EXHIBIT 10.6
FIRST AMENDED AND RESTATED
EXECUTIVE SECURITIES AGREEMENT
(XXXXXXXXX)
THIS FIRST AMENDED AND RESTATED EXECUTIVE SECURITIES AGREEMENT
(this "AGREEMENT") is made as of January 28, 1999, by and between CompleTel LLC
(formerly known as CableTel Europe LLC), a Delaware limited liability company
(the "COMPANY"), and Xxxxxxx X. Xxxxxxxxx ("EXECUTIVE"). Capitalized terms used
but not otherwise defined herein have the meanings ascribed to such terms in
Section 7 hereof.
The Company and Executive are parties to an Executive
Securities Agreement dated as of May 18, 1998 (the "PRIOR AGREEMENT"), pursuant
to which Executive exchanged a then-existing ownership interest in the Company
(the "EXISTING INTEREST") for, and the Company issued to Executive, 3,044 Common
Units (of which 1,999 are not, and 1,045 are, subject to performance vesting
under the terms of the Performance Vesting Agreement). The parties hereto desire
for Executive to make a capital contribution to the Company in the amount of
$2,250 in exchange for the Company's issuance to Executive of an additional
2,250 Common Units (none of which will be subject to performance vesting under
the terms of the Performance Vesting Agreement). In furtherance thereof, the
parties hereto hereby agree to amend and restate the Prior Agreement as set
forth herein.
All of such Executive Securities are subject to time vesting
as set forth herein. In addition to time vesting, the portion of such Executive
Securities indicated above are also subject to performance vesting pursuant to
the terms of the Performance Vesting Agreement. All of the Executive Securities
held by Executive or his transferees are subject to certain restrictions on
transfer and, upon Executive's ceasing to be employed by the Company or its
Subsidiaries, certain repurchase options, each as set forth herein.
All of the Preferred Units issued pursuant to the Equity
Purchase Agreement (including those issued to Executive) are subject to certain
capital contribution obligations, restrictions on transfer, and other terms as
set forth in the Equity Purchase Agreement. In addition, such Preferred Units,
as well as the Executive Securities, are subject to certain voting agreements
and other provisions set forth herein and in the Securityholders Agreement. In
connection with the execution of the Prior Agreement, the Company's subsidiary,
CableTel Management, Inc., a Colorado corporation, and Executive entered into an
Employment Agreement dated as of May 18, 1998 (the "EMPLOYMENT AGREEMENT").
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:
1. EXCHANGE OF EXECUTIVE'S EXISTING INTEREST FOR
EXECUTIVE SECURITIES; CAPITAL CONTRIBUTION AND ISSUANCE OF ADDITIONAL EXECUTIVE
SECURITIES.
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(a) THE EXCHANGE TRANSACTION. On May 18, 1998 (the "PRIOR
DATE"), pursuant to the Prior Agreement and pursuant to a recapitalization of
the Company as then set forth in the LLC Agreement, Executive exchanged all of
his Existing Interest for, and the Company issued to Executive, 3,044 Common
Units (of which 1,999 are not, and 1,045 are, subject to performance vesting
under the terms of the Performance Vesting Agreement), each having the rights
and preferences set forth with respect thereto in the LLC Agreement.
(b) CAPITAL CONTRIBUTION AND ISSUANCE OF ADDITIONAL EXECUTIVE
SECURITIES. Upon execution of this Agreement, Executive shall make a capital
contribution to the Company in the amount of $2,250 in exchange for, and the
Company shall issue to Executive, an additional 2,250 Units (none of which will
be subject to performance vesting under the terms of the Performance Vesting
Agreement), each having the rights and preferences set forth with respect
thereto in the LLC Agreement.
(c) SECTION 83(B) ELECTION. Within 30 days after the exchange
transaction described in Section 1(a) above, Executive made an effective
election with the Internal Revenue Service under Section 83(b) of the Internal
Revenue Code of 1986, as amended, with respect to the Executive Securities
issued pursuant thereto. Within 30 days after the issuance of additional
Executive Securities described in Section 1(b) above, Executive shall make an
effective election with the Internal Revenue Service under Section 83(b) of the
Internal Revenue Code of 1986, as amended, with respect to the additional
Executive Securities issued hereunder.
(d) CONSTRUCTION OF OTHER AGREEMENTS. The parties hereto
acknowledge and agree that, pursuant to the express terms of the Equity Purchase
Agreement, the LLC Agreement, the Securityholders Agreement, the Performance
Vesting Agreement, and the Registration Agreement (as defined in the Equity
Purchase Agreement), this Agreement (like the Prior Agreement) is and shall be
considered an "EXECUTIVE SECURITIES AGREEMENT" as such term is used in such
agreements.
(e) REPRESENTATIONS AND WARRANTIES OF EXECUTIVE. In connection
with the exchange for and issuance of the Executive Securities under the Prior
Agreement and the capital contribution for and issuance of the additional
Executive Securities hereunder, Executive represents and warrants to the Company
that:
(i) As of the Prior Date, prior to giving effect to
the transactions contemplated by the Prior Agreement, Executive owned
beneficially and of record all right, title, and interest in and to the
Existing Interest, free and clear of all liens, security interests,
encumbrances, and purchase rights or rights of first refusal.
(ii) The Executive Securities acquired by Executive
under the Prior Agreement and to be acquired by Executive pursuant to
this Agreement shall be acquired for Executive's own account and not
with a view to, or intention of, distribution thereof in violation of
the Securities Act or any applicable state securities laws, and the
Executive Securities shall not be disposed of in contravention of the
Securities Act or any applicable state securities laws.
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(iii) Executive will serve as a management employee
of the Company and its Subsidiaries, is sophisticated in financial
matters and is able to evaluate the risks and benefits of the
investment in the Executive Securities.
(iv) Executive is able to bear the economic risk of
his investment in the Executive Securities for an indefinite period of
time and is aware that transfer of the Executive Securities may not be
possible because (A) such transfer is subject to contractual
restrictions on transfer set forth herein, in the Securityholders
Agreement, and in the Performance Vesting Agreement, and (B) the
Executive Securities have not been registered under the Securities Act
or any applicable state securities laws and, therefore, cannot be sold
unless subsequently registered under the Securities Act and such
applicable state securities laws or an exemption from such registration
is available.
(v) Executive has had an opportunity to ask
questions and receive answers concerning the terms and conditions of
the offering of the Executive Securities issued hereunder and has had
full access to such other information concerning the Company as he has
requested.
(vi) This Agreement, the LLC Agreement, the
Securityholders Agreement, the Performance Vesting Agreement, and the
other agreements contemplated thereby of even date therewith constitute
the legal, valid and binding obligations of Executive, enforceable in
accordance with their terms, and the execution, delivery and
performance of such agreements by Executive and Executive's employment
with the Company and its Subsidiaries do not and shall not conflict
with, violate or cause a breach of any agreement, contract or
instrument to which Executive is a party or by which he is bound or any
judgment, order or decree to which Executive is subject.
(f) ACKNOWLEDGMENT BY EXECUTIVE. As an inducement to the
Company to enter into this Agreement, and as a condition thereto, Executive
acknowledges and agrees that none of the execution and delivery of this
Agreement, the issuance of the Executive Securities to Executive, or Executive's
status as a holder of Executive Securities, shall:
(i) entitle Executive to remain in the employment of
the Company and its Subsidiaries or affect the right of the Company or
its Subsidiaries to terminate Executive's employment at any time and
for any reason as permitted by the Employment Agreement; or
(ii) impose upon the Company any duty or obligation
to disclose to Executive, or create in Executive any right to be
advised of, any material information regarding the Company and its
Subsidiaries at any time prior to, upon or in connection with the
repurchase of any Executive Securities upon the termination of
Executive's employment with the Company and its Subsidiaries or as
otherwise provided hereunder.
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2. TIME VESTING OF EXECUTIVE SECURITIES.
(a) TIME VESTING SCHEDULE. Except as otherwise provided
herein, an amount of Un-Time-Vested Securities (as defined below) shall time
vest on the date hereof and on each of the first four anniversaries of the Prior
Date, such that the Executive Securities shall be time vested on each such date
in accordance with the following schedule:
Cumulative Percentage of
Date Executive Securities
Time Vested on Such Date
The date hereof 30%
The first anniversary of the Prior Date 47.5%
The second anniversary of the Prior Date 65%
The third anniversary of the Prior Date 82.5%
The fourth anniversary of the Prior Date 100%
Notwithstanding the foregoing sentence, the above time vesting schedule shall
cease and no Un-Time-Vested Securities (as defined below) shall time vest after
the date on which Executive's employment with the Company and its Subsidiaries
terminates for any reason. Executive Securities which have become time vested
pursuant to this Section 2 are referred to herein as "TIME-VESTED SECURITIES,"
and all other Executive Securities are referred to herein as "UN-TIME-VESTED
SECURITIES."
(b) 100% ACCELERATION UPON A QUALIFIED SALE OF THE COMPANY.
All Un-Time-Vested Securities shall become Time-Vested Securities in connection
with the consummation of a Qualified Sale of the Company, so long as Executive
is employed by the Company or any of its Subsidiaries on the date of such sale.
For purposes hereof, a "QUALIFIED SALE OF THE COMPANY" means a Sale of the
Company in which the consideration paid in such sale for at least 50% of the
Company's outstanding equity securities or of the Company's consolidated assets
consists of cash and/or publicly traded equity securities (E.G., 66.7% of the
consideration for such Sale of the Company would have to consist of cash and/or
publicly traded equity securities if only 75% of the Company's outstanding
equity securities were sold in such transaction).
(c) 100% ACCELERATION UPON A SALE OF THE COMPANY (OTHER THAN A
QUALIFIED SALE OF THE COMPANY) WITH NO CONTINUING COMPARABLE TIME VESTING
ARRANGEMENT. In the event of a Sale of the Company (other than a Qualified Sale
of the Company), the above vesting schedule will not accelerate as a result of
such Sale of the Company; PROVIDED that if the surviving or acquiring Person(s)
in such Sale of the Company fails or declines either to (i) continue after such
Sale of the Company to allow Executive to hold his Un-Time-Vested Securities
subject to the time vesting and repurchase provisions hereof, or (ii) grant to
Executive the number of securities in the surviving or acquiring Person(s) that
Executive would have received in such Sale of the Company in exchange for
Executive's Un-Time-Vested Securities if such securities had instead been
Time-Vested
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Securities, subject to ongoing time vesting and repurchase arrangements
substantially comparable to those set forth herein (as such comparability is
determined in good faith by the Board), then all Un-Time-Vested Securities shall
become Time-Vested Securities in connection with the consummation of such Sale
of the Company, so long as Executive is employed by the Company or any of its
Subsidiaries on the date of such sale.
(d) ONE-YEAR ACCELERATION UPON A QUALIFIED PUBLIC OFFERING.
Upon the consummation of a Qualified Public Offering, and so long as Executive
is employed by the Company or any of its Subsidiaries on the closing date of
such offering, there will time vest the amount of Un-Time-Vested Securities
which were scheduled to time vest within the 365 days following such closing
date (and the remaining Un-Time-Vested Securities, if any, shall continue to
time vest 17.5% on each anniversary of the Prior Date in accordance with clause
(a) above, such that the time vesting schedule set forth in paragraph (a) above
shall have been effectively accelerated by one year).
(e) TIME VESTING AND PERFORMANCE VESTING.
(i) INDEPENDENCE OF TIME AND PERFORMANCE VESTING. The
Company and Executive acknowledge that the Executive Securities
constituting Performance Vesting Securities are subject, in addition to
time vesting under this Section 2, to performance vesting as set forth
in the Performance Vesting Agreement. The time vesting provisions of
this Section 2 operate independently of the performance vesting
provisions under the Performance Vesting Agreement. As such, (A) the
terms "Time-Vested Securities" and "Un-Time-Vested Securities" as used
herein refer only to whether particular Executive Securities have time
vested in accordance with the terms of this Section 2 and do not
indicate whether such Executive Securities that constitute Performance
Vesting Securities have or have not also performance vested under the
Performance Vesting Agreement, and (B) the terms "Performance-Vested
Securities" and "Un-Performance-Vested Securities" (each defined below)
as used herein refer only to whether particular Performance Vesting
Securities have performance vested in accordance with the terms of the
Performance Vesting Agreement and do not indicate whether such
Performance Vesting Securities have or have not also time vested under
this Section 2.
(ii) APPLICATION OF TIME VESTING. Whenever
Un-Time-Vested Securities time vest pursuant to the terms of this
Section 2, the Un-Time-Vested Securities that are not Performance
Vesting Securities, on the one hand, and the Un-Time-Vested Securities
that are Performance Vesting Securities, on the other hand, will each
time vest on a pro rata basis based on the number of each such type of
securities then outstanding. Of such Un-Time-Vested Securities
constituting Performance Vesting Securities which are to vest, the
Un-Time-Vested Securities that are Performance-Vested Securities shall
be time vested prior to any Un-Time-Vested Securities that are
Un-Performance-Vested Securities being time vested.
(iii) APPLICATION OF PERFORMANCE VESTING. Whenever
Un-Performance-Vested Securities performance vest pursuant to the terms
of the Performance Vesting
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Agreement, the Un-Performance-Vested Securities that are Time-Vested
Securities shall be performance vested prior to any
Un-Performance-Vested Securities that are Un-Time-Vested Securities
being performance vested.
(f) 100% ACCELERATION UPON CERTAIN TERMINATION OF EMPLOYMENT.
If Executive's employment with the Company is terminated by the Company without
Cause and not as a result of Nonperformance (as defined in the Employment
Agreement), all Un-Time-Vested Securities shall become Time-Vested Securities in
connection with such termination.
3. REPURCHASE OPTIONS.
(a) REPURCHASE OPTIONS UPON DEATH, DISABILITY, OR TERMINATION
WITHOUT CAUSE. If Executive ceases to be employed by the Company and its
Subsidiaries by reason of Executive's death, Disability, or a termination by the
Company without Cause (such cessation of employment, a "TYPE I REPURCHASE
EVENT"), the Executive Securities then in existence (whether held by Executive
or one or more of Executive's transferees) will be subject to repurchase as set
forth below:
(i) UN-TIME-VESTED SECURITIES. The Company (by action
of the Board) may elect to purchase all or any portion of the Executive
Securities constituting Un-Time-Vested Securities by delivering a
Repurchase Notice to the holder or holders of the Executive Securities
at any time within 30 days after the Type I Repurchase Event.
(ii) TIME-VESTED SECURITIES THAT ARE PERFORMANCE
VESTING SECURITIES. The Company (by action of the Board) may elect to
purchase all or any portion of the Time-Vested Securities that are
Performance Vesting Securities by delivering a Repurchase Notice to the
holder or holders of the Executive Securities at any time within 30
days after the Type I Repurchase Event.
(iii) TIME-VESTED SECURITIES, OTHER THAN PERFORMANCE
VESTING SECURITIES, WHERE TERMINATION OCCURS DURING START-UP PERIOD. If
a Type I Repurchase Event occurs at any time during the Start-Up
Period, the holders of Start-Up Group Securities shall have the right
to purchase all or any portion (but in any event not more than 75%) of
the Time-Vested Securities that are not Performance Vesting Securities
by delivering a Repurchase Notice to the holder or holders of the
Executive Securities at any time prior to the fourth anniversary of the
Prior Date. All repurchases pursuant to the immediately preceding
sentence shall be pro rata among the holders of Start-Up Group
Securities electing such a repurchase based on the number of Start-Up
Group Securities held by each such holder, or on such other basis as
agreed to by the holders of Start-Up Group Securities. If Executive at
any time breaches in any material respect the provisions of Section 5
(Confidentiality) or Section 6 (Noncompetition and Nonsolicitation)
hereof, the Company shall have (A) upon giving written notice to the
holders of Start-Up Group Securities affording them 20 days in which to
exercise any of their remaining repurchase rights pursuant to this
subparagraph (iii), the right to purchase all or any portion of the
Time-Vested Securities (other than Performance Vesting Securities) that
the holders of Start-Up Group Securities have not elected to
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repurchase, and (B) the right to purchase all or any portion of the 25%
of such Time-Vested Securities that the holders of Start-Up Group
Securities could not elect to repurchase, in each case by delivering a
Repurchase Notice to the holder or holders of Executive Securities at
any time prior to the six-month anniversary of the date of such breach.
(iv) TIME-VESTED SECURITIES, OTHER THAN PERFORMANCE
VESTING SECURITIES, WHERE TERMINATION OCCURS AFTER START-UP PERIOD. If
a Type I Repurchase Event occurs at any time after the Start-Up Period,
the Company shall have the right to purchase all or any portion of the
Time-Vested Securities that are not Performance Vesting Securities by
delivering a Repurchase Notice to the holder or holders of the
Executive Securities at any time within 30 days after the Type I
Repurchase Event.
(b) REPURCHASE OPTION UPON TERMINATION OTHER THAN BY DEATH,
DISABILITY, OR TERMINATION WITHOUT CAUSE. If Executive ceases to be employed by
the Company and its Subsidiaries for any reason other than Executive's death,
Disability, or a termination by the Company without Cause (such cessation of
employment, a "TYPE II REPURCHASE EVENT"), the Company (by action of the Board)
may elect to purchase all or any portion of the Executive Securities then in
existence (whether held by Executive or one or more of Executive's transferees)
by delivering a Repurchase Notice to the holder or holders of the Executive
Securities at any time within 30 days after the Type II Repurchase Event.
(c) ASSIGNMENT OF REPURCHASE RIGHTS UNDER SECTION 3(a)(iii).
(i) Upon any Type I Repurchase Event giving rise to a
right of the holders of Start-Up Group Securities to purchase
Time-Vested Securities (other than Performance Vesting Securities)
under Section 3(a)(iii) hereof, if the Board and the holders of at
least 80% of the Purchaser Securities then outstanding determine within
six months after the occurrence of the Type I Repurchase Event that it
would be in the best interests of the Company for all or any portion of
such Time-Vested Securities to be available for issuance to one or more
management or other key employees (each a "KEY EMPLOYEE") of the
Company or any of its Subsidiaries, then the Company shall have the
right to require the holders of Start-Up Group Securities to assign to
the Company their rights to repurchase such Time-Vested Securities
under Section 3(a)(iii) (and by so requiring the Company shall be
deemed to have elected to exercise such assigned repurchase rights).
Any assignment of repurchase rights pursuant to the immediately
preceding sentence shall be made pro rata among all holders of Start-Up
Group Securities based on the number of Start-Up Group Securities held
by each such holder, or on such other basis as agreed to by the holders
of Start-Up Group Securities.
(ii) Each holder of Start-Up Group Securities shall
have the right to assign all or any portion of its repurchase rights
under Section 3(a)(iii) hereof to the Company. Upon the vote of the
holders of a majority of the Start-Up Group Securities then
outstanding, all holders of Start-Up Group Securities will assign their
repurchase rights under Section 3(a)(iii) hereof to the Company.
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(iii) If any holder of Start-Up Group Securities
assigns its repurchase rights under Section 3(a)(iii) to the Company,
and the Company fails to exercise such assigned repurchase rights, such
holder shall once again have the right to exercise (or assign) such
rights.
(d) ASSIGNMENT OF COMPANY'S REPURCHASE RIGHTS. Upon any Type I
Repurchase Event or Type II Repurchase Event (a "REPURCHASE EVENT"), the Company
(by action of the Board) shall have the right to assign all or any portion of
its repurchase rights hereunder to any Key Employee of the Company or its
Subsidiaries; PROVIDED that the Company may not assign its rights under Section
3(h) below to pay all or part of the Repurchase Price (as defined below) for
Executive Securities repurchased hereunder by (i) offsetting debts owed by
Executive to the Company or (ii) issuing Class A Senior Units or a promissory
note. If the Company assigns any of its repurchase rights to such a Key
Employee, and such Key Employee fails to exercise such assigned repurchase
rights, the Company shall once again have the right to exercise (or assign) such
rights.
(e) REPURCHASE PRICE. The repurchase price (the "REPURCHASE
PRICE") for any Time-Vested Securities to be repurchased hereunder shall be the
Fair Market Value (as determined below) of such securities on the date of the
Repurchase Event giving rise to such repurchase. The Repurchase Price of any
Un-Time-Vested Securities to be repurchased hereunder shall be the Original Cost
of such securities (with securities having a lower Original Cost being subject
to repurchase prior to securities with a higher Original Cost).
(f) REPURCHASE NOTICE. Each "REPURCHASE NOTICE" delivered
hereunder shall set forth the amount, type, and class of Executive Securities
(including, if applicable, the amount of Un-Time-Vested Securities and/or
Time-Vested Securities) to be acquired from each such holder and the aggregate
consideration to be paid for such Executive Securities. The Executive Securities
to be repurchased pursuant to any Repurchase Notice shall first be satisfied to
the extent possible from the Executive Securities held by Executive at the time
of delivery of such Repurchase Notice. If the amount of Executive Securities
then held by Executive is less than the total amount of Executive Securities
that have been elected to be purchased pursuant to such Repurchase Notice, the
electing party or parties shall purchase the remaining securities elected to be
purchased from the other holder(s) of Executive Securities, pro rata according
to the amount of Executive Securities held of record by each such other holder
at the time of delivery of such Repurchase Notice. The amount of Un-Time-Vested
Securities and Time-Vested Securities repurchased hereunder shall be deemed to
be allocated among Executive and the other holders of repurchased Executive
Securities (if any) pro rata according to the amount of Executive Securities to
be purchased from such persons.
(g) FAIR MARKET VALUE OF REPURCHASED EXECUTIVE SECURITIES.
(i) The "FAIR MARKET VALUE" of Time-Vested Securities
subject to repurchase hereunder (the "VALUED SECURITIES") shall be
determined in accordance with this paragraph (g).
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(ii) A majority interest of the Company and/or the
holders of Start-Up Group Securities and/or any assignees of the
Company's repurchase rights ("majority" determined based on the amount
of Valued Securities to be purchased by each), on the one hand, and the
holders of a majority of the Valued Securities to be repurchased, on
the other hand, shall attempt in good faith to agree on the Fair Market
Value of the Valued Securities to be repurchased. Any agreement reached
by such Persons shall be final and binding on all parties hereto.
(iii) If such Persons are unable to reach such
agreement within 20 days after the giving of any Repurchase Notice, the
Fair Market Value of any Valued Securities that are publicly traded
shall be the average, over a period of 21 days consisting of the date
of the Repurchase Event and the 20 consecutive business days prior to
that date, of the average of the closing prices of the sales of such
securities on the primary securities exchange on which such securities
may at that time be listed, or, if there have been no sales on such
exchange on any day, the average of the highest bid and lowest asked
prices on such exchange at the end of such day, or, if on any day such
securities are not so listed, the average of the representative bid and
asked prices quoted in the Nasdaq System as of 4:00 P.M., New York
time, or, if on any day such securities are not quoted in the Nasdaq
System, the average of the highest bid and lowest asked prices on such
day in the domestic over-the-counter market as reported by the National
Quotation Bureau Incorporated, or any similar successor organization.
If the Fair Market Value of any Valued Securities on the date that is
180 days after the date of the Repurchase Event (the "SIX-MONTH
ANNIVERSARY DATE") (determined as described in the immediately
preceding sentence with respect to such Six-Month Anniversary Date,
rather than with respect to the date of the Repurchase Event) is
greater than the Fair Market Value of such Valued Securities determined
as described in the immediately preceding sentence with respect to the
date of the Repurchase Event, then the "Fair Market Value" of such
publicly traded Valued Securities shall be the Fair Market Value
determined as of the Six-Month Anniversary Date.
(iv) If such Persons are unable to reach agreement
pursuant to subparagraph (ii) within 20 days after the giving of such
Repurchase Notice, and to the extent any Valued Securities are not
publicly traded:
(A) A majority interest of the Company
and/or the holders of Start-Up Group Securities and/or any assignees
of the Company's repurchase rights ("majority" determined based on the
amount of Valued Securities to be purchased by each), on the one hand,
and the holders of a majority of the Valued Securities to be
repurchased, on the other hand, shall each, within 10 days thereafter,
choose one investment banker or other appraiser with experience in
valuing companies such as the Company (and if the Valued Securities
include any Un-Performance-Vested Securities, experienced in valuing
contingent or derivative assets), and the two investment
bankers/appraisers so selected shall together select a third investment
banker/appraiser similarly qualified.
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(B) The three investment bankers/appraisers
shall first appraise the fair market value of the Company's equity
(based on the assumption of an orderly, arm's length sale (structured
to produce the highest price to the equityholders of the Company,
whether such structure is a merger, combination, sale of equity
securities, sale of assets, or otherwise) to a willing unaffiliated
buyer (or to a willing affiliated strategic buyer, PROVIDED that the
investment bankers/appraisers shall not consider any premium that such
affiliated strategic buyer would be willing to pay to the extent such
premium is attributable solely to such Person's affiliation with the
Company, unless the Company or its equityholders have received a fully
financed, firm commitment offer (with no material conditions) from such
affiliated strategic buyer to purchase a majority (based on common
equity equivalents) of the Company's outstanding equity at a price that
includes such premium, IT BEING UNDERSTOOD, HOWEVER, that the
investment bankers/appraisers shall consider, without the need for such
a firm commitment offer, the premium, if any, that is attributable to
such Person's future expected synergies to be generated by combining
such Person's operations with those of the Company and its Subsidiaries
if such Person were to acquire the Company). The three investment
bankers/appraisers shall then appraise the fair market value of such
non-publicly-traded Valued Securities as follows:
1) the fair market value of each
Common Unit (or equivalent common equity security) that is not
an Un-Performance-Vested Security shall be equal to the fair
market value of the Company's equity DIVIDED BY the total
number of Common Units (or equivalent common equity
securities) outstanding on the date of the Repurchase Event
(determined on a fully diluted, as-if-converted basis, but
excluding all Un-Performance-Vested Securities);
2) the fair market value of any
Un-Performance-Vested Securities shall reflect (x) the
expected market value of such securities at such future time
as such securities are expected to become performance vested
under the terms of the Performance Vesting Agreement,
appropriately discounted to its present value as of the
relevant valuation date based upon the amount of time from the
relevant valuation date until the date on which such
Un-Performance-Vested Securities are expected to performance
vest (if at all), and (y) the magnitude of the risk that such
securities may never become performance vested under the terms
of the Performance Vesting Agreement; and
3) the fair market value of any
other non-publicly-traded Valued Securities shall be the fair
value of such securities, determined on the basis of an
orderly, arm's length sale (structured to produce the highest
for such securities) to a willing, unaffiliated buyer, taking
into account all relevant factors determinative of value.
The three investment bankers/appraisers shall, within thirty days of
their retention, provide the written results of such appraisals to the
Company and/or the holders of Start-Up Group
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Securities and/or the Company's assignees, and to each of the holders
of the Valued Securities to be repurchased.
(C) The "FAIR MARKET VALUE" of the
non-publicly-traded Valued Securities to be repurchased shall be the
average of the two appraisals closest to each other, and such amount
shall be final and binding on all parties hereto; PROVIDED that any
Person electing to purchase Executive Securities hereunder may at any
time within five days after receiving written notice of such
determination rescind its prior exercise of such Person's repurchase
option by giving written notice of such revocation to the holder or
holders of the Executive Securities to be repurchased, and upon such
revocation the revoking party will be treated as if it had never
exercised such repurchase option (it being understood that such
revoking party may not then exercise such repurchase option again with
respect to the same Repurchase Event).
(D) A majority interest of the Company
and/or the holders of Start- Up Group Securities and/or any assignees
of the Company's repurchase rights ("majority" determined based on the
amount of Valued Securities to be purchased by each), on the one hand,
and the holders of a majority of the Valued Securities to be
repurchased, on the other hand, will each pay the costs of their own
chosen appraiser and 50% of the costs of the third appraiser.
(h) CLOSING OF EACH REPURCHASE. Within 10 days after the
Repurchase Price for the Executive Securities to be repurchased at any
repurchase hereunder has been determined, the Company shall send a notice to
each holder of Executive Securities setting forth the consideration to be paid
for such securities and the time and place for the closing of the transaction,
which date shall not be more than 30 days nor less than five days after the
delivery of such notice. At each such closing, the holders of Executive
Securities shall deliver all certificates (if any exist) evidencing the
Executive Securities to be repurchased at such closing to the purchaser or
purchasers thereof, and such purchaser or purchasers shall pay for the Executive
Securities to be purchased at such closing by delivery of a check or wire
transfer of immediately available funds in the aggregate amount of the
Repurchase Price for such Executive Securities; PROVIDED that if the Company is
to purchase any Executive Securities from Executive at such closing, the Company
may elect (by action of the Board) to pay all or any portion of the Repurchase
Price for such Executive Securities by setting off against such Repurchase Price
any bona fide debts owed (regardless of whether then due and payable) by
Executive to the Company or any of its Subsidiaries; AND PROVIDED FURTHER that
if the Company is to purchase any Executive Securities at such closing, the
Company may elect (by action of the Board) to pay all or any portion of the
Repurchase Price for such Executive Securities as follows:
(i) in accordance with the LLC Agreement, by issuing
in exchange for such Executive Securities an equal number of Class A
Senior Units, and each such Class A Senior Unit issued in connection
with such repurchase shall be deemed as of the date of such repurchase
to have capital contributions to the Company made with respect to such
Class A Senior Unit equal to the Repurchase Price for the Executive
Securities in exchange for which such Class A Senior Unit was issued;
or
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#520873
(ii) if the Company has prior to the date of such
repurchase converted into a corporation or other corporate form, in the
form of a promissory note, which promissory note shall be subordinated
to all of the Company's senior debt obligations either then or
thereafter incurred, shall earn simple annual interest at a rate of 8%
per annum, shall have all principal and accrued interest due and
payable upon maturity, and shall mature upon the earliest to occur of
the Company's initial Public Offering (if such initial Public Offering
has not occurred prior to the issuance of such promissory note), a Sale
of the Company, or the fourth anniversary of the issuance of such
promissory note.
The purchasers of Executive Securities hereunder shall be entitled to receive
customary representations and warranties from the sellers, including
representations and warranties regarding good title to such securities, free and
clear of any liens or encumbrances.
(i) GENERAL LOOK-BACK RIGHTS. If (i) upon any Type I
Repurchase Event, the Company repurchases any Valued Securities pursuant to the
terms of this Section 3, (ii) a Sale of the Company or the Company's initial
Public Offering is consummated within the 1-year period commencing on the date
of such Type I Repurchase Event, and (iii) the value of the Company's equity
implied by the sale price of such Sale of the Company, or the pre-money
valuation of the Company's equity (I.E., the value of the Company's equity prior
to giving effect to such initial Public Offering) implied by such initial Public
Offering, (as applicable, the "IMPLIED VALUATION") is greater than the value of
the Company's equity actually utilized to determine the Fair Market Value of
such repurchased Valued Securities pursuant to Section 3(g), then the Company
shall in connection with such Sale of the Company or initial Public Offering pay
to each Person from whom such Valued Securities were repurchased the difference
of (x) the Fair Market Value of such Valued Securities purchased by the Company
from such Person that would have been calculated pursuant to Section 3(g) had
the Implied Valuation been used as the Company's equity value, MINUS (y) the
Repurchase Price actually paid for such Valued Securities purchased by the
Company from such Person. The Company shall have the right to pay such amounts
in the same manner or form specified in Section 3(h) as the Company may pay the
Repurchase Price for any Executive Securities at the closing of any repurchase
hereunder.
(j) SPECIAL LOOK-BACK RIGHTS. If (i) upon any termination of
Executive's employment by the Company on or prior to the first anniversary of
the Prior Date, where such termination is not for Cause or as a result of
Nonperformance (as defined in the Employment Agreement), the Company repurchases
any Valued Securities pursuant to the terms of this Section 3, and (ii) the fair
market value of the Company's equity (determined under Section 3(g)(iv)(B)) on
the second anniversary of such termination (the "TWO-YEAR VALUE") is greater
than the value of the Company's equity actually utilized to determine the Fair
Market Value of such repurchased Valued Securities pursuant to Section 3(g),
then the Company shall within 60 days after such second anniversary pay to each
Person from whom such Valued Securities were repurchased as a result of such
termination, the difference of (x) the Fair Market Value of such Valued
Securities purchased by the Company from such Person that would have been
calculated pursuant to Section 3(g) had the Two-Year Value been used as the
Company's equity value, MINUS (y) the Repurchase Price actually paid for such
Valued Securities purchased by the Company from such Person. The Company shall
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have the right to pay such amounts in the same manner or form specified in
Section 3(h) as the Company may pay the Repurchase Price for any Executive
Securities at the closing of any repurchase hereunder.
(k) RESTRICTIONS. Notwithstanding anything to the contrary
contained in this Agreement, all repurchases of Executive Securities by the
Company shall be subject to applicable restrictions contained in the Delaware
General Corporation Law, the Delaware Limited Liability Company Act and in the
Company's and its Subsidiaries' debt and equity financing agreements. If any
such restrictions prohibit the repurchase of Executive Securities hereunder
which the Company is otherwise entitled to make, the time periods provided in
this paragraph 3 shall be suspended, and the Company may make such repurchases
as soon as it is permitted to do so under such restrictions, unless by such time
such repurchase option has terminated pursuant to paragraph (l) below.
(l) TERMINATION OF REPURCHASE OPTIONS. The repurchase
provisions under this paragraph 3 (and the rights and obligations created
thereby) shall cease to apply to all Time-Vested Securities upon the
consummation of a Qualified Sale of the Company or a Qualified Public Offering
(it being understood that (i) such provisions, rights, and obligations shall
continue to apply to all Un-Time-Vested Securities until such time as they
become Time-Vested Securities in accordance with the terms hereof, and (ii) the
forfeiture provisions of the Performance Vesting Agreement shall continue to
apply to all Un-Performance-Vested Securities until such time as they become
Performance-Vested Securities in accordance with the terms of the Performance
Vesting Agreement).
4. RESTRICTIONS ON TRANSFER.
(a) OPINION OF VALID TRANSFER. In addition to any other
restrictions on transfer imposed by this Agreement, the Securityholders
Agreement, the Performance Vesting Agreement, or the LLC Agreement, no holder of
Executive Securities may sell, transfer or dispose of any Executive Securities
(except pursuant to an effective registration statement under the Securities
Act) without first delivering to the Company an opinion of counsel (reasonably
acceptable in form and substance to the Company) that neither registration nor
qualification under the Securities Act or applicable state securities laws is
required in connection with such transfer.
(b) RESTRICTIVE LEGEND. The certificates representing
Executive Securities shall bear a legend in substantially the following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR
THE SECURITIES LAWS OF ANY STATE, AND SUCH SECURITIES MAY NOT BE SOLD
OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE ACT OR AN EXEMPTION FROM REGISTRATION THEREUNDER.
- 13 -
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE ALSO SUBJECT TO
ADDITIONAL RESTRICTIONS ON TRANSFER, VESTING PROVISIONS, AND REPURCHASE
OPTIONS SET FORTH IN AN EXECUTIVE SECURITIES AGREEMENT BETWEEN THE
ISSUER OF SUCH SECURITIES (THE "ISSUER") AND THE INITIAL HOLDER OF SUCH
SECURITIES, AS AMENDED FROM TIME TO TIME. A COPY OF SUCH AGREEMENT MAY
BE OBTAINED BY THE HOLDER HEREOF AT THE ISSUER'S PRINCIPAL PLACE OF
BUSINESS WITHOUT CHARGE."
The legend set forth above shall be removed from the certificates evidencing any
securities which cease to be Executive Securities.
(c) RETENTION OF EXECUTIVE SECURITIES.
(i) Executive shall not sell, transfer, assign,
pledge or otherwise dispose of (whether with or without consideration
and whether voluntarily or involuntarily or by operation of law) any
interest in any Executive Securities (a "TRANSFER"), except (x) with
respect to Un-Performance-Vested Securities, pursuant to the repurchase
provisions of Section 3 hereof or the forfeiture provisions of the
Performance Vesting Agreement (each, an "EXEMPT TRANSFER"), or (y) with
respect to all other Executive Securities, pursuant to (A) the
repurchase provisions of Section 3 hereof, (B) the "Participation
Rights" provisions set forth in the Securityholders Agreement, or (C) a
Sale of the Company (each of (A) through (C), an "EXEMPT TRANSFER").
(ii) The restrictions contained in this paragraph (c)
shall not apply with respect to transfers of Executive Securities
(other than Un-Performance-Vested Securities) (A) pursuant to
applicable laws of descent and distribution or (B) among Executive's
Family Group; PROVIDED that the restrictions contained in this
paragraph shall continue to be applicable to the Executive Securities
after any such Transfer, the transferees of such Executive Securities
shall have agreed in writing to be bound by the provisions of this
Agreement with respect to the Executive Securities so transferred, and
(prior to the death of Executive) each such transferee of Executive
Securities shall have entered into proxies and other agreements
satisfactory to the holders of a majority of the Purchaser Securities
pursuant to which Executive shall have the sole right to vote such
Executive Securities for all purposes (subject to any applicable voting
agreements set forth herein or in the Securityholders Agreement). For
purposes of this Agreement, "FAMILY GROUP" means Executive's spouse,
siblings and descendants (whether natural or adopted) and any of such
descendants' spouses, any trust which at the time of such Transfer and
at all times thereafter is and remains solely for the benefit of
Executive and/or Executive's spouse, siblings, and/or descendants
and/or such descendants' spouses, and any family partnership the
partners of which consist solely of Executive, such spouse, such
siblings, such descendants, such descendants' spouses, and/or such
trusts.
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(iii) The restrictions on the transfer of Executive
Securities set forth in this paragraph (c) shall continue with respect
to each Executive Security following any Transfer thereof (other than
an Exempt Transfer); PROVIDED that upon the consummation of a Qualified
Public Offering, the restrictions set forth in this paragraph (c) shall
thereafter cease to apply to all Fully Vested Securities, it being
understood that such restrictions shall continue to apply to all other
Executive Securities until such time as they become Fully Vested
Securities.
5. CONFIDENTIALITY.
(a) NONDISCLOSURE AND NONUSE OF CONFIDENTIAL INFORMATION.
Executive shall not disclose or use at any time, either during his employment
with the Company and its Subsidiaries or thereafter, any Confidential
Information (as defined below) of which Executive is or becomes aware, whether
or not such information is developed by him, except to the extent that such
disclosure or use is directly related to and required by Executive's performance
of duties assigned to Executive by the Company and its Subsidiaries, or to the
extent such disclosure is expressly addressed by and is permissible under the
confidentiality provisions set forth in the Equity Purchase Agreement. Executive
shall take all appropriate steps to safeguard Confidential Information and to
protect it against disclosure, misuse, espionage, loss and theft. As used in
this Agreement, the term "CONFIDENTIAL INFORMATION" means information that is
not generally known to the public and that is used, developed or obtained by the
Company or its Subsidiaries in connection with their business, including but not
limited to (i) products or services, (ii) fees, costs and pricing structures,
(iii) designs, (iv) analysis, (v) drawings, photographs and reports, (vi)
computer software, including operating systems, applications and program
listings, (vii) flow charts, manuals and documentation, (viii) data bases, (ix)
accounting and business methods, (x) inventions, devices, new developments,
methods and processes, whether patentable or unpatentable and whether or not
reduced to practice, (xi) customer and client information (including customer or
client lists), (xii) copyrightable works, (xiv) all technology and trade
secrets, (xv) business plans and financial models, and (xvi) all similar and
related information in whatever form. Confidential Information shall not include
any information that has been published in a form generally available to the
public prior to the date Executive proposes to disclose or use such information.
Information shall not be deemed to have been published merely because individual
portions of the information have been separately published, but only if all
material features constituting such information have been published in com-
bination.
(b) THE COMPANY'S OWNERSHIP OF INTELLECTUAL PROPERTY.
(i) ACKNOWLEDGMENT OF COMPANY OWNERSHIP. If Executive
as part of his activities on behalf of the Company and its Subsidiaries
generates, authors or contributes to any invention, design, new
development, device, product, method or process (whether or not
patentable or reduced to practice or constituting Confidential
Information), any copyrightable work (whether or not constituting
Confidential Information) or any other form of Confidential Information
relating directly or indirectly to the Company's and its Subsidiaries'
business as now or hereafter conducted (collectively, "INTELLECTUAL
PROPERTY"), Executive
- 15 -
acknowledges that such Intellectual Property is the exclusive property
of the Company and hereby assigns all right, title and interest in and
to such Intellectual Property to the Company. Any copyrightable work
prepared in whole or in part by Executive will be deemed "a work made
for hire" under Section 201(b) of the 1976 Copyright Act, and the
Company shall own all of the rights comprised by the copyright therein.
Executive shall promptly and fully disclose all Intellectual Property
to the Company and shall cooperate with the Company to protect the
Company's interests in and rights to such Intellectual Property
(including, without limitation, providing reasonable assistance in
securing patent protection and copyright registrations and executing
all documents as reasonably requested by the Company, whether such
requests occur prior to or after termination of Executive's employment
with the Company).
(ii) EXECUTIVE INVENTION. Executive understands that
paragraph (b)(i) of this Section regarding the Company's ownership of
Intellectual Property does not apply to any invention for which no
equipment, supplies, facilities or trade secret information of the
Company were used and which was developed entirely on Executive's own
time, unless (i) the invention relates to the business of the Company
or any of its Subsidiaries or to their actual or demonstrably
anticipated research or development or (ii) the invention results from
any work performed by Executive for the Company or any of its
Subsidiaries.
(c) DELIVERY OF MATERIALS UPON TERMINATION OF EMPLOYMENT. As
requested by the Company from time to time and upon the termination of
Executive's employment with the Company and its Subsidiaries for any reason,
Executive shall promptly deliver to the Company all copies and embodiments, in
whatever form, of all Confidential Information and Intellectual Property in
Executive's possession or within his control (including, but not limited to,
written records, notes, photographs, manuals, notebooks, documentation, program
listings, flow charts, magnetic media, disks, diskettes, tapes and all other
materials containing or constituting any Confidential Information or
Intellectual Property) irrespective of the location or form of such material
and, if requested by the Company, shall provide the Company with written
confirmation that all such materials have been delivered to the Company.
6. NONCOMPETITION AND NONSOLICITATION.
(a) NONCOMPETITION. Executive acknowledges and agrees with the
Company that in the course of his employment with the Company and its
Subsidiaries he shall become familiar with the Company's trade secrets and with
other Confidential Information concerning the Company and its Subsidiaries, that
Executive's services to the Company and its Subsidiaries are unique in nature
and of an extraordinary value to the Company, and that the Company would be
irreparably damaged if Executive were to provide similar services to any person
or entity competing with the Company or any of its Subsidiaries or engaged in
similar business. In consideration of and as an inducement to the Company's
entering into this Agreement and issuing the Executive Securities hereunder, and
in further consideration of Executive's compensation and severance payments
under Executive's employment arrangement with the Company and its Subsidiaries,
Executive accordingly covenants and agrees with the Company that during the
Noncompete Period (as defined below),
- 16 -
Executive shall not, directly or indirectly, either for himself or for any other
individual, corporation, partnership, joint venture or other entity, participate
in any business or enterprise that engages or proposes to engage in any business
conducted by the Company or any of its Subsidiaries (including, but not limited
to, the sale or provision of local switched dialtone telecommunication services)
in any geographical market in which the Company or any of its Subsidiaries
conducts business (or any geographical market with respect to which the Company
proposes in good faith to conduct business, as evidenced by an Approved Business
Plan or a Board resolution authorizing the Company to use its resources to
investigate or otherwise pursue an opportunity in such market). For purposes of
this Agreement, the term "participate in" shall include, without limitation,
having any direct or indirect interest in any corporation, partnership, joint
venture or other entity, whether as a sole proprietor, owner, stockholder,
partner, joint venturer, creditor or otherwise, or rendering any direct or
indirect service or assistance to any individual, corporation, partnership,
joint venture and other business entity (whether as a director, officer,
manager, supervisor, employee, agent, consultant or otherwise), other than
ownership of up to 2% of the outstanding stock of any class which is publicly
traded. Executive agrees that this covenant is reasonable with respect to its
duration, geographical area, and scope.
(b) NONSOLICITATION. During the Noncompete Period, Executive
shall not (i) induce or attempt to induce any employee of the Company or any of
its Subsidiaries to leave the employ of the Company and its Subsidiaries, or in
any way interfere with the relationship between the Company or any of its
Subsidiaries and any employee thereof, (ii) hire directly or through another
entity any person who was an employee of the Company or any of its Subsidiaries
at any time during the Noncompete Period, or (iii) induce or attempt to induce
any customer, supplier, licensee or other business relation of the Company or
any of its Subsidiaries to cease doing business with the Company and its
Subsidiaries, or in any way interfere with the relationship between any such
customer, supplier, licensee or business relation and the Company and its
Subsidiaries (including, without limitation, making any negative statements or
communications concerning the Company or any of its Subsidiaries).
(c) NONCOMPETE PERIOD. The "NONCOMPETE PERIOD" shall commence
on the date of the Prior Agreement and continue until the second anniversary of
the date Executive ceases to be employed by the Company and its Subsidiaries.
(d) JUDICIAL MODIFICATION. If the final judgment of a court of
competent jurisdiction declares that any term or provision of this Section is
invalid or unenforceable, the parties agree that the court making the
determination of invalidity or unenforceability shall have the power to reduce
the scope, duration, or geographic area of the term or provision, to delete
specific words or phrases, or to replace any invalid or unenforceable term or
provision with a term or provision that is valid and enforceable and that comes
closest to expressing the intention of the invalid or unenforceable term or
provision, and this Agreement shall be enforceable as so modified after the
expiration of the time within which the judgment or decision may be appealed.
- 17 -
7. DEFINITIONS.
"AGREEMENT" has the meaning set forth with respect thereto in
the preamble.
"BOARD" means the board of managers of the LLC or, if the
Company is hereafter converted into a corporation or other entity form, the
board of directors or comparable governing body of the Company.
"CAUSE" means (A) any act by Executive, where in respect of
such act Executive is ultimately convicted or enters a plea of guilty or NOLO
CONTENDERE to a felony, (B) Executive's willful misconduct, gross negligence,
perpetration of or participation in a fraud, in each case where such acts are
materially injurious to the Company or any of its Subsidiaries or any affiliate
thereof, or (C) Executive's breach in any material respect of the provisions of
Section 5 (Confidentiality) or Section 6 (Noncompetition and Nonsolicitation)
hereof.
"CLASS A SENIOR UNITS" means the Class A Senior Units of the
Company, having the rights and preferences set forth with respect thereto in the
LLC Agreement.
"CLASS B SENIOR UNITS" means the Class B Senior Units of the
Company, having the rights and preferences set forth with respect thereto in the
LLC Agreement.
"CLASS C SENIOR UNITS" means the Class C Senior Units of the
Company, having the rights and preferences set forth with respect thereto in the
LLC Agreement.
"COMMON UNITS" means the Common Units of the Company, having
the rights and preferences set forth with respect thereto in the LLC Agreement.
"COMPANY" has the meaning set forth with respect thereto in
the preamble.
"CONFIDENTIAL INFORMATION" has the meaning set forth with
respect thereto in Section 5(a).
"DISABILITY" means any illness, accident, injury, physical or
mental incapacity or other disability, where such condition has rendered, or is
expected to render (as determined in the good faith judgment of the Board),
Executive unable or unfit to perform effectively the duties and obligations of
his employment or to participate effectively and actively in the management of
the Company for a period of at least 90 days.
"EQUITY PURCHASE AGREEMENT" means the equity purchase
agreement dated the Prior Date (and amended and restated as of the date hereof)
entered into by and among the Company and certain investors, as amended from
time to time in accordance with the terms thereof.
"EXECUTIVE" has the meaning set forth with respect thereto in
the preamble.
- 18 -
"EXECUTIVE SECURITIES" means (i) the Common Units issued to
Executive under the Prior Agreement and hereunder and (ii) any securities issued
directly or indirectly with respect to any Executive Securities by way of a
stock split, stock dividend, or other division of securities, or in connection
with a combination of securities, recapitalization, merger, consolidation, or
other reorganization, or upon conversion or exercise of any of the foregoing;
PROVIDED that Executive Securities shall not include any Senior Units. As to any
particular securities constituting Executive Securities, such securities shall
cease to be Executive Securities 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 under the Securities Act (or any similar
provision then in force) or (c) repurchased pursuant to the provisions hereof or
forfeited pursuant to the provisions of the Performance Vesting Agreement.
"Executive Securities" refers only to Executive Securities under this Agreement
and does not in any way refer to any securities referred to as Executive
Securities under any other executive securities agreement between the Company
and a Key Employee of the Company or its Subsidiaries.
"EXEMPT TRANSFER" has the meaning set forth with respect
thereto in Section 4(c)(i).
"EXISTING INTEREST" has the meaning set forth with respect
thereto in the preamble.
"FAIR MARKET VALUE" has the meaning set forth with respect
thereto in Section 3(g).
"FAMILY GROUP" has the meaning set forth with respect thereto
in Section 4(c)(ii).
"FULLY VESTED SECURITIES" means Executive Securities which
both (i) are Time-Vested Securities and (ii) are not Un-Performance-Vested
Securities.
"IMPLIED VALUATION" has the meaning set forth with respect
thereto in Section 3(i).
"INTELLECTUAL PROPERTY" has the meaning set forth with respect
thereto in Section 5(b)(i).
"INVESTOR" has the meaning ascribed to such term in the Equity
Purchase Agreement.
"KEY EMPLOYEE" has the meaning set forth with respect thereto
in Section 3(c)(i).
"LLC AGREEMENT" means the limited liability company agreement
governing the affairs of the Company, as amended from time to time in accordance
with its terms.
"MDCP" means Madison Dearborn Capital Partners II, L.P., a
Delaware limited partnership.
"NONCOMPETE PERIOD" has the meaning set forth with respect
thereto in Section 6(c).
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"ORIGINAL COST," as to any particular securities, shall mean
the initial price paid to the Company upon issuance of such securities (as such
price is equitably adjusted for any securities splits, securities dividends,
securities combinations, conversions, recapitalizations or reorganizations);
PROVIDED that with respect to any Common Units issued in exchange for Existing
Interests, the Original Cost of such Common Units shall be deemed to be $1.00
per Unit.
"PERFORMANCE-VESTED SECURITIES" means Performance Vesting
Securities that have performance vested pursuant to the terms of the Performance
Vesting Agreement.
"PERFORMANCE VESTING AGREEMENT" means that certain performance
vesting agreement dated the Prior Date (and amended and restated as of the date
hereof), by and among the Company, certain Key Employees (including Executive),
and the Investors, as amended from time to time in accordance with its terms.
"PERFORMANCE VESTING SECURITIES" means (i) the Common Units
specified in the Performance Vesting Agreement as subject to performance vesting
thereunder (regardless of whether such Common Units have or have not performance
vested pursuant to the terms thereof), and (ii) any securities issued directly
or indirectly with respect to any Performance Vesting Securities by way of a
stock split, stock dividend, or other division of securities, or in connection
with a combination of securities, recapitalization, merger, consolidation, or
other reorganization, or upon conversion or exercise of any of the foregoing;
PROVIDED that Performance Vesting Securities shall not include any Senior Units.
As to any particular securities constituting Performance Vesting Securities,
such securities shall cease to be Performance Vesting Securities 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 under the
Securities Act (or any similar provision then in force) or (c) repurchased
pursuant to the provisions hereof or forfeited pursuant to the provisions of the
Performance Vesting Agreement.
"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.
"PREFERRED UNITS" means the Preferred Units of the Company,
having the rights and preferences set forth with respect thereto in the LLC
Agreement.
"PRIOR AGREEMENT" has the meaning set forth in the preamble.
"PRIOR DATE" has the meaning set forth in Section 1(a).
"PUBLIC OFFERING" means any underwritten sale of the company'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
- 20 -
of common stock as consideration for a merger or acquisition, and (ii) any
issuance of common stock or rights to acquire common stock to existing
securityholders or to employees of the Company or its Subsidiaries on Form S-4
or Form S-8 (or a successor form adopted by the Securities and Exchange
Commission) or otherwise.
"PURCHASER SECURITIES" means (i) the Preferred Units issued to
all Purchasers (as defined in the Equity Purchase Agreement) pursuant to the
Equity Purchase Agreement, (ii) any Common Units issued upon conversion of the
Preferred Units referenced in clause (i), and (iii) any securities issued
directly or indirectly with respect to any Purchaser Securities by way of a
stock split, stock dividend, or other division of securities, or in connection
with a combination of securities, recapitalization, merger, consolidation, or
other reorganization, or upon conversion or exercise of any of the foregoing
securities; PROVIDED that Purchaser Securities shall not include any Senior
Units. As to any particular securities constituting Purchaser Securities, such
securities shall cease to be Purchaser Securities 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 under the
Securities Act (or any similar provision then in force) or (c) repurchased or
otherwise acquired by the Company or forfeited pursuant to the provisions of the
Performance Vesting Agreement. Any reference herein to a "majority of the
Purchaser Securities" or the "number of Purchaser Securities" for purposes of
comparison shall refer, with respect to any particular Investor Securities, to
the number of Common Units (or equivalent common equity securities of the
Company) then represented by such Purchaser Securities (on a fully diluted,
as-if-converted basis).
"QUALIFIED PUBLIC OFFERING" means a Public Offering where BOTH
(i) the proceeds (net of underwriting discounts and
commissions) received by the Company in exchange for its issuance of
shares of common stock in such Public Offering equal or exceed $60
million, AND
(ii) the price per share of common stock paid to the Company
in such Public Offering equals or exceeds the product of (x) 3.0 TIMES
(y) the quotient of (A) the aggregate capital contributions to the
Company under the Equity Purchase Agreement (including the initial
purchase price and all Subsequent Contributions (as defined in the
Equity Purchase Agreement)) made on or prior to the date of such Public
Offering with respect to all Purchaser Securities then outstanding,
DIVIDED BY (B) the number of shares of the Company's common stock
represented by all Purchaser Securities (on a fully diluted,
as-if-converted basis) outstanding immediately prior to the
consummation of such Public Offering.
"QUALIFIED SALE OF THE COMPANY" has the meaning set forth with
respect thereto in Section 2(b).
"REPURCHASE EVENT" has the meaning set forth with respect
thereto in Section 3(d).
"REPURCHASE NOTICE" has the meaning set forth with respect
thereto in Section 3(f).
- 21 -
"REPURCHASE PRICE" has the meaning set forth with respect
thereto in Section 3(e).
"SALE OF THE COMPANY" means the arm's length sale of the
Company to a third party or group of third parties acting in concert, pursuant
to which such party or parties acquire (i) equity securities of the Company
possessing the voting power under normal circumstances to control the Company,
or (ii) all or substantially all of the Company's assets determined on a
consolidated basis (in either case, whether by merger, consolidation, sale or
transfer of the Company's equity securities, or sale or transfer of the
Company's consolidated assets).
"SECURITIES ACT" means the Securities Act of 1933, as amended,
or any similar federal law then in force.
"SECURITYHOLDERS AGREEMENT" means the securityholders
agreement dated the Prior Date (and amended and restated as of the date hereof)
entered into by and among the Company and certain of its securityholders, as
amended from time to time in accordance with its terms.
"SENIOR UNITS" means the Company's Class A Senior Units,
Class B Senior Units, and Class C Senior Units.
"SIX-MONTH ANNIVERSARY DATE" has the meaning set forth with
respect thereto in Section 3(g)(iii).
"START-UP GROUP SECURITIES" means (i) the Common Units issued
to Xxxxx X. Xxxxx and Xxxxxxx X. Xxxxxxx pursuant to their Executive Securities
Agreements (as defined in the Equity Purchase Agreement), and (ii) any
securities issued directly or indirectly with respect to any Start-Up Group
Securities by way of a stock split, stock dividend, or other division of
securities, or in connection with a combination of securities, recapitalization,
merger, consolidation, or other reorganization, or upon conversion or exercise
of any of the foregoing; PROVIDED that Start-Up Group Securities shall not
include any Senior Units. As to any particular securities constituting Start-Up
Group Securities, such securities shall cease to be Start-Up Group Securities
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 under the Securities Act (or any similar provision then in force) or
(c) repurchased pursuant to the provisions of any Executive Securities Agreement
(as defined in the Equity Purchase Agreement) or forfeited pursuant to the
provisions of the Performance Vesting Agreement. Any reference herein to a
"majority of the Start-Up Group Securities" or the "number of Start-Up Group
Securities" for purposes of comparison shall refer, with respect to any
particular Start-Up Group Securities, to the number of Common Units (or
equivalent common equity securities of the Company) then represented by such
Start-Up Group Securities (on a fully diluted, as-if-converted basis, but
excluding any Start-Up Group Securities that are Un-Performance-Vested
Securities).
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"START-UP PERIOD" means the period of time commencing on the
date of the Prior Agreement and ending on the earliest to occur of (i) the
second anniversary of the date of the Prior Agreement and (ii) the consummation
of a Public Offering.
"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
any 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, 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 in respect of which Person the term "SUBSIDIARY" is used, the
term "SUBSIDIARY" shall refer to any Subsidiary of the Company.
"TIME-VESTED SECURITIES" has the meaning set forth with
respect thereto in Section 2(a).
"TRANSFER" has the meaning set forth with respect thereto in
Section 4(c)(i)
"TYPE I REPURCHASE EVENT" has the meaning set forth with
respect thereto in Section 3(a).
"TYPE II REPURCHASE EVENT" has the meaning set forth with
respect thereto in Section 3(b).
"UN-PERFORMANCE-VESTED SECURITIES" means Performance Vesting
Securities that have not yet performance vested pursuant to the provisions of
the Performance Vesting Agreement.
"UN-TIME-VESTED SECURITIES" has the meaning set forth with
respect thereto in Section 2(a).
"VALUED SECURITIES" has the meaning set forth with respect
thereto in Section 3(g)(i).
8. MISCELLANEOUS PROVISIONS.
(a) TRANSFERS IN VIOLATION OF AGREEMENT. Any Transfer
or attempted Transfer of any Executive Securities in violation of any provision
of this Agreement shall be void, and the
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Company shall not record such purported Transfer on its books or treat any
purported transferee of such Executive Securities as the owner of such
securities for any purpose.
(b) SEVERABILITY. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability shall not affect
any other provision or any other jurisdiction, but this Agreement shall be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.
(c) COMPLETE AGREEMENT. This Agreement, those documents
expressly referred to herein and related documents among the parties of even
date herewith and therewith embody the complete agreement and understanding
among the parties hereto and supersede and preempt any prior understandings,
agreements or representations by or among the parties, written or oral, which
may have related to the subject matter hereof in any way (including, without
limitation, the Prior Agreement).
(d) COUNTERPARTS. This Agreement may be executed in separate
counterparts, none of which need contain the signature of more than one party
hereto but each of which shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement.
(e) SUCCESSORS AND ASSIGNS. Except as otherwise provided
herein, this Agreement shall bind the parties hereto and their respective
successors and assigns and shall inure to the benefit of and be enforceable by
the parties hereto and their respective successors and assigns, whether so
expressed or not.
(f) CHOICE OF LAW. ALL ISSUES AND QUESTIONS CONCERNING THE
CONSTRUCTION, VALIDITY, ENFORCEMENT AND INTERPRETATION OF THIS AGREEMENT AND THE
EXHIBITS AND SCHEDULES HERETO SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF DELAWARE WITHOUT GIVING EFFECT TO ANY CHOICE OF
LAW OR CONFLICT OF LAW RULES OR PROVISIONS (WHETHER OF THE STATE OF DELAWARE OR
ANY OTHER JURISDICTION) THAT WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY
JURISDICTION OTHER THAN THE STATE OF DELAWARE. IN FURTHERANCE OF THE FOREGOING,
THE INTERNAL LAW OF THE STATE OF DELAWARE SHALL CONTROL THE INTERPRETATION AND
CONSTRUCTION OF THIS AGREEMENT (AND ALL SCHEDULES AND EXHIBITS HERETO), EVEN
THOUGH UNDER THAT JURISDICTION'S CHOICE OF LAW OR CONFLICT OF LAW ANALYSIS, THE
SUBSTANTIVE LAW OF SOME OTHER JURISDICTION WOULD ORDINARILY APPLY.
(g) REMEDIES. Each of the parties to this Agreement (including
the holders of Start-Up Group Securities, and any Key Employee to which the
Company assigns any of its repurchase rights under Section 3 hereof, as
third-party beneficiaries) shall be entitled to enforce its rights under this
Agreement specifically, to recover damages and costs (including reasonable
attorney's fees) caused by any breach of any provision of this Agreement and to
exercise all other rights existing in its favor. The parties hereto agree and
acknowledge that money damages would
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not be an adequate remedy for any breach of the provisions of this Agreement and
that any party may in its sole discretion apply to any court of law or equity of
competent jurisdiction (without posting any bond or deposit) for specific
performance and/or other injunctive relief in order to enforce or prevent any
violations of the provisions of this Agreement.
(h) AMENDMENT, MODIFICATION, OR WAIVER. The provisions of this
Agreement may be amended, modified, or waived only with the prior written
consent of the Company and the Executive.
(i) THIRD-PARTY BENEFICIARIES. The parties hereto acknowledge
and agree that certain provisions of this Agreement are intended for the benefit
of the holders of Start-Up Group Securities and any Key Employee to which the
Company assigns any of its repurchase rights under Section 3 hereof, that such
Persons are third-party beneficiaries of this Agreement, and that the provisions
of this Agreement shall be enforceable by such Persons as provided herein.
(j) BUSINESS DAYS. If any time period for giving notice or
taking action hereunder expires on a day which is a Saturday, Sunday or legal
holiday in the State of Colorado, the Republic of France, or the jurisdiction of
the Company's principal office, the time period shall be automatically extended
to the business day immediately following such Saturday, Sunday or holiday.
(k) 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,
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. If an ambiguity or question of
intent or interpretation arises, 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.
(l) NOTICES. All notices, demands or other communications to
be given or delivered under or by reason of the provisions of this Agreement
shall be in writing and shall be deemed to have been given when (a) delivered
personally to the recipient, (b) telecopied to the recipient (with hard copy
sent to the recipient by reputable overnight courier service (charges prepaid)
that same day) if telecopied before 5:00 p.m. Chicago, Illinois time on a
business day, and otherwise on the next business day, or (c) one business day
after being sent to the recipient by reputable overnight courier service
(charges prepaid). Such notices, demands and other communications shall be sent
to the following Persons at the following addresses:
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TO THE COMPANY:
0000 Xxxxx Xxxxxxxx Xxx, Xxxxx 0000
Xxxxxxxxx, Xxxxxxxx 00000
Attention: Chief Executive Officer
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
WITH A COPY (WHICH SHALL NOT CONSTITUTE NOTICE) TO:
Xxxxxxxx & Xxxxx
000 Xxxx Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxx, Esq.
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
TO EXECUTIVE: at the address set forth in the Company's
records
WITH A COPY (WHICH SHALL NOT CONSTITUTE NOTICE) TO:
Holme Xxxxxxx & Xxxx LLP
0000 Xxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
Attention: W. Xxxx Xxxxxx, Esq.
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
or to such other address or to the attention of such other person as the
recipient party has specified by prior written notice to the sending party.
(m) DELIVERY BY FACSIMILE. This Agreement, the agreements
referred to herein, and each other agreement or instrument entered into in
connection herewith or therewith or contemplated hereby or thereby, and any
amendments hereto or thereto, to the extent signed and delivered by means of a
facsimile machine, shall be treated in all manner and respects as an original
agreement or instrument and shall be considered to have the same binding legal
effect as if it were the original signed version thereof delivered in person. At
the request of any party hereto or to any such agreement or instrument, each
other party hereto or thereto shall reexecute original forms thereof and deliver
them to all other parties. No party hereto or to any such agreement or
instrument shall raise the use of a facsimile machine to deliver a signature or
the fact that any signature or agreement or instrument was transmitted or
communicated through the use of a facsimile machine as a defense to the
formation or enforceability of a contract and each such party forever waives any
such defense.
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* * * *
- 27 -
IN WITNESS WHEREOF, the parties hereto have executed this
First Amended and Restated Executive Securities Agreement on the date first
written above.
CABLETEL EUROPE LLC
By: /S/ XXXXX X. XXXXX
--------------------------------
Xxxxx X. Xxxxx, its Chairman and
Chief Executive Officer
EXECUTIVE
/S/ XXXXXXX X. XXXXXXXXX
-----------------------------------
Name: Xxxxxxx X. Xxxxxxxxx
(Signature page for First Amended and Restated Executive Securities Agreement)
