EXHIBIT 10.3
TRANSACTION AGREEMENT
AMONG
CHOICE ONE COMMUNICATIONS INC.
CHOICE ONE COMMUNICATIONS L.L.C.
and
HOLDERS OF
INVESTOR EQUITY
and
MANAGEMENT EQUITY
July 8, 1998
TABLE OF CONTENTS
Page
----
ARTICLE 1 subscription for LLC interests by investor members and management
members; LLC's Investment in the Corporation 2
Section 1.1. Subscription for LLC Interests by Investor Members and Management Members 2
Section 1.2. Purchase and Sale of Common Stock 2
Section 1.3. The Initial Closing 2
ARTICLE 2Conditions to the Initial Closing 2
Section 2.1. Representations and Warranties; Covenants 3
Section 2.2. Adoption of Certificate of Incorporation 3
Section 2.3. Adoption of the Corporation's Bylaws 3
Section 2.4. LLC Agreement 3
Section 2.5. Investor Purchase Agreement 3
Section 2.6. Executive Purchase Agreements 3
Section 2.7. Registration Rights Agreement 4
Section 2.8. Securities Law Compliance 4
Section 2.9. Compliance with Applicable Laws 4
Section 2.10. Initial Closing Documents 4
Section 2.11. Approval of Initial Budget 5
Section 2.12. Waiver 5
ARTICLE 3Subsequent Contributions; Conditions to Each Subsequent
Contribution
Section 3.1. Subsequent Contributions 5
Section 3.2. Approval of Business Plans by the LLC 6
Section 3.3. Effect of Substantial Negative Deviation from Approved
Business Plan or Approved Budget 8
Section 3.4. Conditions to Each Subsequent Contribution 9
Section 3.5. Certain Opt-Out Rights of Fleet and Xxxxxx-Xxxxxx 11
ARTICLE 4Covenants
Section 4.1. Financial Statements and Other Information 14
Section 4.2. Inspection of Property 17
Section 4.3. Affirmative Covenants 18
Section 4.4. Compliance with Agreements 19
Section 4.5. Current Public Information 19
Section 4.6. Intellectual Property Rights 19
Section 4.7. Public Disclosures 20
Section 4.8. Selection of Corporation's Financial Advisor, Underwriter
etc 20
ARTICLE 5Governance
Section 5.1. Management of the Corporation Generally 20
Section 5.2. Governance Rights of the LLC 20
Section 5.3. Corporate Board Composition and Vacancies 25
Section 5.4. Director Expenses; Directors' and Officers' Insurance;
Indemnity and Exculpation 28
Section 5.5. Termination 28
Section 5.6. Voting Rights 28
ARTICLE 6Restrictions on Transfers of Securities 29
Section 6.1. General Securities Laws Restrictions 29
Section 6.2. Restrictions on Transfer of Management Equity 30
Section 6.3. Transfer of Investor Equity 30
Section 6.4. Transfers in Violation of Agreement 41
Section 6.5. Right to Participate in Certain Sales 41
Section 6.6. All Holders Required to Participate in Certain Sales 44
ARTICLE 7Representations and Warranties of the Corporation 47
Section 7.1. Organization, Corporate Power and Licenses 47
Section 7.2. Capital Stock and Related Matters 48
Section 7.3. Authorization; No Breach 48
Section 7.4. Conduct of Business; Absence of Liabilities 49
Section 7.5. No Subsidiaries 49
Section 7.6. Brokerage 49
Section 7.7. Government Consent, Etc 49
Section 7.8. Compliance with Laws 50
Section 7.9. Disclosure 50
Section 7.10. Litigation 50
Section 7.11. Executive Officers 50
Section 7.12. Taxes 50
ARTICLE 8Definitions 51
Section 8.1. Definitions 51
Section 8.2. Knowledge 60
ARTICLE 9Miscellaneous Provisions 61
Section 9.1. Expenses 61
Section 9.2. Remedies 62
Section 9.3. LLC's Investment Representations 62
Section 9.4. Consent to Amendments 81
Section 9.5. Survival of Representations and Warranties 81
Section 9.6. Successors and Assigns 81
Section 9.7. Capital and Surplus; Special Reserves 82
Section 9.8. Severability 82
Section 9.9. Counterparts 82
Section 9.10. Descriptive Headings; Interpretation; No Strict Construction 82
Section 9.11. Governing Law 83
Section 9.12. Submission to Jurisdiction 83
Section 9.13. Notices 83
TRANSACTION AGREEMENT
THIS TRANSACTION AGREEMENT (this "Agreement") is made as of July 8, 1998,
among Choice One Communications Inc., a Delaware corporation (the
"Corporation"), and Choice One Communications L.L.C., a Delaware limited
liability company (the "LLC"), and each person who on the date hereof or
hereafter becomes a holder of Investor Equity or Management Equity and who
executes an appropriate counterpart of this Agreement. Capitalized terms used
but not otherwise defined herein have the meanings ascribed to such terms in
Article 8 below.
WHEREAS, the Investor Members and the Management Members desire to make
investments in the Corporation to be held initially through ownership of Units
in the LLC;
WHEREAS, this Agreement provides for, among other things, (i) the issuance
of the Corporation's common stock, par value $0.01 per share (the "Common
Stock"), to the LLC at the Initial Closing (as defined below) and the making of
Subsequent Contributions (as defined below) on the terms and conditions hereof,
(ii) certain matters relating to the governance of the Corporation and certain
other covenants of the Corporation in favor of the other parties hereto and
(iii) restrictions on transfer of Units and Common Stock;
WHEREAS, the Investor Members and the Management Members are parties to the
LLC Agreement governing their relationships as Persons holding interests in the
profits, losses, and distributions of the LLC;
WHEREAS, each Management Member has entered into (and each subsequent
Management Member will enter into) an Executive Purchase Agreement (as defined
below) with the LLC and the Corporation providing for certain rights and
obligations relating to the Management Member's investment in the LLC and the
Corporation and certain obligations of the Management Member as an employee of
the Corporation;
NOW, THEREFORE, in consideration of the mutual promises made herein and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto, intending to be legally bound, agree as
follows:
ARTICLE 1
SUBSCRIPTION FOR LLC INTERESTS BY INVESTOR MEMBERS AND MANAGEMENT
MEMBERS; LLC'S INVESTMENT IN THE CORPORATION
Section 1.1. Subscription for LLC Interests by Investor Members and
Management Members. On the date hereof, immediately prior to the transactions
contemplated by Section 1.02, each Investor Member that has executed a
counterpart hereof on the date hereof will have subscribed for Class A Units in
the LLC pursuant to the Investor Purchase Agreement (as defined below), and each
Management Member that has executed a counterpart hereof on the date hereof will
have subscribed for Class B Units in the LLC pursuant to such Management
Member's Executive Purchase Agreement.
Section 1.2. Purchase and Sale of Common Stock. At the Initial Closing
(as defined below), subject to the terms and conditions set forth herein, the
Corporation shall sell to the LLC and the LLC shall purchase from the
Corporation 60,000 shares of Common Stock at a price per share of $100, for an
aggregate purchase price equal to $6,000,000 of which (i) $5,907,020.70 (the
"Initial Contribution") will be funded on the date hereof and (ii) $92,979.30
will be funded as soon as the authorized but unissued Class B Units are issued
pursuant to Section 3.02(a) of the LLC Agreement.
Section 1.3. The Initial Closing. The closing of the purchase and sale of
Common Stock (the "Initial Closing") shall take place at the offices of Xxxxx
Xxxx & Xxxxxxxx in New York, New York, at 10:00 a.m. local time on the date
hereof (the "Initial Closing Date"). At the Initial Closing, the Corporation
shall deliver to the LLC stock certificates evidencing the Common Stock to be
purchased at the Initial Closing, registered in the name of the LLC, upon the
LLC's payment of the purchase price therefor by delivery to the Corporation of a
check, or wire transfer of immediately available funds to an account designated
by the Corporation, in an aggregate amount equal to the Initial Contribution.
ARTICLE 2
Conditions to the Initial Closing
The obligation of the LLC to purchase and pay for the Common Stock at the
Initial Closing is subject to the satisfaction as of the Initial Closing of the
following conditions:
2
Section 2.1. Representations and Warranties; Covenants. The
representations and warranties contained in Article 7 hereof and in each
Executive Purchase Agreement executed on the date hereof shall be true and
correct in all material respects at and as of the Initial Closing as though then
made, and the Corporation shall have performed in all material respects all of
the covenants required to be performed by it hereunder prior to the Initial
Closing.
Section 2.2. Adoption of Certificate of Incorporation. The Corporation's
amended and restated certificate of incorporation shall be in form and substance
as set forth in Exhibit 1 hereto (the "Certificate of Incorporation"), shall be
in full force and effect under the laws of Delaware as of the Initial Closing,
and shall not have been further amended or modified.
Section 2.3. Adoption of the Corporation's Bylaws. The Corporation's
amended and restated bylaws shall have been duly authorized and adopted in form
and substance as set forth in Exhibit 2 attached hereto (as so adopted, the
"Bylaws"), shall be in full force and effect under the laws of Delaware as of
the Initial Closing, and shall not have been further amended or modified.
Section 2.4. LLC Agreement. The Unitholders shall have entered into the
Limited Liability Company Agreement dated as of the date hereof governing the
affairs of the LLC (the "LLC Agreement"), and the LLC Agreement shall be in full
force and effect as of the Initial Closing.
Section 2.5. Investor Purchase Agreement. The LLC and the Investor
Members shall have entered into the Investor Purchase Agreement dated as of the
date hereof (the "Investor Purchase Agreement"), and the Investor Purchase
Agreement shall be in full force and effect as of the Initial Closing.
Section 2.6. Executive Purchase Agreements. (a) The LLC and the
Corporation shall have entered into a separate executive purchase agreement, in
form and substance substantially similar to that set forth in Exhibit 3 attached
hereto (each such agreement and the agreement referred to in Section 2.06(b), an
"Executive Purchase Agreement"), with each of Xxx Xxxxxx-Xxx ("Xxxxxx-Xxx"),
Xxxxx Xxxxxxx ("Xxxxxxx"), and Xxxxxxx Xxxxxx ("Xxxxxx"), and such Executive
Purchase Agreements shall be in full force and effect as of the Initial Closing.
(b) The LLC and the Corporation shall have entered into an Executive
Purchase Agreement, in form and substance substantially similar to that set
forth in Exhibit 4 attached hereto, with Xxxxx Xxxxxx, and such Executive
Purchase Agreement shall be in full force and effect as of the Initial Closing.
3
Section 2.7. Registration Rights Agreement. The Corporation and each of
the Unitholders shall have entered into the Registration Rights Agreement dated
as of the date hereof (the "Registration Rights Agreement"), and the
Registration Rights Agreement shall be in full force and effect as of the
Initial Closing.
Section 2.8. Securities Law Compliance. The Corporation shall have made
all filings under all applicable federal and state securities laws necessary to
consummate the issuance, in compliance with such laws, of the Common Stock to be
issued at the Initial Closing pursuant to this Agreement.
Section 2.9. Compliance with Applicable Laws. The purchase of Common
Stock by the LLC hereunder at the Initial Closing shall not be prohibited by any
applicable law or governmental rule or regulation and shall not subject the LLC
to any penalty, liability or, in the LLC's reasonable judgment, other onerous
condition under or pursuant to any applicable law or governmental rule or
regulation, and the purchase of the Common Stock by the LLC hereunder shall be
permitted by the laws, rules and regulations of the jurisdictions and
governmental authorities and agencies to which the LLC is subject.
Section 2.10. Initial Closing Documents. The Corporation shall have
delivered to the LLC all of the following documents each of which shall be
satisfactory in form and substance to the LLC and its counsel:
(a) an Officer's Certificate, dated the Initial Closing Date, stating
that the conditions specified in Sections 2.01-2.03 and 2.08-2.09, inclusive,
have been fully satisfied;
(b) certified copies of (i) the resolutions duly adopted by the Board
authorizing the execution, delivery and performance of this Agreement, the
Registration Rights Agreement and each of the other agreements contemplated
hereby, the amendment and restatement of the Corporation's Certificate of
Incorporation referred to in Section 2.02, the adoption of the Corporation's
Bylaws referred to in Section 2.03, the issuance and sale of the Common Stock at
the Initial Closing, and the consummation of all other transactions to occur as
of the Initial Closing as contemplated by this Agreement, and (ii) the written
consent executed by the Corporation's sole incorporator electing Xxxxx Xxxxxx as
initial sole director;
(c) certified copies of the Certificate of Incorporation and the Bylaws,
each as in effect at the Initial Closing;
4
(d) a certified copy of the Certificate of Formation as in effect at the
Initial Closing;
(e) copies of all third party and governmental consents, approvals and
filings required in connection with the consummation of the transactions to
occur as of the Initial Closing hereunder;
(f) an opinion of Nixon, Hargrave, Devans & Xxxxx LLP, counsel to the
Corporation in form and substance satisfactory to the LLC; and
(g) such other documents relating to the transactions contemplated by
this Agreement as the LLC or its special counsel may reasonably request.
Section 2.11. Approval of Initial Budget. The LLC shall have approved the
Corporation's initial budget (including the payment of deposits by the
Corporation for two telephone switches), attached hereto as Exhibit 6, covering
the succeeding six months, prepared on a monthly basis for the Corporation and
its Subsidiaries by market and on an aggregate basis, which includes with
respect to such six-month period (i) the information required by Sections
3.02(a)(ii) and 3.02(b) and (ii) statements of anticipated income and cash
flows, balance sheets and proposed capital expenditures (upon which approval,
such budget shall constitute an "Approved Budget" for purposes of Section
3.02(b)).
Section 2.12. Waiver. Any condition specified in this Article 2 that is
legally permissible to be waived may be waived if such waiver is consented to by
the LLC in writing.
ARTICLE 3
Subsequent Contributions; Conditions to Each Subsequent Contribution
Section 3.1. Subsequent Contributions. Subject to the terms and
conditions set forth below, the LLC shall, after the Initial Closing, be
required to make capital contributions to the Corporation ("Subsequent
Contributions") from time to time as proposed by the Corporation's chief
executive officer and set forth in a written notice from such chief executive
officer on behalf of the Corporation (the "Subsequent Contribution Notice") sent
to the LLC and to each Unitholder at least 30 days prior to the proposed date of
the applicable Subsequent Contribution (the "Drawdown Date"). Such notice shall
set forth the aggregate amount of the proposed Subsequent Contribution and shall
specify in reasonable detail the intended use of such Subsequent Contribution by
the Corporation, including a breakdown of the portion of such Subsequent
5
Contribution to be expended in respect of each Approved Business Plan (including
a good faith estimate as to the timing of such expenditures and the amount
thereof to be contributed by each Unitholder). With respect to each Subsequent
Contribution, subject to the terms and conditions hereof, the LLC shall deliver
to the Corporation a check, or wire transfer of immediately available funds to
an account designated by the Corporation, in an aggregate amount equal to the
applicable Subsequent Contribution. If at any time after the date hereof the LLC
makes any contribution to the capital of the Corporation and the amount of such
capital contribution exceeds the LLC's then-outstanding unpaid obligations (if
any) to make the Initial Contribution and all Subsequent Contributions required
to be made prior to such time (the amount of any such excess, an "Excess
Contribution"), then such Excess Contribution shall be credited dollar for
dollar against the LLC's obligation to make Subsequent Contributions on Drawdown
Dates occurring after the date of such Excess Contribution.
Section 3.2. Approval of Business Plans by the LLC. (a) Approval of
Business Plan. With respect to any market in which the Corporation proposes to
commence operations, so long as the LLC may be required to make Subsequent
Contributions hereunder, the chief executive officer shall submit to the LLC for
its approval a business proposal setting forth (i) proposed business activities
of the Corporation in such specified market during the 10-year period (or such
other period as shall otherwise be agreed to by the LLC and the executive
management) commencing on the date of such business proposal (or, if longer, the
period running from the date of such business proposal until the date estimated
in such proposal as the "break even" point for the Corporation's operations in
such market) (including the identification of key managers to be hired and the
proposed compensation and terms for each such hire); projections of revenues,
expenses, income and cash flows from such business activities in such period;
projections of the amounts, timing, and proposed terms for lease financing,
vendor financing and other financing to be obtained by the Corporation to
support such business activities during such period; the best estimates of the
chief executive officer and the Executive Managers as to the amounts and timing
of periodic capital drawdowns to be made by each Unitholder to support such
business activities during such period; and a budget of proposed expenditures of
such capital in such period; and (ii) a budget prepared on a monthly basis
covering the initial 12 months for such market setting forth projections of cash
flows, revenues, expenses, income and cash flows from such business activities
in such period; projections of the amounts, timing, and proposed terms for lease
financing, vendor financing and other financing to be obtained by the
Corporation to support such business activities during such period; and a budget
of proposed expenditures of such capital in such period. Upon approval by the
LLC, such business proposal shall constitute an "Approved Business Plan." It is
6
understood that, without limiting the discretion of the LLC to approve or to
decline to approve any such business plan with respect to a specified market,
the LLC will not approve any business plan submitted unless, among other things,
(i) key local managers for such market have been identified, have been approved
for hiring pursuant to Section 5.02 hereof and Section 3.02 of the LLC Agreement
and are ready, willing and able to commence employment with the Corporation,
(ii) in the case of the first such business proposal submitted to the LLC, the
Corporation shall have in place a term life insurance policy for the Founder
(which insurance policy shall be owned by the Corporation and under which the
Corporation shall have been named the sole beneficiary), in form and substance
acceptable to the LLC, providing coverage in an amount not less than $10,000,000
and (iii) in the case of a business plan proposed to the LLC (x) after business
plans for two markets have been approved or (y) after 50% of the Maximum
Commitment has been contributed by the Investor Members and the Management
Members, a binding, written commitment for $45,000,000 (or such other amount
determined by the LLC) of vendor financing, on terms approved by the LLC, has
been obtained by the Corporation.
(b) Approval of Annual Budget by the LLC. So long as the LLC may be
required to make Subsequent Contributions hereunder, at least 30 days but not
more than 90 days prior to the beginning of each fiscal year, the Corporation
shall submit to the LLC for its approval a proposed annual budget prepared on a
monthly basis for the Corporation and its Subsidiaries by market and on an
aggregate basis covering the next succeeding fiscal year (displaying anticipated
statements of income and cash flows and balance sheets and budgeted capital
expenditures) ("Proposed Budget"); provided that prior to December 1, 1998, the
Corporation shall submit to the LLC for its approval a Proposed Budget covering
the period between the date hereof and December 31, 1999 (the "Benchmark
Budget"). Each Proposed Budget shall also set forth the total amount of
Subsequent Contributions required to be made under such Proposed Budget and a
breakdown of the portion of such Subsequent Contributions to be expended in
respect of each Approved Business Plan (including a good faith estimate as to
the timing of such expenditures and the amount thereof to be contributed by each
Unitholder). The LLC shall approve or disapprove the proposed annual budget
within 20 days of the submission of such budget by the Corporation to the LLC.
Upon approval by the LLC, each such Proposed Budget shall constitute an
"Approved Budget." It is expected that the LLC will approve a Proposed Budget
that is consistent with all Approved Business Plans theretofore approved.
(c) Required Revision of Annual Budget. The Corporation shall submit
with any business proposal submitted to the LLC pursuant to Section 3.02(a) a
revised annual Proposed Budget described in Section 3.02(b) which incorporates
7
such business proposal, including any budget items, for the fiscal year in which
such business proposal first requires funding (it being understood that if an
Approved Budget does not yet exist for such fiscal year, the Corporation must
deliver a Proposed Budget for such fiscal year). The LLC shall not be obligated
to make any Subsequent Contribution with respect to any items in an Approved
Business Plan or Approved Budget unless and until a revised annual Proposed
Budget for the relevant fiscal year that incorporates such business proposal and
all Approved Business Plans has been approved by the LLC.
(d) Amendment of Approved Business Plan or Approved Budget. As soon as
an Approved Business Plan or an Approved Budget ceases to be such pursuant to
Section 3.03, the Corporation shall promptly prepare a revision thereof
(consistent with the information required under Section 3.02(a) or 3.02(b), as
applicable) and deliver such proposed revision to the LLC for its approval. The
Corporation shall also promptly upon preparation of any other significant
budgets and of any other revision of an Approved Business Plan or of an annual
or other budget deliver such budgets and revisions to the LLC for its approval.
When the Corporation submits a revision of an Approved Business Plan (or one
that has ceased to be such pursuant to Section 3.03), the Corporation must also
submit a revised Proposed Budget consistent with the process described in
Section 3.02(c). If an Approved Budget ceases to be such pursuant to Section
3.03, the LLC shall not be obligated to make any Subsequent Contribution with
respect to any items in the relevant budget unless and until the proposed
revision of such budget is approved by the LLC (upon approval of which the
revision thereof will be deemed the applicable Approved Budget hereunder).
(e) Continued Effect of this Section after Maximum Commitment Has Been
Fully Drawn and After Dissolution of the LLC. After the LLC is no longer
required to make Subsequent Contributions hereunder, as well as after
dissolution of the LLC (but after dissolution of the LLC only so long as the
holders of Investor Equity hold at least 10% of the outstanding Common Stock in
the aggregate), management of the Corporation will continue to be required to
seek the prior approval of the LLC (or after dissolution of the LLC, the Board)
for proposed business plans and Proposed Budgets consistent with the
requirements as to timing, content and other procedures set forth in this
Section 3.02.
Section 3.3. Effect of Substantial Negative Deviation from Approved
Business Plan or Approved Budget. An Approved Business Plan for a particular
market shall cease to be such and shall not be considered or deemed to be an
Approved Business Plan for any purpose whatsoever (whether under this Agreement,
the LLC Agreement, or otherwise) as soon as the revenues, expenses, available
financing, capital expenditures, capital requirements, or other business
8
operations of the Corporation in the market to which such plan relates reflect,
in the good faith judgment of the LLC, a substantial negative deviation from
such plan's estimates, plans, and projections of any of the foregoing. An
Approved Budget shall cease to be such and shall not be considered or deemed to
be an Approved Budget for any purpose whatsoever (whether under this Agreement,
the LLC Agreement, or otherwise) as soon as the Corporation's revenues,
expenses, available financing, capital expenditures, capital requirements,
results of operations, cash flows or other business operations of the
Corporation reflect, in the good faith judgment of the LLC, a substantial
negative deviation from such budget. It is understood that in determining the
existence or nonexistence of a "substantial negative deviation," the LLC shall
consider such plan's estimates, plans, and projections or such budget in the
aggregate and shall not consider any one factor or measure in isolation to the
extent a deviation in such factor or measure does not impact the plan or budget
as a whole.
Section 3.4. Conditions to Each Subsequent Contribution . Notwithstanding
anything else contained herein, the obligation of the LLC to make any Subsequent
Contribution to the capital of the Corporation is subject to the satisfaction as
of the applicable Drawdown Date of each of the following conditions:
(a) Authorized by Approved Budgets. The applicable Subsequent
Contribution shall be expressly contemplated and authorized under the terms of
the Corporation's applicable Approved Budget, and such Subsequent Contribution
shall not exceed the aggregate capital requirements of the Corporation during
the 6-month period (or such longer or shorter time period as agreed to by the
LLC and the Corporation's chief executive officer) commencing on the Drawdown
Date for such Subsequent Contribution as set forth in the Corporation's
applicable Approved Budget (taking into account any prior Subsequent
Contribution to the extent the time period for such prior Subsequent
Contribution overlaps with the time period for the present Subsequent
Contribution).
(b) Representations and Warranties. The representations and warranties
contained in Sections 7.01 (Organization), 7.02(b) (Capital Stock), 7.03
(Authorization), 7.06 (Brokerage), 7.07 (Governmental Consent), 7.08 (Compliance
with Laws), 7.09 (Disclosure), 7.10 (Litigation), 7.11 (Executive Officers) and
7.12 (Taxes) hereof and in each of the Executive Purchase Agreements shall be
true and correct in all respects at and as of the applicable Drawdown Date as
though then made, except to such extent as would not reasonably be expected to
have a Material Adverse Effect.
9
(c) No Breach or Default. Neither the Corporation nor any of its
Subsidiaries shall (i) have breached or be in default of any of its obligations
in any material respect under any agreement to which it is a party or (ii) have
failed to comply with any of the provisions of its certificate of incorporation
or bylaws as then in effect.
(d) No Material Adverse Effect. In the good faith judgment of the LLC,
there shall not have occurred a Material Adverse Effect.
(e) Compliance with Applicable Laws; Contribution Not Prohibited. The
making of the applicable Subsequent Contribution by the LLC hereunder shall not
be prohibited by (i) any applicable law or governmental rule or regulation and
shall not subject the LLC to any penalty, liability or, in the LLC's reasonable
judgment, other onerous condition under or pursuant to any applicable law or
governmental rule or regulation, and the making of such Subsequent Contribution
by the LLC hereunder shall be permitted by the laws, rules and regulations of
the jurisdictions and governmental authorities and agencies to which the LLC is
subject or (ii) any applicable judgment, injunction or order of any court or
governmental agency or body. There shall not be pending or threatened before or
by any court, arbitrator or governmental agency or body, any litigation,
investigation or other proceeding seeking such prohibition.
(f) Documents to be Delivered on Drawdown Dates. The Corporation shall
have delivered to the LLC all of the following documents:
(i) an Officer's Certificate, dated the applicable Drawdown Date,
stating that the conditions specified in Sections 3.04(a) through 3.04(d),
inclusive, have been fully satisfied (it being understood and agreed that
such Certificate must include a certification that no Material Adverse
Change has occurred); and
(ii) such other documents relating to the transactions to occur at
such Subsequent Contribution as the LLC or its special counsel may
reasonably request.
(g) Maximum Commitment. The aggregate amount of the applicable
Subsequent Contribution, together with the Initial Contribution and all
previously made Subsequent Contributions, shall not exceed the Maximum
Commitment.
(h) Nondissolution of LLC. The LLC shall not have been dissolved or
terminated; provided, however, that any obligation to make Subsequent
10
Contributions on a Drawdown Date prior to such dissolution shall remain in
existence after such dissolution or termination of the LLC.
(i) Bankruptcy. The Corporation shall (i) not have commenced a case or
other proceeding, nor shall a case or other proceeding have been commenced
against the Corporation, seeking liquidation, reorganization or other relief
with respect to itself or its debts under any bankruptcy, insolvency or other
similar law now or hereafter in effect or seeking the appointment of a trustee,
receiver, liquidator, custodian or other similar official of all or any
substantial part of its property, (ii) not have consented to any such relief or
to any such appointment in an involuntary case or other proceeding commenced
against it, (iii) not have made a general assignment for the benefit of
creditors, (iv) not have failed generally to pay its debts as they become due
and (v) not have taken any corporate action to authorize any of the foregoing.
(j) Management Report. The LLC shall have received a report from the
Founder and Executive Managers setting forth significant recent developments
relating to the Corporation's business operations such as new business lines
which have been added since the last Drawdown Date and the Corporation's current
market share in its markets.
(k) Waiver. Any condition specified in this Article 3 that is legally
permissible to be waived may be waived if consented to by the LLC in writing.
Section 3.5. Certain Opt-Out Rights of Fleet and Xxxxxx-Xxxxxx. (a) If
(i) the requisite approval of the LLC is obtained for (A) any proposed business
plan pursuant to Section 3.02(a), (B) any amendment of a business plan pursuant
to Section 3.02(d) proposing a significant increase in the amount required to be
contributed by each Unitholder from the amount that was required under the
related business plan previously approved pursuant to Section 3.02(a) or (C) any
acquisition pursuant to Section 5.02(d)(i)(C)(2) of the LLC Agreement (which
acquisition is to be funded in any part by a Subsequent Contribution under an
Approved Budget that incorporates an Approved Business Plan reflecting such
acquisition), and (ii) the Representative of Fleet and/or Xxxxxx-Xxxxxx, as the
case may be, does not vote in favor of any of the events described in clauses
(A), (B) or (C), then in any such case Xxxxxx-Xxxxxx and/or Fleet may, within
seven business days of such approval by the LLC, by written notice (the "Opt-Out
Notice") to the LLC and the other Investor Members elect (the "Opt-Out
Election") to be treated thenceforth as an "Opt-Out Investor." Such election
shall result in such Opt-Out Investor having the rights, obligations and
consequences described below in Section 3.05(b). Upon receipt of an Opt-Out
Notice from an Opt-Out Investor, either Fleet or Xxxxxx-Xxxxxx, as the case may
11
be, may also elect to be treated as an Opt-Out Investor by providing, within
three business days of receipt of such Opt-Out Notice, its own Opt-Out Notice to
the LLC and each other Investor Member, whereupon such electing Investor Member
shall also be treated as an Opt-Out Investor.
(b) The following shall be the rights and obligations of, and the
consequences of being, an Opt-Out Investor for purposes of the Transaction
Agreement, the LLC Agreement and the other agreements contemplated hereby and
thereby:
(i) An Opt-Out Investor shall, for a period of six months after the
Opt-Out Election, in order to enable the Corporation to fulfill its
obligations to make Subsequent Contributions with respect to all Approved
Business Plans and Approved Budgets which were approved by the LLC pursuant
to this Article 3 prior to such Opt-Out Election, remain obligated to
provide additional Capital Contributions to the LLC in an amount equal to
its pro rata share (determined pursuant to Section 3.03(a) of the LLC
Agreement before giving effect to clause (iii) below) of the aggregate
amount of Capital Contributions required to be provided to the LLC by all
of its Members in order to permit the LLC to make any such Subsequent
Contributions which it has not already contributed to the Corporation.
(ii) Except as provided in Section 3.05(b)(i) or 3.05(b)(iv), an
Opt-Out Investor shall not have any right or obligation to make any other
capital contributions to or investments in the LLC or the Corporation.
(iii) The aggregate amount of Capital Contributions made by an
Opt-Out Investor to the LLC prior to the Opt-Out Election plus the amount
required to be subsequently contributed by it to the LLC pursuant to
Section 3.05(b)(i) is referred to as such Opt-Out Investor's "Opt-Out
Commitment." The number of Units held by such Opt-Out Investor immediately
prior to the Opt-Out Election (the "Initial Unit Amount") will be
automatically reduced to the number corresponding to the aggregate dollar
amount of such Opt-Out Commitment (assuming for this purpose that each Unit
were equivalent to $1 of commitment) (the "Adjusted Unit Amount"). The
number of Units by which such Opt-Out Investor's Initial Unit Amount
exceeds its Adjusted Unit Amount will be offered (the "Opt-Out Units
Offer"), by written notice, for reissuance to each other Investor Member
that is not an Opt-Out Investor based on each such Investor Member's pro
rata ownership, determined immediately prior to such reissuance, of the
aggregate amount of Units held by all the
12
Investor Members offered such Units. If any such Investor Member subscribes
for less than its full pro rata share of offered Units pursuant to the Opt-
Out Units Offer, such unsubscribed portion shall be offered to the other
Investor Members (that are not Opt-Out Investors) in a similar manner. Such
Opt-Out Units Offer will be deemed rejected by an Investor Member if not
accepted by written notice to the LLC within five business days of such
Opt-Out Units Offer. The maximum commitment of each Investor Member who
subscribes for such Units shall be increased by $1 times the number of
Units so subscribed for. To the extent the Units so offered are not
accepted by any of such other Investor Members, they will be deemed
canceled and the Maximum Commitment will be reduced accordingly.
(iv) Each of the Opt-Out Investors hereby unconditionally releases
and waives, to the fullest extent permitted by applicable law, any and all
rights it may have to approve, object to or make any claim (including for
breach of fiduciary or other duty by any other Investor Member or any of
its Affiliates, designated Directors, designated Representatives or any
other Person) with respect to the amount, timing or terms of any further or
future equity or debt financing of or by the LLC or the Corporation or the
terms of any amendment to this Agreement, the LLC Agreement or the other
agreements contemplated hereby and thereby consistent with such financing
and related arrangements (regardless of whether such financing is senior or
dilutive to the equity ownership of such Opt-Out Investor); provided that
each Opt-Out Investor will be offered the opportunity to participate in any
such future equity or debt financing of or by the LLC or the Corporation,
that is dilutive to its equity ownership position, based on its pro rata
ownership, determined after giving effect to Section 3.05(b)(iii) above, of
the aggregate number of outstanding Units.
(v) An Opt-Out Investor shall immediately cease to have any rights
granted in Section 5.02(d)(i)(B) or 5.02(d)(i)(C) of the LLC Agreement.
(vi) An Opt-Out Investor will continue to hold the number of Class
A Units corresponding to the aggregate dollar amount of its Opt-Out
Commitment (which Units will not be subject to repurchase pursuant to
Section 3.04 of the LLC Agreement by virtue of the Opt-Out Election, but
will remain subject to Section 3.04 of the LLC Agreement in all other cases
including a breach by such Opt-Out Investor of Section 3.05(b)(i) above)
and, except as otherwise provided in this Section 3.05, will
13
continue to have all its other rights and obligations under the Transaction
Agreement, the LLC Agreement and the other agreements contemplated hereby
and thereby, including, without limitation, its voting rights (after giving
effect to Section 3.05(b)(iii) and 3.05(b)(v)), rights under Section 9.04,
rights to distributions under Article 4 of the LLC Agreement and its
registration rights under the Registration Rights Agreement.
ARTICLE 4
Covenants
Section 4.1. Financial Statements and Other Information. The Corporation
shall deliver (i) to each holder of Management Equity (so long as such holder
does not "participate" (as such term is defined in the form executive purchase
agreement attached hereto as Exhibit 3) in any business that may be or is
competitive with any business conducted by the Corporation or any Subsidiary and
has not committed a Vesting Termination Breach (also as defined in said Exhibit
3), the information set forth in Section 4.01(c) below, and (ii) to the LLC (so
long as it holds any Common Stock), to each holder of Investor Equity or its
Affiliates, and to any subsequent holder of at least 5% of the Investor Equity
(so long as such holder or any of its Affiliates holds at least 5% of the
Investor Equity) (the LLC, each holder of Investor Equity or Affiliate, and each
other such holder, a "Qualified Holder") all the information described in this
Section 4.01:
(a as soon as available but in any event within 30 days after the end
of each monthly accounting period in each fiscal year: (i) unaudited
consolidating and consolidated statements of income and cash flows of the
Corporation and its Subsidiaries for such monthly period and for the period from
the beginning of the fiscal year to the end of such month, and unaudited
consolidating and consolidated balance sheets of the Corporation and its
Subsidiaries as of the end of such monthly period, setting forth in each case
comparisons to the Corporation's annual budget and to the corresponding period
in the preceding fiscal year, all such statements shall be prepared in
accordance with generally accepted accounting principles, consistently applied
(subject to the absence of footnote disclosures and to changes resulting from
normal year-end adjustments for recurring accruals), and shall be certified by
the Corporation's chief financial officer, and (ii) a status report prepared by
the Corporation's chief financial officer, indicating whether the Corporation
has met its budgeted financial goals (including, without limitation, those
specified in any Approved Business Plan or Approved Budget and those delivered
pursuant to Section 4.01(e) below),
14
discussing in reasonable detail the reasons for any variation from such goals,
and describing what actions the Corporation and its Subsidiaries have taken and
propose to take in order to meet budgeted financial targets in the future;
(b within 45 days after the end of each quarterly accounting period in
each fiscal year, an Officer's Certificate stating that neither the Corporation
nor any of its Subsidiaries is in default in any material respect under any of
its agreements or, if any such default exists, specifying the nature and period
of existence thereof and what actions the Corporation and its Subsidiaries have
taken and propose to take with respect thereto;
(c within 90 days after the end of each fiscal year, consolidating and
consolidated statements of income and cash flows of the Corporation and its
Subsidiaries for such fiscal year, and consolidating and consolidated balance
sheets of the Corporation and its Subsidiaries as of the end of such fiscal
year, setting forth in each case comparisons to the Corporation's annual budget
and to the preceding fiscal year, all prepared in accordance with generally
accepted accounting principles, consistently applied, and accompanied by (i)
with respect to the consolidated portions of such statements, an opinion
containing no exceptions or qualifications (except for qualifications regarding
specified contingent liabilities) of one of the "Big Five" independent
accounting firms selected by the audit committee of the Corporation, (ii) a
certificate from such accounting firm, addressed to the Board, stating that in
the course of its examination nothing came to its attention that caused it to
believe that there was any default specified in Section 4.01(b) in existence or
that there was any other default by the Corporation or any Subsidiary in the
fulfillment of or compliance with any of the material terms, covenants,
provisions or conditions of any agreement to which the Corporation or any
Subsidiary is a party or, if such accountants have reason to believe any such
default by the Corporation or any Subsidiary exists, a certificate specifying
the nature and period of existence thereof, and (iii) a copy of such firm's
annual management letter to the Board;
(d promptly upon receipt thereof, any additional reports, management
letters or other detailed information concerning significant aspects of the
Corporation's operations or financial affairs given to the Corporation by its
independent accountants (and not otherwise contained in other materials provided
hereunder);
(e at least 30 days but not more than 90 days prior to the beginning
of each fiscal year, the Proposed Budget and, promptly upon preparation thereof,
any other significant budgets prepared by the Corporation and any revisions of
such
15
annual or other budgets, in each case for approval by the LLC pursuant to
Section 3.02;
(f promptly (but in any event within five business days) after the
discovery or receipt of notice of (i) any material lawsuit or proceeding against
the Corporation or any of its Subsidiaries or executive officers, (ii) any
default in any material respect under any agreement to which the Corporation or
any of its Subsidiaries or executive officers is a party, (iii) any condition or
event which is reasonably likely to result in any material liability under any
federal, state or local statute or regulation relating to public health and
safety, worker health and safety or pollution or protection of the environment
or (iv) any other material adverse change, event or circumstance affecting the
Corporation or any Subsidiary or executive officer (including, without
limitation, the filing of any litigation against the Corporation or any
Subsidiary or executive officer or the existence of any dispute with any Person
which involves a reasonable likelihood of such litigation being commenced), an
Officer's Certificate specifying the nature and period of existence thereof and
what actions the Corporation and its Subsidiaries and executive officers have
taken and propose to take with respect thereto;
(g within ten days after transmission thereof, copies of all financial
statements, proxy statements, reports and any other general written
communications which the Corporation sends to its stockholders and copies of all
registration statements and all regular, special or periodic reports which it
files, or (to its knowledge) any of its officers or directors file with respect
to the Corporation, with the Securities and Exchange Commission or with any
securities exchange on which any of its securities are then listed, and copies
of all press releases and other statements made available generally by the
Corporation to the public concerning material developments in the Corporation's
and its Subsidiaries' businesses; and
(h with reasonable promptness, such other information and financial
data concerning the Corporation and its Subsidiaries as any Qualified Holder may
reasonably request.
Each of the financial statements referred to in Section 4.01(a) and
4.01(c) shall be true and correct in all material respects as of the dates and
for the periods stated therein, subject in the case of the unaudited financial
statements to changes resulting from normal year-end adjustments for recurring
accruals (none of which would, alone or in the aggregate, be materially adverse
to the financial condition, operating results, assets, operations or business
prospects of the Corporation and its Subsidiaries taken as a whole).
16
Notwithstanding the foregoing, the provisions of this Section 4.01 shall
cease to be effective so long as the Corporation (a) is subject to the periodic
reporting requirements of the Securities Exchange Act and continues to comply
with such requirements and (b) promptly provides to each Qualified Holder all
reports and other materials filed by the Corporation with the Securities and
Exchange Commission pursuant to the periodic reporting requirements of the
Securities Exchange Act; provided that so long as any Common Stock remains
outstanding, the Corporation shall continue to deliver to each Qualified Holder
the information specified in Sections 4.01(b), 4.01(c)(ii) and (iii), 4.01(e),
4.01(f) and 4.01(h).
Except as otherwise required by law or judicial order or decree or
requested by any governmental agency or authority, or as specified in the
immediately following proviso, each Person entitled to receive information
regarding the Corporation and its Subsidiaries under Section 4.01 or 4.02 shall
not disclose any such information to any third party (other than such Person's
advisors or representatives who shall be instructed to abide by this
confidentiality obligation and for whose breach hereof such Person shall be
responsible); provided that such a Person may disclose such information (i) in
connection with the proposed sale or transfer of any Investor Equity if such
Person's proposed transferee agrees in writing to be bound by the
confidentiality provisions hereof, (ii) if such Person is a partnership, limited
liability company or corporation, to such Person's partners, members and
shareholders, on a need to know basis only, so long as all such parties are
apprised of the confidentiality provisions herein, or (iii) if such information
is available to the public other than by reason of such Person's breach of this
provision.
Section 4.2. Inspection of Property. To the extent not otherwise
prohibited by law or regulation, the Corporation shall permit any
representatives designated by any Qualified Holder, upon reasonable notice and
during normal business hours and at such other times as any such Qualified
Holder may reasonably request to (i) visit and inspect any of the properties of
the Corporation and its Subsidiaries, (ii) examine the corporate and financial
records of the Corporation and its Subsidiaries and make copies thereof or
extracts therefrom and (iii) discuss the affairs, finances and accounts of any
such corporations with the directors, officers, key employees and independent
accountants of the Corporation and its Subsidiaries. The presentation of an
executed copy of this Agreement (or photocopy thereof) by any Qualified Holder
or representative thereof to the Corporation's independent accountants shall
constitute the Corporation's permission to its independent accountants to
participate in discussions with such Persons notwithstanding the fact that such
Qualified Holder is not a party hereto.
17
Section 4.3. Affirmative Covenants. So long as any Investor Equity
remains outstanding, the Corporation shall, and shall cause each Subsidiary (if
any) to:
(a at all times cause to be done all things necessary to maintain,
preserve and renew its corporate existence;
(b at all times take all actions and cause to be done all things
necessary to obtain, maintain, preserve, and renew all material licenses,
authorizations, orders, permits, and other governmental approvals necessary to
the conduct of its businesses as presently proposed to be conducted and as
hereafter conducted;
(c maintain and keep its material properties in good repair, working
order and condition, and from time to time make all necessary or desirable
repairs, renewals and replacements, so that its businesses may be properly and
advantageously conducted in all material respects at all times;
(d pay and discharge when payable all taxes, assessments and
governmental charges imposed upon its properties or upon the income or profits
therefrom (in each case before the same becomes delinquent and before penalties
accrue thereon) and all material claims for labor, materials or supplies which
if unpaid would by law become a Lien upon any of its property unless and except
to the extent that the same are being contested in good faith and by appropriate
proceedings and adequate reserves (as determined in accordance with generally
accepted accounting principles, consistently applied) have been established on
its books with respect thereto;
(e comply with all other material obligations which it incurs pursuant
to any contract or agreement, whether oral or written, express or implied, as
such obligations become due, unless and except to the extent that the same are
being contested in good faith and by appropriate proceedings and adequate
reserves (as determined in accordance with generally accepted accounting
principles, consistently applied) have been established on its books with
respect thereto;
(f comply in all material respects with all applicable laws, rules and
regulations of the Federal Communications Commission and all other governmental
authorities to which any of the Corporation and its Subsidiaries are subject
including, without limitation, environmental laws;
(g apply for and continue in force with nationally reputable insurance
companies adequate insurance covering risks of such types and in such amounts
18
as are customary for well-insured corporations of similar size engaged in
similar lines of business; and
(h maintain proper books of record and account which present fairly in
all material respects its financial condition and results of operations and make
provisions on its financial statements for all such proper reserves as in each
case are required in accordance with generally accepted accounting principles,
consistently applied.
Section 4.4. Compliance with Agreements. The Corporation shall perform
and observe all of its obligations to each holder of Common Stock set forth in
the Certificate of Incorporation, the Bylaws, and the Registration Rights
Agreement.
Section 4.5. Current Public Information. At all times after the
Corporation has filed a registration statement with the Securities and Exchange
Commission pursuant to the requirements of either the Securities Act or the
Securities Exchange Act, the Corporation shall file all reports required to be
filed by it under the Securities Act and the Securities Exchange Act and the
rules and regulations adopted by the Securities and Exchange Commission
thereunder and shall take such further action as any holder or holders of
Restricted Securities may reasonably request, all to the extent required to
enable such holders to sell Restricted Securities pursuant to (a) Rule 144
adopted by the Securities and Exchange Commission under the Securities Act (as
such rule may be amended from time to time) or any similar rule or regulation
hereafter adopted by the Securities and Exchange Commission or (b) a
registration statement on Form S-2 or S-3 or any similar registration form
hereafter adopted by the Securities and Exchange Commission. Upon request, the
Corporation shall deliver to any holder of Restricted Securities a written
statement as to whether it has complied with such requirements.
Section 4.6. Intellectual Property Rights. The Corporation shall, and
shall cause each Subsidiary to, possess and maintain all material Intellectual
Property Rights necessary to the conduct of their respective businesses and own
all right, title and interest in and to, or have a valid license for, all such
Intellectual Property Rights. Neither the Corporation nor any Subsidiary shall
take any action, or fail to take any action, which would result in the
invalidity, abandonment, misuse or unenforceability of such Intellectual
Property Rights or which would infringe upon or misappropriate any intellectual
property rights of other Persons.
19
Section 4.7. Public Disclosures. The Corporation shall not, nor shall it
permit any Subsidiary to, disclose the LLC's or any holder of Investor Equity's
name or identity as an investor in the Corporation or the LLC in any press
release or other public announcement or in any document or material filed with
any governmental entity, without the prior written consent of such Person,
unless such disclosure is required by applicable law or governmental regulations
or by order of a court of competent jurisdiction, in which case prior to making
such disclosure the Corporation shall give written notice to such Person
describing in reasonable detail the proposed content of such disclosure and
shall permit such Person to review and comment upon the form and substance of
such disclosure.
Section 4.8. Selection of Corporation's Financial Advisor, Underwriter
etc. So long as MSCP holds more than 30% of the aggregate outstanding Investor
Equity and Management Equity, MSCP will have the right to select the
Corporation's financial adviser, if any, for all financial advisory assignments
and to select the lead manager or lead arranger, if any, for all securities
offerings, capital markets activities and financings of the Corporation. The
terms of such engagement will be subject to Section 5.03(f) to the extent
provided therein.
ARTICLE 5
Governance
From and after the Initial Closing and until the provisions of this Article
5 cease to be effective:
Section 5.1. Management of the Corporation Generally. Management of the
Corporation shall vest in the Board, subject to the rights and powers of the LLC
described in the next sentence. Notwithstanding anything else contained herein,
the Corporation (i) shall take any lawful action mandated by a resolution
adopted by the LLC and (ii) shall not take any action in violation of any
resolution adopted by the LLC or in violation of Section 5.02. Subject to the
preceding sentences, the day-to-day affairs of the Corporation shall be managed
by the executive officers of the Corporation under the supervision of its chief
executive officer. It is understood that Board meetings are to be conducted in
a manner to encourage participation by all Directors.
Section 5.2. Governance Rights of the LLC. The Corporation shall not (and
shall not permit any of its Subsidiaries to), without the prior written consent
of the LLC:
20
(a directly or indirectly declare or pay any dividends or make any
distributions upon any of its capital stock or other equity securities;
(b directly or indirectly redeem, purchase or otherwise acquire, or
permit any Subsidiary to redeem, purchase or otherwise acquire, any of the
Corporation's or any Subsidiary's capital stock or other equity securities,
except for repurchases of capital stock issued upon the exercise of stock
options pursuant to the terms of any Permitted Stock Option Plan (as defined
below), or repurchases of the Corporation's securities pursuant to the terms of
the Executive Purchase Agreements;
(c except for (x) issuances of Common Stock at the Initial Closing as
contemplated under this Agreement, or (y) issuances of options to acquire Common
Stock pursuant to the terms of the Permitted Stock Option Plan or of Common
Stock upon the exercise of such options, authorize, issue or enter into any
agreement providing for the issuance (contingent or otherwise) of any notes or
debt securities containing equity features (including, without limitation, any
notes or debt securities convertible into or exercisable or exchangeable for
capital stock or other equity securities, issued in connection with the issuance
of capital stock or other equity securities or containing profit participation
features), other than as may be expressly specified in any Approved Business
Plan or Approved Budget, or any capital stock or other equity securities (or
any securities convertible into or exercisable or exchangeable for any capital
stock or other equity securities);
(d make, or permit any Subsidiary to make, any loans or advances to,
guarantees for the benefit of, or Investments in, any Person, except for
reasonable advances to employees or customers in the ordinary course of
business, acquisitions permitted under Section 5.02(h), and Investments having
a stated maturity no greater than one year from the date the Corporation makes
such Investment in obligations of the United States government or any agency
thereof or obligations guaranteed by the United States government, certificates
of deposit of commercial banks having combined capital and surplus of at least
$500 million or commercial paper with a rating of at least "Prime-1" by Xxxxx'x
Investors Service, Inc.;
(e merge or consolidate with any Person or, except as permitted under
Section 5.02(h), permit any Subsidiary to merge or consolidate with any Person
(other than a merger between Wholly-Owned Subsidiaries);
(f sell, lease or otherwise dispose of, or permit any Subsidiary to
sell, lease or otherwise dispose of, assets of the Corporation and its
Subsidiaries having
21
in the aggregate a value of more than $100,000 (computed on the basis of book
value, determined in accordance with generally accepted accounting principles
consistently applied, or fair market value, determined by the LLC in its
reasonable good faith judgment) in any transaction or series of related
transactions, or sell, or license or permanently dispose of any of its or any
Subsidiary's material Intellectual Property Rights;
(g liquidate, dissolve or effect a recapitalization or reorganization,
or permit any Subsidiary to liquidate, dissolve or effect a recapitalization or
reorganization, in any form of transaction (including, without limitation, any
reorganization into a limited liability company, a partnership or any other non-
corporate entity which is treated as a partnership for federal income tax
purposes);
(h acquire, or permit any Subsidiary to acquire, any interest in any
company or business (whether by a purchase of assets, purchase of stock, merger
or otherwise), or enter into any joint venture (in each case, other than as may
be expressly specified in any Approved Business Plan or Approved Budget);
(i enter into, or permit any Subsidiary to enter into, the ownership,
active management or operation of any business other than the provision of
telecommunications services or such other business activities in each case as
may be identified in any Approved Business Plan;
(j become subject to, or permit any of its Subsidiaries to become
subject to (including, without limitation, by way of amendment to or
modification of) any agreement or instrument which by its terms would (under any
circumstances) restrict the right of any Subsidiary to make loans or advances or
pay dividends to, transfer property to, or repay any Indebtedness owed to, the
Corporation or another Subsidiary or restrict the Corporation's performance of
its obligations under the provisions of this Agreement, the Registration Rights
Agreement, the Certificate of Incorporation or the Bylaws (including, without
limitation, provisions relating to the declaration and payment of dividends on
any Common Stock);
(k except as expressly contemplated by this Agreement, make any
amendment to the Certificate of Incorporation or the Bylaws, or file any
resolution of the Board or the LLC with the Delaware Secretary of State;
(l enter into, amend, modify or supplement, or permit any Subsidiary
to enter into, amend, modify or supplement, any agreement, transaction, benefit
plan, commitment or arrangement with any of its or any Subsidiary's executive
officers, directors or Affiliates or with any individual related by blood,
marriage or
22
adoption to any such individual or with any entity in which any such Person or
individual owns a beneficial interest, except as otherwise expressly
contemplated by this Agreement;
(m establish or acquire any Subsidiaries other than Wholly-Owned
Subsidiaries organized within the United States and its territorial possessions;
(n create, incur, assume or suffer to exist, or permit any Subsidiary
to create, incur, assume or suffer to exist, Indebtedness on a consolidated
basis in an aggregate outstanding principal amount in excess of $250,000 at any
time (other than Indebtedness expressly specified in any Approved Business Plan
or Approved Budget then applicable);
(o create, incur, assume or suffer to exist, or permit any Subsidiary
to create, incur, assume or suffer to exist, any Liens other than Permitted
Liens;
(p make any capital expenditures or permit any Subsidiary to make any
capital expenditures (including, without limitation, payments with respect to
capitalized leases, as determined in accordance with generally accepted
accounting principles consistently applied) exceeding $100,000 in the aggregate
on a consolidated basis during any 12-month period (other than capital
expenditures expressly specified in any Approved Business Plan or Approved
Budget then applicable);
(q enter into, or permit any Subsidiary to enter into, any leases or
other rental agreements (excluding capitalized leases, as determined in
accordance with generally accepted accounting principles consistently applied)
under which the amount of the aggregate lease payments for all such agreements
exceeds $100,000 on a consolidated basis for any 12-month period;
(r change its fiscal year or permit any Subsidiary to change its
fiscal year;
(s change the authorized size or composition of the Board or the board
of directors of any Subsidiary from that set forth in Article 5 hereof;
(t adopt any stock option plan or employee stock ownership plan, stock
purchase or restricted stock or stock appreciation rights plan or issue any
shares of Common Stock to its or its Subsidiaries' employees other than
pursuant to an option plan, the terms of which shall be approved by the LLC,
under which employees of the Corporation and its Subsidiaries may be granted
options to acquire up to 5% of the Corporation's Common Stock, determined
immediately
23
after giving effect to the transactions contemplated hereby on a fully diluted
and as-if-converted basis (the "Permitted Stock Option Plan") or the issuance of
options in certain circumstances upon a Public Offering pursuant to the terms of
any Executive Purchase Agreement;
(u issue or sell any shares of the capital stock or other equity
securities (including, without limitation, any warrants, options, and other
rights to acquire such capital stock or other equity securities) of any
Subsidiary to any Person other than the Corporation or a Wholly-Owned
Subsidiary;
(v terminate the employment of, hire, or enter into, amend or modify
any employment agreement or arrangement with, any key employee of the
Corporation or any of its Subsidiaries who would serve as, or would report
directly to, the Corporation's chief executive officer;
(w enter into any voting trust, voting or stockholder agreement with
respect to any of its or its Subsidiaries' securities or register any securities
pursuant to the Securities Act or the Securities Exchange Act, or grant, or
permit any of its Subsidiaries to grant, any registration rights (including,
without limitation, any demand or piggyback registration rights) with respect to
any of its capital stock, in each case other than pursuant to this Agreement and
the Registration Rights Agreement as in effect on the date hereof;
(x amend, waive, or otherwise modify any Approved Business Plan or
Approved Budget;
(y use the proceeds from the sale of the Common Stock hereunder other
than for working capital and budgeted general corporate purposes reflected in
any Approved Business Plan or Approved Budget or for such other purposes as are
contemplated by any Approved Business Plan or Approved Budget;
(z select or retain (except in compliance with Section 4.08), or
enter into, amend, terminate, or modify any retention arrangement with any
underwriter, manager, or financial advisor to advise the Corporation and its
Subsidiaries with respect to any proposed Sale of the Corporation or to
underwrite, or advise the Corporation with respect to, a Public Offering or any
acquisitions or financing transactions;
(aa change any of the accounting principles or practices utilized by
the Corporation or its Subsidiaries, or select, retain, or amend, terminate, or
modify any retention arrangement with any accounting firm engaged to audit the
Corporation's or its Subsidiaries' financial statements;
24
(bb amend, waive, or otherwise modify any agreement entered into by
the Corporation on the date hereof;
(cc make or change any tax election, change any annual tax accounting
periods, adopt or change any method of tax accounting or make any change in the
Corporation's independent accounting firm; or
(dd agree or commit to any of the foregoing.
Section 5.3. Corporate Board Composition and Vacancies. The LLC shall
vote all shares of Common Stock owned by it and the LLC and each Unitholder
shall take all other necessary or desirable action within such holder's control
(whether in such holder's capacity as a stockholder, director, member of a Board
committee or officer of the Corporation, Unitholder or member of the LLC or
otherwise, and including, without limitation, attendance at meetings in person
or by proxy for purposes of establishing a quorum and execution of written
consents in lieu of meetings), and the Corporation shall take all necessary or
desirable actions within its control (including, without limitation, if
necessary, calling special Board and stockholder meetings), so that:
(a The authorized number of directors on the Board shall initially be
established and remain at seven directors. The size of the Board may be changed
at any time by approval of the LLC's Board of Representatives as constituted
immediately prior to such time.
(b The Investor Members and the Management Members shall have the
right to designate the following individuals to be elected to the Board (and the
Board shall be comprised of such designees):
(i the holders of a majority of the MSCP Equity held by MSCP and
its Affiliates may designate (x) a majority of the representatives so long
as MSCP and its Affiliates hold at least a majority of the aggregate
outstanding Class A Units and Class B Units (the "Outstanding Voting
Units"); (y) a number of representatives equal to the total number of
representatives not then designated by MSCP and its Affiliates so long as
MSCP and its Affiliates hold less than a majority but at least 20% of the
Outstanding Voting Units; and (z) one representative so long as MSCP and
its Affiliates hold less than 20% but at least 5% of the Outstanding Voting
Units;
25
(ii the holders of a majority of the Fleet Equity held by Fleet
and its Affiliates may designate one representative so long as Fleet and
its Affiliates hold at least 5% of the Outstanding Voting Units;
(iii the holders of a majority of the Xxxxxx-Xxxxxx Equity held
by Xxxxxx-Xxxxxx and its Affiliates may designate one representative so
long as Xxxxxx-Xxxxxx and its Affiliates hold at least 5% of the
Outstanding Voting Units; and
(iv the holders of a majority of the Management Equity may
designate one member of the Corporation's management, who shall be the
Corporation's chief executive officer (such member when elected, the
"Management Director").
(c The required quorum for Board action shall be the presence at a
Board meeting of at least five directors, at least one of whom is a Director
designated by Fleet or Xxxxxx-Xxxxxx.
(d) The composition of the board of directors of each of the
Corporation's Subsidiaries (a "Sub Board") shall be the same as that of the
Board.
(e) The Board shall create and maintain an executive committee (the
"Executive Committee") consisting of the following members: (i) one Director
designated by the holders of a majority of MSCP Equity held by MSCP and its
Affiliates, (ii) the Corporation's chief executive officer, (iii) the Director
designated by Fleet pursuant to 5.03(b)(ii), and (iv) the Director designated by
Xxxxxx-Xxxxxx pursuant to 5.03(b)(iii); provided that an Investor Member will
lose its right to have its designee on the Executive Committee as soon as it is
not entitled to any designee on the Board. The Executive Committee shall (x)
act as a liaison between the Board, on the one hand, and executive management,
on the other hand, and (y) exercise such powers as shall be delegated to it from
time to time by the Board. Each member of the Executive Committee shall have
one vote.
(f) The Board shall create and maintain a committee (the "Pricing
Committee") consisting of the following members: (i) one Director designated by
the holders of a majority of MSCP Equity held by MSCP and its Affiliates, (ii)
the Corporation's chief executive officer, (iii) the Director designated by
Fleet pursuant to 5.03(b)(ii), and (iv) the Director designated by Xxxxxx-Xxxxxx
pursuant to 5.03(b)(iii); provided that an Investor Member will lose its right
to have its designee on the Pricing Committee as soon as it is not entitled to
any designee on
26
the Board. The Pricing Committee (A) shall negotiate the pricing and other terms
applicable to the engagement of an Affiliate of MSCP as a financial advisor to
the Corporation or the LLC or as lead manager or lead arranger for any
underwritten offering or capital markets activities (x) for the account of the
Corporation or (y) in which MSCP does not participate, which terms will be
customary for a transaction of that nature, (B) will have the authority in all
such cases to select and engage one or more co-managers or co-arrangers for any
such underwritten offering or capital markets activities and may negotiate the
terms of such engagement and (C) shall exercise such others powers as shall be
delegated to it from time to time by the Board. Notwithstanding the foregoing,
MSCP's designee shall abstain from voting on matters referred to in clause (A)
of the previous sentence (but will be entitled to participate in discussions and
deliberations, and will be consulted in good faith, thereon). Each member of the
Pricing Committee shall have one vote.
(g) Committees of the Board or a Sub Board (other than the Executive
Committee and the Pricing Committee) shall be created only upon the approval of
a majority of the members of the entire Board or the applicable entire Sub
Board, in each case assuming there were no vacancies and provided that action is
taken at a meeting at which a quorum exists, and the composition of each such
committee (if any) shall be proportionately equivalent to that of the Board to
the extent practicable. It is understood and agreed, however, that no Director
who is an officer of the Corporation may serve on the audit committee or any
compensation committee or other similar committee established by the Board.
(h) Any director will be removed from the Board or a Sub Board, (i) with
or without cause, at the written request of the holder or holders entitled to
designate such person to be a director or (ii) with cause, at the written
request of any Investor Member, and, subject to Section 141(k) of the Delaware
General Corporation Law, under no other circumstances; provided that if any
Director who is an officer of the Corporation ceases to be an employee of the
Corporation and its Subsidiaries for any reason, he shall be removed as a member
of the Board and each Sub Board promptly after his employment ceases.
(i) In the event any director ceases to serve as a member of the Board
or a Sub Board during his or her term of office, whether pursuant to paragraph
5.03(h) above or otherwise, or for any other reason there are at any time fewer
representatives serving on the Board than are entitled to be designated by an
Investor Member or the Management Members, as the case may be, the resulting
vacancy on the Board or the Sub Board may be filled at any time (i) by a
representative (or in the case of a vacant Management Directorship, a member of
the Corporation's management) designated by the holder or holders entitled to
designate such vacant Board seats or (ii) if no holder is entitled to designate
a
27
representative to fill such vacancy at such time, then by the LLC's Board of
Representatives as constituted immediately prior to such time.
(j) If any of MSCP, Fleet, or Xxxxxx-Xxxxxx become ineligible, by virtue
of the terms of Section 5.03(b)(i), 5.03(b)(ii) or 5.03(b)(iii), respectively
(including by operation of Section 5.03(k)), to designate a representative to
fill a directorship pursuant to such Section, all rights and entitlements
hereunder to designate persons to fill such directorship shall thereafter be
exercised by the holders of a majority of the Investor Equity held by the
Investor Members and their respective Affiliates.
(k) In accordance with Section 9.02(b) hereof, if upon any Capital Call
Notice (as defined in the LLC Agreement), any holder or Class A Units or Class B
Units refuses or otherwise fails to make the capital contributions required by
such Capital Call Notice under the LLC Agreement with respect to the Class A
Units and Class B Units held by such Unitholder, then all securities held by
such Unitholder shall, for purposes of this Section 5.03, thereupon immediately
cease to constitute any of MSCP Equity, Fleet Equity, Xxxxxx-Xxxxxx Equity,
Investor Equity, or Management Equity.
Section 5.4. Director Expenses; Directors' and Officers' Insurance;
Indemnity and Exculpation. The Corporation shall pay all of the reasonable out-
of-pocket expenses incurred by each director in connection with attending the
meetings of the Board, any Sub Board and any committee thereof. So long as any
director designated under this Agreement serves on the Board and for five years
thereafter, the Corporation shall maintain directors and officers indemnity
insurance coverage satisfactory to the Board at the time such insurance is first
obtained and not thereafter reduced in amount or coverage, and the Corporation's
certificate of incorporation and bylaws shall provide for indemnification and
exculpation of directors to the fullest extent permitted under applicable law.
Section 5.5. Termination. The rights and requirements under Sections 5.01
through 5.03 shall terminate upon the earlier to occur of (i) consummation of
the initial Public Offering approved under Section 5.02 of the LLC Agreement and
(ii) the closing of a Sale of the Corporation. The provisions of Section 5.04
shall survive the termination of the other provisions of this Article 5.
Section 5.6. Voting Rights. Any Common Stock distributed in respect of
(i) any Class C Unit or Class D Unit or (ii) any Management Equity owned
beneficially by any Person who has been terminated with Cause (as defined in the
relevant Executive Purchase Agreement) or who has committed a Vesting
Termination Breach (as defined in the relevant Executive Purchase Agreement)
28
shall in each case not have any voting rights whatsoever except for purposes of
Section 9.04 hereof or of Section 14.02 of the LLC Agreement.
ARTICLE 6
Restrictions on Transfers of Securities
Section 6.1. General Securities Laws Restrictions. (a) In addition to the
other restrictions on Transfer set forth in this Article 6, in the Executive
Purchase Agreements, the LLC Agreement and the Registration Rights Agreement,
Restricted Securities may not be Transferred except pursuant to (i) a public
offering registered under the Securities Act that has been approved by the LLC
(prior to its dissolution) and that complies with the Registration Rights
Agreement, (ii) subject to Section 6.01(b) below, Rule 144 if such rule is
available, or (iii) subject to Section 6.01(b) below, any other legally
available means of transfer.
(b) Opinion Delivery. In connection with the transfer of any Restricted
Securities (other than a transfer described in Section 6.01(a)(i) above), the
holder thereof shall deliver written notice to the Corporation describing in
reasonable detail the transfer or proposed transfer, together with an opinion of
Xxxxx Xxxx & Xxxxxxxx or other counsel which (to the Corporation's reasonable
satisfaction) is knowledgeable in securities law matters to the effect that such
transfer of Restricted Securities may be effected without registration of such
Restricted Securities under the Securities Act. In addition, if the holder of
the Restricted Securities delivers to the Corporation an opinion of Xxxxx Xxxx &
Xxxxxxxx or such other counsel that no subsequent transfer of such Restricted
Securities shall require registration under the Securities Act, the Corporation
shall promptly upon such contemplated transfer deliver new certificates for such
Restricted Securities which do not bear the Securities Act legend set forth in
Section 9.03 below. If the Corporation is not required to deliver new
certificates for such Restricted Securities not bearing such legend, the holder
thereof shall not transfer the same until the prospective transferee has
confirmed to the Corporation in writing its agreement to be bound by the
conditions contained in Section 9.03.
(c) Legend Removal Upon Availability of Rule 144(k). If any Restricted
Securities become eligible for sale pursuant to Rule 144(k) and pursuant to this
Agreement, the Corporation shall, upon the request of the holder of such
Restricted Securities and delivery of the opinion described in Section 6.01(b),
29
promptly remove the legend set forth in Section 9.03 from the certificates for
such Restricted Securities.
Section 6.2. Restrictions on Transfer of Management Equity. In addition
to the provisions of this Article 6, each holder of Management Equity shall be
subject to the restrictions on Transfer of such Management Equity set forth in
such holder's Executive Purchase Agreement, the LLC Agreement and the
Registration Rights Agreement.
Section 6.3. Transfer of Investor Equity. (a) Investor Equity will not be
subject to Transfer restrictions or obligations except as follows:
(i) any Transfer of Investor Equity must be made in compliance with
Section 6.01;
(ii) any Transfer of Investor Equity in or after a Public Offering
will be subject to the provisions of the Registration Rights Agreement;
(iii) holders of Investor Equity will be subject to the "drag
along" restrictions and obligations contained in Section 6.06;
(iv) any Transfer of Investor Equity to a third party in a Private
Tag Transaction (as defined below) must (x) be effected in compliance with
Section 6.05 and (y) prior to dissolution of the LLC, be approved by the
LLC;
(v) no Distribution-In-Kind may be made prior to the dissolution of
the LLC except (x) with the approval of the LLC or (y) in connection with
the winding up and dissolution of any Investor Member that is a partnership
or an investment fund; and
(vi) unless after giving effect to the applicable Transfer the
Investor Equity ceases to be such in accordance with its definition, the
applicable transferee or transferees of the Investor Equity must, as a
condition to the valid Transfer thereof, execute and deliver to the
Corporation an instrument (acceptable to the LLC prior to its dissolution,
and thereafter, to the Corporation) agreeing to be bound by the provisions
of this Article 6 and such provisions of this Agreement, the LLC Agreement
and the other agreements contemplated hereby and thereby as shall be
reasonably required by the LLC (or by the Corporation after the LLC's
dissolution); provided that, in the case of an Exempt Transferee holding
Investor Equity, such agreement to be bound shall be only as to
30
the Registration Rights Agreement and as to Sections 6.03(a)(i) and
6.03(a)(ii) hereof and such Exempt Transferee shall not be subject to
Section 6.03(a)(iii), 6.03(a)(iv) or 6.03(a)(v) hereof or to any of the
other provisions of this Agreement or the LLC Agreement.
(b) Each certificate evidencing Investor Equity and each certificate
issued in exchange for or upon the transfer of any Investor Equity (if such
securities remain Investor Equity after such transfer) shall be stamped or
otherwise imprinted with a legend in substantially the following form:
31
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
RESTRICTIONS ON TRANSFER CONTAINED IN A TRANSACTION AGREEMENT DATED AS OF JULY
8, 1998, AMONG THE ISSUER OF SUCH SECURITIES (THE "ISSUER") AND CERTAIN OF THE
ISSUER'S SECURITYHOLDERS, AS AMENDED AND MODIFIED FROM TIME TO TIME. A COPY OF
SUCH TRANSACTION AGREEMENT SHALL BE FURNISHED PROMPTLY WITHOUT CHARGE BY THE
ISSUER TO THE HOLDER HEREOF UPON WRITTEN REQUEST."
The legend set forth above shall be removed from the certificates evidencing any
shares which cease to be Investor Equity in accordance with the definition of
such term herein.
Section 6.4. Transfers in Violation of Agreement. Any Transfer or
attempted Transfer of any Investor Equity or Management Equity in violation of
this Article 6 shall be void, and none of the LLC, the Corporation, or any
Subsidiary shall record such purported Transfer on its books or treat any
purported transferee as the owner of such Investor Equity or Management Equity.
Section 6.5. Right to Participate in Certain Sales. (a) If any holder of
Investor Equity (such holder a "Selling Person") proposes to Transfer any
Investor Equity in a Private Tag Transaction pursuant to an offer made by a
third party (each a "Tag-Along Sale"), the Selling Person must provide each
other holder of Investor Equity (each such other holder, a "Tagging Person")
with
32
written notice of the terms and conditions of such proposed Transfer (the "Tag-
Along Notice"). If the Selling Person proposes to make a Transfer in a Private
Tag Transaction that, if consummated on the terms set forth in the Tag-Along
Notice, would constitute a Sale of the Corporation, (i) the Selling Person must
also provide each holder of Management Equity with a Tag-Along Notice and (ii)
each holder of Management Equity shall also be a Tagging Person.
(b) The Tag-Along Notice must identify the number and type of securities
subject to the offer (the "Tag-Along Offer"), the name and address of the
proposed third party purchaser, the name and address of any party holding 25% or
more of the ownership interests in such third party purchaser, the proposed
consideration per unit or share, and all other material terms and conditions of
the Tag-Along Offer. Any Transfer by a Selling Person of Investor Equity that
occurs within six months of any other Transfer by such Selling Person of the
same securities shall be conclusively deemed to be related to such previous
Transfer.
(c) Each Tagging Person shall have the right (a "Tag-Along Right"), at
its option, exercisable by written notice given to the Selling Person within 20
days after receipt of the Tag-Along Notice (the "Tag-Along Notice Period"), to
request the Selling Person to include in the proposed Transfer any amount of
then held by such Tagging Person; provided that if the aggregate amount of
Equity (as defined below) proposed to be Transferred by the Selling Person and
all Tagging Persons in such transaction exceeds the maximum amount that can be
Transferred on the terms and conditions set forth in the Tag-Along Notice, then
such maximum amount of Equity shall be allocated among the Selling Person and
the Tagging Persons based on their respective pro rata portion of the aggregate
amount of Equity held by the Selling Person and the Tagging Persons at such
time. "Equity" means (i) Investor Equity or (ii) in the case of the application
of the last sentence of Section 6.05(a), the total of Investor Equity and
Management Equity.
(d) Any Tagging Person that exercises its Tag-Along Rights hereunder
must deliver to the Selling Person the certificate or certificates (if any)
representing the Equity of such Tagging Person to be included in the Transfer,
together with a limited power-of-attorney authorizing the Selling Person to
Transfer such Equity on the terms set forth in the Tag-Along Notice. Delivery
by a Tagging Person of such certificate or certificates (if any) and limited
power-of-attorney shall constitute an irrevocable acceptance of the Tag-Along
Offer by such Tagging Person. If, at the end of a 60-day period after such
delivery, the Selling Person has not completed the Transfer of all such Equity
of the Selling Person and all of the Tagging Persons on substantially the same
terms
33
and conditions as set forth in the Tag-Along Notice (for purposes of which a
change of up to 5% in price per share or unit, up or down, from that shown in
the Tag-Along Notice will be deemed substantially the same), the Selling Person
shall promptly return to each Tagging Person the certificate or certificates (if
any) and limited power-of-attorney (and all copies thereof) delivered by such
Tagging Person for Transfer pursuant to this Section 6.05.
(e) Promptly after the consummation of the Tag-Along Sale, the Selling
Person shall give written notice thereof to the Tagging Persons, shall promptly
remit (by bank or certified check) to each Tagging Person who has surrendered
its certificate or certificates (if any) or otherwise participated in such Tag-
Along Sale the consideration for the Equity Transferred by such Tagging Persons
in such Tag-Along Sale, and shall furnish such other evidence of the completion
and time of completion of such Transfer and the terms thereof as may be
reasonably requested by the Tagging Persons.
(f) If at the termination of the Tag-Along Notice Period any Tagging
Person shall not have elected to participate in the Tag-Along Sale, such Tagging
Person will be deemed to have waived its rights under this Section to Transfer
any Equity pursuant to such Tag-Along Sale.
(g) The rights and obligations of the Selling Person and the Tagging
Persons under this Section 6.05 shall be subject to the following conditions:
(i) upon the consummation of any Tag-Along Sale, each of the
Selling Person and the Tagging Persons participating therein will receive
the same form and amount of consideration per unit or share, as the case
may be, or if the Selling Person or any Tagging Person is given an option
as to the form and amount of consideration to be received, the Selling
Person and all Tagging Persons participating therein will be given the same
option;
(ii) no Selling Person nor Tagging Person shall be obligated to pay
more than its pro rata share (based on the aggregate consideration to be
received in respect of its Equity in the Tag-Along Sale) of costs, fees and
expenses incurred in connection with the Tag-Along Sale to the extent such
costs, fees and expenses are incurred for the benefit of all such Tagging
Persons and the Selling Person and are not otherwise paid by the
Corporation or the acquiring party;
(iii) if the Selling Person and the Tagging Persons are required
to provide any representations or indemnities in connection with such Tag-
Along Sale (other than representations and indemnities concerning the
34
Selling Person's and each Tagging Persons' title to the Equity and
authority, power and right to enter into and consummate the transfer
without contravention of any law or agreement), then liability for
misrepresentation or indemnity shall be expressly stated to be several but
not joint and the Selling Person and each Tagging Person shall not be
liable for more than its pro rata share (based on the aggregate
consideration to be received in respect of its Equity in the Tag-Along
Sale) of any liability for misrepresentation or indemnity; and
(iv) in the case of any Tag-Along Sale, the Selling Person will use
commercially reasonable efforts to limit the liability of any Tagging
Person for misrepresentation or indemnity to its pro rata share (based on
the aggregate consideration to be received in respect of its Equity in the
Tag-Along Sale) of the aggregate purchase price.
(h) This Section 6.05 will terminate when (i) the Public Offering
authorized by Section 5.02 of the LLC Agreement has been consummated and (ii)
the holders of Investor Equity and Management Equity immediately prior to the
initial Public Offering cease to hold in the aggregate at least 30% of the
aggregate Common Stock (on a fully diluted basis).
Section 6.6. All Holders Required to Participate in Certain Sales. (a) In
connection with any Sale of the Corporation (other than through a Public
Offering) approved by the LLC (a "Drag-Along Sale"), each holder of Investor
Equity and Management Equity (each a "Securityholder") shall vote for, consent
to and raise no objections against such Drag-Along Sale. The LLC, the Board,
each Director, Representative and each Securityholder shall take all reasonable,
necessary or desirable actions in connection with the consummation of such Drag-
Along Sale as requested by the LLC. Such actions shall include, in a stock
transaction, (i) the transfer of all Investor Equity or Management Equity held
by each Securityholder (or, if less than all such equity is being acquired by
the acquiror, then a pro rata share of each Securityholder's equity based on the
aggregate Investor Equity and Management Equity held by each Securityholder
after taking into account clause (ii) below) and (ii) subject to and at the
closing of the Drag-Along Sale, the exercise of all (or an appropriate pro rata
share) of the options awarded by the Corporation to any officer of the
Corporation and the sale of all (or an appropriate pro rata share) of the
Management Equity received upon such exercise, in each case for the
consideration per unit or share and otherwise on the same terms and conditions
as approved by the LLC; provided that any Securityholder who holds options with
an exercise price per unit or share that is greater than the price per unit or
share at which the Management Equity is to be sold in the Drag-Along Sale may,
if required by the Corporation to exercise such
35
options, in lieu of such exercise, agree to the irrevocable cancellation thereof
without any liability for payment of any exercise price with respect thereto.
(b) The LLC must provide written notice of any Drag-Along Sale to each
Securityholder (a "Drag-Along Notice") not later than the 20th day prior to the
proposed Drag-Along Sale. The Drag-Along Notice must identify (i) the name and
the address of the transferee (the "Transferee") and of any party holding 25% or
more of the ownership interests in the Transferee, (ii) the actions the LLC
requests be taken by the recipient, (iii) in the case of a stock sale, the
number and type of securities subject to the Drag-Along Sale and the proposed
consideration per unit or share and (iv) all other material terms and conditions
of the Drag-Along Sale. Each such Securityholder shall be required to
participate in the Drag-Along Sale on the terms and conditions set forth in the
Drag-Along Notice and, in the case of a stock sale, to tender all (or such pro
rata share) of its Investor Equity or Management Equity as set forth below.
(c) Within 10 days following the date of the Drag-Along Notice (the
"Drag-Along Notice Period"), each Securityholder must deliver to a
representative of the Corporation designated in the Drag-Along Notice (i) a
certificate verifying that such Securityholder has taken all requested actions
in the Drag-Along Notice, (ii) in the case of a stock sale, the certificate or
certificates, if any, representing all (or such pro rata share) Investor Equity
or Management Equity held by such Securityholder, duly endorsed (or, if such
delivery is not permitted by applicable law, an unconditional agreement to
deliver such Investor Equity or Management Equity pursuant to this Section
6.06(c) at the closing of such Drag-Along Sale against delivery to such
Securityholder of the consideration per unit or share therefor) and (iii) all
other documents required to be executed in connection with such Drag-Along Sale.
If any such Securityholder fails to deliver any certificate referred to in
clause (ii) above to the Corporation, the LLC and the Corporation shall (subject
to reversal under Section 6.06(d) below) cause their books and records to show
that such Investor Equity or Management Equity is bound by the provisions of
this Section 6.06 and that such Investor Equity or Management Equity shall be
transferred to the acquiring party immediately upon surrender for transfer by
the Securityholder thereof.
(d) If, within 120 days after the date on which the Corporation gives
the Drag-Along Notice to the Securityholders, the Drag-Along Sale has not been
completed on substantially the same terms and conditions set forth in the Drag-
Along Notice, the Securityholders shall no longer be obligated to sell their
Investor Equity or Management Equity pursuant to such Drag-Along Notice and the
LLC and the Corporation shall promptly return to each Securityholder all (i)
certificates representing Investor Equity and Management Equity that such
36
Securityholder delivered for transfer pursuant hereto and (ii) any documents in
the possession of the LLC or the Corporation executed by the Securityholder in
connection with such proposed transfer, and all of the restrictions on transfer
contained in this Agreement or otherwise applicable at such time with respect to
such Investor Equity or Management Equity shall remain in effect.
(e) Promptly after the consummation of the Drag-Along Sale, the
Corporation shall give written notice thereof to each Securityholder, shall
remit to each such Securityholder who has complied with Section 6.06(c), its pro
rata share of the aggregate consideration received in such Drag-Along Sale, and
shall furnish such other evidence of the completion and time of completion of
such transfer and the terms thereof as may be reasonably requested by such
Securityholders.
(f) The rights and obligations of the Securityholders under this Section
6.06 shall be subject to the following conditions:
(i) upon the consummation of any Drag-Along Sale, all of the
Securityholders participating therein will receive the same form and amount
of consideration per unit or share, as the case may be, or if any
Securityholder is given an option as to the form and amount of
consideration to be received, all Securityholders participating therein
will be given the same option;
(ii) no Securityholder shall be obligated to pay more than its pro
rata share (based on the aggregate consideration to be received in respect
of its Investor Equity or Management Equity in the Drag-Along Sale) of the
costs, fees and expenses incurred in connection with the Drag-Along Sale to
the extent such costs, fees and expenses are incurred for the benefit of
all such Securityholders and are not otherwise paid by the Corporation or
the acquiring party;
(iii) if the Securityholders are required to provide any
representations or indemnities in connection with such Drag-Along Sale
(other than representations and indemnities concerning each
Securityholder's title to the Investor Equity or Management Equity and
authority, power and right to enter into and consummate the transfer
without contravention of any law or agreement), then liability for
misrepresentation or indemnity shall be expressly stated to be several but
not joint and each Securityholder shall not be liable for more than its pro
rata share (based on the aggregate consideration to be received in respect
37
of its Investor Equity or Management Equity in the Drag-Along Sale) of any
liability for misrepresentation or indemnity; and
(iv) in the case of any Drag-Along Sale, the Corporation will use
commercially reasonable efforts to limit the liability of any
Securityholder for misrepresentation or indemnity to its pro rata share
(based on the aggregate consideration to be received in respect of its
Investor Equity or Management Equity in the Drag-Along Sale) of the
aggregate purchase price.
(g) The rights and obligations of the LLC in this Section 6.06 shall,
after dissolution of the LLC, be binding on and inure to the benefit of the
Corporation, and references to the LLC or the LLC's Board of Representatives
shall thereafter mean the Board.
(h) This Section 6.06 will terminate when (i) the Public Offering
authorized by Section 5.02 of the LLC Agreement has been consummated and (ii)
the holders of Investor Equity and Management Equity immediately prior to the
initial Public Offering cease to hold in the aggregate at least 30% of the
aggregate Common Stock (on a fully diluted basis).
ARTICLE 7
Representations and Warranties of the Corporation
As a material inducement to the LLC to enter into this Agreement and
purchase the Common Stock hereunder, the Corporation hereby represents and
warrants that:
Section 7.1. Organization, Corporate Power and Licenses. The Corporation
is a corporation duly organized, validly existing and in good standing under the
laws of Delaware and is qualified to do business in every jurisdiction in which
its ownership of property or conduct of business requires it to qualify. The
Corporation possesses all requisite corporate power and authority and, except as
set forth in the "Licenses Schedule" attached hereto, all material licenses,
permits and authorizations necessary to own and operate its properties, to carry
on its businesses as presently proposed to be conducted and to carry out the
transactions contemplated by this Agreement. The copies of the Corporation's
charter documents and Bylaws which have been furnished to the LLC's special
counsel
38
reflect all amendments made thereto at any time prior to the date of this
Agreement and are correct and complete.
Section 7.2. Capital Stock and Related Matters. (a) As of the Initial
Closing and immediately thereafter, the authorized capital stock of the
Corporation shall consist of (i) 63,000 shares of Common Stock, of which 60,000
shares shall be issued and outstanding and 3,000 shares shall be reserved for
issuance upon exercise of options issued pursuant to the Permitted Stock Option
Plan. Except as set forth on the attached "Capitalization Schedule," as of the
Initial Closing, the Corporation shall not have outstanding any stock or
securities, nor any options, warrants or other rights to acquire capital stock
or securities of the Corporation. As of the Initial Closing, all of the
outstanding shares of the Corporation's capital stock listed on the
Capitalization Schedule shall be validly issued, fully paid and nonassessable.
(b) The Corporation has not violated any applicable federal or state
securities laws in connection with the offer, sale or issuance of any of its
capital stock, and the offer, sale and issuance of the Common Stock hereunder do
not require registration under the Securities Act or any applicable state
securities laws. To the best of the Corporation's knowledge, there are no
agreements between the Corporation's stockholders with respect to the voting or
transfer of the Corporation's capital stock or with respect to any other aspect
of the Corporation's affairs, except for this Agreement and the agreements
contemplated hereby.
Section 7.3. Authorization; No Breach. The execution, delivery and
performance of this Agreement, the Registration Rights Agreement, the Executive
Purchase Agreements, and all other agreements contemplated hereby to which the
Corporation is a party, the filing of the Corporation's amended and restated
Certificate of Incorporation referred to in Section 2.02 above, and the adoption
of the Corporation's Bylaws referred to in Section 2.03 above have been duly
authorized by the Corporation. Each of this Agreement, the Registration Rights
Agreement, the Executive Purchase Agreements and each other agreement
contemplated hereby to which the Corporation is a party constitutes a legal,
valid and binding obligation of the Corporation, enforceable against the
Corporation in accordance with its terms. The execution and delivery by the
Corporation of this Agreement, the Registration Rights Agreement, the Executive
Purchase Agreements and all other agreements contemplated hereby to which the
Corporation is a party and the consummation of the transactions contemplated
hereby and thereby, do not and will not (i) conflict with or result in a default
under or breach of, (ii) result in the creation of any Lien upon the
Corporation's or any Subsidiary's capital stock or assets pursuant to, (iii)
give any third party the
39
right to modify, terminate or accelerate any obligation under, or (iv) require
any authorization, consent, approval, exemption or other action by or notice to,
or filing with, any court or administrative or governmental body or agency
pursuant to, the Certificate of Incorporation or Bylaws of the Corporation, or
any law, statute, rule or regulation to which the Corporation or any Subsidiary
or any executive officer of the Corporation is subject, or any agreement,
instrument, order, judgment or decree to which the Corporation or any Subsidiary
or any executive officer of the Corporation is subject.
Section 7.4. Conduct of Business; Absence of Liabilities. Prior to the
Initial Closing, except as set forth on the attached "Liabilities Schedule," and
except for the Corporation's obligations to pay expenses under Section 9.01
hereof, the Corporation has not conducted any business, activities or
operations, and the Corporation does not have any expenses, obligations or
liabilities (whether accrued, absolute, contingent, unliquidated or otherwise,
whether or not known to the Corporation and whether due or to become due and
regardless of when asserted).
Section 7.5. No Subsidiaries. The Corporation does not own or hold, and
has never owned or held, any shares of stock or any other securities or
interests in or any rights to acquire any shares of stock or any other security
or interest in any other Person.
Section 7.6. Brokerage. There are no claims for brokerage commissions,
finders' fees or similar compensation in connection with the transactions
contemplated by this Agreement based on any arrangement or agreement binding
upon the Corporation. The Corporation shall pay, and hold the LLC and its
Unitholders harmless against, any liability, loss or expense (including, without
limitation, reasonable attorneys' fees and out-of-pocket expenses) arising in
connection with any such claim.
Section 7.7. Government Consent, Etc. Except as set forth on the attached
"Consents Schedule," no permit, consent, approval or authorization of, or
declaration to or filing with, any governmental authority is required in
connection with the execution, delivery and performance by the Corporation of
this Agreement, the Registration Rights Agreement, the Executive Purchase
Agreements or the other agreements contemplated hereby or thereby, the
consummation by the Corporation of any of the transactions contemplated hereby
or thereby, or the conduct or operation of the business of the Corporation and
its Subsidiaries.
40
Section 7.8. Compliance with Laws. Neither the Corporation nor any
Subsidiary has violated any law or any governmental regulation or requirement in
any material respect.
Section 7.9. Disclosure. Neither this Agreement nor any of the exhibits,
schedules, attachments, written statements, documents, certificates or other
written items supplied to the LLC or any holder of Investor Equity by or on
behalf of the Corporation with respect to the transactions contemplated hereby
contain any untrue statement of a material fact or omit a material fact
necessary to make each statement contained herein or therein not misleading.
There is no fact which the Corporation has not disclosed to the LLC and the
holders of Investor Equity in writing and of which any of its officers,
directors or executive employees is aware and which would reasonably be expected
to have a Material Adverse Effect.
Section 7.10. Litigation. There is no claim, suit, litigation,
investigation, arbitration or other proceeding (whether by a private party or
governmental agency) pending or threatened against the Corporation or any of its
executive officers.
Section 7.11. Executive Officers. Each of the executive officers of the
Corporation that holds Management Equity is ready, willing and able to commence
and continue employment with the Corporation in the office to which such
individual was appointed by the Board and such employment and activities
(including recruiting activities) on behalf of the Corporation do not and will
not breach any noncompete, nonsolicitation or other contractual restriction or
arrangement to which such executive officer is subject.
Section 7.12. Taxes. Each of the Corporation and its Subsidiaries have
duly filed all federal, state and other tax returns required by law to be filed
by it and have paid all federal, state and other taxes, assessments and other
governmental charges or levies which are due and payable by the Corporation or
any of its Subsidiaries except any such taxes, assessments or other governmental
charges or levies (i) the payment of which is being contested in good faith by
appropriate proceedings, (ii) for which adequate reserves have been provided on
the books of the Corporation or its Subsidiaries, as applicable, and (iii) as to
which no lien has attached and no foreclosure, distraint, sale or similar
proceedings have been commenced.
ARTICLE 8
Definitions
41
Section 8.1. Definitions. For the purposes of this Agreement, the
following terms have the meanings set forth below:
"Affiliate" of any particular Person means any other Person controlling,
controlled by or under common control with such particular Person, where
"control" means the possession, directly or indirectly, of the power to direct
the management and policies of a Person whether through the ownership of voting
securities, by contract or otherwise.
"Board" means the board of directors of the Corporation.
"Class A Units" has the meaning ascribed to such term in the LLC Agreement.
"Class B Units" has the meaning ascribed to such term in the LLC Agreement.
"Class C Units" has the meaning ascribed to such term in the LLC Agreement.
"Class D Units" has the meaning ascribed to such term in the LLC Agreement.
"Director" means any individual who has been elected to the Board.
"Distribution-In-Kind" means a Transfer (including a distribution-in-kind)
of Investor Equity, pro rata to partners of or investors in any Investor Member
that is a partnership or investment fund.
"Executive Manager" means each of (i) initially, Xxx Xxxxxx-Xxx, Xxxxx
Xxxxxxx and Xxxxxxx Xxxxxx, (ii) the officer of the Corporation who is appointed
after the date hereof as the chief financial officer at the recommendation of
the Founder and with the prior written approval of the LLC's Board of
Representatives and (iii) any other officer of the Corporation who is at any
time designated by the LLC's Board of Representatives to be an Executive Manager
and who executes an Executive Purchase Agreement, this Agreement, the LLC
Agreement and the Registration Rights Agreement.
"Executive Purchase Agreement" shall mean (i) the applicable separate
executive purchase agreement substantially similar to that set forth in Exhibits
3 and 4 attached hereto entered into on or after the date hereof by and among
the LLC, the Corporation and any of Founder, Xxxxxx-Xxx, Xxxxxxx and Xxxxxx (or
any newly hired member of the Corporation's management that becomes a holder
42
of Management Equity and executes a counterpart hereof and of the LLC Agreement
and the Registration Rights Agreement) and (ii) the applicable separate
executive purchase agreement substantially similar to that set forth in Exhibit
5 attached hereto entered into after the date hereof by the LLC and the
Corporation with each newly hired member of the Corporation's management (other
than Founder, Xxxxxx-Xxx, Xxxxxxx or Xxxxxx) that becomes a holder of Management
Equity and executes a counterpart hereof and of the LLC Agreement and the
Registration Rights Agreement.
"Exempt Transferee" means a purchaser or transferee of Investor Equity (i)
in a Public Offering, (ii) in a sale pursuant to Rule 144 effected after the
initial Public Offering and not in a block trade nor in reliance on Rule 144(k),
(iii) pursuant to a Distribution-In-Kind permitted under Section 6.03(a)(v) (but
a transferee pursuant to 6.03(a)(v)(y) will not be an Exempt Transferee), (iv)
in a Drag-Along Sale pursuant to Section 6.06 or (v) in a Private Tag
Transaction once Sections 6.05 and 6.06 cease to be effective.
"Fleet" means, collectively, Xxxxxxxx Partners III, L.P., Xxxxxxx Plaza
Partners, Fleet Venture Resources, Inc. and Fleet Equity Partners VI, L.P.
"Fleet Equity" means (i) the Class A Units initially issued to Fleet
pursuant to the Investor Purchase Agreement (but not including any Class D Units
issued by the LLC in exchange for such Class A Units), (ii) upon and after the
dissolution of the LLC, the Common Stock distributed in respect of the Class A
Units referred to in clause (i) above pursuant to such dissolution, and (iii)
any securities issued directly or indirectly with respect to the foregoing
securities by way of a split, dividend, or other division of securities, or in
connection with a combination of securities, recapitalization, merger,
consolidation, or other reorganization (but not including any Class D Units
issued by the LLC in exchange for any of the foregoing securities). As to any
particular securities constituting Fleet Equity, such securities shall cease to
be Fleet Equity when they have been (a) effectively registered under the
Securities Act and disposed of in accordance with the registration statement
covering them, (b) distributed to the public after a Public Offering through a
broker, dealer or market maker pursuant to Rule 144 in compliance with Article 6
in a transaction that is neither a block trade nor in reliance on Rule 144(k) or
(c) repurchased by the LLC (including in exchange for Class D Units of the LLC),
the Corporation or any Subsidiary.
"Founder" means Xxxxx Xxxxxx so long as he is actively employed as the
Chief Executive Officer of the Corporation. It is understood that as soon as
Xxxxx Xxxxxx ceases to be actively employed as the chief executive officer of
the
43
Corporation for any reason, his rights as Founder will terminate as provided in
Section 5.02(e) of the LLC Agreement.
"Indebtedness" means at a particular time, without duplication, (i) any
indebtedness for borrowed money or issued in substitution for or exchange of
indebtedness for borrowed money, (ii) any indebtedness evidenced by any note,
bond, debenture or other debt security, (iii) any indebtedness for the deferred
purchase price of property or services with respect to which a Person is liable,
contingently or otherwise, as obligor or otherwise (other than trade payables
and other current liabilities incurred in the ordinary course of business which
are not more than six months past due), (iv) any commitment by which a Person
assures a creditor against loss (including, without limitation, contingent
reimbursement obligations with respect to letters of credit), (v) any
indebtedness guaranteed in any manner by a Person (including, without
limitation, guarantees in the form of an agreement to repurchase or reimburse),
(vi) any obligations under capitalized leases with respect to which a Person is
liable, contingently or otherwise, as obligor, guarantor or otherwise, or with
respect to which obligations a Person assures a creditor against loss, (vii) any
indebtedness secured by a Lien on a Person's assets and (viii) any unsatisfied
obligation for "withdrawal liability" to a "multiemployer plan" as such terms
are defined under the Employee Retirement Income Security Act of 1974, as
amended ("ERISA").
"Intellectual Property Rights" means all (i) patents, patent applications,
patent disclosures and inventions, (ii) trademarks, service marks, trade dress,
trade names, logos and corporate names and registrations and applications for
registration thereof together with all of the goodwill associated therewith,
(iii) copyrights (registered or unregistered) and copyrightable works and
registrations and applications for registration thereof, (iv) mask works and
registrations and applications for registration thereof, (v) computer software,
data, data bases and documentation thereof, (vi) trade secrets and other
confidential information (including, without limitation, ideas, formulas,
compositions, inventions (whether patentable or unpatentable and whether or not
reduced to practice), know-how, manufacturing and production processes and
techniques, research and development information, drawings, specifications,
designs, plans, proposals, technical data, copyrightable works, financial and
marketing plans and customer and supplier lists and information), (vii) other
intellectual property rights and (viii) copies and tangible embodiments thereof
(in whatever form or medium).
"Investment" as applied to any Person means (i) any direct or indirect
purchase or other acquisition by such Person of any notes, obligations,
instruments, stock, securities or ownership interest (including partnership
interests
44
and joint venture interests) of any other Person and (ii) any capital
contribution by such Person to any other Person.
"Investor Equity" means (i) the Class A Units issued pursuant to the
Investor Purchase Agreement or Transferred in compliance with Article 6 prior to
dissolution of the LLC (but not including any Class D Units issued by the LLC in
exchange for such Class A Units), (ii) upon and after the dissolution of the
LLC, the Common Stock distributed in respect of the Class A Units referred to in
clause (i) above pursuant to such dissolution, and (iii) any securities issued
directly or indirectly with respect to the foregoing securities by way of a
split, dividend, or other division of securities, or in connection with a
combination of securities, recapitalization, merger, consolidation, or other
reorganization (but not including any Class D Units issued by the LLC in
exchange for any of the foregoing securities). For purposes of this Agreement
and the Registration Rights Agreement, all holdings of Class A Units and Common
Stock by Persons who are Affiliates shall be aggregated for purposes of meeting
any threshold tests under this Agreement or the Registration Rights Agreement.
As to any particular securities constituting Investor Equity, such securities
shall cease to be Investor Equity when they have been (a) effectively registered
under the Securities Act and disposed of in accordance with the registration
statement covering them, (b) distributed to the public after a Public Offering
through a broker, dealer or market maker pursuant to Rule 144 in compliance with
Article 6 in a transaction that is neither a block trade nor in reliance on Rule
144(k) or (c) repurchased by the LLC (including in exchange for Class D Units of
the LLC), the Corporation or any Subsidiary.
"Investor Members" means (i) MSCP, Fleet, Xxxxxx-Xxxxxx and Xxxxx X.
Xxxxxxx, each of which shall, on the date hereof, be admitted as Members
pursuant to Section 3.01(b) of the LLC Agreement and (ii) any transferee of
Investor Equity prior to dissolution of the LLC in compliance with Article 6 of
the Transaction Agreement that is admitted to the LLC as a Substituted Member
(as defined in the LLC Agreement) pursuant to Section 10.01 of the LLC Agreement
but only so long as such person is shown on the LLC's books and records as the
owner of one or more Units.
"Lien" means any mortgage, pledge, security interest, encumbrance, lien or
charge of any kind (including, without limitation, any conditional sale or other
title retention agreement or lease in the nature thereof), any sale of
receivables with recourse against the Corporation, any of its Subsidiaries or
any Affiliate, any filing or agreement to file a financing statement as debtor
under the Uniform Commercial Code or any similar statute other than to reflect
ownership by a third party of property leased to the Corporation or any of its
Subsidiaries under a lease
45
which is not in the nature of a conditional sale or title retention agreement,
or any subordination arrangement in favor of another Person (other than any
subordination arising in the ordinary course of business).
"Management Equity" means (i) the Class B Units issued pursuant to any
Executive Purchase Agreement (but not including any Class C Units or Class D
Units issued by the LLC in exchange for such Class B Units), (ii) upon and after
the dissolution of the LLC, the Common Stock distributed in respect of the Class
B Units referred to in clause (i) above pursuant to such dissolution, and (iii)
any securities issued directly or indirectly with respect to the foregoing
securities by way of a split, dividend, or other division of securities, or in
connection with a combination of securities, recapitalization, merger,
consolidation, or other reorganization (but not including any Class C Units or
Class D Units issued in exchange for any of the foregoing securities). As to
any particular securities constituting Management Equity, such securities shall
cease to be Management Equity when they have been (a) effectively registered
under the Securities Act and disposed of in accordance with the registration
statement covering them, (b) distributed to the public through a broker, dealer
or market maker pursuant to Rule 144 or (c) repurchased by the LLC (including in
exchange for Class C Units or Class D Units of the LLC), the Corporation or any
Subsidiary.
"Management Members" means the Founder, Squier-Dow, Dickens, and Xxxxxx who
are admitted as Members pursuant to Section 3.01(c) of the LLC Agreement and any
other officer of the Corporation that enters into an Executive Purchase
Agreement on or after the date hereof pursuant to Section 3.02(c) of the LLC
Agreement and is admitted as a Substituted Member (as defined in the LLC
Agreement) pursuant to Section 10.01 of the LLC Agreement or as an Additional
Member pursuant to Section 10.02 of the LLC Agreement, but in each case only so
long as such Person is shown on the LLC's books and records as the owner of one
or more Units.
"Material Adverse Effect" shall mean any effect, change, event, matter or
occurrence that is materially adverse to the business, operations, properties
(including intangible properties), financial condition or business prospects of
the Corporation and its Subsidiaries, taken as a whole, except to the extent
solely attributable to changes in general economic or market conditions, and
other than an effect, change, event, matter or occurrence that is specifically
and expressly contemplated in one or more Approved Business Plans or Approved
Budgets approved (and not revoked) prior to the applicable Drawdown Date.
Without limiting the generality of the foregoing, a "Material Adverse Effect"
shall be deemed to have occurred if the applicable effect, change, event, matter
or occurrence, individually or in the aggregate with all other effects, changes,
events,
46
matters or occurrences would be reasonably likely to result in (i) liability to
the Corporation or its Subsidiaries or diminution in the value of the business
(the "Business") of the Corporation and its Subsidiaries, of $500,000 or more in
the aggregate; (ii) any material impediment to or restriction on the operation
or conduct of the Business that is not capable of being cured within a
reasonable period; or (iii) any material adverse effect on the ability of the
Corporation or any of its executive officers to consummate the transactions
contemplated by this Agreement and the other agreements referred to herein.
"Maximum Commitment" means, at any time, $1 times the aggregate number of
Class A Units and Class B Units outstanding at such time. The maximum
commitment, as of the date hereof, for each Member is listed on the Schedule of
Unitholders attached to the LLC Agreement.
"Member" means each of the Investor Members, the Management Members and any
Person admitted to the LLC as a Substituted Member pursuant to Section 10.01 of
the LLC Agreement or as an Additional Member pursuant to Section 10.02 of the
LLC Agreement, but in each case only so long as such Person is shown on the
LLC's books and records as the owner of one or more Units.
"MSCP" means, collectively, Xxxxxx Xxxxxxx Capital Partners III, L.P.,
Xxxxxx Xxxxxxx Capital Investors, L.P., and MSCP III 892 Investors, L.P.
"MSCP Equity" means (i) the Class A Units initially issued to MSCP pursuant
to the Investor Purchase Agreement (but not including any Class D Units issued
by the LLC in exchange for such Class A Units), (ii) upon and after the
dissolution of the LLC, the Common Stock distributed in respect of the Class A
Units referred to in clause (i) above pursuant to such dissolution, and (iii)
any securities issued directly or indirectly with respect to the foregoing
securities by way of a split, dividend, or other division of securities, or in
connection with a combination of securities, recapitalization, merger,
consolidation, or other reorganization (but not including any Class D Units
issued by the LLC in exchange for any of the foregoing securities). As to any
particular securities constituting MSCP Equity, such securities shall cease to
be MSCP Equity when they have been (a) effectively registered under the
Securities Act and disposed of in accordance with the registration statement
covering them, (b) distributed to the public after a Public Offering through a
broker, dealer or market maker pursuant to Rule 144 in compliance with Article 6
in a transaction that is neither a block trade nor in reliance on Rule 144(k) or
(c) repurchased by the LLC (including in exchange for Class D Units of the LLC),
the Corporation or any Subsidiary.
47
"Officer's Certificate" means a certificate signed by the Corporation's
president or its chief financial officer, stating that (i) the officer signing
such certificate has made or has caused to be made such investigations as are
reasonably necessary in order to permit him to verify the accuracy of the
information set forth in such certificate and (ii) such certificate does not
misstate any material fact and does not omit to state any fact necessary to make
the certificate not misleading.
"Permitted Lien" means:
(a) tax liens with respect to taxes not yet due and payable or which are
being contested in good faith by appropriate proceedings and for which
appropriate reserves have been established in accordance with generally accepted
accounting principles, consistently applied;
(b) deposits or pledges made in connection with, or to secure payment of,
utilities or similar services, workers' compensation, unemployment insurance,
old age pensions or other social security obligations;
(c) purchase money security interests in any property acquired by the
Corporation or any Subsidiary to the extent permitted by this Agreement;
(d) interests or title of a lessor under any lease permitted by this
Agreement;
(e) mechanics', materialmen's or contractors' liens or encumbrances or
any similar lien or restriction for amounts not yet due and payable; and
(f) easements, rights-of-way, restrictions and other similar charges and
encumbrances not interfering with the ordinary conduct of the business of the
Corporation and its Subsidiaries or detracting from the value of the assets of
the Corporation and its Subsidiaries.
"Person" means an individual, a partnership, a corporation, a limited
liability company, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization and a governmental entity or any
department, agency or political subdivision thereof.
"Private Tag Transaction" means a sale, transfer or other disposition of
Investor Equity by a holder thereof to a third party, in one transaction or a
series of related transactions, including pursuant to Rule 144 but excluding a
sale or transfer (i) to an Affiliate of such holder, (ii) in a Public Offering,
(iii) pursuant to
48
Rule 144 effected after the initial Public Offering that is neither a block
trade nor in reliance on Rule 144(k), (iv) in a Distribution-In-Kind permitted
under Section 6.03(a)(v), or (v) in a Drag-Along Sale pursuant to Section 6.06.
"Public Offering" means any underwritten sale of the Corporation's common
stock pursuant to an effective registration statement under the Securities Act
filed with the Securities and Exchange Commission on Form S-1 (or a successor
form adopted by the Securities and Exchange Commission); provided that the
following shall not be considered a Public Offering: (i) any issuance of common
stock as consideration or financing for a merger or acquisition, and (ii) any
issuance of common stock or rights to acquire common stock to employees of the
Corporation or its Subsidiaries as part of an incentive or compensation plan.
"Registration Rights Agreement" means the Registration Rights Agreement
dated as of the date hereof, by and between the Corporation and the holders of
Investor Equity and Management Equity, as amended from time to time in
accordance with the terms thereof.
"Remaining Commitment" means, on any particular date, the difference of the
Maximum Commitment then in effect minus the sum of the Initial Contribution and
the aggregate Subsequent Contributions made on or prior to such date.
"Representatives" means the representatives on the LLC's Board of
Representatives.
"Restricted Securities" means (i) the Common Stock issued hereunder, and
(ii) any securities issued directly or indirectly with respect to the securities
referred to in clause (i) above by way of a stock dividend or stock split or in
connection with a combination of shares, recapitalization, merger, consolidation
or other reorganization. As to any particular Restricted Securities, such
securities shall cease to be Restricted Securities when they have (a) been
effectively registered under the Securities Act and disposed of in accordance
with the registration statement covering them, (b) become eligible for sale
pursuant to Rule 144 (without any volume limitations) or (c) been otherwise
transferred and new certificates for them not bearing the Securities Act legend
set forth in Section 9.03 have been delivered by the Corporation in accordance
with Section 6.01(b). Whenever any particular securities cease to be Restricted
Securities, the holder thereof shall be entitled to receive promptly from the
Corporation, without expense, new securities of like tenor not bearing a
Securities Act legend of the character set forth in Section 9.03.
49
"Rule 144" means Rule 144 promulgated under the Securities Act (or any
similar provision then in force).
"Sale of the Corporation" means either (i) the sale, lease, transfer,
conveyance or other disposition, in one or a series of related transactions, of
all or substantially all of the assets of the Corporation and its Subsidiaries,
taken as a whole, or (ii) a transaction or series of transactions (including by
way of merger, consolidation, or sale of stock) the result of which is that the
holders of the Corporation's outstanding voting stock immediately prior to such
transaction are after giving effect to such transaction no longer, in the
aggregate, the "beneficial owners" (as such term is defined in Rule 13d-3 and
Rule 13d-5 promulgated under the Securities Exchange Act), directly or
indirectly through one or more intermediaries, of more than 50% of the voting
power of the outstanding voting stock of the Corporation.
"Securities Act" means the Securities Act of 1933, as amended, and
applicable rules and regulations thereunder.
"Securities and Exchange Commission" includes any governmental body or
agency succeeding to the functions thereof.
"Securities Exchange Act" means the Securities Exchange Act of 1934, as
amended, and applicable rules and regulations thereunder.
"Subsidiary" means, with respect to any Person, any corporation, limited
liability company, partnership, association or other business entity of which
(i) if a corporation, a majority of the total voting power of shares of stock
entitled (without regard to the occurrence of any contingency) to vote in the
election of directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by that Person or one or more of the other
Subsidiaries of that Person or a combination thereof, or (ii) if a limited
liability company, partnership, association or other business entity, a majority
of the partnership or other similar ownership interest thereof is at the time
owned or controlled, directly or indirectly, by that Person or one or more
Subsidiaries of that Person or a combination thereof. For purposes hereof, a
Person or Persons shall be deemed to have a majority ownership interest in a
limited liability company, partnership, association or other business entity if
such Person or Persons shall be allocated a majority of limited liability
company, partnership, association or other business entity gains or losses or
shall be or control any managing director, managing member, manager or general
partner of such limited liability company, partnership, association or other
business entity. For purposes of this Agreement, if the context does not
otherwise indicate to which Person the term "Subsidiary"
50
is used in respect of, the term "Subsidiary" shall refer to any Subsidiary of
the Corporation.
"Transfer" shall include any direct or indirect sale, transfer, assignment,
pledge or other disposition (whether with or without consideration and whether
voluntary or involuntary or by operation of law) of any interest in any Investor
Equity or Management Equity.
"Unitholder" means any Member or Assignee who owns one or more Units as
reflected on the LLC's books and records.
"Units" has the meaning ascribed to such term in the LLC Agreement.
"Xxxxxx-Xxxxxx" means Xxxxxx-Xxxxxx Media Partners, L.P., a Delaware
limited partnership.
"Xxxxxx-Xxxxxx Equity" means (i) the Class A Units initially issued to
Xxxxxx-Xxxxxx pursuant to the Investor Purchase Agreement (but not including any
Class D Units issued by the LLC in exchange for such Class A Units), (ii) upon
and after the dissolution of the LLC, the Common Stock distributed in respect of
the Class A Units referred to in clause (i) above pursuant to such dissolution,
and (iii) any securities issued directly or indirectly with respect to the
foregoing securities by way of a split, dividend, or other division of
securities, or in connection with a combination of securities, recapitalization,
merger, consolidation, or other reorganization (but not including any Class D
Units issued by the LLC in exchange for any of the foregoing securities). As to
any particular securities constituting Xxxxxx-Xxxxxx Equity, such securities
shall cease to be Xxxxxx-Xxxxxx Equity when they have been (a) effectively
registered under the Securities Act and disposed of in accordance with the
registration statement covering them, (b) distributed to the public after a
Public Offering through a broker, dealer or market maker pursuant to Rule 144 in
compliance with Article 6 in a transaction that is neither a block trade nor in
reliance on Rule 144(k) or (c) repurchased by the LLC (including in exchange for
Class D Units of the LLC), the Corporation or any Subsidiary.
"Wholly-Owned Subsidiary" means, with respect to any Person, a Subsidiary
of which all of the outstanding capital stock or other ownership interests are
owned by such Person or another Wholly-Owned Subsidiary of such Person.
Section 8.2. Knowledge. As used in Article 7, the terms "knowledge" or
"aware" in respect of the Corporation shall mean and include (i) the actual
knowledge or awareness of the Founder, Xxxxxx-Xxx, Xxxxxxx or Xxxxxx (and
51
any Person hired to serve as a replacement for any of the foregoing), or any of
the Executive Managers and (ii) with respect to the Persons identified in clause
(i) above, the knowledge or awareness which a prudent business person would have
obtained in the conduct of his business after making reasonable inquiry and
reasonable diligence with respect to the particular matter in question.
ARTICLE 9
Miscellaneous Provisions
Section 9.1. Expenses. The Corporation shall pay, and hold the LLC and
each of its Unitholders harmless against liability for the payment of, all of
the out-of-pocket costs, fees and expenses of the LLC and its Unitholders
(including the reasonable costs, fees and expenses of Xxxxx Xxxx & Xxxxxxxx and
Nixon, Hargrave, Devans & Xxxxx LLP and any other special counsel (an "Other
Counsel") retained by an Investor Member; provided that the fees and expenses of
such Other Counsels shall not exceed $15,000 for any one Other Counsel nor
$30,000 in the aggregate for all such Other Counsels) arising in connection with
the performance of due diligence investigations concerning the Corporation and
its operations and management, the negotiation and execution of this Agreement,
the LLC Agreement, the Registration Rights Agreement, the Executive Purchase
Agreements and the agreements contemplated hereby and thereby, and the
consummation of the transactions to occur at the Initial Closing as contemplated
hereby. In addition, the Corporation shall pay, and hold the LLC and each of
the holders of Investor Equity harmless against liability for the payment of,
all of the out-of-pocket costs, fees and expenses of the LLC and the holders of
Investor Equity and their respective employees and representatives (including
the reasonable fees and expenses of Xxxxx Xxxx & Xxxxxxxx) arising in connection
with (i) any amendments or waivers (whether or not the same become effective)
under or in respect of this Agreement, any of the agreements contemplated hereby
or the Certificate of Incorporation, (ii) the enforcement of the rights granted
under this Agreement, any of the agreements contemplated hereby and the
Certificate of Incorporation, (iii) any filing with any governmental agency with
respect to the LLC's investment in the Corporation or any holder of Investor
Equity's investment in the LLC, or any other filing with any governmental agency
with respect to the Corporation or the LLC which mentions any holder of Investor
Equity, (iv) stamp and other taxes which may be payable in respect of the
execution and delivery of this Agreement or the issuance, delivery or
acquisition of any shares of Common Stock or (v) their investment in the LLC or
the Corporation and their monitoring of the affairs of the Corporation
(including all reasonable travel and related expenses).
52
Section 9.2. Remedies.
(a) Each holder of Common Stock and each party hereto shall have all
rights and remedies set forth in this Agreement and the Certificate of
Incorporation and all rights and remedies which such parties have been granted
at any time under any other agreement or contract and all of the rights which
such parties have under any law or at equity. Any Person having any rights
under any provision of this Agreement shall be entitled to enforce (upon
demonstration of irreparable harm) such rights specifically (without posting a
bond or other security), to recover damages by reason of any breach of any
provision of this Agreement and to exercise all other rights granted by law.
(b) If upon any Capital Call Notice (as defined in the LLC Agreement),
any holder of Class A Units or Class B Units refuses or otherwise fails to make
the capital contributions required by such Capital Call Notice under the LLC
Agreement with respect to the Class A Units and Class B Units held by such
Unitholder, such holder shall forfeit and thereafter cease to possess all rights
hereunder to designate any representatives to the Board or to any Board
committee.
Section 9.3. LLC's Investment Representations. The LLC hereby represents
that it is acquiring the Restricted Securities purchased hereunder or acquired
pursuant hereto for its own account with the present intention of holding such
securities for purposes of investment, and that it has no intention of selling
such securities in a public distribution in violation of the federal securities
laws or any applicable state securities laws; provided that nothing contained
herein shall prevent the LLC or any subsequent holders of Restricted Securities
from transferring such securities in compliance with the provisions of Article 6
hereof. Each certificate or instrument representing Restricted Securities shall
be imprinted with a legend in substantially the following form:
53
"The securities represented by this certificate were originally issued on July
8, 1998, and have not been registered under the Securities Act of 1933, as
amended. The transfer of the securities represented by this certificate is
subject to the restrictions specified in Article 6 of the Transaction Agreement
dated as of July 8, 1998, as amended and modified from time to time, between the
issuer (the "Corporation"), the initial holder of these securities and the other
parties thereto. The Corporation reserves the right to refuse the transfer of
such securities until such conditions have been fulfilled with respect to such
transfer. A copy of such Agreement shall be furnished by the Corporation to the
holder hereof upon written request and without charge."
Section 9.4. Consent to Amendments. Except as otherwise expressly
provided herein, the provisions of this Agreement may only be amended, modified,
or waived with the prior written consent of the holders of at least 80% of the
outstanding Investor Equity and Management Equity voting together as a single
class. Notwithstanding the foregoing, (x) any such amendment, modification or
waiver (except pursuant to Section 3.05(b)(iv)) of (or having the effect of
amending or waiving) Section 3.05, 5.03(b), 5.03(c), 5.03(e), 5.03(f), 6.03(v),
6.05, 6.06 or this Section 9.04 shall also require the prior written consent of
each of Fleet, Xxxxxx-Xxxxxx and MSCP (but only for so long as the applicable
holder of Investor Equity holds at least 1% of the aggregate Investor Equity)
and (y) any such amendment, modification or waiver adverse to the rights of any
holder of Management Equity under this Agreement (including for purposes of this
proviso holders forfeiting their voting rights under Section 9.02(b) or 5.06))
shall also require the prior written consent of the chief executive officer of
the Corporation. No course of dealing between the Corporation and the LLC or
any other holder of Investor Equity or Management Equity or any delay by such
holder in exercising any rights hereunder or under the Certificate of
Incorporation shall operate as a waiver of any rights of such holder.
Section 9.5. Survival of Representations and Warranties. All
representations and warranties contained herein or made in writing by any party
in connection herewith shall survive the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby,
regardless of any investigation made by the LLC or on its or any Investor
Member's behalf.
Section 9.6. Successors and Assigns. (a) Except as otherwise expressly
provided herein (including, without limitation, in Article 5 hereof), all
covenants and agreements contained in this Agreement by or on behalf of any of
the parties hereto shall bind and inure to the benefit of the respective
successors and permitted assigns of the parties hereto whether so expressed or
not.
(b) Notwithstanding anything else contained herein, the Corporation, the
LLC, the Unitholders, and each subsequent holder of Common Stock hereby accept,
acknowledge and agree that upon and after the dissolution of the LLC:
(i) proposed business plans and Proposed Budgets of the
Corporation will continue to be submitted for Board approval in compliance
with Section 3.02(e);
(ii) the Corporation shall continue to be bound by all of the
covenants in Article 4;
54
(iii) the provisions of Article 6 shall continue in effect in
accordance with their terms;
(iv) all rights of the LLC to rely upon the representations and
warranties set forth in Article 7 hereof shall thereafter inure to the
benefit of and be enforceable by all holders of Common Stock;
(v) the provisions of Article 9 except Sections 9.02(b) and 9.03
shall continue to apply; and
(vi) all rights and powers expressly and specifically granted to
the LLC in Section 9.04 (Consent to Amendments) hereof shall thereafter
operate as provided therein.
Section 9.7. Capital and Surplus; Special Reserves. The Corporation
agrees that the capital of the Corporation (as such term is used in Section 154
of the General Corporation Law of Delaware) in respect of the Common Stock
issued pursuant to this Agreement shall be equal to the aggregate par value of
such shares and that it shall not increase the capital of the Corporation with
respect to any shares of the Corporation's capital stock at any time on or after
the date of this Agreement. The Corporation also agrees that it shall not
create any special reserves under Section 171 of the General Corporation Law of
Delaware without the prior written consent of the LLC.
Section 9.8. Severability. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law, such provision shall be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of this Agreement.
Section 9.9. Counterparts. This Agreement may be executed simultaneously
in two or more counterparts, any one of which need not contain the signatures of
more than one party, but all such counterparts taken together shall constitute
one and the same Agreement.
Section 9.10. Descriptive Headings; Interpretation; No Strict
Construction. The descriptive headings of this Agreement are inserted for
convenience only and do not constitute a substantive part of this Agreement.
Whenever required by the context, any pronoun used in this Agreement shall
include the corresponding masculine, feminine or neuter forms, and the singular
forms of nouns, pronouns, and verbs shall include the plural and vice versa.
Reference to any agreement, document, or instrument means such agreement,
55
document, or instrument as amended or otherwise modified from time to time in
accordance with the terms thereof, and if applicable hereof. The use of the
words "include" or "including" in this Agreement shall be by way of example
rather than by limitation. The use of the words "or," "either" or "any" shall
not be exclusive. The parties hereto have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, it is the intent of the parties
that this Agreement shall be construed as if drafted jointly by the parties
hereto, and no presumption or burden of proof shall arise favoring or
disfavoring any party by virtue of the authorship of any of the provisions of
this Agreement. It is the intent of the parties that prior drafts of this
Agreement shall be deemed not to provide any evidence as to the meaning of any
provision hereof or the intent of the parties hereto with respect hereto.
Section 9.11. Governing Law. This Agreement shall be governed by, and
construed under, the laws of the State of Delaware, all rights and remedies
being governed by said laws, without regard to conflict of laws principles.
Each of the parties hereto agrees (a) that this Agreement involves at least
$100,000 and (b) that this Agreement has been entered into by the parties hereto
in express reliance upon 6 Del.C. (S) 2708.
Section 9.12. Submission to Jurisdiction. Each party hereby irrevocably
and unconditionally agrees (a) to be subject to the jurisdiction of the courts
of the State of Delaware and the federal courts sitting in the State of Delaware
or in the County of New York in the State of New York and (b) to the extent such
party is not otherwise subject to service of process in the State of Delaware,
to appoint and maintain an agent in the State of Delaware as such party's agent
for acceptance of legal process, and that service made pursuant to (b) above
shall have the same legal force and effect as if served upon said party
personally within the State of Delaware. For purposes of implementing the
parties' agreement to appoint and maintain an agent for service of process in
the State of Delaware, each such party that has not as of the date hereof
already duly appointed such an agent does hereby appoint RL&F Service Corp., One
Xxxxxx Square, 10th Floor, Wilmington, New Castle County, Delaware 19801, as
such agent.
Section 9.13. Notices. All notices, requests or other communications to
any party hereunder shall be in writing (including facsimile transmission) and
shall be given,
56
if to the LLC, to:
c/x Xxxxxx Xxxxxxx Capital Partners III, L.P.
1221 Avenue of the Xxxxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X.Xxxxxxxxxx
Facsimile: (000) 000-0000
with a copy to:
Xxxxx Xxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxxxx
Facsimile: (000) 000-0000
57
and to:
Fleet Equity Partners VI, L.P.
00 Xxxxxxx Xxxxx
00xx Xxxxx
Xxxxxxxxxx, Xxxxx Xxxxxx 00000
Attention: Xxxxxx X. Xxx Xxxxx
Facsimile: (000) 000-0000
with a copy to:
Paul, Hastings, Xxxxxxxx & Xxxxxx, LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxxxx
Facsimile: (000) 000-0000
and to:
Xxxxxx-Xxxxxx Media Partners, L.P.
000 Xxxxx Xxxx
Xxxxx 0000
Xxxxxxxxxxxx, XX 00000
Attention: Xx. Xxxxx Xxxxxxxxx
Facsimile: (000) 000-0000
with a copy to:
Rubin, Baum, Xxxxx, Constant & Xxxxxxxx
00 Xxxxxxxxxxx Xxxxx
00xx xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxxx X. Xxxxxxx
Facsimile: (000) 000-0000
58
if to the Corporation, to:
Choice One Communications Inc.
000 Xxxx Xxxxxxxxxx Xxxxxx
Xxxxx 0000
Xxxx Xxxxxxxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxxx
Facsimile: (000) 000-0000
with a copy to:
Nixon, Hargrave, Devans & Xxxxx LLP
Xxxxxxx Xxxxxx
X.X. Xxx 0000
Xxxxxxxxx, Xxx Xxxx 00000-0000
Attention: Xxxxx X. Xxxxx, III
Facsimile: (000) 000-0000
and if to any Unitholder or to any other holder of Common Stock, to the address
or facsimile set forth on the books of the LLC or the Corporation or any other
address or facsimile number as a party may hereafter specify for such purpose to
the Corporation. Notwithstanding the foregoing, no Investor Member or its
counsel shall be entitled to notice if such Investor Member holds less than 3%
in aggregate of all Investor Equity held by all Investor Members.
All such notices, requests and other communications shall be deemed
received on the date of receipt by the recipient thereof if received prior to 5
p.m. in the place of receipt and such day is a business day in the place of
receipt. Otherwise, any such notice, request or communication shall be deemed
not to have been received until the next succeeding business day in the place of
receipt.
59
Otherwise, any such notice, request or communication shall be deemed not to
have been received until the next succeeding business day in the place of
receipt
* * * * *
60
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first written above.
CHOICE ONE COMMUNICATIONS INC.
By: /s/ Xxxxx X. Xxxxxx
---------------------------------------
Its: President and Chief Executive Officer
---------------------------------------
CHOICE ONE COMMUNICATIONS L.L.C.
By: /s/ Xxxxx X. Xxxxxx
--------------------------------------
Its: Authorized Person
--------------------------------------
BY: (EACH OF THE FOLLOWING INVESTOR MEMBERS AND
MANAGEMENT MEMBERS SIGNING BOTH INDIVIDUALLY AND
IN THEIR CAPACITIES AS UNITHOLDERS BINDING THE
LLC)
/s/ Xxxxx X. Xxxxxx
--------------------------------------
Xxxxx X. Xxxxxx
/s/ Xxx Xxxxxx-Xxx
--------------------------------------
Xxx Xxxxxx-Xxx
/s/ Xxxxx Xxxxxxx
--------------------------------------
Xxxxx Xxxxxxx
/s/ Xxxxxxx Xxxxxx
--------------------------------------
Xxxxxxx Xxxxxx
XXXXXX XXXXXXX CAPITAL PARTNERS III, L.P.
By MSCP III, L.P., its general partner
By Xxxxxx Xxxxxxx Capital Partners III, Inc., its
general partner
By /s/ Xxxxxxx X. Xxxxxx
-----------------------------------------------
Its Managing Director
-----------------------------------------------
By /s/ Xxxx Xxxxx Xxxxx
-----------------------------------------------
Its Principal
-----------------------------------------------
MSCP III 892 INVESTORS, L.P.
By MSCP III, L.P., its general partner
By Xxxxxx Xxxxxxx Capital Partners III, Inc., its
general partner
By /s/ Xxxxxxx X. Xxxxxx
-----------------------------------------------
Its Managing Director
-----------------------------------------------
By /s/ Xxxx Xxxxx Xxxxx
-----------------------------------------------
Its Principal
-----------------------------------------------
XXXXXX XXXXXXX CAPITAL INVESTORS, L.P.
By MSCP III, L.P., its general partner
By Xxxxxx Xxxxxxx Capital Partners III, Inc., its
general partner
By /s/ Xxxxxxx X. Xxxxxx
-----------------------------------------------
Its Managing Director
-----------------------------------------------
By /s/ Xxxx Xxxxx Xxxxx
-----------------------------------------------
Its Principal
-----------------------------------------------
XXXXXXXX PARTNERS III, L.P.
By Silverado III, L.P., its General Partner
By Silverado III Corp., its General Partner
By /s/ Xxxxxx X. Xxx Xxxxx
--------------------------------------------
Xxxxxx X. Xxx Xxxxx
Chairman & CEO
XXXXXXX PLAZA PARTNERS
By /s/ Xxxxxx X. Xxx Xxxxx
--------------------------------------------
Xxxxxx X. Xxx Xxxxx
Managing General Partner
FLEET VENTURE RESOURCES, INC.
By /s/ Xxxxxx X. Xxx Xxxxx
--------------------------------------------
Xxxxxx X. Xxx Xxxxx
Chairman & CEO
FLEET EQUITY PARTNERS VI, L.P.
By Fleet Growth Resources II, Inc., its
General Partner
By /s/ Xxxxxx X. Xxx Xxxxx
--------------------------------------------
Xxxxxx X. Xxx Xxxxx
Chairman & CEO
XXXXXX-XXXXXX MEDIA PARTNERS, L.P.
By Xxxxxx Xxxxxx Media, L.L.C., its general partner
By /s/ Xxxxx X. Xxxxxxxxx
---------------------------------------------
Its Chief Executive Officer
--------------------------------------------
By /s/ Xxxxx X. Xxxxxxx
---------------------------------------------
Execution of Counterpart Agreeing to be Bound by
Holder of Management Equity Acquired After the Initial
Closing
Name of Individual:
-------------------------------
Signature:
----------------------------------------
Date:
Execution of Counterpart Agreeing to be Bound by
Holder of Investor Equity Acquired After the Initial
Closing
Name of Individual:
-------------------------------
Signature:
----------------------------------------
Date:
