Exhibit 10.2
STOCKHOLDERS AGREEMENT
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THIS AGREEMENT is made as of December 8, 1995, by and among Centennial
Communications Corp., a Delaware corporation (the "Company"), and each of the
investors listed on the signature pages hereto (the "Stockholders").
Capitalized terms used herein are defined in paragraph 5 hereof.
The Stockholders will purchase shares of the Company's Common Stock
pursuant to a Purchase Agreement between the Stockholders and the Company dated
as of the date hereof (the "Purchase Agreement").
The Company and the Stockholders desire to enter into this Agreement for
the purposes, among others, of (i) establishing the composition of the Company's
Board of Directors (the "Board"), (ii) assuring continuity in the management and
ownership of the Company and (iii) limiting the manner and terms by which the
Stockholders' Common Stock may be transferred. The execution and delivery of
this Agreement is a condition to the Stockholders' purchase of the Company's
stock pursuant to the Purchase Agreement.
NOW, THEREFORE, in consideration of the mutual covenants contained herein
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties to this Agreement hereby agree as follows:
1. Board of Directors.
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(a) From and after the Closing (as defined in the Purchase Agreement) and
until the provisions of this paragraph 1 cease to be effective, each Stockholder
shall vote all of its Stockholder Shares (as defined in paragraph 5 hereof) and
any other voting securities of the Company over which such Stockholder has
voting control and shall take all other necessary or desirable actions within
its control (whether in its capacity as a stockholder, director, member of a
board committee or officer of the Company or otherwise, and including, without
limitation, attendance at meetings in person or by proxy for purposes of
obtaining a quorum and execution of written consents in lieu of meetings), and
the Company shall take all necessary and desirable actions within its control
(including, without limitation, calling special board and stockholder meetings),
so that:
(i) subject to paragraph 1(e) below, the authorized number of
directors on the Board shall be established at five directors;
(ii) the following persons shall be elected to the Board:
a. two representatives designated by Centennial Fund IV, L.P.,
initially Xxxx Xxxxxxx and Xxxxxx X. Xxxxxxxx;
b. two representatives designated by Telecom Partners, L.P.,
initially Xxxxxxx X. Xxxxxxx and Xxxxxx XxXxxxxx; and
c. one representative designated by the Company, initially
Xxxxxxx Xxxxxx.
(iii) the removal from the Board (with or without cause) of any
representative designated hereunder by a Stockholder shall be at such
Stockholder's written request, but only upon such written request and under
no other circumstances; and
(iv) in the event that any representative designated hereunder by a
Stockholder for any reason ceases to serve as a member of the Board during
his term of office, the resulting vacancy on the Board shall be filled by a
representative designated by such Stockholder as provided hereunder, and
(v) in the event that any representative designated hereunder by the
Company for any reason ceases to serve as a member of the Board during his
term of office, the resulting vacancy on the Board shall be filled by a
representative designated by the Company as provided hereunder.
(b) The Company shall pay the reasonable out-of-pocket expenses incurred
by each director in connection with attending the meetings of the Board and any
committee thereof.
(c) The rights of each Stockholder under this paragraph 1 shall terminate
at such time as such Stockholder and its Permitted Transferees (as defined in
paragraph 2(d) hereof) hold in the aggregate less than 80% of the Stockholder
Shares held by such persons on the date hereof.
(d) The provisions of this paragraph 1 shall terminate automatically and
be of no further force and effect upon the first to occur of (i) the tenth
anniversary of the date hereof or (ii) a Qualified Public Offering (as defined
in paragraph 5 hereof).
(e) If any party fails to designate a representative to fill a
directorship pursuant to the terms of paragraph 1(ii) or within 30 days after
the date of any subsequent vacancy, the election of a person to such
directorship shall be accomplished in accordance with the Company's bylaws and
applicable law.
2. Restrictions on Transfer of Stockholder Shares.
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(a) Transfer of Stockholder Shares. No Stockholder shall sell, transfer,
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assign, pledge or otherwise dispose of (a "Transfer") any interest in any
Stockholder Shares except pursuant to the provisions of this paragraph 2 or
pursuant to a Public Sale. Each Stockholder agrees not to consummate any
Transfer (other than a Public Sale) until 30 days after the later of the
delivery to the Company and the other Stockholders of such Stockholder's Offer
Notice or Sale Notice (if any), unless the parties to the Transfer have been
finally determined pursuant to this paragraph 4 prior to the expiration of such
30-day period (the "Election Period").
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(b) First Offer Right. At least 30 days prior to making any Transfer of
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any Stockholder Shares (other than a Public Sale), the transferring Stockholder
(the "Transferring Stockholder") shall deliver a written notice (the "Offer
Notice") to the Company and the other Stockholders (the "Other Stockholders").
The Offer Notice shall disclose in reasonable detail the proposed number of
Stockholder Shares to be transferred and the proposed terms and conditions of
the Transfer. First, the Company may elect to purchase all (but not less than
all) of the Stockholder Shares specified in the Offer Notice at the price and on
the terms specified therein by delivering written notice of such election to the
Transferring Stockholders and the Other Stockholders as soon as practical but in
any event within ten days after the delivery of the Offer Notice. If the Company
has not elected to purchase all of the Stockholder Shares within such ten-day
period, each Other Stockholder may elect to purchase all (but not less than all)
of his Pro Rata Share (as defined below) of the Stockholder Shares specified in
the Offer Notice at the price and on the terms specified therein by delivering
written notice of such election to the Transferring Stockholder as soon as
practical but in any event within 20 days after delivery of the Offer Notice.
Any Stockholder Shares not elected to be purchased by the end of such 20-day
period shall be reoffered for the ten-day period prior to the expiration of the
Election Period by the Transferring Stockholder on a pro rata basis to the Other
Stockholders who have elected to purchase their Pro Rata Share. If the Company
or any Other Stockholders have elected to purchase Stockholder Shares from the
Transferring Stockholder, the transfer of such shares shall be consummated as
soon as practical after the delivery of the election notices, but in any event
within 15 days after the expiration of the Election Period. To the extent that
the Company and the Other Stockholders have not elected to purchase all of the
Stockholder Shares being offered, the Transferring Stockholder may, within 90
days after the expiration of the Election Period and subject to the provisions
of subparagraph (c) below, transfer such Stockholder Shares to one or more third
parties at a price no less than 95% of the price per share specified in the
Offer Notice and on other terms no more favorable to the transferees than
offered to the Company and the Other Stockholders in the Offer Notice. The
purchase price specified in any Offer Notice shall be payable solely in cash at
the closing of the transaction or in installments over time, and no Stockholder
Shares may be pledged except on terms and conditions satisfactory to the
Stockholders. Each Stockholder's "Pro Rata Share" shall be based upon such
Stockholder's proportionate ownership of all Stockholder Shares on a fully-
diluted basis.
(c) Participation Rights. At least 30 days prior to any Transfer of
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Stockholder Shares (other than a Public Sale or a Transfer to the Company or the
Other Stockholders pursuant to paragraph 2(b)), the Stockholder making such
Transfer (the "Transferring Stockholder") shall deliver a written notice (the
"Sale Notice") to the Company and the other Stockholders (the "Other
Stockholders"), specifying in reasonable detail the identity of the prospective
transferee(s) and the terms and conditions of the Transfer. The Other
Stockholders may elect to participate in the contemplated Transfer by delivering
written notice to the Transferring Stockholder within 30 days after delivery of
the Sale Notice. If any Other Stockholders have elected to participate in such
Transfer, the Transferring Stockholder and such Other Stockholders shall be
entitled to sell in the contemplated Transfer, at the same price and on the same
terms, a number of Stockholder Shares equal to the product of (i) the quotient
determined by dividing the percentage of Stockholder Shares owned by such person
by the aggregate percentage of Stockholder Shares owned by the Transferring
Stockholder and the Other Stockholders participating in such sale and (ii) the
number of Stockholder Shares to be sold in the contemplated Transfer.
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For example, if the Sale Notice contemplated a sale of 100 Stockholder
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Shares by the Transferring Stockholder, and if the Transferring Stockholder
at such time owns 30% of all Stockholder Shares and if one Other
Stockholder elects to participate and owns 20% of all Stockholder Shares,
the Transferring Stockholder would be entitled to sell 60 shares (30%, 50%
x 100 shares) and the Other Stockholder would be entitled to sell 40 shares
(20%, 50% x 100 shares).
Each Stockholder shall use best efforts to obtain the agreement of the
prospective transferee(s) to the participation of the Other Stockholders in any
contemplated Transfer, and each Stockholder shall not transfer any of its
Stockholder Shares to the prospective transferee(s) if the prospective
transferee(s) declines to allow the participation of the Other Stockholders.
(d) Permitted Transfers. The restrictions contained in this paragraph 2
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shall not apply with respect to any Transfer of Stockholder Shares by any
Stockholder among its Affiliates (collectively referred to herein as "Permitted
Transferees"); provided that the restrictions contained in this paragraph 2
shall continue to be applicable to the Stockholder Shares after any such
Transfer and provided further that the transferees of such Stockholder Shares
shall have agreed in writing to be bound by the provisions of this Agreement
affecting the Stockholder Shares so transferred. "Affiliate" of a Stockholder
means any other person, entity or investment fund controlling, controlled by or
under common control with the Stockholder and any partner of a Stockholder which
is a partnership.
(e) Termination of Restrictions. The restrictions set forth in this
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paragraph 2 shall continue with respect to each Stockholder Share until the
earlier of (i) the date on which such Stockholder Share has been transferred in
a Public Sale, (ii) the date on which such Stockholder Share has been
transferred pursuant to this paragraph 2 (other than subparagraph 2(d)), (iii)
the fifth anniversary of the date of this Agreement or (iv) the consummation of
a Qualified Public Offering.
3. Legend. Each certificate evidencing Stockholder Shares and each
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certificate issued in exchange for or upon the transfer of any Stockholder
Shares (if such shares remain Stockholder Shares as defined herein after such
transfer) shall be stamped or otherwise imprinted with a legend in substantially
the following form:
"The securities represented by this certificate are subject to a
Stockholders Agreement dated as of December 7, 1995, among the issuer
of such securities (the "Company") and certain of the Company's
stockholders. A copy of such Stockholders Agreement will be furnished
without charge by the Company to the holder hereof upon written
request."
The Company shall imprint such legend on certificates evidencing Stockholder
Shares outstanding prior to the date hereof. The legend set forth above shall
be removed from the certificates evidencing any shares which cease to be
Stockholder Shares in accordance with paragraph 2 hereof.
4. Transfer. Prior to transferring any Stockholder Shares (other than in
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a Public Sale) to any person or entity, the transferring Stockholder shall
cause the prospective
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transferee to execute and deliver to the Company and the other Stockholders a
counterpart of this Agreement.
5. Definitions.
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"Independent Third Party" means any person who, immediately prior to the
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contemplated transaction, does not own in excess of 5% of the Company's Common
Stock on a fully-diluted basis (a "5% Owner"), who is not controlling,
controlled by or under common control with any such 5% Owner and who is not the
spouse or descendent (by birth or adoption) of any such 5% Owner or a trust for
the benefit of such 5% Owner and/or such other persons.
"Permitted Transferee" shall have the meaning set forth in paragraph 2(d)
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hereof.
"Public Sale" means any sale of Stockholder Shares to the public pursuant
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to an offering registered under the Securities Act or to the public through a
broker, dealer or market maker pursuant to the provisions of Rule 144 adopted
under the Securities Act.
"Qualified Public Offering" means the sale in an underwritten public
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offering registered under the Securities Act of shares of the Company's Common
Stock resulting in aggregate gross proceeds to the Company of at least $10
million.
"Securities Act" means the Securities Act of 1933, as amended from time to
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time.
"Stockholder Shares" means (i) any Common Stock purchased or otherwise
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acquired by any Stockholder, (ii) any equity securities issued or issuable
directly or indirectly with respect to the Common Stock referred to in clause
(i) above by way of stock dividend or stock split or in connection with a
combination of shares, recapitalization, merger, consolidation or other
reorganization, and (iii) any other shares of any class or series of capital
stock of the Company held by a Stockholder. As to any particular shares
constituting Stockholder Shares, such shares will cease to be Stockholder Shares
when they have been (x) effectively registered under the Securities Act and
disposed of in accordance with the registration statement covering them or (y)
sold to the public through a broker, dealer or market maker pursuant to Rule 144
(or any similar provision then in force) under the Securities Act.
"Sale of the Company" means the sale of the Company to an Independent Third
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Party or group of Independent Third Parties pursuant to which such party or
parties acquire (i) capital stock of the Company possessing the voting power
under normal circumstances to elect a majority of the Company's board of
directors (whether by merger, consolidation or sale or transfer of the Company's
capital stock) or (ii) all or substantially all of the Company's assets
determined on a consolidated basis.
6. Transfers in Violation of Agreement. Any Transfer or attempted
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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.
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7. Amendment and Waiver. Except as otherwise provided herein, no
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modification, amendment or waiver of any provision of this Agreement shall be
effective against the Company or the Stockholders unless such modification,
amendment or waiver is approved in writing by the Company or the holders of at
least a majority of the Stockholder Shares, respectively. The failure of any
party to enforce any of the provisions of this Agreement shall in no way be
construed as a waiver of such provisions and shall not affect the right of such
party thereafter to enforce each and every provision of this Agreement in
accordance with its terms.
8. Severability. Whenever possible, each provision of this Agreement
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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 any other jurisdiction, but this Agreement shall be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.
9. Entire Agreement. Except as otherwise expressly set forth herein,
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this document embodies the complete agreement and understanding among the
parties hereto with respect to the subject matter hereof and supersedes and
preempts 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.
10. Successors and Assigns. Except as otherwise provided herein, this
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Agreement shall bind and inure to the benefit of and be enforceable by the
Company and its successors and assigns and the Stockholders and any subsequent
holders of Stockholder Shares and the respective successors and assigns of each
of them, so long as they hold Stockholder Shares.
11. Counterparts. This Agreement may be executed in separate counterparts
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each of which shall be an original and all of which taken together shall
constitute one and the same agreement.
12. Remedies. The Company and the Stockholders shall be entitled to
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enforce their rights under this Agreement specifically to recover damages by
reason of any breach of any provision of this Agreement and to exercise all
other rights existing in their favor. 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 Company and any Stockholder may in its
sole discretion apply to any court of law or equity of competent jurisdiction
for specific performance and/or injunctive relief (without posting a bond or
other security) in order to enforce or prevent any violation of the provisions
of this Agreement.
13. Notices. Any notice provided for in this Agreement shall be in
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writing and shall be either personally delivered, or mailed first class mail
(postage prepaid) or sent by reputable overnight courier service (charges
prepaid) to the Company at the address set forth below and to any other
recipient at the address indicated on the schedules hereto and to any subsequent
holder of Stockholder Shares subject to this Agreement at such address as
indicated by the Company's records, or 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. Notices will be deemed to have been given
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hereunder when delivered personally, three days after deposit in the U.S. mail
and one day after deposit with a reputable overnight courier service. The
Company's address is:
Centennial Communications Corp.
c/o 0000 Xxxxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx
The address for each Stockholder is set forth on the signature pages hereto.
14. Governing Law. The corporate law of Delaware shall govern all issues
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concerning the relative rights of the Company and its stockholders. All other
questions concerning the construction, validity and interpretation of this
Agreement shall be governed by the internal law, and not the law of conflicts,
of Delaware.
15. Descriptive Headings. The descriptive headings of this Agreement are
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inserted for convenience only and do not constitute a part of this Agreement.
* * * * * *
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the day
and year first above written.
COMPANY CENTENNIAL COMMUNICATIONS CORP.
By /s/ Xxxxxxx X. Xxxxxxx
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Name: Xxxxxxx X. Xxxxxxx
Title: Acting President
STOCKHOLDERS CENTENNIAL FUND IV, L.P.
By: Centennial Holdings IV, L.P.
Its: General Partner
By /s/ Xxxxxx X. Xxxxxxxx
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Name: Xxxxxx X. Xxxxxxxx
Title: General Partner
Address: 0000 Xxxxxxxx
Xxxxx 0000
Xxxxxx, XX 00000
CENTENNIAL HOLDINGS, INC.
By /s/ X. Xxxxxxx Xxxxxxxxxx, Jr.
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Name: X. Xxxxxxx Xxxxxxxxxx, Jr.
Title: President
Address: 0000 Xxxxxxxx
Xxxxx 0000
Xxxxxx, XX 00000
TELECOM PARTNERS, L.P.
By /s/ Xxxxxxx X. Xxxxxxx
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Name: Xxxxxxx X. Xxxxxxx
Title: Managing Member of its
General Partner
Address: 0000 Xxxxxxxx
Xxxxx 0000
Xxxxxx, XX 00000
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