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EXHIBIT 10.6
PREEMPTIVE RIGHTS AGREEMENT
This Preemptive Rights Agreement (the "Agreement") dated as of July 28,
1997, by and among Long Distance International Inc., a Florida corporation
("LDI" or the "Company"); the entities listed on Schedule 1 hereto
(collectively, the "Advent Entities"); Xxxxxxxx Xxxxxxxxx ("Xxxxxxxxx"); and
Xxxxx Xxxxxxxx ("Xxxxxxxx").
WITNESSETH:
WHEREAS, the Advent Entities, Xxxxxxxxx and Xxxxxxxx (collectively, the
"Shareholders") are all holders of shares of, or of warrants, options or other
rights exercisable or convertible into, Common Stock of the Company;
WHEREAS, in accordance with Section 607.063 of the Florida Business
Corporation Law, the Company wishes to provide for preemptive rights and to
specify the terms under which such preemptive rights may be exercised; and
WHEREAS, the Company and the Shareholders wish to provide an
opportunity to other current and future holders of shares of, or of warrants,
options or other rights exercisable or convertible into, Common Stock of the
Company to have and exercise preemptive rights on the same terms as the
Shareholders have.
NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, LDI and the Shareholders (collectively, the "Parties") hereby
agree as follows:
Section 1. Definitions.
Capitalized terms shall have the following meanings when used in this
Agreement:
(a) "Affiliate" of a Person means any other Person that controls, is
controlled by, or is under common control with, such Person.
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(b) "Common Stock" means the common stock of the Company, par value
$0.001 per share.
(c) "Common Stock Fair Market Value" means, if the Common Stock is
traded on the NASDAQ National Market or a national securities exchange, the
average last sale price in such market over the ten (10) trading days on which
the Common Stock was traded immediately preceding the date of determination, or
if not so traded, the fair market value of a share of Common Stock, as
determined in good faith by the Board of Directors of the Company for the
purpose of granting incentive stock options or issuing shares to employees of
the Company or any subsidiary of the Company determined as of the most recent
date that such determination has been made within one year of the applicable
date or, if no such determination has been made during such period, the fair
market value of such stock, as determined in good faith by the Board of the
Directors of the Company as of the applicable date.
(d) "Initial Public Offering" means the completion of an underwritten
public offering pursuant to an effective registration statement under the
Securities Act of 1933, as amended covering the offering and sale of Common
Stock for the account of the Company.
(e) "New Securities" means any Common Stock, whether now authorized or
not, and any rights, options or warrants to purchase any such Common Stock, and
securities of any type whatsoever that are, or may become, convertible into
Common Stock; provided that the term "New Securities" does not include:
(i) securities issued in connection with an acquisition by LDI of
another business entity or business segment of such an entity, whether by
merger, purchase of substantially all the assets, or by other reorganization,
but only if at the conclusion of such acquisition LDI will own more than fifty
percent (50%) of the voting power of such business entity or business segment,
and immediately after the acquisition, each Shareholder's pro rata share (as
defined in Section 2(b)) of the surviving entity's common stock; rights, options
or warrants to purchase any such common stock; and securities of any type
whatsoever that are, or may become, convertible into such common stock is no
less than his pro rata share of the Common Stock; rights, options or warrants to
purchase any Common Stock; and securities of any type whatsoever that are, or
may become, convertible into Common Stock, immediately before such acquisition;
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(ii) securities issued to employees, consultants, officers or
directors of LDI either
(x) pursuant to any stock option, stock purchase, stock
bonus or similar plan that is or has been approved by the Board of Directors of
the Company on or before the date of this Agreement, or
(y) pursuant to any stock option, stock purchase, stock
bonus or similar plan that is approved by the Compensation Committee of the
Board of Directors of the Company, provided that such securities have an
exercise price of no less than the Common Stock Fair Market Value on the date of
the grant;
(iii) securities issued in connection with any stock split, stock
dividend, recapitalization or other reorganization of LDI;
(iv) securities issued upon the exchange, exercise or conversion
of any security that was the subject of a right of first refusal pursuant to
this Agreement;
(v) securities sold in an Initial Public Offering;
(vi) treasury shares;
(vii) any right, option or warrant to acquire any security
convertible solely into the securities excluded from the definition of New
Securities pursuant to subsections (i) through (vi) above;
(viii) any Common Stock, or any rights, options, warrants, or
shares convertible into or exchangeable for Common Stock, which the Company was,
on or before the date of this Agreement, required to issue;
(ix) any securities issued pursuant to the Stock Purchase
Agreement among LDI and the Advent Entities dated as of the date hereof;
(x) any securities issued to shareholders of the Company
pursuant to that certain preemptive rights notice dated July 7, 1997;
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(xi) any securities issued to the purchasers thereof pursuant to
the letter agreement dated November 6, 1996, between the Company and ARC Limited
Partners and the letter agreements dated February 25, 1997, and July 28, 1997,
between the Company and Societe Generale Securities Corporation and Xxxxxx &
Co., Inc.;
(xii) any securities as to which both:
(x) those Advent Entities that are holders of Shares, and
(y) Shareholders representing a majority of the Shares of
the Common Stock subject to this Agreement, on a fully
diluted basis, assuming full conversion or exchange of any
securities convertible into or exchangeable for Common Stock
and exercise for Common Stock of any right, option or
warrant held by such Person (or which such Person is
entitled to hold pursuant to a right of conversion or
exchange on any security)
waive the rights of first refusal contained in Section 2 of this Agreement; and
(xiii) at any time when no Person has preemptive rights, rights of
first refusal or rights of a similar nature pursuant to any other agreement with
the Company (including without limitation those certain shareholders agreement
dated July 22, 1994 and September 1994), securities issued in connection with an
acquisition by LDI of another business entity or business segment of such an
entity, whether by merger, purchase of substantially all the assets, or by other
reorganization.
(f) "Person" means an individual, partnership, company, corporation or
other legal entity, as the context requires.
(g) "Shares" means shares of any class or series of the capital stock
of the Company.
Section 2. Grant of Right of First Refusal.
(a) LDI hereby grants to each of the Shareholders the right of first
refusal to purchase such Shareholder's pro rata share of New Securities which
LDI may, from time to time, sell or issue on or after the date of this
Agreement.
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(b) For purposes of this Agreement, a Shareholder's "pro rata share" is
the ratio of the number of Shares of Common Stock owned by such Shareholder
immediately prior to the issuance of New Securities, assuming full conversion or
exchange of any Shares convertible into or exchangeable for Common Stock and
exercise of any right, option or warrant for Common Stock held by such
Shareholder (or which it is entitled to hold pursuant to a right of conversion
or exchange of any security), to the total number of Shares of Common Stock
outstanding immediately prior to the issuance of New Securities, assuming full
conversion of all outstanding Shares convertible into or exchangeable for Common
Stock and exercise of all outstanding rights, options and warrants for Common
Stock (or which it is entitled to hold pursuant to a right of conversion or
exchange of any security).
(c) This right of first refusal shall be subject to the remaining
provisions of this Agreement.
(d) Every Shareholder hereby irrevocably relinquishes any and all
preemptive rights or rights of first refusal or rights of a similar nature
contained in or described in any other agreement with the Company dated before
the date of this Agreement, including without limitation those certain
shareholders agreements dated July 22, 1994 and September 1994, if applicable.
(e) Notwithstanding anything in this Agreement to the contrary, no
adjustment in the number of shares of Common Stock issuable or issued upon
exercise, exchange, or conversion of any securities convertible into or
exchangeable for Common Stock and exercise for Common Stock of any right, option
or warrant held by such Person (or which such Person is entitled to hold
pursuant to a right of conversion or exchange on any security) by reason of
original provisions of or relating to such security which provide for an
automatic adjustment upon the occurrence of specified events shall be deemed an
issuance or sale or a proposed issuance or sale of New Securities, nor shall
such adjustment give rise to any rights of first refusal under this Agreement.
Section 3. Notice of Proposal to Issue or Sell.
(a) In the event LDI proposes to issue or sell New Securities, it shall
give each Shareholder written notice of the proposal (a "Section 3(a) Notice"),
describing
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the proposed New Securities, and the terms (including the cash to be paid for,
plus the fair market value of any other consideration to be given for, the New
Securities) upon which LDI proposes to sell or issue the New Securities and the
proposed buyers, if known.
(b) Each Shareholder shall have 30 days after any Section 3(a) Notice
is given to agree to purchase such New Securities upon the terms specified in
the Section 3(a) Notice, and any Shareholder wishing to do so shall give written
notice to LDI, stating therein the quantity of New Securities to be purchased,
which in any event may not exceed such Shareholder's pro rata shares thereof. A
Shareholder who fails to give such notice shall be deemed to have waived its
right of first refusal under this Agreement.
(c) Except as otherwise provided in subsection (d), all the
Shareholders who exercise their right pursuant to Section 3(b) shall purchase
the quantity of New Securities specified in each such Shareholder's notice to
the Company on the terms specified in the Section 3(a) Notice (except that if
such terms include the giving of consideration other than cash, the Shareholders
shall pay the fair market value of such other consideration in lieu thereof) on
a date (other than a date on which banks in New York City are closed) not more
than 210 days after the date of Section 3(a) Notice. The Company shall give each
such Shareholder notice of the purchase date not less than ten days in advance
of the purchase date.
(d) If the Company proposes to sell or issue securities that are New
Securities but would not be New Securities if no Person had preemptive rights,
rights of first refusal or rights of a similar nature pursuant to any other
agreement with the Company (including without limitation those certain
shareholders agreement dated July 22, 1994 and September 1994), and if all
Persons having any such rights either waive or are deemed not to have exercised
such rights pursuant to the applicable agreements, then no Shareholder shall
have any right under this Agreement to purchase any such New Securities even if
such Shareholder has given the Company the notice described in Section 3(b).
Section 4. Sale or Issuance After Notice.
(a) From the first day after the first day on which each Shareholder
has (i) exercised its right of first refusal as provided for in Section 3(b),
(ii) waived its right of
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first refusal in writing, or (iii) been deemed to have waived its right of first
refusal pursuant to the last sentence of Section 3(b), LDI shall have 180 days
to sell or issue, or enter into an agreement (pursuant to which the sale of New
Securities covered thereby shall be closed, if at all, no later than 180 days
from the date of such agreement) to sell or issue, all those New Securities
covered by the applicable Section 3(a) Notice, at a price and upon terms no more
favorable to the purchasers thereof than specified in such Section 3(a) Notice.
(b) If LDI does not sell such New Securities within the time periods
specified in Section 4(a), LDI shall not be permitted to issue or sell such New
Securities, unless it first offers such securities to all the Shareholders again
pursuant to the terms of this Agreement.
Section 5. Redemption of Certain New Securities.
(a) Any options, warrants, or other rights to purchase Common Stock
that a Shareholder purchases pursuant to this Agreement (collectively, "Option
Rights") shall be subject to redemption by the Company if the Company does not
complete a sale or issuance pursuant to Section 4(a) of the New Securities the
proposed sale or issuance of which caused the Company to give the Section 3(a)
Notice that led to the Shareholder's purchase of such Option Rights.
(b) If the Company completes a sale or issuance pursuant to Section
4(a) of the New Securities the proposed sale or issuance of which caused the
Company to give the Section 3(a) Notice that led to one or more Shareholders'
purchase of any Option Rights, and any such New Securities (other than any New
Securities purchased by any Shareholder pursuant to his right of first refusal
pursuant to Section 2 hereof) expire without exercise, then the Company shall
redeem that portion of the Option Rights which equals that portion of the New
Securities (other than any New Securities purchased by any Shareholder pursuant
to his right of first refusal pursuant to Section 2 hereof) which have so
expired without exercise, unless such Option Rights are exercised before the
Company so redeems.
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Section 6. Termination.
(a) Upon the disposition by a Shareholder of all of the Shares of
Common Stock owned by such Shareholder, such Shareholder shall have no further
rights under this Agreement.
(b) This Agreement shall terminate upon the consummation of an Initial
Public Offering.
Section 7. Further Assurances. LDI and each Shareholder shall execute,
deliver and perform all such additional documents, agreements, certificates and
instruments and shall take all such further actions as may be necessary or
advisable to effectuate the terms and conditions of this Agreement.
Section 8. Notice.
(a) All notices and other communications to be given under this
Agreement, including without limitation a Section 3(a) Notices described in
Section, shall be in writing and shall be deemed to have been given:
(i) on the date delivered if delivered personally or actually
received by a means other than those specified in the remainder of this Section
8(a);
(ii) on the date sent if sent by registered or certified mail,
return receipt requested;
(iii) on the date sent if sent by overnight courier or
international air courier; or
(iv) on the date sent if sent by facsimile transmission with
electronic verification.
(b) Notice shall be given to the parties to this Agreement at the
following addresses (or at such other address as a party may specify by notice
pursuant to this Section 8):
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If to the Company:
Long Distance International Inc.
000 X. Xxxxxxx Xxxxxx, Xxxxx 000
Xx. Xxxxxxxxxx, Xxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxx Xxxxxxxx
If to any of the Advent Entities:
Advent International Corporation
000 Xxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxx X. Xxxxx
If to Xxxxxxxx:
Xxxxx Xxxxxxxx
c/o Long Distance International Inc.
000 X. Xxxxxxx Xxxxxx, Xxxxx 000
Xx. Xxxxxxxxxx, Xxxxxxx 00000
Facsimile: (000) 000-0000
If to Xxxxxxxxx:
Xxxxxxxx Xxxxxxxxx
c/o Long Distance International Inc.
000 X. Xxxxxxx Xxxxxx, Xxxxx 000
Xx. Xxxxxxxxxx, Xxxxxxx 00000
Facsimile: (000) 000-0000
Section 9. Additional Parties.
(a) At the option of the Company, any current or future Person holding
of record Shares of Common Stock, whether now authorized or not, or holding any
rights, options or warrants to purchase any Common Stock, or holding any
securities of any
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type whatsoever that are, or may become, convertible into Common Stock may
become a party to this Agreement and a Shareholder for all purposes under this
Agreement by taking all of the actions specified in Section 9(b). Upon the
acceptance in writing by the Company of such Person as a party to this Agreement
following such Person's taking all such actions, such Person shall be deemed to
have become a Shareholder under this Agreement and a party to this Agreement,
and to have relinquished any and all preemptive rights, rights of first refusal,
and rights of a similar nature contained or described in any other agreement
with the Company (including without limitation those certain shareholders
agreements dated July 22, 1994 and September 1994).
(b) The required actions of a Person seeking to become a party to this
Agreement and a Shareholder are:
(i) Signing a copy of this Agreement and delivering the signed
Agreement to the Company pursuant to the provisions of Section 8(a); and
(ii) Giving the Company a writing (i) explicitly relinquishing any
and all preemptive rights, rights of first refusal or rights of a similar nature
contained in or described in any other agreement with the Company (including
without limitation those certain shareholders agreement dated July 22, 1994 and
September 1994) if applicable and (ii) specifying an address at which such
Person can be given notices under this Agreement.
Section 10. Miscellaneous.
(a) This Agreement supersedes all prior agreements among the
Shareholders relating to the subject hereof and is intended as a complete and
exclusive statement of the terms of the agreement between the parties with
respect to such subject.
(b) This Agreement shall be governed by and construed in accordance
with the laws of the State of New York without regard to the principles of
conflicts of laws of choice of laws.
(c) The headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement.
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(d) Any term or provision of this Agreement may be waived at any time
by any party hereto by means of a writing signed by such party.
(e) This Agreement may only be amended in a writing executed by all the
parties hereto.
(f) Except as otherwise provided herein, no party hereto shall assign
this Agreement or any part hereof or any rights or obligations hereunder without
the prior written consent of the other parties. No such assignment shall release
any party of any of obligations or liabilities it has already accrued under this
Agreement.
(g) Except as otherwise provided herein, this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns.
(h) If any term or other provision of this Agreement is invalid,
illegal or incapable of being enforced by any rule of law or public policy, all
other conditions and provisions of this Agreement shall nevertheless remain in
full force and effect. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, then the invalid, illegal,
or unenforceable part shall be replaced, if possible, by a valid, legal and
enforceable provision that most closely effectuates the intent of the parties to
this Agreement.
(i) This Agreement may be executed in any number of counterparts, each
of which shall be deemed to be an original, but all of which together shall
constitute but one and the same agreement.
IN WITNESS WHEREOF, LDI and the Shareholders have caused this Agreement
to be duly executed as of the day and year first above written.
[Signatures begin on next page]
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GLOBAL PRIVATE EQUITY III L.P., a
Delaware limited partnership
By: Advent International L.P., General Partner
By: Advent International Corporation, General
Partner
By: _____________________________
Its: _____________________________
GLOBAL PRIVATE EQUITY III-A L.P., a
Delaware limited partnership
By: Advent International L.P., General Partner
By: Advent International Corporation, General
Partner
By: _____________________________
Its: _____________________________
GLOBAL PRIVATE EQUITY III-B L.P., a
Delaware limited partnership
By: Advent International L.P., General Partner
By: Advent International Corporation, General
Partner
By: _____________________________
Its: _____________________________
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GLOBAL PRIVATE EQUITY III-C L.P., a
Delaware limited partnership
By: Advent International L.P., General Partner
By: Advent International Corporation, General
Partner
By: _____________________________
Its: _____________________________
ADVENT PGGM GLOBAL L.P., a Delaware
limited partnership
By: Advent International L.P., General Partner
By: Advent International Corporation, General
Partner
By: _____________________________
Its: _____________________________
ADVENT EURO-ITALIAN DIRECT
INVESTMENT PROGRAM L.P., a Delaware
limited partnership
By: Advent International L.P., General Partner
By: Advent International Corporation, General
Partner
By: _____________________________
Its: _____________________________
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ADVENT PARTNERS (NA) GPE III L.P., a
Delaware limited partnership
By: Advent International Corporation, General
Partner
By: _____________________________
Its: _____________________________
ADVENT PARTNERS GPE III L.P., a Delaware
limited partnership
By: Advent International Corporation, General
Partner
By: _____________________________
Its: _____________________________
ADVENT PARTNERS L.P., a Delaware limited
partnership
By: Advent International Corporation, General
Partner
By: _____________________________
Its: _____________________________
FOUR SEASONS VENTURE II AS, a Norwegian
limited company
By: _____________________________
Pursuant to a Power of Attorney
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ADVENT GLOBAL GECC III L.P., a Delaware
limited partnership
By: Advent Global Management L.P., General
Partner
By: Advent International L.P., General Partner
By: Advent International Corporation, General
Partner
By: _____________________________
Its: _____________________________
LONG DISTANCE INTERNATIONAL INC., a
Florida corporation
By: _____________________________
Its: _____________________________
XXXXXXXX XXXXXXXXX
_______________________
XXXXX XXXXXXXX
_______________________
