EXHIBIT 7.2
PHOENIX NETWORK, INC.
STOCKHOLDERS AGREEMENT
This STOCKHOLDERS AGREEMENT (this "Agreement"), dated as of October
20, 1995, is entered into by and among PHOENIX NETWORK, INC., a Delaware
corporation (the "Company"), and each of the undersigned Holders. Each of the
capitalized terms used herein and not otherwise defined herein have the meanings
given such terms in the Series F Preferred Stock and Warrant Purchase Agreement
of even date herewith, by and among the Company and each of the Purchasers named
therein (the "Purchase Agreement").
SECTION 1. BOARD OF DIRECTORS.
(a) Composition. Immediately after the Closing (as defined in Section 1(e)
hereof) and so long as at least 200,000 Registrable Securities remain
outstanding, the Holders (as hereinafter defined) and the Company shall take all
action within their respective power, including but not limited to the voting of
capital stock of the Company, required to cause the Board of Directors of the
Company to include two Series F Directors (as hereinafter defined). In the event
there are less than 150,000 but at least 75,000 Registrable Securities
outstanding, the Holders and the Company shall take all action within their
respective power, including but not limited to the voting of capital stock of
the Company, required to cause the Board of Directors of the Company to include
at all times one Series F Director. Each initial Series F Director designated
pursuant hereto agrees to proffer his resignation in the event such initial
Series F Director shall own beneficially (as determined pursuant to Rule 13d-3
promulgated under the Securities Exchange Act of 1934, as amended) less than
750,000 Registrable Securities. "Holder" means each owner of Registrable
Securities or securities convertible or exercisable for Registrable Securities
who is now or hereafter becomes a party to this Agreement.
(b) By execution hereof, each Holder hereby agrees that the initial Series
F Directors shall be Xxx X. Xxxxxxxxx and Xxxxx Xxxxxxxxx.
(c) Inability of Directors to Serve. In the event that any Series F
Director is unable to serve, or once having commenced to serve, is removed or
withdraws from the Board of Directors of the Company (such a director, a
"Withdrawing Director"), the Withdrawing Director's replacement on such Board of
Directors (and, if applicable, any executive or similar committee thereof) shall
be designated (i) by the vote of both of the Series F Directors then in office,
if such designation takes place prior to the effective date of the resignation
of the Series F Director or (ii) if only one Series F Director remains in
office, then by such remaining Series F Director, in each case in accordance
with Section 223 of the General Corporation Law of the State of Delaware.
(d) Failure to Designate a Director. In the event that a vacancy exists in
the office of Series F Director and such directorship is not filled within 30
days pursuant to Section 1(c), due notice thereof shall be delivered by the
Company to the Holders and such vacancy shall be filled by action of a majority
in interest of the Holders in accordance with the charter and by-laws of the
Company.
(e) Voting of Capital Stock. Each of the Holders agrees that, to the
extent it holds any voting stock of the Company (or any stock that is entitled
to vote upon any particular matter, whether or not such stock is generally
entitled to voting rights), it will at all times vote such stock in such a
manner as to ensure that the terms and intention of this Agreement, the
certificate of incorporation, and the bylaws of the Company are carried out and
observed and to ensure that the certificate of incorporation and bylaws as in
effect on the date hereof do not, at any time hereafter, conflict in any respect
with the provisions of this Agreement. In addition, each of the Holders agrees
that it or he will not vote any voting capital stock of the Company to cause the
removal from the Board of Directors of the Company of any directors serving
pursuant to Section 1 hereof (a "Series F Director") except with the written
consent of such director, except to the extent such removal is for cause. The
Company agrees that it will not take any action, including any amendment to its
certificate of incorporation or bylaws, which would be inconsistent with this
Agreement.
(f) Proxy. Effective upon the Closing, each Holder hereby grants to Xxx X.
Xxxxxxxxx, with full power of substitution, a proxy (the "Proxy") to vote, with
respect to the election of the Series F Directors, any capital stock of the
Company which such grantor is entitled to vote and to give written consents in
lieu of voting such capital stock with respect to such election. The Proxy shall
be irrevocable and shall survive the death, disability, or incapacity of the
grantor. After the Closing, Xx. Xxxxxxxxx shall have the right to vote or
exercise (or refrain from voting or exercising) the Proxy at any time and from
time to time as he may elect in his sole discretion. "Closing" means the closing
of the sale of the Series F Preferred Stock to the Purchasers pursuant to the
Purchase Agreement.
(g) Other Activities. It is understood and accepted that the initial
Series F Directors and all of their respective Affiliates (as hereinafter
defined) have interests in other business ventures which may be competitive with
the activities of the Company and that, to the fullest extent permitted by law,
nothing in this Agreement shall limit the current or future business activities
of any of them or any of their respective Affiliates whether or not such
activities are competitive with those of the Company or any of its subsidiaries.
Except as expressly provided herein, nothing in this Agreement shall limit the
ability of any Holder to exercise its rights under this Agreement or as a
stockholder of the Company in accordance with its own best judgment and
applicable law. Nothing in this Agreement, express or implied, shall relieve any
officer or director, as such, of the Company of any fiduciary duties they may
have to the stockholders of the Company. "Affiliate" means, with respect to any
Person, any other Person who, directly or indirectly, controls, is controlled
by, or is under common control with that Person. "Person" means any individual,
partnership, joint venture, corporation, trust, unincorporated organization, or
other entity.
(g) Indemnification of Series F Directors. The Company and each Holder
agrees, severally and not jointly, to indemnify, reimburse, and hold harmless to
the fullest extent permitted by law, each Series F Director against any and all
losses, claims, damages, liabilities, costs, and expenses (including, without
limitation, reasonable attorneys' fees and disbursements incurred in
investigating, preparing, or defending against any litigation, or investigation
or proceeding commenced or threatened, or any claim whatsoever) arising from
such Series F Director's serving in such capacity. In the event of the death of
any person having a right of indemnification under the foregoing provisions,
such right shall inure to the benefit of his or her heirs, executors,
administrators, and personal representatives. The rights conferred above shall
not be exclusive of any other right which any person may have or hereafter
acquire under any statute, by-law, resolution of stockholders or directors,
agreement, or otherwise.
SECTION 2. OTHER TRANSFER RESTRICTIONS.
(a) Restrictions. Other than (i) transfers to the public pursuant to an
effective registration statement filed pursuant to the Securities Act of 1933,
as amended (the "Securities Act"), or (ii) sales to the public pursuant to Rule
144, no Holder shall transfer any Registrable Securities or securities
convertible or exercisable for Registrable Securities, unless such Holder shall
cause the proposed transferee of such securities to agree, pursuant to a written
agreement reasonably satisfactory to the Company, to take and hold such
securities subject to the provisions and upon the conditions specified in this
Agreement.
(b) Legends. Each certificate evidencing Registrable Securities or
securities convertible or exercisable for Registrable Securities subject to this
Agreement and each certificate issued to any subsequent transferee of such
securities, shall be stamped or otherwise imprinted with a legend in
substantially the following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
PROVISIONS REGARDING THE VOTING OF SUCH SECURITIES AND CERTAIN TRANSFER
RESTRICTIONS SET FORTH IN THE STOCKHOLDERS AGREEMENT DATED AS OF OCTOBER
20, 1995, A COPY OF WHICH MAY BE OBTAINED FROM THE COMPANY AT ITS
PRINCIPAL EXECUTIVE OFFICES.
(c) Termination of Certain Restrictions.
The legend required by Section 2(b) shall terminate as to any securities
(A) upon the termination of this Agreement or (B) upon the valid transfer of
such shares to a transferee who is not required to agree to take and hold such
shares subject to the provisions of Section 2(a) of this Agreement. Whenever the
legend requirements of Section 2(b) shall terminate as to any securities, the
holder thereof shall be entitled to receive from the Company, at the Company's
expense, a new certificate evidencing such securities not bearing the
restrictive legend set forth in Section 2(b) hereof.
(d) Nonconforming Transfers Void. Any purported transfer which is not
effected in compliance with the foregoing provisions of this Section 2 shall be
void and of no force or effect whatsoever.
SECTION 3. TERMINATION.
The provisions of this Agreement shall terminate (i) as to any Holder when
such Holder is no longer the beneficial owner of any Registrable Securities,
(ii) as to all Holders when such Holders no longer have the right to designate
one or more Series F Directors or (iii) as to any Holder upon such time as such
Holder can sell their Registrable Securities under Rule 144 or such Registrable
Securities may be sold under a registration statement that has been declared
effective by the Securities and Exchange Commission.
SECTION 4. MISCELLANEOUS.
(a) Remedies. Any Person having rights under any provision of this
Agreement will be entitled to enforce such rights specifically, to recover
damages caused by reason of any breach of any provision of this Agreement, and
to exercise all other rights granted by law or otherwise available to such
Persons.
(b) Amendments and Waivers. The provisions of this Agreement may be
amended or waived at any time by the written agreement of the Company and
Holders of at least two-thirds in interest of the Registrable Securities.
(c) Assignment. No Person may assign any of its rights or obligations
under this Agreement (except in connection with sales and transfers of the
securities which are subject to this Agreement or to a successor by merger or
similar succession to the business or assets of such Person).
(d) Notices. All notices, requests, consents, or other communications
required or permitted under this Agreement shall be in writing and shall be
deemed to have been duly given or delivered by any party (i) when received by
such party if delivered by hand, (ii) upon confirmation when delivered by
telecopy, (iii) within one day after being sent by recognized overnight delivery
service, or (iv) within five business days after being mailed by first-class
mail, postage prepaid, and in each case addressed as follows:
(i) If to the Company:
Phoenix Network, Inc.
000 Xxxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxxxx, XX 00000
Telecopy No.: (000) 000-0000
with a copy to:
Xxxxx X. Xxx, Esq.
Xxxxxx Godward
0000 Xxxx Xxxx Xxxx
Xxxxxxxx 0, Xxxxx 000
Xxxxx Xxxx, XX 00000-0000
Telecopy No.: (000) 000-0000
(ii) If to the Xxx X. Xxxxxxxxx:
Xxx X. Xxxxxxxxx
000 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxxxxx 00000
Telecopy No.: (000) 000-0000
with a copy to:
Xxxx X. Xxxxx, Esq.
Weil, Gotshal & Xxxxxx
000 Xxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Telecopy No.: (000) 000-0000
(iii) If to Xxxxx Xxxxxxxxx:
Xxxxx Xxxxxxxxx
000 0/0 Xxxxx Xxxxxxx Xx.
Xxxxxxxxxx, Xxxxxxxxxxx 00000
(iv) If to any Holder other than the initial Series F Directors, at
his or its address set forth on such Holder's signature s hereto or, if not
so set forth, as reflected in the Company's records.
Any party by written notice to the other parties pursuant to this Section
may change the address or the Persons to whom notices or copies thereof shall be
directed.
(e) Construction. This Agreement shall be construed and enforced in
accordance with and governed by the internal substantive laws of the State of
Delaware.
(f) Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be deemed an
original, and such counterparts together shall constitute one instrument. Each
party shall receive a duplicate original of the counterpart copy or copies
executed by it and the Company.
(g) Severability. Whenever possible, each provision of this Agreement will
be interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement is held to be prohibited by or invalid
under applicable law, such provision will be ineffective only to the extent of
such prohibition or invalidity, without invalidating the remainder of this
Agreement.
IN WITNESS WHEREOF, this Agreement has been executed and delivered as of
the date first set forth above.
PHOENIX NETWORK, INC.
By:
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Name:
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Title:
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HOLDERS:
