EXHIBIT 10.3
AMENDED AND RESTATED STOCKHOLDERS AGREEMENT
This Amended and Restated Stockholders Agreement (this "AGREEMENT") is
dated as of October 29, 1999 and amended and restated as of May 24, 2001 by and
among Velocita Corp., a Delaware corporation (formerly known as XX.Xxx
Communications, Inc. (formerly known as XX.Xxx Holdings, Limited) (the
"COMPANY")), XX.Xxx Corp., XX.Xxx Property Corp., XX.Xxx Supply Corp., XX.Xxx
Construction Corp., XX.Xxx Network Services Corp., XX.Xxx Virginia Corp. and
XX.Xxx Virginia, LLC (XX.Xxx Corp., collectively with XX.Xxx Property Corp.,
XX.Xxx Supply Corp., XX.Xxx Construction Corp., XX.Xxx Network Services Corp.,
XX.Xxx Virginia Corp. and XX.Xxx Virginia, LLC, the "VELOCITA SUBSIDIARIES"),
Xxxx Xxxxx ("XXXXX"), Xxxxx Xxxxx, Treg Ventures LLC ("TREG"), Xxxxxxx X. Xxxxx
Trust, Xxxxxx X. Xxxxx-Xxxxxxx Trust, Odyssey Investment Partners Fund, LP
("ODYSSEY"), Odyssey Coinvestors, LLC ("COINVESTORS"), PF Coinvestment, LLC, PF
Coinvestment II, LLC, PF Telecom Holdings, LLC ("PF TELECOM"), Xxxx Telecom
Ventures, Inc. ("XXXX"), UBS Capital II LLC ("UBS CAPITAL"), GLW Ventures LLC
("GLW"), Xxxxxxxxx Xxxxx, First Union Investors, Inc. ("FIRST UNION"), First
Union Capital Partners, LLC and Cisco Systems, Inc. ("CISCO"). This Agreement
amends and restates the Stockholders Agreement (the "ORIGINAL AGREEMENT")
entered into as of October 29, 1999 by and among the Company, Xxxxx, Xxxxx
Xxxxx, Treg, PF Telecom, Xxxx, GLW, Xxxxxxxxx Xxxxx, Odyssey, Coinvestors, PF
Coinvestment, LLC, PF Coinvestment II, LLC (Odyssey, together with Coinvestors,
the "ODYSSEY STOCKHOLDERS"), UBS Capital, UBS Warburg LLC (formerly known as
Warburg Dillon Read LLC) ("UBSW"), Credit Suisse First Boston ("CSFB") and
Lucent Technologies Inc. ("LUCENT") as such Agreement was amended on March 31,
2000 and May 10, 2000.
RECITALS
A. WHEREAS, the Original Agreement was entered into as of October 29,
1999 by and among the Company, Xxxxx, Xxxxx Xxxxx, Treg, Xxxx, XX Telecom, GLW,
Xxxxxxxxx Xxxxx, Coinvestors, Odyssey, UBS Capital, CSFB and Lucent;
B. WHEREAS, the Original Agreement was amended as of March 31, 2000 by
an amendment ("AMENDMENT NO. 1") entered into by and among the Company, Odyssey,
Xxxx, XX Telecom, UBS Capital (UBS Capital, Odyssey, Xxxx and PF Telecom, the
"INITIAL INVESTORS");
C. WHEREAS, the Original Agreement was further amended as of May 10,
2000 by an amendment ("AMENDMENT NO. 2") entered into by and among the Company,
Odyssey, Xxxx, XX Telecom, UBS Capital, UBSW, CSFB and First Union (as successor
in interest to Lucent);
D. WHEREAS, the Original Agreement was further amended on May 10, 2000
by an amendment (the "LETTER AGREEMENT") by and among the Company, Odyssey,
Xxxx, XX Telecom, Xxxxx, Xxxxxxx Xxxxx and UBS Capital;
E. WHEREAS, the Company and Cisco wish to enter into a transaction
whereby the Company will issue Senior Cumulative Convertible Preferred Stock to
Cisco in exchange for cash consideration to be paid by Cisco; and
F. WHEREAS, the parties hereto desire to enter into this Agreement to
add Cisco as a party and to restate the Original Agreement to give effect to the
previous amendments;
NOW, THEREFORE, in consideration of the mutual agreements contained
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties agree as follows:
1. CERTAIN DEFINITIONS. In addition to the terms defined elsewhere
herein, the following terms have the following meanings when used herein with
initial capital letters:
"ACTIVELY PUBLICLY TRADED" shall mean, with respect to the Common
Stock, that an offering (or series of offerings) of the Common Stock has been
consummated pursuant to one or more registration statements following which
shares of the Common Stock representing (a) at least 10% of the outstanding
shares of the Common Stock and (b) an aggregate Current Market Price of at least
$50 million, have been sold to the public and are listed on a national
securities exchange or the Nasdaq Stock Market.
"AFFILIATE" shall mean, with respect to any Person, any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified Person. For purposes of this definition,
"control" (including, with correlative meanings, the terms "controlling,"
"controlled by" and "under common control with"), as used with respect to any
Person, shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of such Person,
whether through the ownership of voting securities, by agreement or otherwise;
provided that beneficial ownership of 10% or more of the voting securities of a
Person shall be deemed to be control; and provided further, that without
limiting the foregoing, the following Persons shall be deemed to be "AFFILIATES"
of the Company, but shall not, solely based upon their ownership interests in
the Company, be deemed to be "AFFILIATES" of each other: Odyssey, Xxxx, XX
Telecom, Cisco, Treg, Irwin, Xxxxx Xxxxx, the Xxxxxxx X. Xxxxx Trust, the Xxxxxx
X. Xxxxx-Xxxxxxx Trust, GLW, Xxxxx and Xxxxxxxxx Xxxxx.
"AFFILIATE TRANSACTION" shall have the meaning set forth in
Section 4(h).
"AGREEMENT" shall have the meaning set forth in the first paragraph of
this Agreement.
"AMENDMENT NO. 1" shall have the meaning set forth in the Recitals of
this Agreement.
"AMENDMENT NO. 2" shall have the meaning set forth in the Recitals of
this Agreement.
"AT&T HOLDERS" shall mean AT&T Corp. and all transferees of AT&T
Warrants and shares of Common Stock issued upon exercise thereof.
"AT&T TAG-ALONG RIGHTS" shall have the meaning set forth in
Section 8(h).
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"AT&T WARRANTS" shall mean the warrants to purchase shares of Common
Stock, dated as of October 29, 1999, issued to AT&T Corp.
"BLOCK TRANSFERS" means any sale, transfer, conveyance or other
disposition of 5% or more of the Fully Diluted Common Stock, in one or a series
of related transactions, to a single purchaser or group of purchasers that would
be a "person" for purposes of Section 13(d)(3) of the Exchange Act, whether or
not pursuant to a Public Offering. Notwithstanding the foregoing, the term
"Block Transfer" shall not apply to any distribution by any Person to holders of
equity interests in such Person (whether or not such holders might otherwise
collectively be deemed a person for purposes of Section 13(d)(3) of the Exchange
Act), except to the extent that any individual acquires 5% or more of the Fully
Diluted Common Stock, and then only with respect to such individual.
"BOARD" shall have the meaning set forth in Section 3(a).
"CERTIFICATES OF DESIGNATIONS" means the Certificates of Designations
setting forth the rights, preferences and privileges of the Senior Preferred
Stock.
"CISCO" shall have the meaning set forth in the first paragraph of this
Agreement.
"CISCO CO-INVESTOR" means with respect to any Cisco Holder, any
transferee (other than another Cisco Holder) of shares of Series B Senior
Preferred Stock or Common Stock from such Cisco Holder which acquires shares of
Series B Senior Preferred Stock or Common Stock pursuant to Section 6(b) below.
"CISCO CO-INVESTOR HOLDERS" shall mean the Cisco Co-Investors and the
Permitted Cisco Co-Investor Transferees that have acquired securities of the
Company and become parties hereto.
"CISCO DIRECTORS" shall have the meaning set forth in Section 3(b)(iv).
"CISCO HOLDERS" shall mean Cisco Systems, Inc. and all Permitted Cisco
Transferees that have acquired securities of the Company and become parties
hereto.
"CISCO NOMINEE" shall mean any nominee holder of Securities with
respect to which Cisco has the economic benefits of, and the sole right to vote
and dispose of, such Securities.
"CISCO WAIVER LETTER" shall mean the waiver letter, dated as of date
hereof, from Cisco to the Company.
"CISCO WARRANTS" shall mean the warrants to purchase Common Stock
issued or issuable pursuant to the Series B Subscription Agreement.
"COINVESTORS" shall have the meaning set forth in the first paragraph
of this Agreement.
"CO-INVESTOR DIRECTOR" shall have the meaning set forth in
Section 3(c).
"COMMON STOCK" shall mean the common stock, par value $0.01 per share,
of the Company and any successor(s) to such common stock.
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"COMPANY" shall have the meaning set forth in the first paragraph of
this Agreement.
"COMPANY COMPETITOR" shall mean a service provider that has a long-haul
fiber-optic network in North America and whose primary business is the provision
of telecommunications transmission or network services.
"COMPANY SALE" shall have the meaning set forth in Section 15(a).
"COMPANY SALE OFFER" shall have the meaning set forth in Section 15(b).
"COMPANY SALE OFFEROR" shall have the meaning set forth in
Section 15(b).
"COMPANY SALE RIGHT" shall have the meaning set forth in Section 15(a).
"COMPANY SALE RIGHT NOTICE" shall have the meaning set forth in
Section 15(b).
"COMPETITOR RESTRICTION RELEASE DATE" shall mean the earliest of: (a)
the earliest date on which the Common Stock is Actively Publicly Traded; (b)
earliest date on which the Purchase Commitment (as defined in the General Supply
Agreement) and any payments related thereto have been satisfied; or (c) the
earliest date on which the Series B Senior Preferred Stock holdings of the Cisco
Holders are less than $40.0 million in aggregate initial liquidation preference
(not including any dividends added thereto).
"CONVERTIBLE SECURITIES" shall mean any evidence of indebtedness,
shares of stock (other than Common Stock) or other securities directly or
indirectly convertible into or exchangeable or exercisable for shares of Common
Stock, including without limitation, the Senior Preferred Stock.
"CREDIT AGREEMENT" shall mean the Credit Agreement, dated as of October
29, 1999, among XX.Xxx Corp., the Lenders party thereto and First Union National
Bank, as Administrative Agent (as amended, modified, supplemented or restated
from time to time).
"CSFB" shall have the meaning set forth in the first paragraph of this
Agreement.
"CURRENT MARKET PRICE" means, with respect to any particular security
on any date of determination, the average over the 20 trading days ending on the
date immediately preceding the date of such determination of the last reported
sale price, or, if no such sale takes place on any such day, the closing bid
price, in either case as reported for consolidated transactions on the principal
national securities exchange (including the Nasdaq Stock Market) on which such
security is listed or admitted for trading.
"CUSTODY AGREEMENT AND POWER OF ATTORNEY" shall have the meaning set
forth in Section 8(d).
"DARK FIBER WARRANTS" shall mean the warrants to purchase shares of
Common Stock issued pursuant to the Series A Subscription Agreement.
"DEMAND REGISTRATION" shall have the meaning set forth in Section
10(a).
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"DEMAND SELLER" shall have the meaning set forth in Section 10(a).
"DISINTERESTED DIRECTOR" means, in connection with any Affiliate
Transaction, each member of the Board who is not an officer, employee, director
or other Affiliate of the party with whom the Company is entering into such
Affiliate Transaction.
"DISINTERESTED STOCKHOLDER GROUP" shall mean, with respect to any
Affiliate Transaction, any group comprised of (a) the Odyssey Holders, (b) the
Xxxx Holders, (c) the PF Telecom Holders or (d) the Cisco Holders; PROVIDED that
(i) such Affiliate Transaction is not with, or for the benefit of, any member of
such group or their Affiliates and (ii) such group is not an Excluded Holder
with respect to such Affiliate Transaction.
"DRAG-ALONG HOLDERS" shall have the meaning set forth in Section 9(a).
"DRAG-ALONG INITIATOR" shall have the meaning set forth in
Section 9(a).
"DRAG-ALONG NOTICE" shall have the meaning set forth in Section 9(a).
"DRAG-ALONG RIGHT" shall have the meaning set forth in Section 9(a).
"DRAG-ALONG SALE" shall have the meaning set forth in Section 9(a).
"DRAG-ALONG SALE DATE" shall have the meaning set forth in
Section 9(a).
"EFFECTIVE EQUIVALENT SHARE PRICE" means, as of any date, (a)
$200,000,000 divided by (b) the number of Equivalent Shares into which all
shares of Series B Senior Preferred Stock ever issued would be convertible
(assuming all such shares were outstanding as of such date), plus the number of
shares of Common Stock ever issued in connection with the exercise of the Cisco
Warrants, including the shares of Common Stock issuable upon exercise of
unexercised or partially exercised Cisco Warrants, to the extent vested or
exercisable (assuming satisfaction of any condition to exercise related to the
conversion of Series B Senior Preferred Stock) as of the date of determination.
"EQUIVALENT SHARES" shall mean: (i) as to any outstanding shares of
Common Stock, such shares of Common Stock; (ii) as to any outstanding Options or
any outstanding Convertible Securities, the maximum number of shares of Common
Stock for which or into which such Options or Convertible Securities may then be
exercised or converted; and (iii) as to any PF Telecom Shares held by any Xxxxx
Holder or Treg Holder, the number of shares of Common Stock attributable to such
PF Telecom Shares, determined as though PF Telecom had immediately prior to such
determination distributed all of the shares of Common Stock then held by PF
Telecom pro rata to the shareholders of PF Telecom, including such Xxxxx Holder
or Treg Holder.
"EXCESS SHARES" shall have the meaning set forth in Section 7(c)(iii).
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended.
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"EXCLUDED HOLDER" shall mean any of the Odyssey Holders (considered as
a group), the Xxxx Holders (considered as a group), the PF Telecom Holders
(considered as a group) or the Cisco Holders (considered as a group) if at any
time (a) such Stockholder Group shall have waived any rights that it otherwise
would have to cause the directors nominated by such Stockholder Group to
participate in such action as a group, (b) such Stockholder Group shall have the
right to designate fewer than two directors pursuant to the requirements of
Section 3(b) (PROVIDED, that the Cisco Holders shall not be considered an
"Excluded Holder" solely as a result of a reduction in the number of directors
that the Cisco Holders have the right to designate pursuant to the proviso in
Section 3(b)(iv)(A)), or (c) with respect to any action of the Board, all of the
directors (the "ABSTAINING DIRECTORS") nominated by such Stockholder Group
abstain from voting for any reason. Without limiting this definition, the Cisco
Holders will be deemed to be Excluded Holders with respect to the actions set
forth in the Cisco Waiver Letter.
"EXEMPT ISSUANCE" shall mean, (i) the issuance of the Senior Preferred
Stock pursuant to the terms of the Subscription Agreements or in accordance with
the General Supply Agreement Letter, (ii) the conversion of the Senior Preferred
Stock into Common Stock, (iii) any adjustment to the conversion price, or the
number of shares of Common Stock issuable upon conversion, of the shares of
Senior Preferred Stock in accordance with the terms thereof or in accordance
with the General Supply Agreement Letter (including, without limitation, as a
result of the accretion of dividends as increases in liquidation preference),
(iv) the issuance of the AT&T Warrants, the First Union Warrants, the Dark Fiber
Warrants, the Cisco Warrants, the High Yield Warrants, the H&S Warrants and the
Home Run Warrants, (v) the issuance of Common Stock upon exercise of warrants
issued in accordance with clause (iv) and any adjustment to the exercise price,
or increase in the number of shares issuable upon exercise, of any warrant
issued pursuant to clause (iv), (vi) Common Stock, or options to purchase Common
Stock, issued to the Company's employees under bona fide employee compensation
or benefit agreements or plans approved by the Board and approved by the holders
of Common Stock when required by law, (vii) Common Stock issued to acquire, or
in the acquisition of, all or any portion of a business as a going concern, in
an arm's-length transaction between the Company and an unaffiliated third party,
whether such acquisition shall be effected by purchase of assets, exchange of
securities, merger, consolidation or otherwise, (viii) Common Stock issued in
(A) a bona fide public offering pursuant to a firm commitment underwriting or
(B) a private placement pursuant to a plan of distribution that involves resales
into a diverse market of "qualified institutional buyers" (as such term is used
in Rule 144A under the Securities Act) that is broadly marketed by one or more
nationally recognized investment banks, or (ix) warrants (including vesting)
issued to lenders or bond purchasers that are unaffiliated third parties in any
financing transaction on arm's-length terms.
"EXEMPT TRANSFEREES" shall mean any Initial Stockholder.
"EXERCISE NOTICE" shall have the meaning set forth in Section 14(b).
"FINAL COMPANY NOTICE" shall have the meaning set forth in
Section 7(d).
"FIRST UNION" shall have the meaning set forth in the first paragraph
of this Agreement.
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"FIRST UNION HOLDERS" shall mean First Union and all Permitted First
Union Transferees that have acquired First Union Securities and become parties
hereto.
"FIRST UNION SECURITIES" shall mean the First Union Warrants and any
shares of Common Stock issued upon exercise of the First Union Warrants.
"FIRST UNION WARRANTS" shall mean the warrants to purchase shares of
Common Stock issued to Lucent by the Company and subsequently assigned by Lucent
to First Union.
"FULLY DILUTED COMMON STOCK" means, as of any date of determination,
the total number of shares of Common Stock outstanding as of such date
(calculated assuming exercise of all outstanding Options, that as of such date
are permitted by their terms to be exercised for shares of Common Stock and
conversion of all outstanding Convertible Securities that as of such date are
permitted by their terms to be converted into shares of Common Stock).
"FULLY PARTICIPATING PREEMPTIVE HOLDERS" shall have the meaning set
forth in Section 14(c).
"FULLY PARTICIPATING STOCKHOLDERS" shall have the meaning set forth in
Section 7(c)(ii).
"GENERAL SUPPLY AGREEMENT" shall mean the Service Provider Agreement,
dated as of the date hereof, by and between XX.Xxx Corp. and Cisco.
"GENERAL SUPPLY AGREEMENT LETTER" shall mean the letter agreement,
dated as of April 6, 2001, by and among the Company and Cisco relating to the
General Supply Agreement.
"GLW" shall have the meaning set forth in the first paragraph of this
Agreement.
"GLW HOLDER" means Xxxxxxxxx Xxxxx and all Permitted GLW Transferees
that have acquired GLW Shares and become parties hereto.
"GLW SHARES" shall mean any equity interests in GLW.
"H&S WARRANTS" shall mean the warrants to purchase shares of Common
Stock issued by the Company on September 7, 2000 to Xxxxxxxx & Struggles, Inc.
"HIGH YIELD WARRANTS" shall mean the warrants to purchase shares of
Common Stock issued or issuable pursuant to that certain Warrant Agreement dated
as of May 10, 2000 by and between the Company and United States Trust Company of
New York, as Warrant Agent.
"HOLDERS" shall have the meaning set forth in Section 10(a).
"HOLDING COMPANY" shall mean XX.Xxx Corp., a wholly-owned Subsidiary of
the Company.
"HOME RUN WARRANTS" shall mean those warrants to purchase shares of
Common Stock issued by the Company to Xxxx and PF Telecom.
"INDEMNIFIED PERSON" shall have the meaning set forth in Section 13(c).
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"INDEPENDENT INVESTMENT BANKING FIRM" means any nationally recognized
investment banking firm which does not hold any equity interest (including any
preferred equity interest) in the Company or in any shareholder of the Company.
"INDIVIDUAL STOCKHOLDER" shall mean any Stockholder who is an
individual.
"INDIVIDUAL TRANSFEROR" shall have the meaning set forth in Section
6(a).
"INITIAL COMPANY NOTICE" shall have the meaning set forth in Section
7(c)(i).
"INITIAL INVESTORS" shall have the meaning set forth in the Recitals of
this Agreement.
"INITIAL PUBLIC OFFERING" shall mean the first firm commitment
underwritten public offering pursuant to an effective registration statement
under the Securities Act covering the offer and sale of the Common Stock to the
public which is underwritten by one or more Underwriters and following which the
Common Stock is Actively Publicly Traded.
"INITIAL STOCKHOLDER" means any of the Odyssey Stockholders, UBS
Capital, Xxxx, XX Telecom, Xxxxx, GLW, Treg or Xxxxx Xxxxx, individually and
"INITIAL STOCKHOLDERS" means all of them collectively.
"INITIATING HOLDERS" shall have the meaning set forth in Section 15(a).
"IRREVOCABILITY PERIOD" shall have the meaning set forth in
Section 15(b).
"XXXXX" shall mean Xxxxxxx Xxxxx.
"XXXXX GROUP" shall mean Xxxxx Xxxxx, Treg and all Permitted Treg
Transferees that have acquired shares of Common Stock (including Equivalent
Shares).
"XXXXX HOLDERS" means Xxxxx Xxxxx and all Permitted Xxxxx Transferees
that have acquired Treg Shares.
"XXXX" shall have the meaning set forth in the first paragraph of this
Agreement.
"XXXX AGREEMENTS" shall mean the Amended and Restated Fiber Networks
Development Agreement (including all attachments, schedules and exhibits
thereto), dated as of October 29, 1999, by and between Sea Breeze Communication
Company and Holding Company and the related IRU Agreements between Sea Breeze
Communication Company and Holding Company.
"XXXX DIRECTORS" shall have the meaning set forth in Section 3(b)(ii).
"XXXX HOLDERS" shall mean Xxxx and all Permitted Xxxx Transferees that
have acquired securities of the Company and become parties hereto.
"LETTER AGREEMENT" shall have the meaning set forth in the Recitals of
this Agreement.
"LUCENT" shall have the meaning set forth in the first paragraph of
this Agreement.
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"MAJORITY IN INTEREST" means, as of any date, the holders of
outstanding Securities representing the right to acquire a majority of the
shares of Common Stock issuable as of that date to the holders of Securities
outstanding as of the date.
"MATERIAL TERMS" shall have the meaning set forth in Section 8(a).
"MAXIMUM OFFERING SIZE" shall have the meaning set forth in Section
10(c).
"NASD" shall mean the National Association of Securities Dealers, Inc.
"NAMED COMPETITORS" shall mean the parties identified on Schedule 5
hereto and any direct or indirect Subsidiary of such parties.
"NONCOMPETING PRODUCT" means any product other than any of the
Exclusivity Products, as defined in the General Supply Agreement.
"NON-INITIATING HOLDERS" shall have the meaning set forth in
Section 15(a).
"ODYSSEY" shall have the meaning set forth in the first paragraph of
this Agreement.
"ODYSSEY CO-INVESTOR" means (a) with respect to any Odyssey Holder, any
transferee (other than another Odyssey Holder) of shares of Series A Senior
Preferred Stock or Common Stock from such Odyssey Holder which acquires shares
of Series A Senior Preferred Stock or Common Stock pursuant to Section 6(b)
below and (b) any Person (other than Odyssey Holders) which acquires shares of
Series A Senior Preferred Stock from the Company pursuant to the terms and
conditions of the Series A Subscription Agreement. The definition of "Odyssey
Co-Investor" shall include, without limitation, UBS Capital.
"ODYSSEY CO-INVESTOR HOLDERS" shall mean the Odyssey Co-Investors and
the Permitted Odyssey Co-Investor Transferees that have acquired securities of
the Company and become parties hereto.
"ODYSSEY DIRECTORS" shall have the meaning set forth in Section
3(b)(i).
"ODYSSEY HOLDERS" shall mean the Odyssey Stockholders and all Permitted
Odyssey Transferees that have acquired securities of the Company and become
parties hereto.
"ODYSSEY STOCKHOLDERS" shall have the meaning set forth in the first
paragraph of this Agreement.
"OFFER" shall have the meaning set forth in Section 7(a).
"OFFER PRICE" shall have the meaning set forth in Section 7(a).
"OFFERED SECURITIES" shall have the meaning set forth in Section 7(a).
"OFFEREE STOCKHOLDERS" shall have the meaning set forth in
Section 7(a).
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"OPTIONS" shall mean any options or warrants to subscribe for, purchase
or otherwise acquire Common Stock or Convertible Securities.
"ORIGINAL AGREEMENT" shall have the meaning set forth in the first
paragraph of this Agreement.
"PARTICIPATION SECURITIES" shall have the meaning set forth in Section
14(a).
"PERMITTED CISCO CO-INVESTOR TRANSFEREE" means with respect to any
Cisco Co-Investor, any corporation, partnership, limited liability company or
other entity which is a direct or indirect Subsidiary of such Cisco Co-Investor.
"PERMITTED CISCO TRANSFEREES" means with respect to any Cisco Holder,
any corporation, partnership, limited liability company or other entity that is
a direct or indirect Subsidiary of Cisco or any Cisco Nominee.
"PERMITTED FIRST UNION TRANSFEREE" means, with respect to any transfers
of First Union Warrants, (i) any Subsidiary of First Union Corporation and (ii)
any Lender (as defined in the Credit Agreement).
"PERMITTED GLW TRANSFEREES" means all Permitted Xxxxx Transferees.
"PERMITTED XXXXX TRANSFEREES" means all Permitted Treg Transferees.
"PERMITTED XXXX TRANSFEREE" means with respect to any Xxxx Holder, any
corporation, partnership, limited liability company or other entity which is a
direct or indirect Subsidiary of Xxxx Industries, Inc.
"PERMITTED ODYSSEY CO-INVESTOR TRANSFEREE" means with respect to any
Odyssey Co-Investor, any corporation, partnership, limited liability company or
other entity which is a Subsidiary of such Odyssey Co-Investor; provided that
(i) with respect to UBS Capital, such term shall include any corporation,
partnership, limited liability company or other entity that is a direct or
indirect Subsidiary of UBS AG and (ii) with respect to First Union Capital
Partners, LLC, such term shall include any corporation, partnership, limited
liability company or other entity that is a direct or indirect Subsidiary of
First Union Corporation.
"PERMITTED ODYSSEY TRANSFEREE" means with respect to any Odyssey
Holder, any corporation, partnership, limited liability company or other entity
which is controlled by Odyssey Investment Partners, LLC, except with respect to
any proposed Transfer that would cause the Series A Senior Preferred Stock
holdings of the Odyssey Stockholders, to be reduced below $60 million in
aggregate initial liquidation preference. For purposes of this definition, the
term "controlled by" means the power to direct or cause the direction of the
management or policies of such corporation, partnership, limited liability
company or other entity. Notwithstanding the foregoing, no Person that (a)
acquires shares of Preferred Stock or Common Stock, either from an Odyssey
Stockholder pursuant to Section 6(b) below or from the Company pursuant to the
Series A Subscription Agreement, and (b) is identified as an "Odyssey
Co-Investor" in a written instrument delivered to the Company by Odyssey or such
Odyssey Co-Investor, shall be considered a "Permitted Odyssey Transferee" for
purposes of this Agreement.
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"PERMITTED PF TELECOM TRANSFEREE" means with respect to any PF Telecom
Holder, (a) Xxxxx, any Permitted Xxxxx Transferee, Treg or any Permitted Treg
Transferee, except with respect to any proposed Transfer that would cause (i)
the Xxxxx Group to hold shares of Common Stock and Equivalent Shares in an
aggregate amount that is less than 80% of the Equivalent Shares set forth beside
the name, "XXXXX GROUP" on Schedule 2 hereto or (ii) the Xxxxx Group to hold
shares of Common Stock (including Equivalent Shares) in an aggregate amount that
is less than 80% of the Equivalent Shares set forth beside the name "XXXXX
GROUP" on Schedule 2 hereto and (b) any shareholder of PF Telecom in connection
with a general pro rata distribution of Common Stock to all shareholders of PF
Telecom.
"PERMITTED TRANSFEREE" means a Permitted Odyssey Co-Investor
Transferee, a Permitted Xxxxx Transferee, a Permitted Xxxx Transferee, a
Permitted Odyssey Transferee, a Permitted PF Telecom Transferee, a Permitted
First Union Transferee, a Permitted Cisco Transferee, a Permitted Cisco
Co-Investor Transferee or a Permitted Xxxxx Transferee, and "PERMITTED
TRANSFEREES" means any one or more of the foregoing.
"PERMITTED TREG TRANSFEREE" means with respect to any Treg Holder or
any PF Telecom Holder, (A) the Company, (B) any corporation, partnership or
other entity in which at least 95% of the equity interest is owned (directly or
indirectly), beneficially and of record, collectively by Xxxxx or his spouse,
lineal descendants, siblings, parents or any spouse of any of his lineal
descendants (collectively, "XXXXX AFFILIATES"), (C) any spouse, lineal
descendant, sibling, parent or spouse of a lineal descendant of Xxxxx, or any
heir, executor, administrator, testamentary trustee, legatee or beneficiary of
Xxxxx or of any of the foregoing Persons referred to in this clause (C)
(collectively, "XXXXX ASSOCIATES"), and (D) any trust, the beneficiaries of
which, or any corporation, limited liability company or partnership, the
stockholders, members or general and limited partners of which, include only
Xxxxx, Xxxxx Affiliates or Xxxxx Associates.
"PERMITTED XXXXX TRANSFEREE" means with respect to any Xxxxx Holder or
any PF Telecom Holder, (A) the Company, (B) any corporation, partnership or
other entity in which at least 95% of the equity interest is owned (directly or
indirectly), beneficially and of record, collectively by Xxxxx or his spouse,
lineal descendants, siblings, parents or any spouse of any of his lineal
descendants (collectively, "XXXXX AFFILIATES"), (C) any spouse, lineal
descendant, sibling, parent or spouse of a lineal descendant of Xxxxx, or any
heir, executor, administrator, testamentary trustee, legatee or beneficiary of
Xxxxx or of any of the foregoing Persons referred to in this clause (C)
(collectively, "XXXXX ASSOCIATES"), and (D) any trust, the beneficiaries of
which, or any corporation, limited liability company or partnership, the
stockholders, members or general and limited partners of which, include only
Xxxxx, Xxxxx Affiliates or Xxxxx Associates.
"PERSON" shall mean an individual, partnership, corporation, limited
liability company, business trust, joint stock company, trust, unincorporated
association, joint venture, governmental authority or other entity of whatever
nature.
"PF TELECOM" shall have the meaning set forth in the first paragraph of
this Agreement.
"PF TELECOM DIRECTORS" shall have the meaning set forth in Section
3(b)(iii).
11
"PF TELECOM HOLDERS" shall mean PF Telecom and any Permitted PF Telecom
Transferees that have acquired securities of the Company and become parties
hereto.
"PF TELECOM SHARES" means any equity interests of PF Telecom.
"PIGGY-BACK STOCKHOLDERS" shall have the meaning set forth in
Section 11(a).
"PREEMPTIVE HOLDERS" shall have the meaning set forth in Section 14(a).
"PREEMPTIVE NOTICE" shall have the meaning set forth in Section 14(b).
"PRO RATA SHARE" shall have the meaning set forth in Section 14(a).
"PROPORTIONATE SHARE" shall have the meaning set forth in
Section 7(c)(i).
"PROPOSED PURCHASER" shall have the meaning set forth in Section 8(a).
"PROPOSED SALE" shall have the meaning set forth in Section 8(a).
"PROPOSED SELLERS" shall have the meaning set forth in Section 8(a).
"PUBLIC OFFERING" shall mean a public offering and sale of Common Stock
for cash pursuant to an effective registration statement under the Securities
Act.
"QUALIFYING PUBLIC OFFERING" shall mean any firm commitment
underwritten public offering by the Company of its Common Stock yielding gross
proceeds to the Company of at least $160.00 million at a per share price to the
public of at least $10.00 (subject to adjustment for stock splits, stock
dividends, stock recombinations and similar transactions).
"QUALIFYING TAG-ALONG SALE" shall mean any Proposed Sale initiated by a
holder or holders of Series A Senior Preferred Stock in which the price per
Equivalent Share is at least $8.50 (subject to adjustment for stock splits,
stock dividends, stock recombinations and similar transactions).
"REGISTRABLE SECURITIES" shall mean shares of Common Stock (including
without limitation, (i) shares of Common Stock that will be acquired upon the
exercise of any Options and (ii) shares of Common Stock that will be acquired
upon the conversion of any Convertible Securities, including, without
limitation, the Senior Preferred Stock); PROVIDED that such securities shall
cease to be Registrable Securities when (A) a registration statement relating to
such securities shall have been declared effective by the SEC and such
securities shall have been disposed of pursuant to such effective registration
statement or (B) such securities may be sold without registration pursuant to
Rule 144(k).
"REGISTRATION EXPENSES" shall mean (i) all registration and filing fees
with the SEC, (ii) all fees and expenses of compliance with state securities or
blue sky laws (including, without limitation, reasonable fees and disbursements
of a qualified independent Underwriter, if any, counsel in connection therewith
and the reasonable fees and disbursements of counsel in connection with blue sky
qualifications of the Registrable Securities), (iii) all printing expenses,
12
(iv) all internal expenses of the Company (including, without limitation, all
salaries and expenses of officers and employees performing legal or accounting
duties), (v) the fees and expenses of counsel and independent public
accountants for the Company, (vi) the fees and expenses of any additional
experts retained by the Company in connection with such registration, (vii) all
fees and expenses of listing the Registrable Securities, if any, (viii) all
rating agency fees, if any, and (ix) the reasonable fees and expenses of one
counsel for the holders of Registrable Securities participating in an offering
involving the exercise of registration rights pursuant to Section 9 or 10
hereof, which counsel shall be selected by the holders holding a majority of
the Registrable Securities to be offered in such offering; PROVIDED that
Registration Expenses shall not include underwriting discounts and/or
commissions and transfer taxes, if any, in connection with such registration.
"RELEASE DATE" shall have the meaning set forth in Section 7(e).
"REQUISITE DIRECTORS" shall mean three out of four of the following
groups (each, a "DIRECTOR GROUP"):
(i) the Odyssey Directors voting as a group;
(ii) the PF Telecom Directors voting as a group;
(iii) the Xxxx Directors voting as a group; and
(iv) the Cisco Directors voting as a group,
unless any of the Odyssey Holders (considered as a group), the Xxxx Holders
(considered as a group), the PF Telecom Holders (considered as a group) or the
Cisco Holders (considered as a group) is an Excluded Holder with respect to a
particular Board action, then the term "REQUISITE DIRECTORS" shall mean two out
of three of the other Director Groups; PROVIDED, HOWEVER, if at any time more
than one such group is an Excluded Holder, then the term "REQUISITE DIRECTORS"
shall mean a simple majority of the Board (voting as individuals) after
excluding any Abstaining Directors, if any.
"RULE 144" shall mean Rule 144 under the Securities Act, as it may be
amended from time to time (including without limitation clause (k) thereof).
"RULES" shall have the meaning set forth in Section 13(a).
"SEC" shall mean the Securities and Exchange Commission.
"SECURITIES" shall mean the shares of Senior Preferred Stock, shares of
Common Stock (other than First Union Securities), the Home Run Warrants, the
Cisco Warrants and the Dark Fiber Warrants.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended.
"SELLER'S NOTICE" shall have the meaning set forth in Section 7(a).
13
"SELLING STOCKHOLDER" shall have the meaning set forth in Section 7(a).
"SENIOR PREFERRED STOCK" shall mean the Series A Senior Preferred Stock
of the Company and the Series B Senior Preferred Stock of the Company.
"SERIES A SENIOR PREFERRED STOCK" shall mean the Series A Senior
Cumulative Convertible Preferred Stock.
"SERIES A SUBSCRIPTION AGREEMENT" means the subscription agreement,
dated as of October 29, 1999, by and among the Company, Odyssey, UBS Capital and
Coinvestors.
"SERIES B CERTIFICATE" shall mean the Certificate of Designations
setting forth the rights, preferences and privileges of the Series B Senior
Preferred Stock.
"SERIES B SENIOR PREFERRED STOCK" shall mean the Series B Senior
Cumulative Convertible Preferred Stock.
"SERIES B SUBSCRIPTION AGREEMENT" means the Series B Senior Cumulative
Convertible Preferred Stock Purchase Agreement, dated as of April 12, 2001, by
and between the Company and Cisco.
"STOCKHOLDER" means any holder of Securities that is a party to this
Agreement.
"STOCKHOLDER GROUP" shall mean the Odyssey Holders, the Xxxx Holders,
the PF Telecom Holders or the Cisco Holders, considered, in each case, as a
group.
"SUBSCRIPTION AGREEMENTS" means the Series A Subscription Agreement and
the Series B Subscription Agreement.
"SUBSIDIARY" of an entity shall mean (i) any corporation, association
or other business entity of which more than 50% of the total voting power of
shares of the voting securities outstanding thereof is at the time owned or
controlled, directly or indirectly, by such entity or one or more of the other
Subsidiaries of that person (or a combination thereof) and (ii) any partnership
(a) the sole general partner or the managing general partner of which is such
person or a Subsidiary of such person or (b) the only general partners of which
are such person or of one or more Subsidiaries of such person (or any
combination thereof).
"SYNDICATION ACTIVITIES" shall have the meaning set forth in Section
6(b)(ii).
"TAG-ALONG NOTICE" shall have the meaning set forth in Section 8(a).
"TAG-ALONG OFFEREES" shall have the meaning set forth in Section 8(a).
"TAG-ALONG REQUEST" shall have the meaning set forth in Section 8(a).
"TAG-ALONG SECURITIES" shall have the meaning set forth in
Section 8(a).
14
"TRANSFER" (or any variation thereof used herein) shall mean any direct
or indirect sale, offer, assignment, mortgage, transfer, pledge, hypothecation
or other disposal, in each case, whether voluntary or involuntary.
"TRANSFER NOTICE" shall have the meaning set forth in Section 5(f).
"TREG" shall have the meaning set forth in the first paragraph of this
Agreement.
"TREG HOLDERS" shall mean Treg and all Permitted Treg Transferees that
have acquired PF Telecom Shares and become parties hereto.
"TREG SHARES" shall mean any equity interests of Treg.
"UBS CAPITAL" shall have the meaning set forth in the first paragraph
of this Agreement.
"UBSW" shall have the meaning set forth in the first paragraph of this
Agreement.
"UNDERWRITER" shall mean a securities dealer who purchases any
Registrable Securities as a principal in connection with a distribution of such
Registrable Securities and not as part of such dealer's market making
activities, which underwriter shall be selected by the Company in its sole
discretion.
"VELOCITA SUBSIDIARIES" shall have the meaning set forth in the first
paragraph of this Agreement.
"XXXXX" shall have the meaning set forth in the first paragraph of this
Agreement.
"XXXXX GROUP" shall mean Xxxxx, GLW and all Permitted Xxxxx Transferees
that have acquired shares of Common Stock (including Equivalent Shares).
"XXXXX HOLDERS" shall mean Xxxxx, GLW and all Permitted Xxxxx
Transferees that have acquired PF Telecom Shares and become parties hereto.
"XXXXXXX OR XXXXXXXXX XXXX TRANSFER" shall have the meaning set forth
in Section 5(f).
2. LEGEND.
(a) Each party hereto acknowledges and agrees that each certificate (or
certificates) representing the securities subject to this agreement owned or
held by it shall bear one of the following legends:
"The securities evidenced by this certificate have not been
registered under the Securities Act of 1933, as amended (the
"Securities Act"), and may not be sold or transferred unless
there is an effective registration statement under the
Securities Act covering the sale or transfer of such
securities or such sale or transfer is exempt from the
registration and prospectus delivery requirements of the
Securities Act. The securities evidenced by this certificate
also are subject to certain
15
other restrictions on transfer, as set forth in a Stockholders
Agreement, dated as of October 29, 1999, as amended, among the
Company and certain stockholders named therein (the
"Stockholders Agreement"). Accordingly, these securities may
only be transferred in compliance with the Stockholders
Agreement."
or
"The securities evidenced by this certificate have not been
registered under the Securities Act of 1933, as amended (the
"Securities Act"), and may not be sold or transferred unless
there is an effective registration statement under the
Securities Act covering the sale or transfer of such
securities or such sale or transfer is exempt from the
registration and prospectus delivery requirements of the
Securities Act. The securities evidenced by this certificate
also are subject to certain other restrictions on transfer, as
set forth in a Stockholders Agreement, dated as of October 29,
1999, and amended and restated as of May 24, 2001, as amended,
among the Company and certain stockholders named therein (the
"Stockholders Agreement"). Accordingly, these securities may
only be transferred in compliance with the Stockholders
Agreement."
(b) The certificates representing such securities, and each certificate
issued in transfer thereof, also will bear any legend required under any
applicable state securities laws.
(c) Absent an effective registration statement under the Securities Act
covering the disposition of such securities which any party hereto acquires, any
such party will not sell, transfer, assign, pledge, hypothecate or otherwise
dispose of any or all of the securities (A) unless such disposition is exempt
from the registration and prospectus delivery requirements of the Securities Act
and has been registered or qualified under (or is exempt from the registration
and qualification requirements of) any applicable state securities laws and (B)
except in compliance with the terms of this Agreement.
(d) Each of the parties hereto consents to the Company making a
notation on its records or giving instructions to any transfer agent of such
securities in order to implement the restrictions on transfer of securities set
forth in this Section 2.
(e) Any legend endorsed on a certificate evidencing a security and any
stop transfer instructions or notations on the Company's records with respect to
such security pursuant to Section 2(a) and 2(b) hereof shall be removed or
lifted and the Company shall issue a certificate without such legend to the
holder of such security if (i) the transfer of such security has been registered
under the Securities Act or (ii) such holder provides the Company with an
opinion of counsel (which counsel and opinion are reasonably satisfactory to the
Company) stating that a public sale or transfer of such security may be made
without registration under the Securities Act and that such legend is not
required under any applicable state securities laws.
16
3. ELECTION OF DIRECTORS. Except that in the event that one or more of the
conditions described in Section 6(b) of the Certificates of Designations exists,
each Stockholder that is a party to this Agreement agrees to cast all votes in
respect of Securities held by such Stockholder entitled to vote for the election
of directors, whether at any annual or special meeting, by written consent or
otherwise, as follows:
(a) NUMBER OF DIRECTORS. Each such Stockholder will vote to fix the
number of members of the board of directors of the Company (the "BOARD") at such
number as may be required by this Section 3 (including without limitation,
Section 3(b)(v), 3(c) and 3(d)) or as may be otherwise agreed by the Requisite
Directors or as may be required to comply with the terms of the Certificates of
Designations; provided that no agreement of the Requisite Directors may cause
the number of directors that a Stockholder may nominate to be less than the
number determined pursuant to this Section 3.
(b) ELECTION OF DIRECTORS. Each such Stockholder will vote to elect as
directors of the Company:
(i) (A) at all times in which the Odyssey Holders hold fifty
percent (50%) or more of the aggregate shares of Common Stock and Equivalent
Shares held by the Odyssey Holders on October 29, 2000, two (2) individuals
designated by Odyssey; (B) at all times in which the Odyssey Holders hold
twenty-five percent (25%) or more, but less than fifty percent (50%) of the
aggregate shares of Common Stock and Equivalent Shares held by the Odyssey
Holders on October 29, 2000, one (1) individual designated by Odyssey; and (C)
at all times in which the Odyssey Holders hold less than twenty-five percent
(25%) of the aggregate shares of Common Stock and Equivalent Shares held by the
Odyssey Holders on October 29, 2000, no Stockholder shall be required to vote
for any individual designated by Odyssey (the director or directors nominated by
the Odyssey Holders pursuant to this Section 3(b)(i) are referred to as the
"ODYSSEY DIRECTORS");
(ii) (A) at all times in which the Xxxx Holders hold fifty percent
(50%) or more of the Securities held by the Xxxx Holders on October 29, 1999,
two (2) individuals designated by Xxxx; (B) at all times in which the Xxxx
Holders hold twenty-five percent (25%) or more, but less than fifty percent
(50%), of the Securities held by the Xxxx Holders on October 29, 1999, one (1)
individual designated by Xxxx; and (C) at all times in which the Xxxx Holders
hold less than twenty-five percent (25%) of the aggregate shares of the
Securities held by the Xxxx Holders on October 29, 1999, no Stockholder shall be
required to vote for any individual designated by Xxxx (the director or
directors nominated by Xxxx pursuant to this Section 3(b)(ii) are referred to as
the "XXXX DIRECTORS");
(iii) (A) at all times in which the PF Telecom Holders hold fifty
percent (50%) or more of the Securities held by the PF Telecom Holders on
October 29, 1999, two (2) individuals designated by PF Telecom; (B) at all times
in which the PF Telecom Holders hold twenty-five percent (25%) or more, but less
than fifty percent (50%), of the Securities held by the PF Telecom Holders on
October 29, 1999, one (1) individual designated by PF Telecom; and (C) at all
times in which the PF Telecom Holders hold less than twenty-five percent (25%)
of the aggregate shares of the Securities held by the PF Telecom Holders on
October 29, 1999, no Stockholder shall be required to vote for any individual
designated by PF Telecom (the director
17
or directors nominated by PF Telecom pursuant to this Section 3(b)(iii) are
referred to as the "PF TELECOM DIRECTORS");
(iv) (A) at all times in which (1) the Cisco Holders and the Cisco
Co-Investor Holders collectively hold shares of Series B Senior Preferred Stock
having an aggregate initial liquidation preference (not including any dividends
added thereto) of $100.00 million or more, (2) the Cisco Holders collectively
hold shares of Series B Senior Preferred Stock having an aggregate initial
liquidation preference (not including any dividends added thereto) of $40.00
million or more and (3) the number of Cisco Co-Investors (together, in each case
with such Cisco Co-Investor's respective Permitted Cisco Co-Investor
Transferees) is less than or equal to five (5), two (2) individuals designated
by Cisco; PROVIDED that if the total number of directors serving on the Board,
excluding the individuals designated by Cisco, is eight or less, then Cisco
shall have the right to designate one (1) individual pursuant to this clause
(A); (B) at all times in which (1) the Cisco Holders collectively hold shares of
Series B Senior Preferred Stock having an aggregate initial liquidation
preference (not including any dividends added thereto) of $40.00 million or
more, (2) the number of Cisco Co-Investors (together, in each case with such
Cisco Co-Investor's respective Permitted Cisco Co-Investor Transferees) is less
than or equal to five and (3) the Cisco Holders and the Cisco Co-Investor
Holders collectively hold shares of Series B Senior Preferred Stock having an
aggregate initial liquidation preference (not including any dividends added
thereto) of less than $100.00 million, one (1) individual designated by Cisco;
or (C) at all times in which (1) the Cisco Holders collectively hold shares of
Series B Senior Preferred Stock having an aggregate initial liquidation
preference (not including any dividends added thereto) of less than $40.00
million or (2) the number of Cisco Co-Investors (together, in each case with
such Cisco Co-Investor's respective Permitted Cisco Co-Investor Transferees) is
greater than five (5), no Stockholder shall be required to vote for any
individual designated by Cisco (the director or directors nominated by Cisco
pursuant to this Section 3(b)(iv) are referred to as the "CISCO DIRECTORS");
PROVIDED that no Stockholder shall be required to vote for any Person or Persons
designated by Cisco unless each such Person is an employee of Cisco; and
(v) the chief executive officer, when such officer has been
employed by the Company with approval of the Board pursuant to the provisions of
Section 4.
(c) CO-INVESTOR DIRECTOR. Odyssey may grant the right to designate one
(1) additional director (the "CO-INVESTOR DIRECTOR") to any one Odyssey
Co-Investor requiring the right to designate such director, subject to the
consent of Xxxx and PF Telecom, which consent shall not be unreasonably
withheld. If Odyssey grants such right to designate an additional director and
Xxxx continues to have the right to designate two (2) directors pursuant to
Section 3(b)(ii), Xxxx will have the right to designate one (1) additional
director who shall be deemed a Xxxx Director. If Odyssey grants such a right to
designate an additional director and PF Telecom continues to have the right to
designate two (2) directors pursuant to Section 3(b)(iii), PF Telecom will have
the right to designate one (1) additional director who shall be deemed a PF
Telecom Director. The right of the Odyssey Co-Investor to designate the
Co-Investor Director pursuant to this Section 3(c) shall terminate on the first
date on which the Odyssey Co-Investor owns less than fifty percent (50%) of its
initial holdings calculated as of October 29, 2000. Notwithstanding the
foregoing, (y) if the right of the Odyssey Co-Investor to designate the
Co-Investor Director terminates for any reason, the right of Xxxx and PF Telecom
to designate additional directors pursuant to this Section 3(c) shall terminate
and (z) if either the Xxxx Holders or the PF Telecom
18
Holders no longer have the right to designate two (2) directors pursuant to
Section 3(b), then the right of Xxxx or PF Telecom, as the case may be, to
designate an additional director pursuant to this Section 3(c) shall terminate.
Each Stockholder that is a party hereto will vote for the individual designated
pursuant to this Section 4(c).
(d) REDUCTION OF BOARD AND REMOVAL OF DIRECTORS. Each Stockholder that
is a party to this Agreement agrees to vote, or consent with respect to, its
Securities to remove any director(s) elected or appointed pursuant to Section
3(b) or 3(c) and to decrease the number of members of the Board by the number of
director(s) actually removed pursuant to this Section 3(d) in accordance with
the instructions provided by the party entitled to designate or appoint such
director(s). If the number of directors permitted to be designated by a
Stockholder is reduced and such Stockholder so designates a specific individual
or individuals of its designees to be removed, then the other Stockholders that
are parties to this Agreement agree to vote for the removal of the individual so
designated.
(e) REMOVAL.
(i) Other than as set forth in Section 3(d) above, no Odyssey
Director may be removed without the consent of Odyssey.
(ii) Other than as set forth in Section 3(d) above, no Xxxx
Director may be removed without the consent of Xxxx.
(iii) Other than as set forth in Section 3(d) above, no PF Telecom
Director may be removed without the consent of PF Telecom.
(iv) Other than as set forth in Section 3(d) above, the Co-Investor
Director may not be removed without the consent of UBS Capital.
(v) Other than as set forth in Section 3(d) above, no Cisco
Director may be removed without the consent of Cisco.
(vi) No other director at any time in office may be removed without
the consent of the Requisite Directors.
(f) Odyssey hereby irrevocably grants to UBS Capital the rights set
forth under Section 3(c), and each other party hereby acknowledges and consents
to the grant of such rights.
4. PROTECTIVE PROVISIONS.
(a) Except as set forth in Section 4(c)-(j), the approval of the
Requisite Directors will be required in order for the Company (or any of its
Subsidiaries) to consummate, or to cause any of its Subsidiaries to consummate,
any of the following transactions:
(i) any increase or decrease in the number of shares of capital
stock of the Company or any of its Subsidiaries issued or authorized;
19
(ii) the creation (by reclassification or otherwise) of any new
class or series of capital stock of the Company or any of its Subsidiaries;
(iii) any amendment or waiver of the Company's or any of its
Subsidiaries' certificate of incorporation or bylaws;
(iv) any sale, merger, acquisition or consolidation (other than
pursuant to the Company Sale Right described in Section 15 hereof) involving the
Company or any of its Subsidiaries in excess of $10 million in value;
(v) any financing arrangement in excess of $10 million;
(vi) each business plan and annual budget of the Company or any of
its Subsidiaries;
(vii) changes to the business plan or any amendments to the annual
budget of the Company or any of its Subsidiaries, in either case, that involve
increases in expenditures in excess of $10 million in the aggregate;
(viii) the entering into or amendment of any partnership or joint
venture arrangement or the making of any other debt or equity investment in any
other entity or the formation of any new Subsidiary or Affiliate involving an
investment, performance of services or delivery of goods or materials of an
amount or value in excess of $10 million;
(ix) the entering into of any other contract or any amendment to
existing contracts (other than any agreement with Xxxx and its Affiliates),
including any contract involving performance of services or delivery of goods or
materials by the Company or any of its Subsidiaries of an amount or value in
excess of $10 million or having an effect in excess of $10 million on the value
of the Company or any of its Subsidiaries;
(x) any sale of assets for a price in excess of $10 million;
(xi) any redemption, purchase or other acquisition of capital stock
of the Company;
(xii) the adoption or amendment of any management incentive plan,
including the granting of awards pursuant to such plan and the terms and
conditions of such awards (including, without limitation, vesting and expiration
provisions);
(xiii) entry into any new line or type of business;
(xiv) the resolution or settlement of any third party claim in
excess of $10 million; or
(xv) the election of each of the members of the board of directors
of each of the Subsidiaries.
20
(b) Except as set forth in Section 4(c)-(j), the approval of a majority
of the Board will be required in order for the Company to consummate, or to
cause any Subsidiary to consummate, any of the following transactions:
(i) any sale, merger, acquisition or consolidation (other than
pursuant to the Company Sale Right described in Section 15 hereof) involving the
Company or any of its Subsidiaries that is in excess of $5 million and less than
or equal to $10 million in value;
(ii) any financing arrangement in excess of $5 million and less
than or equal to $10 million;
(iii) changes to the business plan or any amendments to the annual
budget of the Company or any of its Subsidiaries, in either case, that involve
increases in expenditures that are in excess of $5 million in the aggregate and
less than or equal to $10 million in the aggregate;
(iv) the entering into or amendment of any partnership or joint
venture arrangement or the making of any other debt or equity investment in any
other entity or the formation of any new Subsidiary or Affiliate involving an
investment, performance of services or delivery of goods or materials of an
amount or value in excess of $5 million and less than or equal to $10 million;
(v) any other contract or any amendment to existing contracts
(other than any agreement with Xxxx and its Affiliates), including any contract
involving performance of services or delivery of goods or materials by the
Company or any of its Subsidiaries of an amount or value in excess of $5 million
and less than or equal to $10 million or having an effect on the value of the
Company or any of its Subsidiaries in excess of $5 million and less than or
equal to $10 million;
(vi) any sale of assets for a price in excess of $5 million and
less than or equal to $10 million;
(vii) the resolution or settlement of any third party claim in
excess of $5 million and less than or equal to $10 million; or
(viii) the employment or termination of any member of senior
management of the Company or any of its Subsidiaries (excluding relatives and
Affiliates of the PF Telecom Holders).
(c) Each of the Velocita Subsidiaries hereby agrees to take all actions
reasonably necessary to effect, and to forego taking any actions that would be
reasonably likely to limit the application of, the provisions of this Section 4.
(d) The approval of any two of: (i) the Odyssey Directors (voting as a
group); (ii) the Xxxx Directors (voting as a group) and (iii) the Cisco
Directors (voting as a group), will be required for the employment or
termination of any position or title of the Company or any Subsidiary
(including, without limitation, any title held on the Board of the Company or
any Subsidiary of the Company) held by any Person that is an Affiliate of or
otherwise related to, or previously employed by, any of the PF Telecom Holders;
PROVIDED, that if at the time of such
21
action any of the Odyssey Holders (considered as a group), the Xxxx Holders
(considered as a group) or the Cisco Holders (considered as a group) is an
Excluded Holder with respect to such Board action, then such action shall
require the approval of a majority of the directors, excluding those nominated
by the PF Telecom Holders.
(e) The approval of the Requisite Directors will be required, but will
be the only Board approval required, for the Company or any Subsidiary to
voluntarily commence any proceeding or file any petition seeking liquidation,
reorganization or similar relief under any federal, state or foreign bankruptcy,
insolvency, receivership or similar law.
(f) The approval, of any two of: (i) the Odyssey Directors (voting as a
group), (ii) the PF Telecom Directors (voting as a group) and (iii) the Cisco
Directors (voting as a group) will be required for (A) employment or termination
by the Company or any of its Subsidiaries of any position or title held by any
Person that is an Affiliate of or otherwise related to, or previously employed
by, any of the Xxxx Holders and (B) the execution of any contract, or the
amendment or extension of any existing contract between the Company or any of
its Subsidiaries and Xxxx or its Affiliates, including without limitation, the
Xxxx Agreements and all agreements related thereto (except but any of the
foregoing actions described in subsection (A) related to Xxxx Xxxxxx, Xxxxx
Xxxxxx and Xxx XxXxxxx will require the approval of only a majority of the
directors); PROVIDED, that if at the time of such action any of the Odyssey
Holders (considered as a group), the PF Telecom Holders (considered as a group)
or the Cisco Holders (considered as a group) is an Excluded Holder with respect
to such Board action, then such action shall require the approval of a majority
of the directors, excluding those nominated by the Xxxx Holders.
(g) Any sale or lease of dark fiber or conduit by the Company or any of
its Subsidiaries that is made in accordance with, and subject to any limitations
specified in, the business plan and annual budget approved pursuant to Section
4(a) or 4(b) (but only to the extent that the quantity and location of the
assets subject to such sale, the price at which such assets shall be sold or
leased and all other material terms of such sale or lease, are specifically
identified in such business plan and annual budget) will not require the consent
of the Board.
(h) The Company shall not, and shall not permit any of its Subsidiaries
to, and no Velocita Subsidiary shall, make any payment to, or sell, lease,
transfer or otherwise dispose of any of its properties or assets to, or purchase
any property or assets from, or enter into or make or amend any contract,
agreement, understanding, loan, advance or guarantee with, or for the benefit
of, any Affiliate (each of the foregoing, an "AFFILIATE TRANSACTION"), unless
(i) such Affiliate Transaction is on terms that are no less favorable to the
Company or the relevant Subsidiary than those that would have been obtained in a
comparable transaction by the Company or such Subsidiary with an unrelated
Person and (ii) a majority of the directors nominated by at least two
Disinterested Stockholder Groups approves such Affiliate Transaction; PROVIDED
that if there are fewer than three Disinterested Stockholder Groups at the time
of the approval of any such Affiliate Transaction, then such Affiliate
Transaction must be approved by a majority of the Disinterested Directors.
(i) The approval of the Odyssey Directors (voting as a group) will be
required, for any alteration, amendment or termination of the resolutions of the
Board, as in effect on October 29, 1999, relating to the authorization of the
Series A Senior Preferred Stock and the reservation
22
of shares of Common Stock issuable upon the conversion of the shares of the
Series A Senior Preferred Stock. The approval of the Cisco Directors (voting as
a group) will be required, for any alteration, amendment or termination of the
resolutions of the Board, as in effect on the date hereof, relating to the
authorization of the Series B Senior Preferred Stock and the reservation of
shares of Common Stock issuable upon the conversion of shares of the Series B
Senior Preferred Stock. The approval of the Xxxx Directors and the PF Telecom
Directors (voting collectively as a group) will be required for any alteration,
amendment or termination of the resolutions of the Board, as in effect on
October 29, 1999, relating to the authorization of the shares of Common Stock
held by Xxxx and PF Telecom on the date hereof.
(j) At any time after the second anniversary of the date hereof and
prior to the date that the Common Stock is Actively Publicly Traded, (i) so long
as none of the Stockholder Groups is an Excluded Holder with respect to
initiating a Qualifying Public Offering, any two of Odyssey (or any Odyssey
Holder designated in writing by Odyssey), Xxxx (or any Xxxx Holder designated in
writing by Xxxx), PF Telecom (or any PF Telecom Holder designated in writing by
PF Telecom) and Cisco (or any Cisco Holder designated in writing by Cisco), may
initiate a Qualifying Public Offering, and (ii) if any Stockholder Group is an
Excluded Holder with respect to initiating a Qualifying Public Offering, any one
of Odyssey, Xxxx, XX Telecom or Cisco, or any other member of their respective
Stockholder Groups designated in writing by them, may initiate a Qualifying
Public Offering; provided, in the case of clause (i) or (ii) above, that at the
time of initiation of, and immediately prior to the completion of, the
Qualifying Public Offering, the Person initiating such Qualifying Public
Offering is not a member of a Stockholder Group that is an Excluded Holder with
respect to such Board action.
(k) Notwithstanding the foregoing, the provisions of this Section 4
shall not apply, with respect to transactions contemplated by Section 4(a) or
Section 4(b) during any period in which one or more of the conditions described
in Section 6(b) of the Certificates of Designations exist and as a result a
majority of the Board consists of individuals elected by the holders of the
Series A Senior Preferred Stock and the Series B Senior Preferred Stock, voting
together as a class; PROVIDED, HOWEVER, that such provisions shall continue to
apply with respect to each such action to the extent that any of such action is
not related to and does not adversely affect the Company's ability to cure any
condition described in Section 6(b) of the Certificates of Designations. The
exercise by the holders of the Series A Senior Preferred Stock and the Series B
Senior Preferred Stock, voting together as a class, of the rights set forth in
Section 6(b) of the Certificates of Designations shall be accompanied by a
resolution of the holders of the Series A Senior Preferred Stock and the Series
B Senior Preferred Stock, voting together as a class, (which may be passed at a
meeting of the holders of the Series A Senior Preferred Stock and the Series B
Senior Preferred Stock or in writing to the extent permitted under applicable
law) instructing such additional directors to use their good faith effort to
cause the Company to cure any condition in Section 6(b) of the Certificates of
Designations as expeditiously as possible.
(l) Notwithstanding any other provisions of this Agreement, prior to
the Competitor Restriction Release Date, the prior written consent of Cisco will
be required for (a) any sale or issuance of equity securities (including,
without limitation, any sale or issuance of securities pursuant to the exercise
of the Company Sale Right or any Participation Securities pursuant to Section
14) by the Company to any of the Named Competitors, except for such issuances of
equity securities in connection with a commitment to purchase Noncompeting
Products or (b)
23
any consolidation with or merger with or into any of the Named Competitors or
any sale of all or substantially all of the assets of the Company to any of the
Named Competitors, except in connection with a transaction in which the Cisco
Holders either (i) receive in cash an amount equal at least $10.00 per
Equivalent Share (subject to adjustment for stock splits, stock dividends, stock
recombinations and similar transactions) or (ii) are entitled to exercise rights
under Section 7 of the Series B Certificate and receive the full Change of
Control Payment (as defined in the Series B Certificate) to which they would be
entitled without regard to any comparable rights of holders of Notes (as defined
in the Indenture) pursuant to the Indenture or Section 7(g) of the Series B
Certificate.
(m) The Company shall not approve any Transfer by any Cisco Holder to a
Company Competitor pursuant to Section 6(b)(ii) without the approval of at least
two of (i) the Odyssey Directors (voting as a group), the Xxxx Directors (voting
as a group) and the PF Telecom Directors (voting as a group), PROVIDED, that if,
at the time of such action, any of the foregoing groups is an Excluded Holder
with respect to such Board action, then such action shall require the approval
of a majority of the directors, other than those nominated by Cisco.
5. TRANSFER RESTRICTIONS.
(a) Until the earlier of (i) October 29, 2001 and (ii) the date on
which the Common Stock is Actively Publicly Traded, no Stockholder shall
Transfer any interest in any Securities now or hereafter owned by it except for
Transfers of Securities pursuant to Section 6 hereof. Until the earlier of (i)
October 29, 2001 and (ii) 180 days after the date on which the Common Stock is
Actively Publicly Traded, no First Union Holder shall Transfer any interest in
any First Union Securities issued upon exercise thereof except for Transfers of
First Union Securities pursuant to Section 6 hereof.
(b) Each party hereto agrees and acknowledges that it will not Transfer
any securities subject to this Agreement now or hereafter owned by it unless
such Transfer complies with the terms and conditions of this Agreement and the
Transfer is in compliance with applicable federal and state securities laws. Any
attempt to Transfer any such securities not in compliance with this Agreement
shall be null and void and neither the Company nor any transfer agent shall give
any effect in the Company's stock records to such attempted Transfer.
(c) No Stockholder or group of Stockholders party hereto shall Transfer
any interest in any Securities now or hereafter owned by it, comprising more
than 15% of the Fully Diluted Common Stock, in a single transaction or a series
of related transactions, to any Person or group of Persons that is a "person" as
such term is used in Section 13(d)(3) under the Exchange Act (other than the
Exempt Transferees) except for a Transfer of Securities pursuant to, or
otherwise permitted under, Sections 6, 9 or 15 hereof.
(d) Except for Transfers of Securities pursuant to Sections 9, 10, 11
and 15 hereof, until the date on which the Common Stock is Actively Publicly
Traded, no Transfers by a Stockholder of any interest in any Securities
permitted by this Agreement shall be effective unless and until the recipient of
such Securities has delivered to the Company a written acknowledgment and
agreement in form and substance reasonably satisfactory to the Company
24
that the Securities to be received by such recipient are subject to all the
provisions of this Agreement and that such recipient is bound by the obligations
herein as a Stockholder.
(e) Notwithstanding the other provisions of this Agreement, no Transfer
of any interests in PF Telecom Shares, Treg Shares, GLW Shares, Home Run
Warrants or Dark Fiber Warrants is permitted except pursuant to Section 6(a),
6(b) and 6(d).
(f) Notwithstanding any other provision of this Agreement, prior to any
Transfer of Securities before the Common Stock is Actively Publicly Traded, the
transferring Stockholder must notify the Company and Xxxx in writing of its
intention to effect such a Transfer (a "TRANSFER NOTICE"). The Stockholder shall
not be permitted to effect such a Transfer if (a) such Transfer would constitute
a Transfer to Xxxxxxx X. Xxxx or Xxxxxxxxx Xxxx, any member of the immediate
family of Xxxxxxx X. Xxxx or Xxxxxxxxx Xxxx (spouse, children, or
grandchildren), or any partnership (general or limited), corporation,
association, joint stock company, trust, family trust, joint venture,
unincorporated organization or other entity of any type or nature, that
directly, or indirectly through one or more intermediaries, is controlled, or is
under common control with Xxxxxxx X. Xxxx or Xxxxxxxxx Xxxx, or any member of
the immediate family of Xxxxxxx X. Xxxx or Xxxxxxxxx Xxxx (a "XXXXXXX OR
XXXXXXXXX XXXX TRANSFER") and (b) within 15 business days following receipt of
such Transfer Notice, the Company or Xxxx shall have notified such Stockholder
in writing that the proposed Transfer would constitute a Xxxxxxx or Xxxxxxxxx
Xxxx Transfer and is therefore prohibited by this Section 5(f). For purposes of
the foregoing, "control" (including, with correlative meanings, the terms
"controlling," "controlled by" and "under common control with"), as used with
respect to any person, shall mean the possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of such
person, whether through the ownership of voting securities, by agreement or
otherwise.
(g) Notwithstanding the other provisions of this Agreement, prior to
the date on which the Common Stock is Actively Publicly Traded, no Transfer of
any interests in Securities by an Initial Stockholder or an Odyssey Co-Investor
aggregating less than 2.5% of such Initial Stockholder's or Odyssey
Co-Investor's interest in the Securities (including Equivalent Shares),
calculated as of the date of acquisition, shall be permitted.
(h) Notwithstanding the other provisions of this Agreement, prior to
the Competitor Restriction Release Date, no Stockholder shall Transfer, without
Cisco's prior written consent, any interests in Securities, PF Telecom Shares,
Treg Shares, GLW Shares or First Union Securities to any of the Named
Competitors, except in connection with a transaction pursuant to Section 9 or
Section 15 in which the holders of the Series B Senior Preferred Stock either
(i) receive in cash an amount equal at least $10.00 per Equivalent Share
(subject to adjustment for stock splits, stock dividends, stock recombinations
and similar transactions) or (ii) are entitled to exercise rights under Section
7 of the Series B Certificate and receive the full Change of Control Payment (as
defined in the Series B Certificate) to which they would be entitled without
regard to any comparable rights of holders of Notes pursuant to the Indenture or
Section 7(g) of the Series B Certificate.
25
6. PERMITTED TRANSFERS.
(a) TRANSFERS TO PERMITTED TRANSFEREES. Notwithstanding any of the
transfer restrictions set forth in Section 5, 7 or 8 (other than Sections 5(f)
and 5(h)), any of the Odyssey Holders, Xxxx Holders, Xxxxx Holders, GLW Holders,
Treg Holders, Xxxxx Holders, PF Telecom Holders, First Union Holders, Cisco
Holders, Cisco Co-Investor Holders or the Odyssey Co-Investor Holders may, at
any time and without complying with such restrictions, Transfer any interest in
any Securities, PF Telecom Shares, Treg Shares, GLW Shares or First Union
Securities to any of their respective Permitted Transferees; PROVIDED, HOWEVER,
that no such Transfer shall be effective until (i) such Permitted Transferee has
delivered to the Company a written acknowledgment and agreement in form and
substance reasonably satisfactory to the Company that the Securities, PF Telecom
Shares, Treg Shares or First Union Securities to be received by such Permitted
Transferee are subject to all the provisions of this Agreement and that such
Permitted Transferee is bound hereby and a party hereto as a Stockholder and
(ii) in the case of a Transfer by any Individual Stockholder (an "INDIVIDUAL
TRANSFEROR"), the Permitted Transferee has executed and delivered an irrevocable
proxy to the Individual Transferor, in form and substance reasonably
satisfactory to the Company, whereby the voting rights with respect to such
Securities are retained by (a) Xxxxx (or, if Xxxxx shall no longer be a
Stockholder as a result of Xxxxx'x death, the holder of the Securities that were
held by Xxxxx immediately prior to Xxxxx'x death), if such Individual Transferor
is a member of the Xxxxx Group or (b) Xxxxx (or, if Xxxxx shall no longer be a
Stockholder as a result of Xxxxx'x death, the holder of the Securities that were
held by Xxxxx immediately prior to Xxxxx'x death), if such Individual Transferor
is a member of the Xxxxx Group.
(b) CO-INVESTOR TRANSFERS.
(i) ODYSSEY CO-INVESTOR TRANSFERS. Notwithstanding any of the
transfer restrictions set forth in Section 5, 7 or 8 (other than Section 5(f)
and 5(h)), the Odyssey Holders shall be permitted to Transfer Securities to any
Odyssey Co-Investor at any time on or before October 29, 2000 without complying
with such restrictions; PROVIDED, HOWEVER, that such Transfers shall be subject
to the approval of each of Xxxx and PF Telecom, which consent shall not be
unreasonably withheld; and PROVIDED FURTHER, that such Transfers shall not cause
the Series A Senior Preferred Stock holdings of the Odyssey Holders to be
reduced below $75,000,000 in aggregate initial liquidation preference (not
including any dividends added thereto); and PROVIDED FURTHER, that no such
Transfer shall be effective until such Odyssey Co-Investor has delivered to the
Company a written acknowledgment and agreement in form and substance reasonably
satisfactory to the Company that the Securities to be received by such Odyssey
Co-Investor are subject to all the provisions of this Agreement and that such
Odyssey Co-Investor is bound hereby and a party hereto as a Stockholder. For
purposes of this Section 6(b)(i), each of Xxxx and PF Telecom consent to any one
or more of the following as Odyssey Co-Investors: UBS Capital; any Affiliate of
Credit Suisse First Boston; any Affiliate of First Union Corp.; Newcourt
Capital; and General Electric Capital Corporation.
(ii) CISCO CO-INVESTOR TRANSFERS. Notwithstanding any of the
transfer restrictions set forth in Section 5, 7 or 8 (other than Section 5(f)),
the Cisco Holders shall be permitted to Transfer Securities acquired pursuant to
the Series B Subscription Agreement to Cisco Co-Investors at any time without
complying with such restrictions; PROVIDED, HOWEVER,
26
that any such Transfer to a Company Competitor shall be subject to the approval
of the Company in accordance with Section 4(m); and PROVIDED FURTHER, that no
Cisco Holder shall have entered into any agreement or arrangement with such
Cisco Co-Investor with respect to the election of directors or the actions of
any director nominated by the Cisco Holders on matters before the Board; and
PROVIDED FURTHER, that no such Transfer shall be effective until such Cisco
Co-Investor has delivered to the Company a written acknowledgment and agreement
in form and substance reasonably satisfactory to the Company that the Securities
to be received by such Cisco Co-Investor are subject to all the provisions of
this Agreement (including the immediately preceding proviso) and that such Cisco
Co-Investor is bound hereby and a party hereto as a Stockholder. Cisco shall
provide the Company with not less than 10 days' prior notice of any Transfer of
Securities, offer to Transfer Securities, solicitation of offers to Transfer
Securities or engagement in activities related to the foregoing (collectively,
"SYNDICATION ACTIVITIES"), and the Company shall provide the Cisco Holders with
such cooperation as may reasonably be requested by the Cisco Holders in
connection with such Syndication Activities, which cooperation, subject to the
execution of a confidentiality agreement in customary form, shall consist of
reasonable access to the management (including making members of management
available in the close proximity of the place of business of any such member of
management to meet prospective investors) and books and records of the Company
during normal business hours upon reasonable prior notice.
(c) SALES TO PUBLIC. Notwithstanding any of the transfer restrictions
set forth in Section 5, 6(a), 7 or 8, after the date the Common Stock is
Actively Publicly Traded, any Stockholder may Transfer any or all of such
Securities in a Public Offering or to the public through a broker, dealer or
market maker pursuant to Rule 144, subject to applicable lock-ups or applicable
law without complying with such restrictions; PROVIDED that Block Transfers
(other than by the Cisco Holders) will be subject to the tag-along rights set
forth in Section 8.
(d) APPROVED TRANSFERS. Notwithstanding any of the transfer
restrictions set forth in Section 5, 7 or 8, any Stockholder may Transfer any
interest in any Securities, PF Telecom Shares or Treg Shares without complying
with such restrictions with the prior written consent of each of Odyssey, Xxxx,
XX Telecom and Cisco.
(e) FIRST UNION SECURITIES TRANSFER. Following the expiration of the
restrictions set forth in Section 5(a) with respect to First Union Securities,
subject to the provisions of Section 7, any First Union Holder may Transfer any
interest in the First Union Warrants or any shares of Common Stock issued upon
exercise thereof; provided that such Transfers comply with applicable federal
and state securities laws and provided further, that no such Transfer prior to
the date on which the Common Stock is Actively Publicly Traded shall be
effective until the transferee has delivered to the Company a written
acknowledgment and agreement in form and substance reasonably satisfactory to
the Company that the First Union Warrants and any such shares of Common Stock
issued upon exercise thereof to be received by such transferee are subject to
all the provisions of this Agreement and that such transferee is bound hereby
and a party hereto as a First Union Holder.
7. RIGHT OF FIRST OFFER.
27
(a) If, at any time after October 29, 2001 and prior to the date the
Common Stock is Actively Publicly Traded, any Stockholder or group of
Stockholders party to this Agreement (other than the Cisco Holders) or any First
Union Holder or group of First Union Holders (collectively, the "SELLING
STOCKHOLDER") desires to sell any or all of its Securities or First Union
Securities, as the case may be, to any other Person (which may include another
Stockholder or First Union Holder), such Selling Stockholder (other than any
First Union Holder or group of First Union Holders) shall promptly provide a
written notice (the "SELLER'S NOTICE") to each of the other Odyssey Holders, PF
Telecom Holders, Xxxx Holders, Odyssey Co-Investor Holders and the Cisco
Co-Investor Holders (the "OFFEREE STOCKHOLDERS") and (whether the Selling
Stockholder is or is not a First Union Holder or group of First Union Holders)
to the Company. The Selling Stockholders may, for purposes of determining the
recipients of the Seller's Notice, rely upon a list of securityholders provided
by the Company (which the Company shall provide to any requesting securityholder
promptly upon request). The Seller's Notice shall contain an irrevocable offer
(the "OFFER") to sell to (i) the Offeree Stockholders, if the Selling
Stockholder is any Person other than a First Union Holder or a group of First
Union Holders, or (ii) the Company, if the Selling Stockholder is a First Union
Holder or a group of First Union Holders, in the manner set forth below, such
Securities or First Union Securities, as the case may be (the "OFFERED
SECURITIES"), at a purchase price (the "OFFER PRICE") and on the terms and
conditions set forth in the Seller's Notice (provided, that the consideration
included in the Offer must be in the form of cash).
(b) Upon receipt of the Seller's Notice, the Offeree Stockholders (or
the Company, if the Selling Stockholder is a First Union Holder or group of
First Union Holders) shall have the irrevocable and exclusive option to buy all,
but not less than all, of the Offered Securities at the Offer Price on the terms
and subject to the conditions of Section 7(c) (or, if the Selling Stockholder is
a First Union Holder or group of First Union Holders, Sections 7(d) and 7(e)).
(c) The provisions of this Section 7(c) shall apply only if the Selling
Stockholder is a Person other than a First Union Holder or group of First Union
Holders.
(i) Promptly upon receipt of the Seller's Notice (but in no event
later than five business days thereafter), the Company shall deliver to each
Offeree Stockholder a notice (the "INITIAL COMPANY NOTICE") stating the number
of Offered Securities that such Offeree Stockholder would have the option to
purchase under Section 7(c), which number shall in each case be calculated as
the product of (1) the number of Offered Securities, times (2) a fraction, the
numerator of which shall be the number of Equivalent Shares represented by the
Securities owned by such Offeree Stockholder and the denominator shall be the
number of Equivalent Shares represented by the Securities owned by all Offeree
Stockholders (the "PROPORTIONATE SHARE"). Within twenty (20) business days of
receipt of the Initial Company Notice, each Offeree Stockholder who elects to
participate shall deliver to the Company a written notice stating its election
to participate and the maximum number of shares (up to all the Offered
Securities) that it is willing to purchase, and such notice shall constitute an
irrevocable commitment to purchase such shares, if any, as are allocated to such
Offeree Stockholder pursuant to Section 7(c), up to such maximum number of
shares.
(ii) To the extent that any Offeree Stockholder has indicated that
it will not fully subscribe for its Proportionate Share of the Offered
Securities, the Company shall allocate
28
all such shares not subscribed for to the Offeree Stockholders who have
subscribed for more shares than their Proportionate Share (the "FULLY
PARTICIPATING STOCKHOLDERS") in the proportion that the number of Equivalent
Shares represented by the Securities each owns bears to the total number of
Equivalent Shares represented by the Securities owned by all such Fully
Participating Stockholders. If the number of shares so allocated to a Fully
Participating Stockholder exceeds the maximum number of shares that it has
indicated in its notice to the Company it is willing to subscribe for, then the
Company shall allocate any excess over such maximum among all Fully
Participating Stockholders who have subscribed for a maximum number of shares
which exceeds the number of shares allocated to them pursuant to the preceding
sentence, in the proportion that their respective holdings bear to the total
number of Equivalent Shares represented by the Securities owned by all such
Stockholders, and the Company shall follow this procedure, if necessary, until
all shares available for purchase by the Offeree Stockholders have been
allocated to them.
(iii) If not all of the Offered Securities have been subscribed for
(the "EXCESS SHARES") pursuant to the procedures set forth in Section 7(c)(ii),
the Company shall deliver to each Offeree Stockholder a notice stating that not
all of the Offered Securities have been subscribed for and the additional number
of Offered Securities that such Offeree Stockholder will have the option to
purchase under this Section 7(c)(iii), which number shall in each case be
calculated as the product of (1) the number of Excess Shares, times (2) a
fraction, the numerator of which shall be the number of Equivalent Shares
represented by the Securities owned by such Offeree Stockholder and the
denominator of which shall be the number of Equivalent Shares represented by the
Securities owned by all Offeree Stockholders. If the number of Excess Shares so
allocated to an Offeree Stockholder exceeds the maximum number of Excess Shares
that it has indicated in its notice to the Company it is willing to subscribe
for, then the Company shall allocate any excess over such maximum among all
Offeree Stockholders who have subscribed for a maximum number of Excess Shares
which exceeds the number of Excess Shares allocated to them pursuant to the
preceding sentence, in the proportion that their respective holdings bear to the
total number of Equivalent Shares represented by the Securities owned by all
such Stockholders, and the Company shall follow this procedure, if necessary,
until all shares available for purchase by the Offeree Stockholders have been
allocated to them. If, following the completion of the procedures set forth in
this clause (iii), not all of the Offered Securities have been subscribed for,
then the Selling Stockholder shall have the rights set forth in Section 7(e).
(d) The Company shall promptly, and in any event within thirty-five
(35) business days of the Seller's Notice, notify the Selling Stockholder and
each Offeree Stockholder in writing concerning the final allocation of the
Offered Securities subject to options pursuant to Section 7(c) or, if the
Selling Stockholder is a First Union Holder or a group of First Union Holders,
concerning whether the Company elects to exercise its rights under Section 7(b)
(the "FINAL COMPANY NOTICE"). Such notice to the Selling Stockholder shall be
deemed the irrevocable exercise of such options on behalf of each purchaser
named therein.
(e) SELLER'S RIGHTS TO TRANSFER. If the Seller's Notice shall be duly
given, and if the option to purchase the Offered Securities at the Offered Price
as provided in Section 7(c) (or, if the Selling Stockholder is a First Union
Holder or group of First Union Holders, Section 7(b)) shall not have been
exercised, or if the amount of Securities with respect to which all options
29
have been exercised is less than the amount of Offered Securities, then, subject
to Section 8, the Selling Stockholder shall be free, for a period of 120 days
from the earlier of (i) the 45th day following the date of the Seller's Notice,
and (ii) the date the Selling Stockholder shall have received written notice
from the Company stating the intention of the Offeree Stockholders (or the
Company, if the Selling Stockholder is a First Union Holder) not to exercise the
options granted under Section 7 (such earlier date being the "RELEASE DATE"), to
sell the Offered Securities to any Person, as long as the Offered Securities so
sold are sold at a price equal to or greater than the Offered Price and on
substantially the same terms and conditions; PROVIDED, that no such Transfer
shall be effective until the transferee has delivered to the Company a written
acknowledgment and agreement in form and substance reasonably satisfactory to
the Company that the Securities to be received by such transferee are subject to
all the provisions of this Agreement and that such transferee is bound hereby
and a party hereto as a Stockholder.
(f) CLOSING DATE. In the case of the purchase by the Offeree
Stockholders of the Offered Securities pursuant to this Section 7, the parties
to such purchase shall close such transaction on the 45th day after the later of
the date the Final Company Notice is received and the date of receipt of any
required regulatory approvals (and if such day is not a business day, then the
following business day) at the principal executive office of the Company, or at
such other place or time as the parties may agree. If all such Offered
Securities are not duly purchased by the Offeree Stockholders (or the Company,
if the Selling Stockholder is a First Union Holder), the Selling Stockholder
shall not be obligated to sell any of such Offered Securities to the Offeree
Stockholders (or the Company, if the Selling Stockholder is a First Union
Holder) and the provisions of Section 7(e) shall apply in respect of such
Offered Securities.
(g) EXCEPTIONS. The provisions of this Section 7 shall not apply to the
following:
(i) Any Transfer of Securities pursuant to Section 6, 9, 10, 11 or
15;
(ii) Any Transfer of First Union Securities pursuant to Xxxxxxx 0,
0, 00, 00 xx 00;
(iii) Any Transfer of Securities or First Union Securities by a
Tag-Along Offeree pursuant to Section 8; or
(iv) Any Transfers of Securities by an Initial Stockholder or any
Odyssey Co-Investor Transferee aggregating not more than 10% of the
Stockholder's or Odyssey Co-Investor Transferee's interest in the Securities
(including Equivalent Shares) calculated as of the date of acquisition.
8. "TAG-ALONG" RIGHT.
(a) In the event that any Stockholder or group of Stockholders party to
this Agreement (other than the Cisco Holders) propose to sell for cash or any
other consideration Securities owned by it or them (such Persons, the "PROPOSED
SELLERS"), in each such case, to any Person or group of Persons (a "PROPOSED
PURCHASER"), after expiration of the periods in Section 7(c) and 7(d), if
applicable, the Proposed Sellers will promptly notify (i) each other Odyssey
Holder, Xxxx Holder, PF Telecom Holder, Odyssey Co-Investor Holder, First Union
Holder,
30
AT&T Holder and Cisco Co-Investor Holder and (ii) any other Person listed on
Exhibit A attached hereto (it being understood that such Exhibit may be amended,
modified, extended or terminated pursuant to Section 19) that has the right to
participate in the Proposed Sale (as defined below) by the Proposed Seller or
Proposed Sellers, whether or not pursuant to this Agreement (collectively, the
"TAG-ALONG OFFEREES") and the members of each other Stockholder Group, if any,
in writing (a "TAG-ALONG NOTICE") of such proposed sale (a "PROPOSED SALE") and
the material terms of the Proposed Sale as of the date of the Tag-Along Notice
(the "MATERIAL TERMS"). The Proposed Sellers may, for purposes of determining
the recipients of the Tag-Along Notice, rely upon a list of securityholders
provided by the Company (which the Company shall provide to any requesting
securityholder promptly upon request). If within 15 days of the receipt by the
Tag-Along Offerees of the Tag-Along Notice, the Proposed Seller receives a
written request (a "TAG-ALONG REQUEST") to include shares of Common Stock (in
the case of (i) a Proposed Sale in which the Proposed Sellers are proposing to
sell shares of Common Stock or (ii) a Qualifying Tag-Along Sale) or shares of
Senior Preferred Stock (in the case of a Proposed Sale in which the Proposed
Sellers are proposing to sell shares of Senior Preferred Stock (the "TAG-ALONG
SECURITIES") held by one or more Tag-Along Offerees (including without
limitation, (i) shares of Common Stock that will be acquired upon the exercise
of any Options and (ii) shares of Common Stock that will be acquired upon the
conversion of any Convertible Securities, including, without limitation, the
Senior Preferred Stock, the Home Run Warrants, the Dark Fiber Warrants and the
Cisco Warrants) in the Proposed Sale, the Tag-Along Securities so held by such
Tag-Along Offerees shall be so included as provided herein, and the Proposed
Seller shall not be permitted to complete such Proposed Sale unless such
Tag-Along Securities are so included in such Transfer; PROVIDED, HOWEVER, that
any Tag-Along Request shall be irrevocable unless (x) there shall be an adverse
change in the Material Terms or (y) otherwise mutually agreed to in writing by
such Tag-Along Offerees and the Proposed Seller. In the case of a Qualifying
Tag-Along Sale, the Proposed Purchaser may not offer to the Tag-Along Offerees
proposing to sell Common Stock consideration at a price per Equivalent Share
that is less than 75% of the price per Equivalent Share offered to the Proposed
Seller or Proposed Sellers. If the Proposed Purchaser is unwilling to offer the
Tag-Along Offerees a price per Equivalent Share that is greater than or equal to
75% of the price per Equivalent Share offered to the Proposed Seller or Proposed
Sellers, then (a) the requirement to include such Tag-Along Securities shall be
deemed not to have been satisfied, (b) the Tag-Along Offerees (other than the
Cisco Co-Investor Holders) shall not be permitted to sell Securities to the
Proposed Purchaser or its Affiliates for a period of one year from the date of
the Tag-Along Notice, except pursuant to another Qualifying Tag-Along Sale and
(c) the Cisco Co-Investor Holders shall be free to sell shares of Senior
Preferred Stock to the Proposed Purchaser for a period of one year from the date
of the Tag-Along Notice without complying with the provisions of this Section 8;
PROVIDED, HOWEVER, that if the Cisco Co-Investor Holders complete any such sale
after the first anniversary of the date of the Tag-Along Notice, or at any time
at a price per Equivalent Share that is greater than 125% of the price per
Equivalent Share included in the Tag-Along Notice with respect to the Series A
Senior Preferred Stock, then such Cisco Co-Investor Holders shall be deemed to
be "Proposed Sellers" for purposes of this Section 8, and such sale shall be
subject to the rights of participation set forth herein. The requirement that
the Proposed Purchaser offer the Tag-Along Offerees a price per Equivalent Share
that is greater than or equal to 75% of the price per Equivalent Share offered
to the Proposed Seller or Proposed Sellers may be waived by a majority vote of
both the PF Telecom Holders (voting
31
as a separate group) and the Xxxx Holders (voting as a separate group). The
parties agree to use good faith in the interpretation and administration of this
Section 8(a).
(b) The number of Tag-Along Securities that each Tag-Along Offeree will
be permitted to include in a Proposed Sale pursuant to a Tag-Along Request will
be the product of (i) the number of Tag-Along Securities then held by such
Tag-Along Offeree multiplied by (ii) a fraction, (A) the numerator of which is
the number of Equivalent Shares represented by the Securities which the Proposed
Seller or Proposed Sellers propose to sell in the Proposed Sale, and (B) the
denominator of which is the number of Equivalent Shares represented by all
Securities outstanding as of such date held by the Proposed Seller or Proposed
Sellers and all Tag-Along Offerees. Notwithstanding the foregoing, it is the
parties' intention that the rights of holders of Common Stock to participate in
a Qualifying Tag-Along Sale shall not affect the number of shares of Series B
Senior Preferred Stock that otherwise would be eligible to be sold in a Proposed
Sale, but shall instead reduce proportionately the number of shares of Series A
Senior Preferred Stock that may be sold in such Proposed Sale; accordingly, in
the case of a Qualifying Tag-Along Sale, the number of shares of Series B Senior
Preferred Stock that may be sold shall be calculated assuming that only shares
of Senior Preferred Stock are being sold in such Proposed Sale, and the amount
of Securities that may be sold by the remaining Stockholders shall be calculated
assuming that: (a) for purposes of the numerator referred to in clause (ii)(A)
above, the total number of Equivalent Shares subject to the Proposed Sale equals
(i) the amount reflected in the Tag-Along Notice less (ii) the number of
Equivalent Shares represented by the lesser of (A) the shares of Series B Senior
Preferred Stock that may be sold in such Qualifying Tag-Along Sale (determined
as provided above) and (B) the shares of Series B Senior Preferred Stock
included in the Tag-Along Requests provided by the holders of Series B Senior
Preferred Stock; and (b) for purposes of the denominator referred to in clause
(ii)(B) above, no holder of Series B Senior Preferred Stock is a Tag-Along
Offeree.
(c) Except as may otherwise be provided herein, the Tag-Along
Securities will be included in a Proposed Sale pursuant hereto and to any
agreements with the Proposed Purchaser relating thereto, on the same terms and
subject to the same conditions applicable to the holders of the same type of
securities included in the Proposed Sale (assuming, in the case of the First
Union Warrants, the Home Run Warrants, the Dark Fiber Warrants and the Cisco
Warrants, the exercise thereof). Such terms and conditions shall include,
without limitation, the sale consideration; the payment of fees, commissions and
expenses; the provision of, and representation and warranty as to, information
requested of the Proposed Seller or Proposed Sellers; and (with respect to the
Odyssey Holders, the PF Telecom Holders, the Xxxx Holders and any other holder
of securities of the Company (including Equivalent Shares) representing 10% or
more of the Fully Diluted Common Stock) the provision of requisite
indemnifications; PROVIDED, HOWEVER, that any indemnification provided by the
Tag-Along Offerees shall (i) be determined pro rata in proportion with the
aggregate number of Securities (including the Tag-Along Securities) to be sold
in the Proposed Sale and (ii) not be structured in a way so as to require
additional contributions from the Tag-Along Offerees; and PROVIDED FURTHER, that
no holder of securities of the Company (including Equivalent Shares)
representing less than 10% of the Fully Diluted Common Stock shall be required
to make any representation or warranty other than with respect to such holder's
ownership of the Securities to be sold in the proposed sale.
32
(d) Upon delivering a Tag-Along Request, each Tag-Along Offeree will,
if requested by the Proposed Seller, execute and deliver a custody agreement and
power of attorney in form and substance satisfactory to the Proposed Seller (a
"CUSTODY AGREEMENT AND POWER OF ATTORNEY") with respect to the Tag-Along
Securities which are to be included in the Proposed Sale pursuant hereto. The
Custody Agreement and Power of Attorney will provide that the Tag-Along Offeree
will deliver to and deposit in custody with the custodian and attorney-in-fact
named therein a certificate or certificates representing such Tag-Along
Securities (duly endorsed in blank by the registered owner or owners thereof or
accompanied by duly executed stock powers in blank) and irrevocably appoint said
custodian and attorney-in-fact as such Tag-Along Offeree's agent and
attorney-in-fact with full power and authority to act under a custody agreement
and power of attorney on behalf of the such Tag-Along Offeree with respect to
the matters specified herein. Notwithstanding the provisions of this Section
8(d), a Tag-Along Offeree may, at its option and in lieu of delivering a Custody
Agreement and Power of Attorney, deliver to the Proposed Seller such other
assurance as may be reasonably acceptable to the Proposed Seller of such
Tag-Along Offeree's ability to complete the Proposed Sale on the date selected
by the Proposed Seller for completion hereof.
(e) Each Tag-Along Offeree agrees that he or she will execute such
other agreements as the Proposed Seller or Proposed Purchaser may reasonably
request in connection with the consummation of a Proposed Sale and Tag-Along
Request and the transactions contemplated thereby.
(f) EXCEPTIONS. The provisions of this Section 8 shall not apply to the
following:
(i) Any Transfer of Securities pursuant to Section 6, 9, 10, 11 or
15;
(ii) Any Transfers of Securities by an Initial Stockholder, any
Odyssey Co-Investor Transferee or Cisco Co-Investor Holder aggregating not more
than 10% of such Stockholder's interest in the Securities (including Equivalent
Shares) calculated as of the date of acquisition; and
(iii) Any Transfer of Securities after the date on which the Common
Stock is Actively Publicly Traded, that is not a Block Transfer.
(g) Notwithstanding any other provision of this Section 8, no Transfer
made pursuant to this Section 8 shall be effective until the transferee has
delivered to the Company a written acknowledgment and agreement in form and
substance reasonably satisfactory to the Company that the Securities to be
received by such transferee are subject to all the provisions of this Agreement
and that such transferee is bound hereby and a party hereto as a Stockholder.
(h) The Company hereby acknowledges that the shares of Common Stock
issuable upon exercise of the AT&T Warrants are subject to tag-along rights
similar to those set forth in this Section 8 ("AT&T TAG-ALONG Rights"). Upon any
proposed transfer of such shares of Common Stock by any AT&T Holder which is
subject to AT&T Tag-Along Rights, the Company shall notify the holders of
securities entitled to participate in such transfer pursuant to the terms of the
AT&T Tag-Along Rights and shall enforce such AT&T Tag-Along Rights on behalf of,
and at the direction of, such holders.
33
9. "DRAG-ALONG" RIGHT.
(a) In the event that at any time prior to the date on which the Common
Stock is Actively Publicly Traded, (i) Odyssey, Xxxx, XX Telecom or Cisco, or
any Odyssey Holder, Xxxx Holder, PF Telecom Holder or Cisco Holder designated in
writing by Odyssey, Xxxx, XX Telecom or Cisco, as the case may be, proposes to
initiate a Company Sale pursuant to the Company Sale Right contained in Section
15 hereof or (ii) there is a sale, lease, transfer, conveyance or other
disposition (including, without limitation, any merger or consolidation), in a
single transaction, of all or substantially all of the equity interests or
assets of the Company and its Subsidiaries taken as a whole, which is approved
by the Board pursuant to Section 4 hereof, the applicable Stockholder, in the
case of a transaction pursuant to clause (i) hereof, or the Company, in the case
of a transaction pursuant to clause (ii) hereof (each, a "DRAG-ALONG
INITIATOR"), may require (a "DRAG-ALONG RIGHT") all Stockholders and all First
Union Holders (collectively, "DRAG-ALONG HOLDERS") to participate in such
transaction in accordance with the terms of this Section 9 (any transaction
involving the exercise of such Drag-Along Right shall be referred to as a
"DRAG-ALONG SALE"); PROVIDED, that the approval of the holders of each series of
Senior Preferred Stock (each voting as a separate class) shall be required for
any Drag-Along Sale that, if structured as a merger, would have required the
approval of such holders pursuant to Section 6(f) of the applicable Certificate
of Designations as in effect on the date hereof. The Drag-Along Initiator shall
provide the Stockholders and the First Union Holders written notice (a
"DRAG-ALONG NOTICE") of such Drag-Along Sale and the material terms thereof not
less than 25 days prior to the proposed date of the Drag-Along Sale (the
"DRAG-ALONG SALE DATE") and each of the Drag-Along Holders hereby agrees to sell
to such Proposed Purchaser all Securities, First Union Securities, Options or
Convertible Securities held by such Drag-Along Holder. No Drag-Along Holder
shall exercise any dissenter's rights with respect to the consummation of any
such Drag-Along Sale.
(b) On the Drag-Along Sale Date, each Drag-Along Holder shall deliver a
certificate or certificates for its Securities, First Union Securities, Options
or Convertible Securities, duly endorsed for transfer with signatures
guaranteed, to such Proposed Purchaser in the manner and at the address
indicated in the Drag-Along Notice against delivery of the purchase price for
such Securities, First Union Securities, Options or Convertible Securities. The
provisions of this Section 9 shall apply regardless of the form of consideration
in the Drag-Along Sale.
(c) Securities, First Union Securities, Options or Convertible
Securities subject to a Drag-Along Right will be included in a Drag-Along Sale
pursuant hereto and to any agreements with the Proposed Purchaser relating
thereto, on the same terms and subject to the same conditions applicable to
holders of the same type of securities included in the Drag-Along Sale. Such
terms and conditions shall include, without limitation, the consideration; the
payment of fees, commissions and expenses; the provision of, and representation
and warranty as to, information requested of the Drag-Along Initiators; and the
provision of requisite indemnifications; PROVIDED, HOWEVER, that any
indemnification provided by the Drag-Along Holders shall (i) be determined pro
rata in proportion with the aggregate number of Securities, First Union
Securities, Options and Convertible Securities to be sold in the Drag-Along Sale
and (ii) not be structured in a way so as to require additional contributions
from the Drag-Along Holders.
34
(d) Each of the Drag-Along Holders will, if requested by the Drag-Along
Initiators, execute and deliver a Custody Agreement and Power of Attorney in
form and substance satisfactory to Drag-Along Initiators with respect to the
Securities, First Union Securities, Options or Convertible Securities which are
to be included in the Drag-Along Sale pursuant hereto. The Custody Agreement and
Power of Attorney will provide that the Drag-Along Holder will deliver to and
deposit in custody with the custodian and attorney-in-fact named therein a
certificate or certificates representing such Securities, First Union
Securities, Options or Convertible Securities (duly endorsed in blank by the
registered owner or owners thereof or accompanied by duly executed stock powers
in blank) and irrevocably appoint said custodian and attorney-in-fact as such
Drag-Along Holder's agent and attorney-in-fact with full power and authority to
act under a custody agreement and power of attorney on behalf of such Drag-Along
Holder with respect to the matters specified herein.
(e) Each Drag-Along Holder agrees that he or she will execute such
other agreements as Drag-Along Initiators or the Proposed Purchaser may
reasonably request in connection with the consummation of a Drag-Along Sale and
the transactions contemplated thereby; provided, however, that Xxxx shall not be
required to make any modification to the Xxxx Agreements.
(f) In order to effect the provisions of this Section 9, each
Drag-Along Holder hereby irrevocably constitutes and appoints: each Initiating
Holder, in the case of a transaction specified in Section 9(a)(i); or the Board,
in case of a transaction specified in Section 9(a)(ii), as attorney and proxy,
with, subject to the consent of each Initiating Holder or the Company, as
applicable, full power of substitution, to receive all notices, and to
represent, vote and consent, with respect to all Securities, First Union
Securities, Options or Convertible Securities held by such Drag-Along Holder, in
such manner as said proxies may, in the exercise of their sole and absolute
discretion, determine, and without any prior notice to such Drag-Along Holder
(provision of such notice concurrently or promptly after the taking of any such
action being deemed sufficient for all purposes and any requirement for prior
notice being expressly waived by such Drag-Along Holder), whether or not said
representation, vote or consent benefits the interests of any of said proxies,
but only with respect to any and all of the matters specified in this Section 9.
Notwithstanding the foregoing, no Cisco Holder shall be required to deliver a
proxy or consent in connection with any transaction which (a) required the
consent of Cisco pursuant to Section 4(l) or 5(h) and (b) is undertaken without
the consent of Cisco pursuant to Section 4(l) or 5(h).
10. DEMAND REGISTRATION.
(a) Subject to Section 10(d), at any time after 180 days from the
effective date of an Initial Public Offering (or such lesser period of time as
agreed between the managing Underwriter in such Initial Public Offering and the
Company), any one or more of (i) the Odyssey Holders, (ii) the Xxxx Holders,
(iii) PF Telecom or a group of other PF Telecom Holders which certifies that it
represents not less than 25% of the Securities then held by the PF Telecom
Holders, (iv) the Cisco Holders or (v) UBS Capital, may make a written request
(any such requesting Person or a group of Persons, as the case may be, a "DEMAND
SELLER") that the Company effect the registration under the Securities Act of
such Demand Seller's Registrable Securities, and specifying the intended method
of disposition thereof. The Company will promptly give written notice of such
requested registration (a "DEMAND REGISTRATION") at least 25 business days prior
to the anticipated filing date of the registration statement relating to such
35
Demand Registration to all other holders of Registrable Securities (whether or
not pursuant to this Agreement) who have incidental or piggy-back registration
rights (each such holder having such rights is hereinafter referred to as a
"HOLDER" and collectively as the "HOLDERS"), and thereupon will use its best
efforts to effect, as expeditiously as possible, the registration under the
Securities Act of:
(i) the Registrable Securities then held by the Demand Sellers that
the Company has been so requested to register by the Demand Sellers; and
(ii) subject to Section 10(c), all other Registrable Securities
that any other Holder has requested the Company register by written request
received by the Company within 15 business days after the receipt by each such
Holders of such written notice given by the Company;
all to the extent necessary to permit the disposition (in accordance with the
intended methods thereof as aforesaid) of the Registrable Securities so to be
registered.
(b) The Company will pay all Registration Expenses in connection with
any Demand Registration. Each Holder shall be responsible for the payment of any
discounts and/or commissions of underwriters or placement agents in connection
with resales of its shares of Common Stock subject to any Demand Registration
pursuant to this Section 10.
(c) If a Demand Registration involves an underwritten Public Offering
and the managing Underwriter shall advise the Company and the Demand Sellers
that, in its view, the number of shares of Common Stock requested to be included
in such registration, including shares of Registrable Securities requested to be
included by Holders in such registration and Common Stock which the Company
proposes to be included which are not Registrable Securities, exceeds the
largest number of shares of Common Stock which can be sold without having a
substantial adverse effect on such offering, including, without limitation, the
price at which such shares of Common Stock can be sold (the "MAXIMUM OFFERING
SIZE"), the Company will include in such registration, in the priorities listed
below, up to the Maximum Offering Size:
(i) first, all Registrable Securities requested to be included in
such registration by the Demand Sellers and all Registrable Securities, if any,
to be included in such registration by the Holders (allocated if necessary for
the Public Offering not to exceed the Maximum Offering Size, pro rata among the
Demand Sellers and the Holders on the basis of the relative number of
Registrable Securities requested to be included in such registration by the
Demand Sellers and the Holders); and
(ii) second, any Common Stock proposed to be registered by the
Company.
(d) Notwithstanding the foregoing, the Company shall not be obligated
to take any action to effect any Demand Registration pursuant to this Section
10: (i) if the Demand Seller is any Odyssey Holder and the Company has
previously effected two (2) Demand Registrations in which one or more Odyssey
Holders were Demand Sellers; (ii) if the Demand Seller is any Xxxx Holder and
the Company has previously effected two (2) Demand Registrations in which one or
more Xxxx Holders were Demand Sellers; (iii) if the Demand Seller is any PF
Telecom Holder and the Company has previously effected two (2) Demand
Registrations in which one or more
36
PF Telecom Holders were Demand Sellers; (iv) if the Demand Seller is any Cisco
Holder and the Company has previously effected two (2) Demand Registrations in
which one or more Cisco Holders were Demand Sellers; and (v) if the Demand
Seller is UBS Capital and the Company has previously effected one (1) Demand
Registration in which UBS Capital was a Demand Seller.
(e) A registration of securities by the Company shall not be considered
as a Demand Registration hereunder unless (i) a registration statement filed
pursuant to this Section 10 has been declared effective by the SEC and
maintained continuously effective for a period of at least six months (or such
shorter period as will terminate when all Registrable Securities included
therein have been sold in accordance with such registration statement), and (ii)
the shares of Common Stock registered pursuant to such registration statement
include at least 70% of the Registrable Securities requested to be registered by
the Demand Seller.
(f) Any Transfer of Registrable Securities pursuant to this Section 10
shall not be subject to the provisions of Section 7 and 8.
11. PIGGY-BACK REGISTRATION.
(a) If, at any time after the Initial Public Offering, the Company
proposes to register any of its Common Stock under the Securities Act (other
than a registration (i) on Form S-8 or Form S-4 or any successor or similar
forms, (ii) relating to Common Stock issuable upon exercise of employee stock
options or in connection with any employee benefit or similar plan of the
Company, (iii) in connection with a direct or indirect acquisition by the
Company of another company), whether or not for sale for its own account, it
will each such time give prompt written notice at least 20 days prior to the
anticipated filing date of the registration statement relating to such
registration to each of the Odyssey Holders, Xxxx Holders, PF Telecom Holders,
the Odyssey Co-Investor Holders, the Cisco Co-Investor Holders, the First Union
Holders and the Cisco Holders (the "PIGGY-BACK STOCKHOLDERS"), which notice
shall set forth such Piggy-Back Stockholder's rights under this Section 11 and
shall, subject to the provisions of Section 11(b), offer such Piggy-Back
Stockholders the opportunity to include in such registration statement such
number of Registrable Securities as each such Piggy-Back Stockholder may
request. Subject to the foregoing, upon the written request of any Piggy-Back
Stockholder made within 10 days after the receipt of notice from the Company
(which request shall specify the number of Registrable Securities intended to be
disposed of by such Piggy-Back Stockholder and the intended method of
disposition thereof), the Company will use its best efforts to effect the
registration under the Securities Act of all Registrable Securities which the
Company has been so requested to register by such Piggy-Back Stockholders, to
the extent required to permit the disposition of the Registrable Securities so
to be registered; PROVIDED that (A) if such registration involves an
underwritten Public Offering, all such Piggy-Back Stockholders requesting to be
included in the Company's registration must sell their Registrable Securities to
the Underwriters as provided in Section 14(a)(viii) on the same terms and
conditions as apply to the Company and (B) if, at any time after giving written
notice of its intention to register any Registrable Securities pursuant to this
Section 11(a) and prior to the effective date of the registration statement
filed in connection with such registration, the Company or, if pursuant to
Section 10, the Demand Sellers, shall determine for any reason not to register
such Registrable Securities, the Company shall give written notice to all such
Piggy-Back Stockholders and, thereupon, shall be relieved of
37
its obligation to register any Registrable Securities pursuant to this Section
11 in connection with such registration. No registration effected under this
Section 11 shall relieve the Company of its obligations to effect a Demand
Registration to the extent required by Section 10. The Company will pay all
Registration Expenses in connection with each registration of Registrable
Securities requested pursuant to this Section 11. Each Piggy-Back Stockholder
shall be responsible for the payment of any discounts and/or commissions of
underwriters or placement agents in connection with resales of its shares of
Common Stock subject to any registration pursuant to this Section 11.
(b) If a registration pursuant to this Section 11 involves an
underwritten Public Offering (other than in the case of an underwritten Public
Offering requested by any Demand Seller in a Demand Registration, in which case
the provisions with respect to priority of inclusion in such offering set forth
in Section 10(c) shall apply) and the managing Underwriter advises the Company
that, in its view, the number of shares of Common Stock that the Company, the
Piggy-Back Stockholders and the Holders (other than the Piggy-Back Stockholders)
intend to include in such registration exceeds the Maximum Offering Size, the
Company will include in such registration, in the following priority, up to the
Maximum Offering Size:
(i) first, so much of the Common Stock proposed to be registered by
the Company as would not cause the offering to exceed the Maximum Offering Size;
and
(ii) second, all Registrable Securities requested to be included in
such registration by the Holders (allocated, if necessary for the offering not
to exceed the Maximum Offering Size, pro rata among such Holders on the basis of
the relative number of shares of Registrable Securities so requested to be
included in such registration).
(c) Any Transfer of Registrable Securities pursuant to this Section 11
shall not be subject to the provisions of Section 7 and 8.
12. HOLDBACK AGREEMENTS.
Each Stockholder agrees that for so long as such Stockholder owns any
Registrable Securities, if any shares of Common Stock (or securities convertible
into or exchangeable or exercisable for Common Stock) are offered pursuant to an
initial Public Offering (other than a registration (i) on Form S-8 or Form S-4
or any successor or similar forms, (ii) relating to Common Stock issuable upon
exercise of employee stock options or in connection with any employee benefit or
similar plan of the Company, (iii) in connection with a direct or indirect
acquisition by the Company of another company), such Stockholder will not,
subject to any exceptions agreed to by the managing Underwriter and the Company,
effect any sale or distribution, including, without limitation, any sale
pursuant to Rule 144 or any successor provision under the Securities Act, of any
Common Stock, and will not effect any sale or distribution of any stock
convertible into or exchangeable or exercisable for any Common Stock of the
Company (in each case, other than as part of such initial Public Offering)
during the 14 days prior to the effective date of such registration statement or
during the period after such effective date equal to the lesser of (i) such
period of time as agreed between such managing Underwriter in such initial
Public Offering and the Company and (ii) 180 days from the effective
38
date of such registration statement, PROVIDED, HOWEVER, that the directors and
executive officers of the Company are otherwise bound by similar agreements and
none of such agreements have been waived by the managing Underwriter.
13. REGISTRATION PROCEDURES.
(a) REGISTRATION PROCEDURES. Whenever the holders of Registrable
Securities have requested that any Registrable Securities be registered pursuant
to this Agreement, the Company will use all reasonable efforts to effect the
registration and the sale of such Registrable Securities in accordance with the
intended method of disposition thereof and pursuant thereto the Company will as
expeditiously as possible:
(i) in the case of a registration pursuant to Section 10 or 11
hereof, prepare and file within 90 days of such request with the SEC a
registration statement with respect to such Registrable Securities
including all exhibits and financial statements required by the SEC on
any form for which the Company then qualifies and which form shall be
available for the sale of the Registrable Securities to be registered
thereunder in accordance with the intended method of distribution
thereof, and use all reasonable efforts to cause such registration
statement to become effective;
(ii) prepare and file with the SEC such amendments and supplements
to such registration statement and the prospectus and in connection
therewith as may be necessary to comply with the provisions of the
Securities Act with respect to the disposition of all securities
covered by such registration statement, or any such amendment or
supplement reasonably requested by any participating holder of
Registrable Securities;
(iii) notify each holder of Registrable Securities being so
registered and counsel for such holders promptly and, if requested by
such holder or such holder's counsel, confirm such advice in writing
promptly (A) when a registration statement has become effective with
respect to such Registrable Securities and when any post-effective
amendments and supplements thereto become effective, (B) of any request
by the SEC or any state securities authority for post-effective
amendments and supplements to any such registration statement and
prospectus or for additional information after the registration
statement has become effective, (C) of the issuance by the SEC or any
state securities authority of any stop order suspending the
effectiveness of any such registration statement or the initiation of
any proceedings for that purpose, (D) if, between the effective date of
any such registration statement and the closing of any sale of
Registrable Securities covered thereby, the representations and
warranties of the Company contained in any underwriting agreement,
securities sales agreement or other similar agreement, if any, relating
to such offering cease to be true and correct in all material respects,
(E) of the receipt by the Company of any notification with respect to
the suspension of the qualification of any such Registrable Securities
for sale in any jurisdiction or the initiation or threatening of any
proceeding for such purpose, (F) of the happening of any event or the
discovery of any facts during the period such registration statement is
effective which makes any statement made in such registration statement
or the related prospectus untrue in any material respect or which
requires the making of any changes in
39
such registration statement or prospectus in order to make the
statements therein not misleading and (G) of any determination by the
Company that a post-effective amendment to a registration statement
would be appropriate;
(iv) furnish to each seller of Registrable Securities such number
of copies of such registration statement, each amendment and supplement
thereto, the prospectus included in such registration statement
(including each preliminary prospectus) and such other documents as
such seller may reasonably request in order to facilitate the
disposition of the Registrable Securities owned by such seller;
(v) use its reasonable best efforts to register or qualify such
Registrable Securities under such other securities or blue sky laws of
such jurisdictions as any seller reasonably requests and do any and all
other acts and things which may be reasonably necessary to enable such
seller to consummate the disposition in such jurisdictions of the
Registrable Securities owned by such seller (provided that the Company
will not be required to (A) qualify generally to do business in any
jurisdiction where it would not otherwise be required to qualify but
for this subparagraph, (B) subject itself to taxation in any such
jurisdiction or (C) consent to general service of process in any such
jurisdiction);
(vi) use its reasonable best efforts to cause all such Registrable
Securities to be listed on each securities exchange on which similar
securities issued by the Company are then listed and, if not so listed,
to be listed on a national securities exchange or quoted on any
national quotation system;
(vii) provide a transfer agent and registrar for all such
Registrable Securities not later than the effective date of such
registration statement;
(viii) enter into such customary agreements (including underwriting
agreements in customary form) and take all such other actions as the
underwriters reasonably request in order to expedite or facilitate the
disposition of such Registrable Securities (including, without
limitation, effecting a stock split or a combination of shares);
(ix) make available for inspection by any seller of Registrable
Securities, any underwriter participating in any disposition pursuant
to such registration statement and any attorney, accountant or other
agent retained by any such seller or underwriter, all financial and
other records, pertinent corporate documents and properties of the
Company, and cause the Company's officers, directors, employees and
independent accountants to supply all information reasonably requested
by any such seller, underwriter, attorney, accountant or agent in
connection with such registration statement;
(x) otherwise use its reasonable best efforts to comply with all
applicable rules and regulations of the SEC, and make available to its
security holders, as soon as reasonably practicable, an earnings
statement covering the period of at least twelve months beginning with
the first day of the Company's first full calendar quarter after the
effective date of the registration statement, which earnings statement
shall satisfy the provisions of Section 11(a) of the Securities Act and
Rule 158 thereunder;
40
(xi) in the event of the issuance of any stop order suspending the
effectiveness of a registration statement, or of any order suspending
or preventing the use of any related prospectus or suspending the
qualification of any Registrable Securities included in such
registration statement for sale in any jurisdiction, the Company will
use its reasonable best efforts promptly to obtain the withdrawal of
such order;
(xii) use its reasonable best efforts to obtain a comfort letter
from the Company's independent public accountants in customary form and
covering such matters of the type customarily covered by cold comfort
letters as the holders of a majority of the Registrable Securities
being sold reasonably request;
(xiii) upon the occurrence of any event or the discovery of any
facts, each as contemplated by Section 13(a)(iii)(A), (B), (C) and (F)
hereof, use its best efforts to prepare a supplement or post-effective
amendment to a registration statement or the related prospectus or any
document incorporated therein by reference or file any other required
document so that, as thereafter delivered to the purchasers of the
Registrable Securities, such prospectus will not contain at the time of
such delivery any untrue statement of a material fact or omit to state
a material fact necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading. The
Company agrees to notify each holder of Registrable Securities covered
by such registration statement to suspend use of the prospectus as
promptly as practicable after the occurrence of such an event, and each
such holder hereby agrees to suspend use of the prospectus until the
Company has amended or supplemented the prospectus to correct such
misstatement or omission. At such time as such public disclosure is
otherwise made or the Company determines that such disclosure is not
necessary, in each case to correct any misstatement of a material fact
or to include any omitted material fact, the Company agrees promptly to
notify each such holder of such determination and to furnish each such
holder such numbers of copies of the prospectus, as amended or
supplemented, as such holder may reasonably request;
(xiv) cause the senior executive officers of the Company to
participate in the customary "road show" presentations that may be
reasonably requested by the holders of Registrable Securities or the
managing Underwriter and otherwise facilitate, cooperate with and
participate in each proposed offering and customary selling efforts
related thereto; and
(xv) in the event that any broker-dealer registered under the
Exchange Act shall underwrite any Securities or participate as a member
of an underwriting syndicate or selling group or "assist in the
distribution" (within the meaning of the Conduct Rules (the "RULES") of
the NASD thereof, whether as a holder of such Securities or as an
underwriter, a placement or sales agent or a broker or dealer in
respect thereof, or otherwise, assist such broker-dealer in complying
with the requirements of such Rules, including, without limitation, by
(i) if such Rules, including Rule 2720, shall so require, engaging a
"qualified independent underwriter" (as defined in Rule 2720) to
participate in the preparation of the Registration Statement relating
to such Securities, to exercise usual standards of due diligence in
respect thereto and, if any portion of the offering contemplated by
such Registration Statement is an underwritten offering or is made
41
through a placement or sales agent to recommend the yield of such
Securities, (ii) indemnifying any such qualified independent
underwriter to the extent of the indemnification of underwriters
provided in Section 13(c) hereof and (iii) providing such information
to such broker-dealer as may be required in order for such
broker-dealer to comply with the requirements of the Rules.
(b) STOCKHOLDER INFORMATION; STOCKHOLDER COVENANT. The Company may
require each holder of Registrable Securities being registered pursuant to this
Agreement to promptly furnish in writing to the Company such information
regarding the plan of distribution of such Registrable Securities and such other
information as the Company may from time to time reasonably request in
connection with such registration. Each holder of Registrable Securities covered
by such registration statement agrees that, upon receipt of any notice from the
Company of the happening of any event or the discovery of any facts, each of the
kind described in Section 13(a)(iii)(B)-(F) hereof, such holder will forthwith
discontinue disposition of Registrable Securities pursuant to such registration
statement until such holder's receipt of the copies of the supplemented or
amended prospectus contemplated by Section 13(a)(xiii) hereof.
(c) INDEMNIFICATION BY THE COMPANY. The Company agrees to indemnify and
hold harmless (i) each holder of Registrable Securities being registered
pursuant to Section 10 or Section 11, (ii) each Person, if any, who controls
each such holder within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act (any of the persons referred to in this clause
(ii) being hereinafter referred to as a "controlling person") and (iii) the
respective officers, directors, partners, employees, representatives and agents
of any such holder of Registrable Securities or any controlling person (any
person referred to in clause (i), (ii) or (iii) may hereinafter be referred to
as an "INDEMNIFIED PERSON") from and against any and all losses, claims,
damages, liabilities and expenses (including, without limitation and as
incurred, reimbursement of all reasonable costs of investigating, preparing,
pursuing or defending any claim or action, or any investigation or proceeding by
any governmental agency or body, commenced or threatened, including the
reasonable fees and expenses of counsel to any Indemnified Person), directly or
indirectly caused by, related to, based upon, arising out of or in connection
with any untrue statement or alleged untrue statement of a material fact
contained in any registration statement or prospectus relating to such
Registrable Securities (or any amendment or supplement thereto) or any
preliminary prospectus, or caused by any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, except insofar as such losses, claims,
damages, liabilities or expenses are caused by any such untrue statement or
omission or alleged untrue statement or omission based upon information
furnished in writing to the Company by or on behalf of such Indemnified Person
expressly for use therein. The Company also agrees to reimburse each Indemnified
Person for any and all fees and expenses (including, without limitation, the
fees and expenses of counsel) as they are incurred in connection with enforcing
such Indemnified Person's rights under this Section 13(c). The Company also
agrees, if requested, to provide reasonable and customary indemnification to any
Underwriters of the Registrable Securities, their officers and directors and
each Person who controls such Underwriters.
(d) INDEMNIFICATION BY HOLDERS. Each holder of Registrable Securities
being registered pursuant to Section 10 or Section 11 agrees, severally but not
jointly, to indemnify and hold harmless the Company, its officers and directors
and each Person, if any, who controls the
42
Company within the meaning of either Section 15 of the Securities Act or Section
20 of the Exchange Act and its officers, directors, partners, employees,
representatives and agents of each such Person to the same extent as the
foregoing indemnity from the Company to such holder, but only with reference to
information related to such holder furnished in writing by or on behalf of such
holder expressly for use in any registration statement or prospectus relating to
the Registrable Securities, or any amendment or supplement thereto or any
preliminary prospectus. Each such holder of Registrable Securities also agrees
to indemnify and hold harmless any Underwriters of the Registrable Securities,
their officers and directors and each Person who controls such Underwriters on
substantially the same basis as that of the indemnification of the Company
provided in this Section 13(d). The Company and the holders of the Registrable
Securities hereby acknowledge and agree that, unless otherwise expressly agreed
to in writing by such holders to the contrary, for all purposes of this
Agreement the only information furnished or to be furnished to the Company by
such holders for use in any registration statement or prospectus relating to the
Registrable Securities, or any amendment or supplement thereto or any
preliminary prospectus are statements specifically relating to (a) transactions
between such holder and its Affiliates, on the one hand, and the Company, on the
other hand, (b) the beneficial ownership of shares of Common Stock by such
holder and its Affiliates and (c) the name and address of such holder. If any
additional information about such holder or the plan of distribution (other than
for an underwritten offering) is required by law to be disclosed in any such
document, then such holder shall not unreasonably withhold its agreement
referred in the immediately preceding sentence of this Section 13(d).
Notwithstanding the foregoing, no holder of Registrable Securities being
registered pursuant to Section 10 or Section 11 will be required to indemnify
the Company for any amount in excess of the total price at which the Registrable
Securities of such holder were sold to the public (less underwriting discounts
and commissions, if any).
(e) CONDUCT OF INDEMNIFICATION PROCEEDINGS. In case any proceeding
(including any governmental investigation) is instituted involving any Person in
respect of which indemnity may be sought pursuant to Section 13(c) or Section
13(d), such Person will promptly notify the Person against whom such indemnity
may be sought in writing and the indemnifying party upon request of the
indemnified party will retain counsel reasonably satisfactory to the indemnified
party to represent the indemnified party and any others the indemnifying party
may designate in such proceeding and will pay the fees and disbursements of such
counsel related to the proceeding. Notwithstanding the foregoing, the failure to
give notice shall not relieve the indemnifying party of the obligation to
indemnify the indemnified party, except to the extent of actual prejudice or
damages suffered as a result thereof. In any such proceeding, any indemnified
party will have the right to retain its own counsel, but the fees and expenses
of such counsel will be at the expense of such indemnified party unless (i) the
indemnifying party and the indemnified party have mutually agreed to the
retention of such counsel or (ii) the named parties to any such proceeding
(including any impleaded parties) include both the indemnified party and the
indemnifying party (or any Persons designated by the indemnifying party to be
represented in such proceeding by counsel selected by the indemnifying party)
and representation of both parties by the same counsel would be inappropriate
due to actual or potential differing interests between them, in which case the
fees and expenses of such counsel will be paid by the Company. It is understood
that the indemnifying party will not, in connection with any proceeding or
related proceedings in the same jurisdiction, be liable for the reasonable fees
and expenses of more than one separate firm of attorneys (in addition to any
local counsel)
43
at any time for all such indemnified parties, and that all such fees and
expenses will be reimbursed as they are incurred. In the case of the retention
of any such separate firm for the indemnified parties, such firm will be
designated in writing by the indemnified parties. The indemnifying party will
not be liable for any settlement of any proceeding effected without its consent,
but if settled with such consent, or if there be a final judgment for the
plaintiff, the indemnifying party will indemnify and hold harmless such
indemnified parties from and against any loss or liability (to the extent stated
above) by reason of such settlement or judgment.
(f) CONTRIBUTION.
(i) If the indemnification provided for herein is for any reason
unavailable to the indemnified parties in respect of any losses, claims, damages
or liabilities referred to herein, then each such indemnifying party, in lieu of
indemnifying such indemnified party, will contribute to the amount paid or
payable by such indemnified party as a result of such losses, claims, damages or
liabilities in such proportion as is appropriate to reflect the relative fault
of the Company, the holders of Registrable Securities being registered pursuant
to Section 10 or Section 11 and any Underwriter in connection with the
statements or omissions which resulted in such losses, claims, damages or
liabilities, as well as any other relevant equitable considerations. The
relative fault of the Company, such holders of Registrable Securities and such
Underwriter will be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by such party,
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
(ii) The Company and each holder of Registrable Securities being
registered pursuant to Section 10 or Section 11 agree that it would not be just
and equitable if contribution pursuant to this Section 13(f)(ii) were determined
by pro rata allocation (even if the Underwriters were treated as one entity for
such purpose) or by any other method of allocation which does not take account
of the equitable considerations referred to in the immediately preceding
subsection. The amount paid or payable by an indemnified party as a result of
the losses, claims, damages or liabilities referred to in the immediately
preceding subsection will be deemed to include, subject to the limitations set
forth above, any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any such action or claim. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) will be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. The obligations of the
holders of Registrable Securities being registered pursuant to Section 10 or
Section 11 to contribute pursuant to this Section 13(f) are several in
proportion to the respective principal amount of Securities held by each of such
holders hereunder and not joint.
(g) PARTICIPATION IN UNDERWRITTEN REGISTRATIONS. No Person may
participate in any underwritten registration hereunder unless such Person (i)
agrees to sell such Person's securities on the basis provided in any
underwriting arrangements approved by the Company (in the case of any
registration other than pursuant to Section 10) or the Demand Seller (in the
case of any registration pursuant to Section 10) and (ii) completes and executes
all questionnaires, powers of attorney, indemnities, underwriting agreements
and other documents reasonably required under the terms of such underwriting
arrangements and these registration rights. No underwriting
44
agreement (or other agreement in connection with such offering) shall require
any holder of Registrable Securities to make any representations or warranties
to or agreements with the Company or the Underwriters other than
representations, warranties or agreements regarding such holder in its capacity
as a stockholder or controlling person, the ownership of such holder's
Registrable Securities and such holder's intended method or methods of
disposition and any other representation required by law or to furnish any
indemnity to any Person which is broader than the indemnity furnished by such
holder in Section 13(d).
14. PREEMPTIVE RIGHTS.
(a) Notwithstanding any other provision hereof, for so long as the
Common Stock is not Actively Publicly Traded, the Company shall not issue any
(a) capital stock of the Company, (b) securities convertible or exchangeable for
capital stock of the Company or (c) options, warrants or rights carrying any
rights to purchase capital stock of the Company (the securities described in
clauses (a)-(c) are referred to herein collectively as the "PARTICIPATION
SECURITIES"), in each case referred to in clauses (a)-(c), to any Affiliate of
the Company, or to any Person if the offering price is less than the Effective
Equivalent Share Price, without offering to each of the Odyssey Holders, Xxxx
Holders, PF Telecom Holders, the Odyssey Co-Investor Holders, the Cisco
Co-Investor Holders and the Cisco Holders (collectively, the "PREEMPTIVE
HOLDERS"), the right to purchase or subscribe for up to that number of
additional Participation Securities (a "PRO RATA SHARE") which represents the
product of (i) the total number of Participation Securities to be issued by the
Company multiplied by (ii) a fraction, (A) the numerator of which is the number
of Equivalent Shares represented by all Securities owned by such Preemptive
Holder, and (B) the denominator of which is the number of Equivalent Shares
represented by all Securities outstanding immediately prior to such issuance
held by all Preemptive Holders and all other Persons that have similar
pre-emptive rights (it being understood and agreed that the Company will
accordingly be required to reduce the number of shares of Participation
Securities to be issued or sold to Persons other than the Preemptive Holders);
provided that the provisions of this Section 14 shall not apply to any Exempt
Issuance.
(b) In the event the Company proposes to issue or sell any
Participation Securities in a transaction giving rise to the preemptive rights
provided for in this Section 14, the Company shall send a written notice (the
"PREEMPTIVE NOTICE") to each Preemptive Holder setting forth the number of such
Participation Securities that the Company proposes to sell or issue, the price
(before any commission or discount) at which such securities are proposed to be
issued (or, in the case of an underwritten or privately placed offering in which
the price is not known at the time the Preemptive Notice is given, the method of
determining such price and an estimate thereof), the other material terms of the
transaction and such Preemptive Holder's Pro Rata Share of the Participation
Securities. At any time within 15 business days after its receipt of the
Preemptive Notice, the Preemptive Holders may exercise their preemptive rights
to purchase or subscribe for Participation Securities as provided for in this
Section 14, by so informing the Company in writing (an "EXERCISE NOTICE"). Each
Exercise Notice shall state the percentage of the proposed sale or issuance that
each Preemptive Holder elects to purchase (up to all the Participation
Securities that could be purchased by all Preemptive Holders and all other
Persons that have similar preemptive rights).
45
(c) To the extent that any Preemptive Holder has indicated that it will
not fully subscribe for its Pro Rata Share of the Participation Securities, the
Company shall allocate all such Participation Securities not subscribed for to
the Preemptive Holders who have subscribed for more Participation Securities
than their Pro Rata Share (the "FULLY PARTICIPATING PREEMPTIVE HOLDERS") in the
proportion that the number of Equivalent Shares represented by the Securities
each owns bears to the total number of Equivalent Shares represented by the
Securities owned by all such Fully Participating Preemptive Holders. If the
number of Participation Securities so allocated to a Fully Participating
Preemptive Holder exceeds the maximum number of Participation Securities that it
has indicated in its notice to the Company it is willing to subscribe for, then
the Company shall allocate any excess over such maximum among all Fully
Participating Preemptive Holders who have subscribed for a maximum number of
Participation Securities which exceeds the number of Participation Securities
allocated to them pursuant to the preceding sentence, in the proportion that
their respective holdings bear to the total number of Equivalent Shares
represented by the Securities owned by all such Fully Participating Preemptive
Holders, and the Company shall follow this procedure, if necessary, until all
Participation Securities available for purchase by the Preemptive Holders have
been allocated to them.
(d) TERMS OF SALE. The purchase or subscription by the Preemptive
Holders, pursuant to this Section 14(d) shall be on the same price and other
terms and conditions, including the date of sale or issuance, as are applicable
to the purchasers or subscribers of the additional Participation Securities
whose purchases or subscriptions give rise to the preemptive rights, which price
and other terms and conditions shall be as stated in the relevant Preemptive
Notice.
(e) TIMING OF SALE. If, with respect to any Preemptive Notice, the
Preemptive Holders fail to deliver an Exercise Notice within the requisite time
period, the Company shall have 90 days after the expiration of the time in which
the Exercise Notice is required to be delivered in which to sell not less than
90% and not more than 110% of the number of shares of Participation Securities
of the Company described in the Preemptive Notice at a price of not less than
the estimated price set forth in the Preemptive Notice. If, at the end of such
90-day period, the Company has not completed the sale or issuance of
Participation Securities of the Company in accordance with the terms described
in the Preemptive Notice, or in the event of any contemplated sale or issuance
within such 90 day period but outside such price parameters, the Company shall
again be obligated to comply with the provisions of this Section 14 with respect
to, and provide the opportunity to participate in, any proposed sale or issuance
of Participation Securities of the Company.
15. COMPANY SALE RIGHT.
(a) At any time after October 29, 2004 and prior to the date that the
Common Stock is Actively Publicly Traded, Odyssey or any Odyssey Holder
designated in writing by Odyssey shall have the right (the "COMPANY SALE RIGHT")
to initiate a sale or recapitalization (including, without limitation, any
merger or consolidation) of the Company pursuant to an Initial Public Offering
or an auction sale process (in any such case, involving the services of an
Independent Investment Banking Firm to assist in structuring and completing such
transaction with the intention of achieving the best execution and the highest
valuation in any such transaction) pursuant to the procedures of Section 15(b)
(a "COMPANY SALE"); PROVIDED that at the time of
46
initiation of, and immediately prior to the completion of, the Company Sale the
Odyssey Holders hold in the aggregate twenty-five percent (25%) or more of the
shares of Common Stock and Equivalent Shares held in the aggregate by the
Odyssey Holders on October 29, 2000. At any time after October 29, 2005 and
prior to the date that the Common Stock is Actively Publicly Traded, (i) so long
as each of the Xxxx Holders, the PF Telecom Holders and the Cisco Holders is not
an Excluded Holder with respect to initiating a Company Sale, any two of Xxxx
(or any Xxxx Holder designated in writing by Xxxx), PF Telecom (or any PF
Telecom Holder designated in writing by PF Telecom) and Cisco (or any Cisco
Holder designated in writing by Cisco) may initiate a Company Sale, and (ii)
otherwise, any one of Xxxx, XX Telecom or Cisco, or any other member of their
respective Stockholder Groups designated in writing by them, may initiate a
Company Sale; PROVIDED, in the case of clause (i) or (ii) above, that (A) at the
time of initiation of, and immediately prior to the completion of, the Company
Sale, the Person initiating such Company Sale is not a member of a Stockholder
Group that is an Excluded Holder with respect to initiating a Company Sale and
(B) the approval of the holders of each series of Senior Preferred Stock (each
voting as a separate class) shall be required for any such Company Sale that
involves a merger that would require the approval of such holders pursuant to
Section 6(f) of the applicable Certificate of Designations as in effect on the
date hereof or an exchange, sale or cancellation of shares of Senior Preferred
Stock that, if structured as a merger, would have required the approval of such
holders pursuant to Section 6(f) of the applicable Certificate of Designations
as in effect on the date hereof. The Stockholder Group or Groups of which the
Person or Persons initiating any Company Sale pursuant to this Section 15(a) are
members shall be referred to as the "INITIATING HOLDERS." The Initiating Holders
shall consult with the other Stockholder Groups that continue to have nominating
rights under Section 3(b) (the "NON-INITIATING HOLDERS") concerning the nature
of such transaction, the manner and timing of its execution and related matters.
(b) The Initiating Holders shall send a written notice (the "COMPANY
SALE RIGHT NOTICE") to the Company, and each of the Non-Initiating Holders
indicating that the Initiating Holders are exercising their Company Sale Right
pursuant to Section 15(a). Each of the Non-Initiating Holders shall have 90 days
following delivery of the Company Sale Right Notice to send a written offer (a
"COMPANY SALE OFFER") to the Initiating Holders to purchase all of the equity
interests or assets of the Company, including the Securities held by the
Initiating Holders, for cash. A Stockholder making a Company Sale Offer shall be
referred to herein as a "COMPANY SALE OFFEROR"). The Company Sale Offer shall
contain evidence satisfactory to Initiating Holders of the financial ability of
the Company Sale Offeror to complete the transaction contemplated by the Company
Sale Offer and shall state that such Company Sale Offer will be irrevocable
during the period set forth therein, which period shall not be less than 90 days
(the "IRREVOCABILITY PERIOD"). Such Company Sale Offer shall be subject only to
the conditions that (i) the consummation thereof shall not be prohibited by
applicable law and (ii) there shall not occur any event which has, or which
could reasonably be expected to have, a material adverse effect on the financial
condition or results of operations of the Company (other than an effect caused
by a change in general market conditions); PROVIDED that the occurrence of any
such material adverse effect shall not result in the failure to be satisfied of
a condition to such Company Sale Offer unless the Company Sale Offeror shall
have notified the Initiating Holders prior to the acceptance by the Initiating
Holders of such Company Sale Offer that a material adverse effect has occurred.
Upon the failure to be satisfied of a closing condition referred to in clause
(i) or (ii) of the immediately preceding sentence, the Irrevocability Period
47
shall automatically terminate. In the event that the Initiating Holders desire
to accept a Company Sale Offer, the Initiating Holders shall accept the highest
of such Company Sale Offers and shall so notify the Company Sale Offeror, in
writing, which acceptance shall be irrevocable for a period of 90 days from the
date such acceptance shall have been delivered, subject only to the condition
that the consummation thereof shall not be prohibited by applicable law. If the
Initiating Holders deliver such an acceptance prior to the termination of the
Irrevocability Period, the parties agree to use their respective reasonable best
efforts to complete the Company Sale as expeditiously as possible.
(c) If no Company Sale Offer is accepted by Initiating Holders, the
Initiating Holders shall use their diligent efforts to commence and pursue a
Company Sale during the Irrevocability Period; PROVIDED that the Initiating
Holders shall not effect, or enter into any definitive agreement to effect, a
Company Sale (other than an Initial Public Offering) during the Irrevocability
Period that includes an aggregate purchase price for all of the outstanding
equity interests or assets of the Company that is less than or equal to the
purchase price for all of the outstanding equity interests or assets of the
Company that is contained in the Company Sale Offer (or, in the event that more
than one of the Non-Initiating Holders shall have delivered separate Company
Sale Offers, the highest of such Company Sale Offers), including, for purposes
of such determination, the implied purchase price for any such equity interests
that are then held by the Person making such Company Sale Offer (or the highest
of such Company Sale Offers) and therefore are not included in such Company Sale
Offer. In the event that the Initiating Holders do not effect, or enter into any
definitive agreement to effect, a Company Sale prior to the expiration of such
Irrevocability Period, the Initiating Holders shall not be permitted to effect a
Company Sale unless they first deliver a new Company Sale Right Notice. The
remaining provisions of this Section 15 shall apply fully to any such new
Company Sale Right Notice.
(d) Each of the Stockholders, the First Union Holders and the Company
agrees to reasonably cooperate with the Odyssey Holders to provide for an
orderly process to effect the Company Sale and take all actions (whether in such
Stockholder's capacity as a stockholder, director, member of a board committee
or officer of the Company or otherwise, including without limitation, attendance
at meetings in person or by proxy for purposes of obtaining a quorum, execution
of written consents in lieu of meetings and approval of amendments and/or
restatements of the Company's certificate of incorporation or bylaws) within its
control to effect a Company Sale; provided, however, that Xxxx shall not be
required to make any modification to the Xxxx Agreements Notwithstanding the
foregoing, no Cisco Holder shall be required to deliver a proxy or consent to
take other actions in connection with any transaction which (a) required the
consent of Cisco pursuant to Section 4(l) or 5(h) and (b) is undertaken without
the consent of Cisco pursuant to Section 4(l) or 5(h).
16. RECAPITALIZATIONS, ETC.
The provisions of this Agreement shall apply, to the full extent set
forth herein, to any and all Securities (whether owned by a party hereto on
October 29, 1999 or thereafter acquired by any such party) of the Company or any
capital stock, partnership units or any other security evidencing ownership
interests in any successor or assign of the Company (whether by merger,
consolidation, sale of assets or otherwise) which may be issued in respect of,
in exchange for, or
48
in substitution of the Common Stock (or any other Securities), by reason of any
stock dividend, split, reverse split, combination, recapitalization,
liquidation, reclassification, merger, consolidation or otherwise.
17. BINDING EFFECT.
The provisions of this Agreement shall be binding upon and accrue to
the benefit of the parties hereto and their respective heirs, legal
representatives, successors and assigns.
18. AMENDMENT, MODIFICATION, ETC. This Agreement may be amended, modified,
extended or terminated and the provisions hereof may be waived, only by a
written instrument signed by the holders of a Majority in Interest.
Notwithstanding the foregoing, (a) the consent of the holders of at least 50% of
the Common Stock (including Equivalent Shares) issued or issuable upon exercise
of the First Union Warrants or any class or series of Securities shall be
required for any amendment, modification, extension, termination or waiver which
has an adverse effect on the rights of the Holders or the holders of such class
or series (b) the consent of the holders of at least 66.67% of the class or
series of any Securities (including Equivalent Shares ) shall be required for
any amendment, modification, extension, termination or waiver which has an
adverse effect on the rights, benefits privileges or obligations of the holders
of such class or series and (c) the consent of the Odyssey Holders, the Xxxx
Holders, the PF Telecom Holders or the Cisco Holders, as the case may be, shall
be required for any amendment, modification, extension, termination or waiver
which has an adverse effect on the rights, benefits privileges or obligations of
such respective Holders. Each amendment, modification, extension, termination
and waiver pursuant to this Section 18 shall be binding upon each party hereto.
19. APPLICABLE LAW.
The laws of the State of New York shall govern the interpretation,
validity and performance of the terms of this Agreement, regardless of the law
that might be applied under principles of conflicts of law.
20. NOTICES.
All notices and other communications provided for herein shall be in
writing and shall be deemed to have been duly given if delivered by hand
(whether by overnight courier or otherwise) or sent by registered or certified
mail, return receipt requested, postage prepaid, or sent by facsimile or email
to the party to whom it is directed:
(a) If to the Company, to:
Velocita Corp.
0000 Xxxxxxxxx Xxxx Xxxxx
Xxxxxx Xxxxx
Xxxxxx, XX 00000
Attn: Xxxxx Xxxxxxxxx, Esq.
Fax: (000) 000-0000
Email: XXXXX.XXXXXXXXX@XXXXXXXX.XXX
49
with a copy to:
Xxxxxx & Xxxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxx X. Xxxxxxxxx, Esq.
Fax: (000) 000-0000
Email: XXXXXX.XXXXXXX@XX.XXX
(b) If to any Odyssey Holder, to:
c/o Odyssey Investment Partners, LLC
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxx Xxxxx
Fax: (000) 000-0000
Email: XXXXXX@XXXXXXXXXXXXXXXXX.XXX
with a copy to:
Xxxxxx & Xxxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxx X. Xxxxxxx, Esq.
Fax: (000) 000-0000
Email: XXXX.XXXXXXXXX@XX.XXX
(c) If to any Xxxx Holder, to:
Xxxx Telecom Ventures, Inc.
00000 X. Xxxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000
Attn: Xxxxx Xxxxxx
Fax: (000) 000-0000
Email: XXXXXXX@XXXXXXXXXXXX.XXX
with a copy to:
Xxxx Industries, Inc.
0000 Xxxx 00xx Xxxxxx Xxxxx
Xxxxxxx, XX 00000
Attn: Xxx X. Xxxxxxx, Esq.
Fax: (000) 000-0000
Email: XXXXXXXX@XXXXXXX.XXX
50
(d) If to any PF Telecom Holder, to:
PF Telecom Holdings, LLC
0000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxx, XX 00000
Attn: Xxxx Xxxxx
Fax: (000) 000-0000
Email: X00XX@XXX.XXX
and to:
Attn: Xxxxxxx Xxxxx, Esq.
Fax: (000) 000-0000
Email: XXXXXXXXX@XXX.XXX
with a copy to:
Xxxxxxx & Xxxxxxx
000 Xxxxxxxxx Xxxxx
Xxxxx 000
Xxxxxxxx, Xxxxxx 00000
Attn: Xxxxxx Xxxxxxx, Esq.
Fax: (000) 000-0000
Email: XX@XXXXXX.XXX
(e) If to any Xxxxx Holder or GLW Holder, to:
Xxxx Xxxxx
X.X. Xxx 0000
Xxxxxxxxx, XX 00000-0000
Fax (000) 000-0000
Email: X00XX@XXX.XXX
51
with a copy to:
Xxxxxxx & Xxxxxxx
000 Xxxxxxxxx Xxxxx
Xxxxx 000
Xxxxxxxx, Xxxxxx 00000
Attn: Xxxxxx Xxxxxxx, Esq.
Fax: (000) 000-0000
Email: XX@XXXXXX.XXX
(f) If to any Treg Holder or Xxxxx Xxxxxx, to:
Xxxxxxx Xxxxx, Esq.
00 Xxxxxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
Fax: (000) 000-0000
Email: XXXXXXXXX@XXX.XXX
with a copy to:
Xxxxxxx & Xxxxxxx
000 Xxxxxxxxx Xxxxx
Xxxxx 000
Xxxxxxxx, Xxxxxx 00000
Attn: Xxxxxx Xxxxxxx, Esq.
Fax: (000) 000-0000
Email: XX@XXXXXX.XXX
(g) If to UBS or its Permitted Transferees, to:
UBS Capital
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxxx X. Xxxxx
Fax: (000) 000-0000
Email: XXXXXXX.XXXXX@XXX.XXX
with a copy to:
Xxxx, Scholer, Fierman, Xxxx & Handler, LLP
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxx X. Xxxxx, Esq.
Fax: (000) 000-0000
Email: XXXXXX@XXXXXXXXXXX.XXX
52
(h) If to any First Union Holder, to:
First Union Capital Partners
000 X. Xxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attn: Xxxxxx Xxxxxxxxx
Fax: (000) 000-0000
with a copy to:
Xxxxx & Xxx Xxxxx, PLLC
000 Xxxxx Xxxxx Xxxxxx
Xxxxx 0000
Xxxxxxxxx, XX 00000-0000
Attn: Xxxxxx Xxxxxxx
Fax: (000) 000-0000
Email: XXXXXXXXXXXXX@XXXXXX.XXX
(i) If to any Cisco Holder, to:
Cisco Systems, Inc.
000 Xxxx Xxxxxx Xxxxx
Xxx Xxxx, XX 00000-0000
Attn: Senior Vice President,
Legal and Government Affairs
Fax: (000) 000-0000
with a copy to:
Xxxxxxx, Phleger & Xxxxxxxx LLP
0000 Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxx Xxxxxxxx, Esq.
Fax: (000) 000-0000
Email: XXXXXXXXX@XXXXXXX.XXX
or at such other address as the party shall have specified by notice in writing
to the other parties in accordance with this Section 20.
21. HEADINGS.
The headings in this Agreement are for convenience of reference only
and will not control or affect the meaning or construction of any provisions
hereof.
53
22. ENTIRE AGREEMENT.
This Agreement constitutes the entire agreement between the parties
with respect to the subject matter of this Agreement. This Agreement supersedes
all prior agreements and understandings, both oral and written, between the
parties with respect to the subject matter of this Agreement. This Agreement is
not intended to confer upon any Person other than the parties hereto and thereto
any rights or remedies hereunder or thereunder.
23. SEVERABILITY.
The invalidity or unenforceability of any provisions of this Agreement
in any jurisdiction will not affect the validity, legality or enforceability of
the remainder of this Agreement in such jurisdiction or the validity, legality
or enforceability of this Agreement, including any such provision, in any other
jurisdiction, it being intended that all rights and obligations of the parties
hereunder will be enforceable to the fullest extent permitted by law.
24. COUNTERPARTS.
This Agreement may be executed in any number of counterparts, each of
which will be an original with the same effect as if the signatures thereto and
hereto were upon the same instrument.
25. REMEDIES.
The parties hereby acknowledge that money damages would not be adequate
compensation for certain of the damages that a party would suffer by reason of a
failure of any other party to perform any of the obligations under this
Agreement. Therefore, each party hereto hereby waives the claim or defense that
any other party has an adequate remedy at law.
26. REPRESENTATIONS.
For convenience, Schedule 1 (attached hereto) sets forth the ownership
of Common Stock and Equivalent Shares of (A) the Odyssey Holders as of October
29, 2000; (B) the Xxxx Holders as of October 29, 1999; (C) the PF Telecom
Holders as of October 29, 1999; (D) the Odyssey Co-Investor Holders as of
October 29, 2000; and (E) the Cisco Holders as of the date hereof. Each of PF
Telecom, Xxxxx, GLW and Treg represents and warrants to the other Stockholders
that as of October 29, 1999, their respective economic and voting interests in
PF Telecom (stated as a percentage of the total of such interests in PF Telecom
outstanding as of October 29, 1999) are as set forth on Schedule 2 hereto. No
holder of any interests in PF Telecom, other than Xxxxx, GLW and Treg, holds,
beneficially or of record, more than 10% of the total economic or voting
interests in PF Telecom, or otherwise has the right to direct the actions of PF
Telecom as they relate to the performance of PF Telecom's obligations hereunder.
Xxxxx Xxxxx, the Xxxxxxx X. Xxxxx Trust and the Xxxxxx X. Xxxxx-Xxxxxxx Trust
represent and warrant to the other Stockholders that as of October 29, 1999, all
equity interests of Treg were held, beneficially and of record, as set forth on
Schedule 3 hereto. Xxxxxxxxx Xxxxx represents and warrants to the other
Stockholders that as of October 29, 1999, the equity interests of GLW were held,
beneficially and of record, by Xxxxxxxxx Xxxxx, as set forth on Schedule 4
thereto.
54
27. ACKNOWLEDGMENTS.
The parties hereto acknowledge that First Union is a party hereto
solely with respect to the First Union Warrants, including any shares of Common
Stock issued upon exercise thereof, and solely for purposes of setting forth
certain registration rights and other rights and restrictions related to the
transfer of such securities.
28. GENERAL SUPPLY AGREEMENT LETTER.
Each of Xxxx, Odyssey, PF Telecom and UBS Capital hereby agree to take
such actions as may be reasonably necessary or appropriate to effectuate the
provisions set forth in the General Supply Agreement Letter, including, causing
each of the members of the Board nominated by such Person to vote in favor of
the transactions set forth in the General Supply Agreement Letter.
29. ASSIGNEES.
The parties agree that any successor or assignee pursuant to a
Subscription Agreement shall accede to this Agreement and become a party hereto
upon the closing of such successor or assignee's acquisition of Senior Preferred
Stock pursuant to such Subscription Agreement.
[Signature Page Follows]
55
IN WITNESS WHEREOF, the parties have executed this Stockholders
Agreement as of the date first above written.
VELOCITA CORP.
By: /s/ Xxxxx X. Xxxxxx
--------------------------------
Name: Xxxxx X. Xxxxxx
Title: CFO
ODYSSEY INVESTMENT PARTNERS FUND, LP
By: ODYSSEY CAPITAL PARTNERS, LLC,
its general partner
By: /s/ Xxxxx Xxxxx
---------------------------------
Name: Xxxxx Xxxxx
Title: Managing Principal
ODYSSEY COINVESTORS, LLC
PF COINVESTMENT, LLC
PF COINVESTMENT II, LLC
By: ODYSSEY INVESTMENT PARTNERS, LLC
it's managing member
By: /s/ Xxxxx Xxxxx
---------------------------------
Name: Xxxxx Xxxxx
Title: Managing Principal
XXXX TELECOM VENTURES, INC.
By: /s/ Xxxxx Xxxxxx
---------------------------------
Name: Xxxxx Xxxxxx
Title: VP, Xxxx Telecom Ventures, Inc.
PF TELECOM HOLDINGS, LLC
By: /s/ Xxxx Xxxxx
---------------------------------
Name: Xxxx Xxxxx
Title: Managing Member
UBS CAPITAL II LLC
By: /s/ Xxxxxxx X. Xxxxx
---------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Attorney-in-Fact
By: /s/ Xxxx Xxxxx
---------------------------------
Name: Xxxx Xxxxx
Title: Attorney-in-Fact
XX.XXX CORP.
By: /s/ Xxxxx X. Xxxxxx
---------------------------------
Name: Xxxxx X. Xxxxxx
Title: CFO
XX.XXX PROPERTY CORP.
By: /s/ Xxxxx X. Xxxxxx
---------------------------------
Name: Xxxxx X. Xxxxxx
Title: CFO
XX.XXX SUPPLY CORP.
By: /s/ Xxxxx X. Xxxxxx
---------------------------------
Name: Xxxxx X. Xxxxxx
Title: CFO
XX.XXX CONSTRUCTION CORP.
By: /s/ Xxxxx X. Xxxxxx
---------------------------------
Name: Xxxxx X. Xxxxxx
Title: CFO
XX.XXX NETWORK SERVICES CORP.
By: /s/ Xxxxx X. Xxxxxx
---------------------------------
Name: Xxxxx X. Xxxxxx
Title: CFO
XX.XXX VIRGINIA CORP.
By: /s/ Xxxxx X. Xxxxxx
---------------------------------
Name: Xxxxx X. Xxxxxx
Title: CFO
XX.XXX VIRGINIA, LLC
By: /s/ Xxxxx X. Xxxxxx
---------------------------------
Name: Xxxxx X. Xxxxxx
Title: CFO
FIRST UNION INVESTORS, INC.
By: /s/ Xxxxxx Xxxxxxxxx
----------------------------------
Name: Xxxxxx Xxxxxxxxx
Title: Assistant Vice President
FIRST UNION CAPITAL PARTNERS, LLC
By: /s/ Xxxxxx Xxxxxxxxx
----------------------------------
Name: Xxxxxx Xxxxxxxxx
Title: Assistant Vice President
CISCO SYSTEMS, INC.
By: /s/ Xxxxxxxxxxxx Xxxxx
---------------------------------
Name: Xxxxxxxxxxxx Xxxxx
Title: Chief Strategy Officer
XXXX XXXXX
/s/ Xxxx Xxxxx
-------------------------------------
XXXXX XXXXX
/s/ Xxxxx Xxxxx
------------------------------------
TREG VENTURES LLC
By: /s/ Xxxxx Xxxxx
---------------------------------
Name: Xxxxx Xxxxx
Title:
GLW VENTURES LLC
By: /s/ Xxxxxxxxx Xxxxx
---------------------------------
Name: Xxxxxxxxx Xxxxx
Title: Managing Member
XXXXXXXXX XXXXX
/s/ Xxxxxxxxx Xxxxx
------------------------------------
XXXXXXX X. XXXXX TRUST
By: /s/ Xxxxx X. Xxxxx
----------------------------------
Name: Xxxxx X. Xxxxx
Title: Trustee
XXXXXX X. XXXXX-XXXXXXX TRUST
By: /s/ Xxxxx X. Xxxxx
----------------------------------
Name: Xxxxx X. Xxxxx
Title: Trustee
EXHIBIT A
Tag-along rights have been granted to:
1. AT&T Corp. pursuant to the Amended and Restated Warrants issued by the
Company to AT&T Corp. as of October 29, 1999.
2. The Holders (as defined therein) pursuant to the Tag-Along Sales
Agreement, dated as of May 10, 2000, by and among the Company, Odyssey,
Xxxx, XX Telecom, UBS Warburg LLC and Credit Suisse First Boston
Corporation.
SCHEDULE 1
SHAREHOLDINGS OF ODYSSEY HOLDERS, XXXX HOLDERS,
PF TELECOM HOLDERS, ODYSSEY CO-INVESTOR HOLDERS
AND CISCO HOLDERS
-------------------------------------------------
Number of Shares of
Holder Common Stock
------ --------------------
PF TELECOM HOLDER
-----------------
PF Telecom Holdings LLC 40,000,000
XXXX HOLDER
-----------
Xxxx Telecom Ventures, Inc. 40,000,000
Number of Shares of
Series A Senior
Holder PreferreD Stock
------ --------------------
ODYSSEY HOLDERS
---------------
Odyssey Investment Partners Fund, LP 759,432
Odyssey Coinvestors, LLC 3,368
PF Coinvestment, LLC 45,500
PF Coinvestment II, LLC 31,700
ODYSSEY CO-INVESTOR HOLDERS
---------------------------
UBS Capital II LLC 300,000
First Union Capital Partners, LLC 110,000
Number of Shares of
Series B Senior
Holder Preferred Stock
------ --------------------
CISCO HOLDERS
-------------
Cisco Systems, Inc. 2,000,000
SCHEDULE 2
SHAREHOLDINGS OF PF TELECOM HOLDINGS, LLC
-----------------------------------------
Approximate Percentage of
Outstanding Number of
Holder PF Telecom Shares Equivalent Shares
------ ------------------------ ------------------
Xxxx Xxxxx 48% 9,600,000
Treg Ventures LLC 19% 3,800,000
GLW Ventures LLC 10% 2,000,000
-------------------------------------------------------------------------------
Xxxxx Group 58% 11,600,000
Xxxxx Group 19% 3,800,000
SCHEDULE 3
SHAREHOLDINGS OF TREG VENTURES LLC
----------------------------------
Percentage of Outstanding
Holder Treg Shares
----- ----------------------------
Xxxxx Xxxxx 70.00%
Xxxxxxx X. Xxxxx Trust 15.00%
Xxxxxx Xxxxx-Xxxxxxx Trust 15.00%
SCHEDULE 4
SHAREHOLDINGS OF GLW VENTURES LLC
----------------------------------
Percentage of Outstanding
Holder Equity Shares
------ -------------------------
Xxxxxxxxx Xxxxx 100.00%
SCHEDULE 5
NAMED COMPETITORS
-------------------
Lucent Technologies Inc.
Nortel Networks Corp.
Siemens AG
Ericsson
Alcatel
NEC
Ciena
Juniper Networks
