EXHIBIT 10.8
Amendment No. 5
to
Transaction Agreement
This Amendment No. 5 ("Amendment") to the Transaction Agreement dated
as of July 8, 1998, as amended by Amendment No. 1 dated as of December 18, 1998,
by Amendment No. 2 dated as of February 18, 1999, by Amendment No. 3 dated as of
May 14, 1999 and by Amendment No. 4 dated as of June 30, 1999 (the "Original
Agreement"), is made as of June 30, 1999, among Choice One Communications Inc.
(the "Corporation"), Choice One Communications L.L.C. (the "LLC") and the
persons listed on the signature pages hereto.
WHEREAS, the initial holders of Investor Equity and Management Equity
entered into the Transaction Agreement on July 8, 1998 in connection with their
investments in the Corporation to be held initially through their ownership of
Units in the LLC;
WHEREAS, certain additional persons have become holders of Management
Equity pursuant to the terms of the Original Agreement subsequent to July 8,
1998;
WHEREAS, First Union Capital Partners, Inc. became a holder of Investor
Equity on February 18, 1999 and General Electric Capital Corporation became a
holder of Investor Equity on the date hereof;
WHEREAS, Xxxxxx Xxxxxxx Xxxx Xxxxxx Capital Partners IV, L.P., Xxxxxx
Xxxxxxx Xxxx Xxxxxx Capital Investors IV, L.P. and MSDW IV 892 Investors, L.P.
(collectively, "MSDWCP IV"), R. Xxxxxx Silver and Caravelle Investment Fund,
L.L.C. ("Caravelle") desire to become holders of Investor Equity and to become
party to the Original Agreement and certain related agreements relating to their
investment in the LLC;
WHEREAS, certain of the Investor Members, MSDWCP IV, R. Xxxxxx Silver
and Caravelle desire to commit to provide an aggregate of an additional $71.25
million in equity capital to the LLC on the terms and conditions set forth in
the LLC Agreement and the Transaction Agreement;
WHEREAS, the parties hereto desire that MSDWCP IV, R. Xxxxxx Silver and
Caravelle become parties to the Original Agreement; and
WHEREAS, the parties desire to amend the Original Agreement to provide
for the additional equity commitment as described above;
NOW, THEREFORE, the parties hereto hereby agree as follows:
SECTION 1. Amendment to Original Agreement. Section 1.01 of the
Original Agreement is hereby amended by inserting as the last sentence thereof
the following:
"On June 30, 1999 each Tranche 2 Investor Member (as defined
below) subscribed for additional Class A Units in the LLC pursuant to
the Tranche 2 Investor Purchase Agreement (as defined below)."
SECTION 2. Amendment to Section 3.01. Section 3.01 of the Original
Agreement is hereby amended by inserting as the last sentence thereof the
following:
"Nothing in this Agreement will be construed to limit the powers of the
LLC or the Board to determine the appropriate capital structure of, or sources
or amounts of financing for, the Corporation. It is understood that (1)
Subsequent Contributions shall first be drawn down from Tranche 1 Equity, which
the parties hereto, including the chief executive officer, agree shall be drawn
down in full (at such times and in such amounts as the LLC directs), and only
after Tranche 1 Equity has been exhausted shall Subsequent Contributions of
Tranche 2 Equity be made; and (2) if the Tranche 2 Expiration Date has not
occurred prior to January 1, 2001, the equity portion of the Corporation's
capital requirements under all then Approved Business Plans which have not been
funded as of January 1, 2001 shall, subject to the conditions in Section 3.04,
be funded by the LLC out of Tranche 2 Equity on such date."
SECTION 3. Amendment to Section 3.02. Section 3.02(a)(y) is hereby
amended by inserting "Tranche 1" after "50% of the" and before "Maximum
Commitment".
SECTION 4. Amendment to Section 3.04. (a) Section 3.04(a) is hereby
amended by adding the following sentence at the end thereof: "Notwithstanding
the foregoing, if the Tranche 2 Expiration Date has not occurred prior to
January 1, 2001, then on such date, Subsequent Contributions shall be expressly
contemplated and authorized as the equity portion of the Corporation's capital
requirements under all then Approved Business Plans, and the 6-month period
limitation referred to above will be disregarded."
(b) Section 3.04(g) is hereby amended by inserting the following
sentence at the end thereof.
"No Member shall be required to fund a capital contribution in respect
of a Subsequent Contribution that, when aggregated with all previously funded
capital
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contributions by such Member, would exceed such Member's share of the Maximum
Commitment."
(c) Section 3.04 is hereby amended by inserting as the last clauses
thereof the following:
"(l) Expiration of Commitment. The Drawdown Date shall be on or prior
to the Tranche 2 Expiration Date.
(m) Issuances of Shares. Simultaneously with any Subsequent
Contribution drawn down from Tranche 2 Equity, the Corporation shall issue to
the LLC a number of shares of Common Stock equal to the amount of such
Subsequent Contribution divided by $1,200. The Board shall have approved the
foregoing issuance."
SECTION 5. Amendment to Section 3.05. (a) Section 3.05(b)(iii) is
hereby amended by deleting it in its entirety and replacing it with the
following:
"(iii) The aggregate amount of Capital Contributions made by an Opt-Out
Investor to the LLC prior to the Opt-Out Election plus the amount required to be
subsequently contributed by it to the LLC pursuant to Section 3.05(b)(i) is
referred to as such Opt-Out Investor's "Opt-Out Commitment." The number of Units
held by such Opt-Out Investor immediately prior to the Opt-Out Election (the
"Initial Unit Amount") will be automatically reduced to the number of Class A
Units in respect of Tranche 1 Equity (based on a per Unit commitment of $1.00)
and in respect of Tranche 2 Equity (based on a per Unit commitment of $1.20)
representing such remaining Opt-Out Commitment (the "Adjusted Unit Amount"). The
number of Units in each Tranche by which such Opt-Out Investor's Initial Unit
Amount exceeds its Adjusted Unit Amount will be offered (the "Opt-Out Units
Offer"), by written notice, for reissuance to each other Investor Member that is
not an Opt-Out Investor based on each such Investor Member's pro rata ownership,
determined immediately prior to such reissuance, of the aggregate amount of
Units in each Tranche held by all the Investor Members offered such Units. If
any such Investor Member subscribes for less than its full pro rata share of
offered Units pursuant to the Opt-Out Units Offer, such unsubscribed portion
shall be offered to the other Investor Members (that are not Opt-Out Investors)
in a similar manner. Such Opt-Out Units Offer will be deemed rejected by an
Investor Member if not accepted by written notice to the LLC within five
business days of such Opt-Out Units Offer. The maximum commitment of each
Investor Member who subscribes for such Units shall be increased by the number
of Units so subscribed for times the price per Unit in each Tranche (as set
forth in Section 3.01 of the LLC Agreement). To the extent the Units so offered
are not accepted by any of such other Investor Members, they
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will be deemed canceled and the Maximum Commitment and, as applicable, Tranche 1
Maximum Commitment and Tranche 2 Maximum Commitment will be reduced accordingly.
(b) Section 3.05(b)(vi) is hereby amended by deleting "corresponding
to the aggregate dollar amount of its Opt-Out Commitment" and replacing it with
"representing its Opt-Out Commitment as described in clause (iii) above" after
"Class A Units" and before "(which Units will".
SECTION 6. Amendment to Section 5.02. Section 5.02(q) is hereby amended
by (i) deleting "$100,000" and replacing it with "$200,000" and (ii) inserting
"(other than leases or other rental agreements expressly specified in any
Approved Business Plan or Approved Budget then applicable)" at the end of such
Section.
SECTION 7. Amendment to Section 5.03. (a) Section 5.03(b)(i) is hereby
amended by (i) deleting "the holders of a majority of the MSCP Equity held by
MSCP and its Affiliates" and replacing it with "MSCP" and (ii) by inserting at
the end of such clause "with respect to the foregoing representatives so
entitled to be designated, so long as more than one representative is entitled
to be designated by MSCP, Xxxxxx Xxxxxxx Capital Partners III, L.P. may
designate one representative (as long as it owns Outstanding Voting Units), and
Xxxxxx Xxxxxxx Xxxx Xxxxxx Capital Partners IV, L.P. may designate one
representative (as long as it owns Outstanding Voting Units); all other
designations of such representatives will be by the general partner of either
Xxxxxx Xxxxxxx Capital Partners III, L.P. or Xxxxxx Xxxxxxx Xxxx Xxxxxx Capital
Partners IV, L.P.;".
(b) Section 5.03(b)(ii) is hereby amended by deleting "the holders of
a majority of the Fleet Equity held by Fleet and its Affiliates" and replacing
it with "Xxxxxxxx Partners III, L.P."
SECTION 8. Amendment to Definitions. (a) The Original Agreement is
hereby amended by inserting the following definition before the definition of
"Class A Units":
"Caravelle" means Caravelle Investment Fund, L.L.C., a Delaware limited
liability company.
(b) The Original Agreement is hereby amended by inserting the
following definitions before the definition of "Transfer" in Section 8.01:
"Tranche 1 Class A Units" has the meaning ascribed to such term in the
LLC Agreement.
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"Tranche 2 Class A Units" has the meaning ascribed to such term in the
LLC Agreement.
"Tranche 1 Equity" has the meaning ascribed to such term in the LLC
Agreement.
"Tranche 2 Equity" has the meaning ascribed to such term in the LLC
Agreement.
"Tranche 2 Expiration Date" means the earliest of (a) January 1, 2001,
(b) the date designated as such by the chief executive officer, provided that
such date so designated pursuant to this clause (b) shall not be prior to the
closing of a high yield financing by the Corporation raising at least $100
million, and (c) the date of consummation of the initial Public Offering.
"Tranche 2 Investor Members" has the meaning ascribed to such term in
the LLC Agreement.
"Tranche 2 Investor Purchase Agreement" means the Tranche 2 investor
purchase agreement, dated as of June 30, 1999, between the LLC and the Tranche 2
Investor Members, as amended from time to time in accordance with its terms,
pursuant to which each Tranche 2 Investor Member subscribed for a number of
Class A Units set forth therein.
"Tranche 1 Maximum Commitment" means, at any time, $1 times the
aggregate number of Tranche 1 Class A Units and Class B Units outstanding at
such time. The maximum commitment with respect to Tranche 1 Equity, as of June
30, 1999, for each Member is listed on the Schedule of Unitholders attached to
the LLC Agreement."
"Tranche 2 Maximum Commitment" means, at any time, $1.20 times the
aggregate number of Tranche 2 Class A Units outstanding at such time. The
maximum commitment with respect to Tranche 2 Equity, as of June 30, 1999, for
each Member is listed on the Schedule of Unitholders attached to the LLC
Agreement. The foregoing will be construed after giving effect to Section
3.01(g) of the LLC Agreement."
(c) The definition of "Investor Equity" in Section 8.01 of the Original
Agreement is hereby amended by inserting "or to the Tranche 2 Investor Purchase
Agreement" after "Agreement" and before "or Transferred" in the second line
thereof.
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(d) The definition of "Investor Members" in Section 8.01of the Original
Agreement is hereby amended by deleting it in its entirety and replacing it with
the following:
"Investor Members" means (i) MSCP III, Fleet, Xxxxxx-Xxxxxx and Xxxxx
X. Xxxxxxx, each of which was, on July 8, 1998, admitted as a Member pursuant to
Section 3.01(b) of the LLC Agreement, (ii) First Union, which was admitted on
February 18, 1999 as a Member pursuant to Section 3.01(d) of the LLC Agreement,
(iii) General Electric which was admitted on June 30, 1999 as a Member pursuant
to Section 3.01(e) of the LLC Agreement, (iv) Caravelle, which may be admitted
as a Member pursuant and subject to Section 3.01(f) of the LLC Agreement, (v)
MSDWCP IV, which entities shall be admitted on June 30, 1999 as Members pursuant
to Section 3.01(f) of the LLC Agreement, (vi) R. Xxxxxx Silver who shall be
admitted as a Member on June 30, 1999 pursuant to Section 3.01(f) of the LLC
Agreement and (vii) any transferee of any Investor Equity prior to dissolution
of the LLC in compliance with Article 6 of the Transaction Agreement that is
admitted to the LLC as a Substituted Member pursuant to Section 10.01 of the LLC
Agreement, but in each case only so long as such Person is shown on the LLC's
books and records as the owner of one or more Units.
(e) The definition of "MSCP" in Section 8.01 of the Original Agreement
is hereby amended by deleting in its entirety and replacing it with the
following:
"MSCP" means collectively MSCP III and MSDWCP IV.
(f) The Original Agreement is hereby amended by inserting the
following definitions of "MSCP III" and "MSDWCP IV" before the definition of
"Officer's Certificate" in Article 1:
"MSCP III" means, collectively, Xxxxxx Xxxxxxx Capital Partners III,
L.P., Xxxxxx Xxxxxxx Capital Investors, L.P., and MSCP III 892 Investors, L.P.
"MSDWCP IV" means, collectively, Xxxxxx Xxxxxxx Xxxx Xxxxxx Capital
Partners IV, L.P., Xxxxxx Xxxxxxx Xxxx Xxxxxx Capital Investors IV, L.P., and
MSDW IV 892 Investors, L.P.
(g) The definition of "MSCP Equity" in Section 8.01 of the Original
Agreement is hereby amended by inserting "or to the Tranche 2 Investor Purchase
Agreement" after "Investor Purchase Agreement" in the second line thereof.
(h) The definition of "Maximum Commitment" in Section 8.01 of the
Original Agreement is hereby amended by deleting it in its entirety and
replacing it with the following:
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"Maximum Commitment" means the sum of the Tranche 1 Maximum Commitment
plus the Tranche 2 Maximum Commitment. The maximum commitment, as of June 30,
1999, for each Member (and each Member's share of the Tranche 1 Maximum
Commitment and Tranche 2 Maximum Commitment) is listed on the Schedule of
Unitholders attached to the LLC Agreement. The foregoing will be construed after
giving effect to Section 3.01(g) of the LLC Agreement."
SECTION 9. Amendment to Section 9.04. Section 9.04 of the Original
Agreement is hereby amended by inserting "and if such amendment to Section 6.05,
6.06 or this Section 9.04 would have an adverse economic impact (which is
disproportionate to First Union Capital Partners, Inc., General Electric Capital
Corporation or Caravelle, as applicable, as compared to the other Investor
Members) on First Union Capital Partners, Inc.'s, General Electric Capital
Corporation's or Caravelle's investment in the LLC then such amendment shall
also require the prior written consent of First Union Capital Partners, Inc.,
General Electric Capital Corporation or Caravelle, as applicable," after "and
MSCP" and before "(but".
This amendment to Section 9.04 shall not be effective until
effectiveness of Caravelle's admission as a Member pursuant to Section 3.01(f)
of the LLC Agreement.
SECTION 10. Amendment to Section 9.13. Section 9.13 is hereby amended
by adding the following after "Nixon, Hargrave, Devans & Xxxxx LLP... (716)
263-1600" and before "if" in such Section:
"if to Caravelle to:
Caravelle Advisors, L.L.C.
x/x Xxxxx Xxxxx
0xx Xxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Facsimile: (000) 000-0000
SECTION 11. Agreement to Be Bound. Each of Xxxxxx Xxxxxxx Xxxx Xxxxxx
Capital Partners IV, L.P., Xxxxxx Xxxxxxx Xxxx Xxxxxx Capital Investors IV,
L.P., MSDW IV 892 Investors, L.P., R. Xxxxxx Silver and Caravelle hereby adopts,
executes and delivers, and agrees to bound by, the Original Agreement as amended
hereby.
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SECTION 12. Other Defined Terms. Capitalized terms used in this
Amendment and not otherwise defined have the meanings ascribed to them in the
Original Agreement.
SECTION 13. Effect of Amendment; Governing Law. Except as amended
hereby, the Original Agreement shall remain unchanged. The Original Agreement,
as amended hereby, shall remain in full force and effect. This Amendment shall
be governed by, and construed under, the laws of the State of Delaware, all
rights and remedies being governed by said laws, without regard to conflict of
laws principles.
SECTION 14. Counterparts. This Amendment may be executed simultaneously
in two or more counterparts, any one of which need not contain the signatures of
more than one party, but all such counterparts taken together shall constitute
one and the same agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this Amendment as
of the date first written above.
CHOICE ONE COMMUNICATIONS INC.
By: /s/ Xxxxx X. Xxxxxx
______________________________________
Its: President and Chief Executive Officer
______________________________________
CHOICE ONE COMMUNICATIONS
L.L.C.
By: /s/ Xxxxx X. Xxxxxx
______________________________________
Its: Authorized Person
______________________________________
MANAGEMENT MEMBERS
/s/ Xxxxx X. Xxxxxx
______________________________________
as a Management Member and as Chief
Executive Officer of Choice One
Communications, Inc.
/s/ Xxx Xxxxxx-Xxx
______________________________________
/s/ Xxxxx Xxxxxxx
______________________________________
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/s/ Xxxxxxx Xxxxxx
_____________________________________
/s/ Xxxxxx Xxxxxx
_____________________________________
/s/ Xxxxxxxxx Xxxxx
_____________________________________
/s/ Xxxxxx Xxxxxxx
_____________________________________
/s/ Xxxxxxxx Xxxxxx
_____________________________________
/s/ Xxxxx Xxxxxxx
_____________________________________
/s/ Xxxx Xxxxxx
_____________________________________
/s/ Xxxxx Xxxxx
_____________________________________
/s/ Xxxxxxx Xxxxxxxxx
_____________________________________
/s/ Xxxxxx X. Xxxx
_____________________________________
/s/ Xxxxxxx X'Xxxxxx
_____________________________________
10
/s/ Xxxxxx Xxxxxxx
_____________________________________
Xxxxxx Xxxxxxx
/s/ Xxx Xxxxxxx
_____________________________________
Xxx Xxxxxxx
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INVESTOR MEMBERS
XXXXXX XXXXXXX CAPITAL
PARTNERS III, L.P.
By MSCP III, L.P., its general partner
By Xxxxxx Xxxxxxx Capital Partners III,
Inc., its general partner
/s/ Xxxxxxx X. Xxxxxx
By ____________________________________
Managing Director
Its ____________________________________
/s/ Xxxx Xxxxxxxxxx
By ____________________________________
Principal
Its ____________________________________
MSCP III 892 INVESTORS, L.P.
By MSCP III, L.P., its general partner
By Xxxxxx Xxxxxxx Capital Partners III,
Inc., its general partner
/s/ Xxxxxxx X. Xxxxxx
By ____________________________________
Managing Director
Its ____________________________________
/s/ Xxxx Xxxxxxxxxx
By ____________________________________
Principal
Its ____________________________________
XXXXXX XXXXXXX CAPITAL
INVESTORS, L.P.
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By MSCP III, L.P., its general partner
By Xxxxxx Xxxxxxx Capital Partners III,
Inc., its general partner
/s/ Xxxxxxx X. Xxxxxx
By ____________________________________
Managing Director
Its ____________________________________
/s/ Xxxx Xxxxxxxxxx
By ____________________________________
Principal
Its ____________________________________
XXXXXX XXXXXXX XXXX XXXXXX
CAPITAL PARTNERS IV, L.P.
By MSDW Capital Partners IV, LLC, its
general partner
By MSDW Capital Partners IV, Inc., its
general partner
/s/ Xxxxxxx X. Xxxxxx
By ____________________________________
Managing Director
Its ____________________________________
/s/ Xxxx Xxxxxxxxxx
By ____________________________________
Principal
Its ____________________________________
MSDW IV 892 INVESTORS, L.P.
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By MSDW Capital Partners IV, LLC, its
general partner
By Xxxxxx Xxxxxxx Capital Partners IV,
Inc., its general partner
/s/ Xxxxxxx X. Xxxxxx
By ____________________________________
Managing Director
Its ____________________________________
/s/ Xxxx Xxxxxxxxxx
By ____________________________________
Principal
Its ____________________________________
XXXXXX XXXXXXX XXXX XXXXXX
CAPITAL INVESTORS IV, L.P.
By MSDW Capital Partners IV LLC, its
general partner
By Xxxxxx Xxxxxxx Capital Partners IV,
Inc., its general partner
/s/ Xxxxxxx X. Xxxxxx
By ____________________________________
Managing Director
Its ____________________________________
/s/ Xxxx Xxxxxxxxxx
By ____________________________________
Principal
Its ____________________________________
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XXXXXXXX PARTNERS III, L.P.
By Silverado III, L.P., its General Partner
By Silverado III Corp., its General Partner
/s/ Xxxxxx X. Xxx Xxxxx
By ________________________________________
Xxxxxx X. Xxx Xxxxx
Chairman & CEO
XXXXXXX PLAZA PARTNERS
/s/ Xxxxxx X. Xxx Xxxxx
By _________________________________________
Xxxxxx X. Xxx Xxxxx
Managing General Partner
FLEET VENTURE RESOURCES, INC.
/s/ Xxxxxx X. Xxx Xxxxx
By _________________________________________
Xxxxxx X. Xxx Xxxxx
Chairman & CEO
FLEET EQUITY PARTNERS VI, L.P.
By Fleet Growth Resources II, Inc., its
General Partner
/s/ Xxxxxx X. Xxx Xxxxx
By __________________________________________
Xxxxxx X. Xxx Xxxxx
Chairman & CEO
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XXXXXX-XXXXXX MEDIA PARTNERS, L.P.
By Xxxxxx Xxxxxx Media, L.L.C. its general
partner
/s/ Xxxxx Xxxxxxxxx
By __________________________________________
Xxxxx Xxxxxxxxx
Chief Executive Officer
FIRST UNION CAPITAL PARTNERS, INC.
/s/ Xxxxxx Xxxxxx
By: __________________________________________
Managing Director
Its: __________________________________________
GENERAL ELECTRIC CAPITAL
CORPORATION
Xxxxx X. Xxxxxxxxx
By: ___________________________________________
Manager Operations
Its: ___________________________________________
CARAVELLE INVESTMENT FUND, L.L.C.
By Caravelle Advisors, L.L.C.,
as Investment Manager and
Attorney In Fact
/s/
By: ___________________________________________
Portfolio Manager
Its: ___________________________________________
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XXXXX X. XXXXXXX
/s/ Xxxxx X. Xxxxxxx
By: ___________________________________________
Xxxxx X. Xxxxxxx
R. XXXXXX SILVER
/s/ R. Xxxxxx Silver
By: ___________________________________________
R. Xxxxxx Silver
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