, warrants and similar rights held by such Holder), by such minimum
number of shares as is necessary to comply with such request. If, after such
reductions, further reductions are
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14
required, the number of shares included in the registration by each of X. X.
Xxxxxxx and Blackstone shall be reduced on a pro rata basis (based on the
percentage of the outstanding Common Stock held by each of X. X. Xxxxxxx and
Blackstone, assuming the conversion of the Preferred Stock and any other
convertible preferred or common stock and the exercise of any options, warrants
and similar rights held by X. X. Xxxxxxx and Blackstone).
ARTICLE 3
FIRST OFFER AND CO-SALE RIGHTS
3.01 Prohibition on Transfer.
No Significant Stockholder shall sell, transfer, assign, pledge or
otherwise dispose of (whether with or without consideration and whether
voluntarily or involuntarily or by operation of law) any interest in any
Preferred Stock or Common Stock (a "Transfer") other than in compliance with
this Article 3. Each Significant Stockholder agrees not to consummate any
Transfer (other than a Transfer to a Permitted Transferee pursuant to Section
3.03) until the expiration of a 30-day period (the "Election Period") following
delivery by such Significant Stockholder to the Company and the other
Significant Stockholders of an Offer Notice pursuant to Section 3.02(a), unless
the parties to the Transfer have been finally determined prior to the expiration
of the Election Period.
3.02 First Offer and Co-Sale Rights.
(a) At least 30 days prior to making any Transfer of any
Significant Stockholder Stock, the transferring Significant Stockholder (the
"Transferring Stockholder") shall deliver a written notice (the "Offer Notice")
to the Company (as required by Section 4.5.1(b) of the Amended and Restated
Certificate of Incorporation) and the other Significant Stockholders (the "Other
Significant Stockholders"), stating the Transferring Stockholder's intention to
transfer, and specifying all particulars of the proposed Transfer, including,
but not limited to, (i) the name(s) and address(es) of the proposed
transferee(s), (ii) the number and class of capital stock involved in the
proposed Transfer (the "Offered Shares"), (iii) a description of all of the
terms of the Transfer (which must include a cash price unless the Transfer is
proposed to be made in exchange for either partly or wholly consideration other
than cash), and a copy of any third party offer, and (iv) the address of the
Transferring Stockholder to which notice or acceptance of the Offer Notice is to
be sent. In the event that the Company declines to exercise its right to
purchase any or all of the Offered Shares pursuant to the Amended and Restated
Certificate of Incorporation, such Offered Shares shall be offered to the Other
Significant Stockholders on a pro rata basis (and the Company may also purchase
Offered Shares), until the expiration of the Election Period. If the Other
Significant Stockholders and the Company have not elected to purchase any of the
of the Offered Shares prior to the expiration of the Election Period, the
Transferring Stockholder may, within 60 days after the expiration of the
Election Period, Transfer the Offered Shares to one or more third parties at a
price not less than 100% of the price per share specified in the Offer Notice;
provided that such third parties execute joinder agreements to this Agreement as
provided in Section 6.01. Any Offered Shares not transferred during such 60-
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15
day period shall again be subject to the provisions of this Section 3.02(a) upon
subsequent Transfer. Notwithstanding the foregoing, if the terms of a third
party offer require that all or a specified minimum (the "Specified Minimum")
number of shares be sold to the proposed transferee, then the Other Significant
Stockholders and the Company (either pursuant to Section 4.5 of the Amended and
Restated Certificate of Incorporation or to this Section 3.02(a) must purchase
in the aggregate either (i) all of the Offered Shares or (ii) no more than that
number of Offered Shares which when deducted from the total number of Offered
Shares results in the Specified Minimum. Otherwise such Offer Notice shall be
deemed to have been completely rejected by the Other Significant Stockholders
and the Company (a "Deemed Rejection").
(b) Each Other Significant Stockholder who (i) has not
exercised its rights pursuant to Section 3.02(a) or (ii) has exercised its
rights pursuant to Section 3.02(a) but is unable to purchase Offered Shares
pursuant to Section 3.02(a) as a result of a Deemed Rejection (each a
"Non-Purchasing Holder") may elect to participate in the contemplated Transfer
at the same price per share and on the same terms by delivering written notice
to the Transferring Stockholder within 15 days after expiration of the Election
Period. If any Non-Purchasing Holders have elected to participate in such
Transfer, the Transferring Stockholder and such Non-Purchasing Holders shall be
entitled to sell in the contemplated Transfer, at the same price and on the same
terms, a number of shares of Significant Stockholder Stock equal to the product,
calculated on a fully-diluted, as-converted, as-exercised basis, of (i) the
quotient determined by dividing the percentage of shares of Significant
Stockholder Stock owned by such Holder by the aggregate percentage of shares of
Significant Stockholder Stock owned by the Transferring Stockholder and all
Non-Purchasing Holders participating in such sale and (ii) the number of shares
of Significant Stockholder Stock to be sold in the contemplated Transfer. Each
Transferring Stockholder shall use best efforts to obtain the agreement of the
prospective transferee(s) to the participation of the Non-Purchasing Holders in
any contemplated Transfer, and no Transferring Stockholder shall transfer any of
its shares of Significant Stockholder Stock to any prospective transferee if
such prospective transferee(s) declines to allow the participation of the
Non-Purchasing Holders.
3.03 Exempt Transactions. The restrictions set forth in this Article 3
shall not apply to Transfers of Significant Stockholder Stock (i) to a Permitted
Transferee of the transferring Stockholder; provided, however, that such
Permitted Transferee shall agree in writing to be bound by such restrictions in
connection with subsequent Transfers, or (ii) by a Significant Stockholder who
is an individual to any of Xxxxxxxx X. Xxxxxx III, SCANA Communications, Inc.,
the South Atlantic Funds, or ITC Holding Company, Inc. Notwithstanding the
foregoing, no party hereto shall avoid the provisions of this Agreement by
making one or more transfers to one or more Permitted Transferees and then
disposing of all or any portion of such party's interest in any such Permitted
Transferee.
3.04 Repurchase Rights. In the event of termination of a Management
Holder's employment with the Company and its subsidiaries for any reason, the
Company shall have the right, exercisable by written notice to the Management
Holder at any time prior to the expiration of a 90-day period following such
termination of employment, to repurchase all or any portion of the Management
Stock held by such Management Holder and its Permitted Transferees at a cash
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price per share equal to the fair market value of the Management Stock as
determined in good faith by the Company's Board of Directors as of the date of
termination. The closing of the repurchase of Management Stock shall occur
within 120 days of termination of the Management Holder's employment.
ARTICLE 4
DIRECTORS OF THE COMPANY
4.01 X. X. Xxxxxxx Series B Director. The Company and each of the
Series B Investors (for so long as such Series B Investor owns any Series B
Preferred Stock) shall take or cause to be taken all such action within their
respective power and authority as may be required, for so long as X. X. Xxxxxxx
XX, L.P. and its Affiliates (collectively, "X. X. Xxxxxxx") together shall own
45% or more of the shares of Investor Stock held by X. X. Xxxxxxx as of the date
shares of Series B Preferred Stock are first issued to X. X. Xxxxxxx (as
adjusted to reflect stock splits and combinations):
(a) To cause to be elected to the board of directors of the
Company one director designated by X. X. Xxxxxxx to fill one of the two Series B
board seats provided for by Section 4.4.2(e) of the Amended and Restated
Certificate of Incorporation (the "X. X. Xxxxxxx Series B Director"); provided,
however, that for so long as X. X. Xxxxxxx owns less than 45% of the shares of
Investor Stock held by X. X. Xxxxxxx as of the date shares of Series B Preferred
Stock are first issued to X. X. Xxxxxxx (as adjusted to reflect stock splits and
combinations), X. X. Xxxxxxx shall not have the right under this Section 4.01 to
have one person designated by it to be elected as a Series B Director; further
provided that such person designated by X. X. Xxxxxxx may be any general partner
of X. X. Xxxxxxx & Co. or its affiliated funds, or any other person reasonably
satisfactory to the Company, and shall have executed a non-disclosure agreement
with the Company; and
(b) To remove forthwith any Series B Director designated by X.
X. Xxxxxxx when (and only when) such removal is requested, with or without
cause, by X. X. Xxxxxxx, and in the case of death, resignation or other removal
as herein provided of such director, to elect another Series B Director
designated by X. X. Xxxxxxx (if at the time the vacancy occurs, X. X. Xxxxxxx
shall have the right to have a person designated by X. X. Xxxxxxx elected as the
Series B Director pursuant to Section 4.01 hereof).
4.02 X. X. Xxxxxxx Board Observer Rights. In the event that X. X.
Xxxxxxx shall not have the right to designate the X. X. Xxxxxxx Series B
Director pursuant to Section 4.01, but for so long as X. X. Xxxxxxx owns at
least 25% of the shares of Investor Stock held by X. X. Xxxxxxx as of the date
shares of Series B Preferred Stock are first issued to X. X. Xxxxxxx (as
adjusted to reflect stock splits and combinations) the Company shall provide X.
X. Xxxxxxx notice (in the same manner as notice is given to directors), and
permit one person designated by X. X. Xxxxxxx to attend as observer, all
meetings of the Company's board of directors and shall provide to X. X. Xxxxxxx
the same information concerning the Company, and access thereto, provided to
members of the Company's board of directors; provided that such person
designated by X. X. Xxxxxxx may
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be any general partner of X. X. Xxxxxxx & Co. or its affiliated funds, or any
other person reasonably satisfactory to the Company, and shall have executed a
non-disclosure agreement with the Company. The reasonable out-of-pocket travel
expenses incurred by any such designee of X. X. Xxxxxxx in attending any board
meeting shall be reimbursed by the Company to the extent consistent with the
Company's then existing policy of reimbursing directors generally for such
expenses.
4.03 Blackstone Series B Director. The Company and each of the Series B
Investors (for so long as such Series B Investors owns any Series B Preferred
Stock) shall take or cause to be taken all such action within their respective
power and authority as may be required, for so long as Blackstone CCC Capital
Partners L.P., Blackstone CCC Offshore Capital Partners L.P., and Blackstone
Family Investment Partnership III L.P. and their respective Affiliates
(collectively, "Blackstone") together shall own 45% or more of the shares of
Investor Stock held by Blackstone as of the date shares of Series B Preferred
Stock are first issued to Blackstone (as adjusted to reflect stock splits and
combinations):
(a) To cause to be elected to the board of directors of the
Company one director designated by Blackstone to fill one of the two Series B
board seats provided for by Section 4.4.2(e) of the Amended and Restated
Certificate of Incorporation (the "Blackstone Series B Director"); provided,
however, that for so long as Blackstone, owns less than 45% of the shares of
Investor Stock held by Blackstone as of the date shares of Series B Preferred
Stock are first issued to Blackstone (as adjusted to reflect stock splits and
combinations), Blackstone shall not have the right under this Section 4.03 to
have one person designated by it to be elected as a Series B Director; further
provided that such person designated by Blackstone shall be any reasonably
satisfactory to the Company and shall have executed a non-disclosure agreement
with the Company; and
(b) To remove forthwith any Series B Director designated by
Blackstone when (and only when) such removal is requested, with or without
cause, by Blackstone, and in the case of death, resignation or other removal as
herein provided of such director, to elect another Series B Director designated
by Blackstone (if at the time the vacancy occurs, Blackstone shall have the
right to have a person designated by Blackstone elected as the Series B Director
pursuant to Section 4.03 hereof).
4.04 Blackstone Board Observer Rights. In the event that Blackstone
shall not have the right to designate the Blackstone Series B Director pursuant
to Section 4.03, but for so long as Blackstone owns at least 25% of the shares
of Investor Stock held by Blackstone as of the date shares of Series B Preferred
Stock are first issued to Blackstone (as adjusted to reflect stock splits and
combinations), the Company shall provide Blackstone notice (in the same manner
as notice is given to directors), and permit one person designated by Blackstone
to attend as observer, all meetings of the Company's board of directors and
shall provide to Blackstone the same information concerning the Company, and
access thereto, provided to members of the Company's board of directors;
provided that such person designated by Blackstone shall be reasonably
satisfactory to the Company, and shall have executed a non-disclosure agreement
with the Company. The reasonable out-of-pocket travel expenses incurred by any
such designee of
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Blackstone in attending any board meeting shall be reimbursed by the Company to
the extent consistent with the Company's then existing policy of reimbursing
directors generally for such expenses.
4.05 First Union Board Observer Rights. For so long as First Union
Investors, Inc. and its Affiliates (collectively, "First Union") together shall
own at least 25% of the shares of Investor Stock held by First Union as of the
date shares of Series B Preferred Stock are first issued to First Union (as
adjusted to reflect stock splits and combinations) the Company shall provide
First Union notice (in the same manner as notice is given to directors), and
permit one person designated by First Union to attend as observer, all meetings
of the Company's board of directors and shall provide to First Union the same
information concerning the Company, and access thereto, provided to members of
the Company's board of directors; provided that such person designated by First
Union shall be reasonably satisfactory to the Company, and shall have executed a
non-disclosure agreement with the Company. The reasonable out-of-pocket travel
expenses incurred by any such designee of First Union in attending any board
meeting shall be reimbursed by the Company to the extent consistent with the
Company's then existing policy of reimbursing directors generally for such
expenses.
4.06 X. X. Xxxxxxx Director After a Qualified Public Offering. After
the Company has completed a Qualified Public Offering, the Company and each of
the parties to this Agreement (for so long as such parties own any voting stock
of the Company) shall take or cause to be taken all such action within their
respective power and authority as may be required, for so long as X. X. Xxxxxxx
shall own 5% or more of the outstanding shares of Common Stock on a
fully-diluted basis:
(a) To cause to be elected to the board of directors of the
Company one director designated by X. X. Xxxxxxx (the "X. X. Xxxxxxx Director");
provided, however, that for so long as X. X. Xxxxxxx owns less than 5% of the
outstanding shares of Common Stock on a fully-diluted basis, X. X. Xxxxxxx shall
not have the right under this Section 4.06 to have one person designated by it
to be elected as to the board of directors of the Company; further provided that
such person designated by X. X. Xxxxxxx may be any general partner of X. X.
Xxxxxxx & Co. or its affiliated funds, or any other person reasonably
satisfactory to the Company, and shall have executed a non-disclosure agreement
with the Company; and
(b) To remove forthwith any director designated by X. X.
Xxxxxxx when (and only when) such removal is requested, with or without cause,
by X. X. Xxxxxxx, and in the case of death, resignation or other removal as
herein provided of such director, to elect another director designated by X. X.
Xxxxxxx (if at the time the vacancy occurs, X. X. Xxxxxxx shall have the right
to have a person designated by X. X. Xxxxxxx elected to the board of directors
of the Company pursuant to Section 4.06 hereof).
4.07 Blackstone Director After a Qualified Public Offering. After the
Company has completed a Qualified Public Offering, the Company and each of the
parties to this Agreement (for so long as such parties own any voting stock of
the Company) shall take or cause to be taken all such action within their
respective power and authority as may be required, for so long as
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Blackstone shall own 5% or more of the outstanding shares of Common Stock on a
fully-diluted basis:
(a) To cause to be elected to the board of directors of the
Company one director designated by Blackstone (the "Blackstone Director");
provided, however, that for so long as Blackstone owns less than 5% of the
outstanding shares of Common Stock on a fully-diluted basis, Blackstone shall
not have the right under this Section 4.07 to have one person designated by it
to be elected as to the board of directors of the Company; further provided that
such person designated by Blackstone shall be reasonably satisfactory to the
Company, and shall have executed a non-disclosure agreement with the Company;
and
(b) To remove forthwith any director designated by Blackstone
when (and only when) such removal is requested, with or without cause, by
Blackstone, and in the case of death, resignation or other removal as herein
provided of such director, to elect another director designated by Blackstone
(if at the time the vacancy occurs, Blackstone shall have the right to have a
person designated by Blackstone elected to the board of directors of the Company
pursuant to Section 4.07 hereof).
ARTICLE 5
COVENANTS OF THE COMPANY
The Company hereby covenants and agrees, so long as any Investor Stock is
outstanding as follows:
5.01 Basic Financial Information. If at any time the Company is not
subject to the reporting requirements at Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Company will furnish the following reports to each
Holder:
(a) As soon as practicable after the end of each fiscal year of
the Company, and in any event within 90 days thereafter, a consolidated and
consolidating balance sheet of the Company and its subsidiaries, if any, as of
the end of such fiscal year, and consolidated and consolidating statements of
income and cash flow of the Company and its subsidiaries, if any, for such year,
prepared in accordance with generally accepted accounting principles
consistently applied and setting forth in each case in comparative form the
figures for the previous fiscal year, all in reasonable detail and audited by a
"Big Five" international accounting firm selected by the Company;
(b) As soon as practicable after the end of each quarterly
accounting period in each fiscal year of the Company, and in any event within 45
days thereafter, a consolidated and consolidating balance sheet of the Company
and its subsidiaries, if any, as of the end of each such quarterly period, and
consolidated and consolidating statements of income and cash flow of the Company
and its subsidiaries, if any, for such period and for the current fiscal year to
date, prepared in accordance with generally accepted accounting principles
consistently applied and
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setting forth in comparative form the figures for the corresponding periods of
the previous fiscal year, subject to changes resulting from normal year-end
audit adjustments, all in reasonable detail and certified by the chief financial
officer of the Company, except that such statements need not contain the notes
required by generally accepted accounting principles; and
(c) As soon as practicable after the end of each monthly
accounting period and in any event within 30 days thereafter, a consolidated and
consolidating balance sheet of the Company and its subsidiaries, if any, as of
the end of such month and consolidated and consolidating statements of income
and of cash flow of the Company and its subsidiaries, if any, for each month and
for the current fiscal year of the Company to date, all subject to normal
year-end audit adjustments, prepared in accordance with generally accepted
accounting principles consistently applied and certified by an officer of the
Company, except that such statements need not contain the notes required by
generally accepted accounting principles. Such balance sheet and statements
shall include a comparison to the Company's financial plan for such month and
fiscal year-to-date period and shall show variances therefrom.
5.02 Prompt Payment of Taxes, etc. The Company will promptly pay and
discharge, or cause to be paid and discharged, when due and payable, all lawful
taxes, assessments and governmental charges or levies imposed upon the income,
profits, property or business of the Company or any subsidiary; provided,
however, that any such tax, assessment, charge or levy need not be paid if the
validity thereof shall currently be contested in good faith by appropriate
proceedings and if the Company shall have set aside on its books adequate
reserves with respect thereto; and provided, further, that the Company will pay
all such taxes, assessments, charges or levies forthwith upon the commencement
of proceedings to foreclose any lien which may have attached as security
therefor. The Company will promptly pay or cause to be paid when due, in
conformance with customary trade terms, all other obligations incident to the
operations of the Company.
5.03 Maintenance of Properties and Leases. The Company will keep its
properties and those of its subsidiaries, if any, in good repair, working order
and condition, reasonable wear and tear excepted, and from time to time make all
needful and proper repairs, renewals, replacements, additions and improvements
thereto; and the Company and its subsidiaries will at all times comply with each
material provision of all leases to which any of them is a party or under which
any of them occupies property if the breach of such provision might have a
material and adverse effect on the condition, financial or otherwise, or
operations of the Company.
5.04 Insurance. The Company will keep its assets and those of its
subsidiaries which are of an insurable character insured by financially sound
and reputable insurers against loss or damage by fire, explosion and other risks
customarily insured against by companies in the Company's line of business, and
the Company will maintain, with financially sound and reputable insurers,
directors and officers' insurance and insurance against other hazards and risks
and liability to persons and property to the extent and in the manner customary
for companies in similar businesses similarly situated.
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5.05 Accounts and Records. The Company will keep true records and books
of account in which full, true and correct entries will be made of all dealings
or transactions in relation to its business and affairs in accordance with
generally accepted accounting principles applied on a consistent basis. The
Company shall provide access during regular business hours to such records and
books of accounts to the Investors for inspection; provided that such Investors
provide reasonable notice to the Company of their intention to inspect.
5.06 Independent Accountants. The Company will retain a "Big Five"
international accounting firm as its independent public accountants who shall
certify the Company's financial statements at the end of each fiscal year. In
the event the services of the independent public accountants so selected are
terminated, the Company will promptly thereafter notify the holders of Investor
Stock and will request the firm of independent public accountants whose services
are terminated to deliver to the Investors a letter from such firm setting forth
the reasons for the termination of their services. In the event of such
termination, the Company will promptly thereafter engage another "Big Five"
international accounting firm as its independent public accountants. In its
notice to the holders of Investor Stock the Company shall state whether the
change of accountants was recommended or approved by the Board of Directors of
the Company or any committee thereof.
5.07 Compliance with Laws. The Company and all its subsidiaries shall
duly observe and conform to all applicable laws and valid requirements of
governmental authorities relating to the conduct of their businesses or to their
properties or assets.
5.08 Maintenance of Corporate Existence, etc. The Company shall
maintain in full force and effect its corporate existence, rights and franchises
and all licenses and other rights in or to use patents, processes, licenses,
trademarks, trade names or copyrights owned or possessed by it or any subsidiary
and deemed by the Company to be necessary to the conduct of their business.
5.09 Preemptive Rights.
(a) In the event that the Company proposes to issue any
Preferred Stock, Common Stock or any other equity securities, including, without
limitation, warrants, options and other convertible securities, the Company
shall give not less than 30 days' prior written notice to each Investor and
Additional Stockholder holding Preferred Stock representing, on an as-converted
basis, at least 5% of the Company's outstanding Common Stock (after giving
effect to the exercise of any outstanding warrants or options to purchase Common
Stock and conversion in full of all Preferred Stock or other securities that are
convertible into Common Stock) ("Eligible Holders") setting forth the terms and
conditions of such proposed issuance (the "Issuance Notice"). Each Eligible
Holder shall have the preemptive right to purchase the securities so offered on
the terms and conditions set forth herein and in the Issuance Notice by giving
written notice to the Company within 15 days after receipt of the Issuance
Notice (the "Preemptive Election Period"). Each electing Eligible Holder shall
have the right to purchase all or any portion of its pro rata share of 75% of
the offered securities. For purposes of this Section 5.09, an Eligible Holder's
pro rata share shall equal the ratio of (i) the aggregate number of shares of
Common Stock held by such Eligible Holder (including all shares of Common Stock
issuable upon conversion of Preferred Stock held by such Eligible Holder and
issuable upon exercise of any outstanding warrants or options for Common Stock
or Preferred Stock held by such Eligible Holder) to (ii) the total number of
outstanding shares of Common Stock held by all Eligible Holders (including all
shares of Common Stock issuable
- 21 -
22
upon conversion of all outstanding Preferred Stock and other securities
convertible into Common Stock and issuable upon exercise of any outstanding
warrants or options for Common Stock or Preferred Stock) as determined
immediately prior to the proposed issuance. The Company may issue and sell all
offered securities not purchased by the Eligible Holders on the terms and
conditions set forth in the Issuance Notice within 120 days after the expiration
of the Preemptive Election Period; provided, however, that any offered
securities not sold within such 120-day period or any offered securities that
are proposed to be sold on terms and conditions less favorable to the Company
than those set forth in the Issuance Notice shall again be subject to the
procedure set forth in this Section 5.09 prior to issuance. An Eligible Holder
may assign its rights pursuant to this Section 5.09 to one or more of its
Affiliates, subject only to compliance with applicable securities laws.
(b) Notwithstanding the foregoing, the provisions of Section
5.09(a) shall not apply to:
(i) any issuance to non-Affiliates of the Company of
equity securities for consideration other than cash which are approved by
a Series B Director or such issuances which in the aggregate are less
than 2% of the outstanding Common Stock of the Company calculated on a
fully-diluted, as-converted, as-exercised basis;
(ii) shares of Common Stock (or options, warrants or
other rights to purchase Common Stock) issued or to be issued to
employees, officers or directors of, or consultants or advisors to, the
Company or any subsidiary pursuant to stock purchase plans, stock option
plans, or other compensation plans or arrangements that are approved by
the Board of Directors;
(iii) any equity securities issued pursuant to a Qualified
Public Offering; and
(iv) any equity securities issued (A) in connection with
any stock split, stock dividend or recapitalization by the Company, so
long as immediately after such stock split, stock dividend or
recapitalization the Investors own the same relative proportion of the
Company's equity securities as immediately prior to such stock split,
stock dividend or recapitalization, or (B) upon conversion of the Series
A Preferred Stock or the Series B Preferred Stock.
5.10 Affiliate Transactions. In the event that the Company enters into
a contract or transaction between the Company and one or more of its directors,
officers, or Significant Stockholders (or Affiliates thereof) or between the
Company and any other corporation, partnership, association, or other
organization in which one or more of its directors, officers or Significant
Stockholders, are directors or officers, or have a financial interest (an
"Affiliate Transaction"), such Affiliate Transaction shall (i) be fair as to the
Company at the time it is
- 22 -
23
entered into and (ii) be approved by the affirmative votes of a majority of the
disinterested directors of the Company, even though such disinterested directors
be less than a quorum.
ARTICLE 6
MISCELLANEOUS
6.01 Addition of Parties. Notwithstanding any other provisions of this
Agreement, with the approval of the Board of Directors of the Company, and
without any further action on part of any of the other parties to this
Agreement, the Company may allow persons acquiring shares of Common Stock,
Preferred Stock or any other securities from the Company or as provided in this
Agreement to agree in writing to become party to this Agreement and to be bound
by all of the terms and conditions hereof applicable to an Investor prior to
acquiring such shares. Each such stockholder shall become party to this
Agreement by executing a joinder to this Agreement in form and substance
reasonably acceptable to the Board of Directors of the Company (it being agreed
that a joinder in substantially the form of Exhibit B shall be sufficient), and
shall thereafter enjoy the rights of and be bound by the obligations of an
Investor under this Agreement.
6.02 Legend. The certificates or other evidence of the Company's Common
Stock and Preferred Stock now or hereinafter owned by the parties hereto shall
bear a legend in substantially the following form:
THE SHARES REPRESENTED BY THIS CERTIFICATE, INCLUDING, WITHOUT
LIMITATION, THE TRANSFER THEREOF, ARE SUBJECT TO THE TERMS AND PROVISIONS
OF A STOCKHOLDERS AGREEMENT, AS AMENDED HEREAFTER, A COPY OF WHICH IS ON
FILE WITH THE SECRETARY OF THE CORPORATION AND WILL BE PROVIDED FREE OF
CHARGE UPON REQUEST.
6.03 Governing Law. This Agreement shall be governed in all respects by
the laws of the State of Georgia as such laws are applied to agreements between
Georgia residents entered into and performed entirely in Georgia, except that
the General Corporation Law of the State of Delaware shall govern as to matters
of corporate law.
6.04 Successors and Assigns. Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, assigns, heirs, executors and administrators of the
parties hereto.
6.05 Entire Agreement, Amendment and Waiver; Termination of Prior
Agreements.
(a) This Agreement constitutes the full and entire
understanding and agreement between the parties with regard to the subjects
hereof.
(b) Neither Article 1, Article 2 nor Article 3 of this
Agreement may be amended, waived, discharged or terminated except by a written
instrument signed by the Company and the holders of at least 75% of the combined
outstanding Investor Stock on an as-
- 23 -
24
converted basis, and any such amendment, waiver, discharge or termination,
whether retroactively or prospectively effective, shall be binding on all of the
Investors and Management Holders.
(c) Article 4 of this Agreement may not be amended, waived,
discharged or terminated except by a written instrument signed by the Company
and the holders of in excess of 70% of outstanding shares of Series B Preferred
Stock, and any such amendment, waiver, discharge or termination, whether
retroactively or prospectively effective, shall be binding on all of the Series
B Investors.
6.06 Notices, etc. All notices and other communications required or
permitted hereunder shall be in writing and shall be deemed effectively given:
(i) upon personal delivery to the party to be notified, (ii) when sent by
confirmed telex, facsimile or electronic mail if sent during normal business
hours of the recipient, if not, then on the next business day, (iii) five (5)
days after having been sent by United States first class registered or certified
mail, return receipt requested, postage prepaid, or (iv) one day after deposit
with a nationally recognized overnight courier, special next day delivery, with
verification of receipt (a) if to an Investor, Management Holder or Additional
Stockholder, to the address reflected in the Company's stock ledger, or at such
other address as such stockholder shall have furnished to the Company in
writing, and, with respect to X. X. Xxxxxxx and its Affiliates, with a copy to
Xxxxxxxx Xxxxx Singer & Xxxxxxxxx, LLP, Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000, Attn: Xxxxx X Xxxxxx, Esq., email address: xxxxxxx@xxxx.xxx or (b) if to
the Company, at 0000 X.X. Xxxxxxx Xxxxx, Xxxx Xxxxx, Xxxxxxx 00000, email
address: xxxxxx.xxxxxxx@xxxxxxx.xxx, Attention: President, with a copy to Xxxxxx
& Bird LLP, One Atlantic, 0000 X. Xxxxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxx 00000-0000,
email address: xxxxxxxxx@xxxxxx.xxx, Attention: Xxxxxx X. Xxxxxxxx, or at such
other address as the Company shall have furnished to each stockholder in
writing.
6.07 Delays or Omissions. No delay or omission to exercise any right,
power or remedy accruing to any Investor, Management Holder or Additional
Stockholder under this Agreement shall impair any such right, power or remedy of
such Investor, Management Holder or Additional Stockholder nor shall it be
construed to be a waiver of any such breach or default, or an acquiescence
therein, or of or in any similar breach or default thereafter occurring; nor
shall any waiver of any single breach or default be deemed a waiver of any other
breach or default theretofore or thereafter occurring. Any waiver, permit,
consent or approval of any kind or character on the part of any Investor,
Management Holder or Additional Stockholder of any breach or default under this
Agreement or any waiver on the part of any Investor, Management Holder or
Additional Stockholder of any provisions or conditions of this Agreement must be
made in writing and shall be effective only to the extent specifically set forth
in such writing. All remedies, either under this Agreement or by law or
otherwise afforded to any Investor, Management Holder or Additional Stockholder,
shall be cumulative and not alternative.
6.08 Severability. Unless otherwise expressly provided herein, an
Investor's, Management Holder's or Additional Stockholder's rights hereunder are
several rights, not rights jointly held with any of the other stockholders. In
case any provision of the Agreement shall be invalid, illegal or unenforceable,
the validity, legality and enforceability of the remaining provisions shall not
in any way be affected or impaired thereby.
- 24 -
25
6.09 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
6.10 Termination. The provisions of this Agreement (other than Article
2, Sections 4.06 and 4.07 and Article 6 hereof) shall terminate upon
consummation of a Qualified Public Offering.
6.11 Specific Enforcement. Any holder of Investor Stock shall be
entitled to specific enforcement of its rights under this Agreement. The parties
acknowledge that money damages would be an inadequate remedy for a breach of
this Agreement and consent to an action for specific performance or other
injunctive relief in the event of any such breach.
[SIGNATURE PAGES FOLLOW]
- 25 -
26
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date set forth in the first Paragraph hereof
COMPANY:
KNOLOGY, INC.
By: /s/ Xxxx X. Xxxxxxx
----------------------------------------------
Xxxx X. Xxxxxxx
Vice President/General Counsel/Secretary
27
SERIES B INVESTORS:
X. X. XXXXXXX XX, L.P.
By: X. X. XXXXXXX EQUITY PARTNERS IV, LLC
Its General Partner
By: /s/ Xxxxx X. Xxxxxxxx
--------------------------------------------------
Name: Xxxxx X. Xxxxxxxx
Title: Managing Member
28
VENTURE FUND I, LP
By: Venture Management I, GP
Its General Partner
By: /s/ Xxxxxxx Xxxxxx
-----------------------------------------
Name: Xxxxxxx Xxxxxx
Title: General Partner
AT&T VENTURE FUND II, LP
By: Venture Management LLC
Its General Partner
By: /s/ Xxxxxxx Xxxxxx
-----------------------------------------
Name: Xxxxxxx Xxxxxx
Title: Manager
SPECIAL PARTNERS FUND, LP
By: Venture Management III LLC
Its General Partner
By: /s/ Xxxxxxx Xxxxxx
-----------------------------------------
Name: Xxxxxxx Xxxxxx
Title: Manager
SPECIAL PARTNERS FUND INTERNATIONAL, LP
By: Venture Management III LLC
Its General Partner
By: /s/ Xxxxxxx Xxxxxx
-----------------------------------------
Name: Xxxxxxx Xxxxxx
Title: Manager
00
XXXXX XXXXXXXX PRIVATE EQUITY FUND IV,
LIMITED PARTNERSHIP
By: South Atlantic Private Equity Partners IV, Inc.
Its General Partner
By: /s/ Xxxxxx X. Xxxxxx
-----------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Chairman and Managing Director
00
XXXXX XXXXXXXX PRIVATE EQUITY FUND IV (QP),
LIMITED PARTNERSHIP
By: South Atlantic Private Equity Partners IV, Inc.
Its General Partner
By: /s/ Xxxxxx X. Xxxxxx
-----------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Chairman and Managing Director
31
THE XXXXXX PARTNERSHIP,
LIMITED PARTNERSHIP
By: /s/ Xxxxxx X. Xxxxxx
-----------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: General Partner
32
PRIME VIII, L.P.
By: PRIME SKA-1, L.L.C.,
Its General Partner
By: /s/ Xxxxxx X. Xxxxxx
-----------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Managing Director
33
BLACKSTONE CCC CAPITAL PARTNERS L.P.
By: Blackstone Management Associates III L.L.C., its
General Partner
By: /s/ Xxxx Xxxxxxxx
-----------------------------------------
Name: Xxxx Xxxxxxxx
Title: Member
BLACKSTONE CCC OFFSHORE CAPITAL PARTNERS L.P.
By: Blackstone Management Associates III L.L.C., its
General Partner
By: /s/ Xxxx Xxxxxxxx
-----------------------------------------
Name: Xxxx Xxxxxxxx
Title: Member
BLACKSTONE FAMILY INVESTMENT PARTNERSHIP III L.P.
By: Blackstone Management Associates III L.L.C., its
General Partner
By: /s/ Xxxx Xxxxxxxx
-----------------------------------------
Name: Xxxx Xxxxxxxx
Title: Member
34
BESSEMER VENTURE PARTNERS V L.P.
By: Deer V & Co. LLC
Its General Partner
By: /s/ Xxxxxx X. Xxxxxxxx
-----------------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: Manager
BESSEC VENTURES V L.P.
By: Deer V & Co. LLC
Its General Partner
By: /s/ Xxxxxx X. Xxxxxxxx
-----------------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: Manager
35
By: /s/ Xxxxxxxx Xxxxxxx
-----------------------------------------
Xxxxxxxx Xxxxxxx
36
XXXXXX XXXXXXX XXXX XXXXXX EQUITY
FUNDING, INC.
By: /s/ Xxxxx Xxxxxx
-----------------------------------------
Name: Xxxxx Xxxxxx
Title: Vice President
37
FIRST UNION INVESTORS, INC.
By: /s/ Xxxxxx X. Xxxxxxx
-----------------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Vice President
38
MELLON VENTURES II, L.P.
By: MVMA II, L.P.
Its General Partner
By: MVMA, Inc.
Its General Partner
By: /s/ Xxxx Xxxxx
-----------------------------------------
Name: Xxxx Xxxxx
Title: Vice President
39
SERIES A EXCHANGE HOLDERS:
SCANA COMMUNICATIONS, INC.
By: /s/ Xxxxx X. Xxxxx
-----------------------------------------
Name: Xxxxx X. Xxxxx
Title: Chief Operating Officer
40
MANAGEMENT HOLDERS:
/s/ Xxxxxx X. Xxxxxxx
-----------------------------------------
Xxxxxx X. Xxxxxxx
/s/ Xxxx X. Xxxxxxx
-----------------------------------------
Xxxx X. Xxxxxxx
/s/ Xxxxxxx X. Xxxxxxx, Xx.
-----------------------------------------
Xxxxxxx X. Xxxxxxx, Xx.
/s/ Xxxx X. XxXxxxx
-----------------------------------------
Xxxx X. XxXxxxx
/s/ Xxxxx Xxxxxxxx
-----------------------------------------
Xxxxx Xxxxxxxx
/s/ Xxxxx X. Xxxxxx
-----------------------------------------
Xxxxx X. Xxxxxx
/s/ Xxxxxx X. Xxxx
-----------------------------------------
Xxxxxx X. Xxxx
/s/ Xxxxx X. Xxxxxx
-----------------------------------------
Xxxxx X. Xxxxxx
/s/ Xxxxxx X. Xxxxx
-----------------------------------------
Xxxxxx X. Xxxxx
41
ADDITIONAL STOCKHOLDERS:
42
/s/ Xxxxxxxx X. Xxxxxx III
--------------------------------------
Xxxxxxxx X. Xxxxxx III
43
EXHIBIT A
ADDITIONAL STOCKHOLDERS
Xxxxxxxx X. Xxxxxx III
44
EXHIBIT B
STOCKHOLDER JOINDER AGREEMENT
THIS STOCKHOLDER JOINDER AGREEMENT (this "Agreement") is made and
entered into as of ________, ____, by and among KNOLOGY, INC., a Delaware
corporation (the "Company"), and the stockholders thereof whose signatures
appear below (the "New Stockholders").
Premises
Pursuant to a [Stock Purchase Agreement], dated as of _________,
_____ (the "Purchase Agreement"), by and among [the Company] and the New
Stockholders, each of the New Stockholders have become stockholders of the
Company and as such desire to derive the benefits and burdens associated with
being a stockholder of the Company.
The Company is party to a Stockholders Agreement, dated as of
______, 1999 (as the same may be amended from time to time, the "Stockholders
Agreement"), with certain of the Company's existing stockholders ("Existing
Stockholders") governing certain rights and obligations of the Existing
Stockholders as stockholders of the Company. It is a condition to the obligation
of the Company under the Purchase Agreement that the Company and each of the New
Stockholders execute this Agreement evidencing such New Stockholders' agreement
to be bound by the terms of the Stockholders Agreement. Capitalized terms used
and not otherwise defined herein shall have the respective meanings ascribed
thereto in the Stockholders Agreement.
NOW, THEREFORE, in consideration of the mutual covenants herein contained
and other valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Company and each New Stockholder hereby agree as
follows:
1. The Company and each of the New Stockholders agrees that, from and
after the [issuance/transfer] of the shares of Company Common Stock or Preferred
Stock pursuant to [the Purchase Agreement], by virtue of such New Stockholders'
execution of this Agreement, (i) each of the New Stockholders shall, without any
further action on the part of the Company or any of the New Stockholders, become
parties to the Stockholders Agreement subject to and bound by, and entitled to
the benefits of, all the terms and conditions of the Stockholders Agreement
applicable to an Investor, (ii) the shares of Company Common Stock or Preferred
Stock received by the New Stockholders pursuant to [the Purchase Agreement],
shall be "Investor Stock" for all purposes under the Stockholders Agreement, and
(iii) each of the New Stockholders shall be an "Other Investor" for purposes of
the Stockholders Agreement.
2. A legend in substantially the form required by Section 6.01 of the
Stockholders Agreement shall appear on each certificate representing Shares
issued to the New Stockholders pursuant to the Purchase Agreement.
45
IN WITNESS WHEREOF, each of the parties hereto has executed or caused
this Agreement to be executed by its duly authorized representative as an
agreement under seal as of the date first above written.
KNOLOGY, INC.
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
NEW STOCKHOLDERS:
---------------------------------------
---------------------------------------
