EXHIBIT 10.25
INVESTOR RIGHTS AGREEMENT
This Investor Rights Agreement (the "Agreement") is made as of December
19, 2001, between Choice One Communications Inc., a Delaware corporation (the
"Corporation") and FairPoint Communications Solutions, Corp., a Delaware
corporation (the "Holder").
WHEREAS, this Agreement provides for certain rights and obligations of
the Corporation and the Holder with respect to preemptive rights and
registration of the Common Stock under the Securities Act;
NOW, THEREFORE, in consideration of the mutual promises made herein and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, and the parties hereto, intending to be legally bound agree
as follows:
ARTICLE 1
DEFINITIONS
SECTION 1.1. Definitions. The following terms used herein but not
otherwise defined will have the following meanings, applicable both to the
singular and the plural forms of the terms described:
"Affiliate" of any particular Person means any other Person
controlling, controlled by or under common control with such particular Person,
where "control" means the possession, directly or indirectly, of the power to
direct the management and policies of a Person whether through the ownership of
voting securities, by contract or otherwise
"Board" means the board of directors of the Corporation.
"Common Stock" means the common stock, par value $0.01 per share, of
the Corporation.
"Corporation Securities" has the meaning ascribed thereto in Section
2.1(b).
"Holder" means FairPoint Communications Solutions Corp.
"Original Holdings" means the aggregate number of shares of Common
Stock received by the Holder pursuant to that certain Network Transition
Agreement dated as of November 7, 2001.
"Other Securities" has the meaning ascribed thereto in Section 2.1.
"Person" means an individual, a partnership, a corporation, a limited
liability company, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization and a governmental entity or any
department, agency or political subdivision thereof.
"Public Offering" means any underwritten sale of the Common Stock
pursuant to an effective registration statement under the Securities Act filed
with the Securities and Exchange Commission on Form S-1 or S-3 (or a successor
form adopted by the Securities and Exchange Commission); provided that the
following shall not be considered a Public Offering: (i) any issuance of common
stock as consideration or financing for a Board-approved merger or acquisition,
and (ii) any issuance of Common Stock or rights to acquire Common Stock to
employees of the Corporation or its Affiliates as part of an incentive or
compensation plan.
"Registrable Securities" means Common Stock and any securities issued
directly or indirectly with respect to such Common Stock by way of a split,
dividend, or other division of securities, or in connection with a combination
of securities, recapitalization, merger, consolidation, or other reorganization.
As to any particular Registrable Securities, such Registrable Securities shall
cease to be Registrable Securities when they (i) have been effectively
registered under the Securities Act and disposed of in accordance with the
registration statement covering them, (ii) have been repurchased by the
Corporation or otherwise have ceased to be outstanding or (iii) may be sold
pursuant to the provisions of Rule 144(k) of the Securities Act.
"Registration Expenses" means any and all expenses incident to
performance of or compliance with any registration or marketing of securities
pursuant to Article 2, including, without limitation, (i) the fees,
disbursements and expenses of the Corporation's counsel and accountants in
connection with this Agreement and the performance of the Corporation's
obligations hereunder (including the expenses of any annual audit letters and
"cold comfort" letters required or incidental to the performance of such
obligations); (ii) all expenses, including filing fees, in connection with the
preparation, printing and filing of the registration statement, any preliminary
prospectus or final prospectus, any other offering document and amendments and
supplements thereto and the mailing and delivering of copies thereof to any
underwriters and dealers; (iii) the cost of printing or producing any agreements
among underwriters, underwriting agreements, and blue sky or legal investment
memoranda, any selling agreements and any other documents in connection with the
offering, sale or delivery of the securities to be disposed of; (iv) all
expenses in connection with the qualification of the securities to be disposed
of for offering and sale under state securities laws, including the fees and
disbursements of counsel for the underwriters or the Holder of securities in
connection with such qualification and in connection with any blue sky and legal
investment surveys; (v) the filing fees incident to securing any required review
by the National Association of Securities Dealers, Inc. of the terms of the sale
of the securities to be disposed of; (vi) transfer agents' and registrars' fees
and expenses and the fees and expenses of any other agent or trustee appointed
in connection with such offering; (vii) all security engraving and security
printing expenses; (viii) all fees and expenses payable in connection with the
listing of the securities on any securities exchange or automated interdealer
quotation system or the rating of such securities; (ix) any other fees and
disbursements of underwriters customarily paid by the issuers of securities, but
excluding underwriting discounts and commissions and transfer taxes, if any; (x)
the costs and expenses of the Corporation and its officers relating to rating
agency, analyst or investor presentations or any "road show" undertaken in
connection with the registration and/or marketing of any Registrable Securities,
(xi) the reasonable out-of-pocket costs, fees and expenses for one legal counsel
for all the Selling Holders which are pre-approved in writing by the
Corporation, (such approval not to be unreasonably withheld or delayed), and
(xii) other reasonable out-of-pocket costs, fees and expenses of the Holders
which are pre-approved in writing by the Corporation.
"Rule 144" means Rule 144 (or any successor rule to similar effect)
promulgated under the Securities Act.
"Rule 415 Offering" means an offering on a delayed or continuous basis
pursuant to Rule 415 (or any successor rule to similar effect) promulgated under
the Securities Act.
"Securities Act" means the Securities Act of 1933, as amended, and
applicable rules and regulations thereunder.
"Securities and Exchange Commission" includes any governmental body or
agency succeeding to the functions thereof.
"Securities Exchange Act" means the Securities Exchange Act of 1934, as
amended, and applicable rules and regulations thereunder.
"Selling Holder" means a holder of Registrable Securities included in
the relevant registration statement.
"Senior Holders" means the parties to the Registration Rights Agreement
dated as of July 8, 1998, as amended, and any other holder of securities who
have piggyback registration rights that are pari passu with such parties. The
Corporation represents that there are currently no Senior Holders other than the
parties to such Registration Rights Agreement; however, the Holder acknowledges
that certain lenders to whom warrants are expected to be issued on or about
November 9, 2001 will then become Senior Holders.
"Senior Securities" means securities held by Senior Holders which are
eligible to be sold in a registration contemplated by Section 2.1 hereof.
ARTICLE 2
REGISTRATION RIGHTS
SECTION 2.1. Piggyback Registration. Subject to Section 2.5, in the
event that the Corporation proposes to register any of its Common Stock, any
other of its equity securities or securities convertible into or exchangeable
for its equity securities (collectively, including Common Stock, "Other
Securities") under the Securities Act, whether or not for sale for its own
account, in a manner that would permit registration of Registrable Securities
for sale for cash to the public under the Securities Act, it shall give prompt
written notice to the Holder of its intention to do so and of the rights of the
Holder under this Section 2.1. Subject to the terms and conditions hereof, such
notice shall offer to the Holder the opportunity to include in such registration
statement such number of Registrable Securities as the Holder may request. Upon
the written request of the Holder made within 15 days after the receipt of the
Corporation's notice (which request shall specify the number of Registrable
Securities intended to be disposed of and the intended method of disposition
thereof), the Corporation shall use its best efforts to effect, in connection
with the registration of the Other Securities, the registration under the
Securities Act of all Registrable Securities which the Corporation has been so
requested to register, to the extent required to permit the disposition (in
accordance with such intended methods thereof) of the Registrable Securities so
requested to be registered; provided, that:
(a) if, at any time after giving such written notice of its
intention to register any Other Securities and prior to the effective date of
the registration statement filed in connection with such registration, the
Corporation shall determine for any reason not to register all of the Other
Securities, the Corporation may, at its election, give written notice of such
determination to the Holder and thereupon the Corporation shall be relieved of
its obligation to register such Registrable Securities in connection with the
registration of such Other Securities;
(b) if the registration referred to in the first sentence of
this Section 2.1 is to be an underwritten registration on behalf of the
Corporation or any other holder of Other Securities, and a nationally recognized
investment banking firm selected by the Corporation or a holder of Other
Securities to be the lead underwriter in such offering advises the Corporation
in writing that, in such firm's good faith view, the inclusion of all or a part
of such Registrable Securities in such registration would be likely to have an
adverse effect upon the price, timing or distribution of the offering and sale
of the Other Securities then contemplated, the Corporation shall include in such
registration: (i) first, (x) if such registration is being effected at the
request of any holder of Other Securities pursuant to the exercise of
contractual demand registration rights (an "Other Holder Demand Registration"),
up to the full number of Other Securities ("Other Holder Demand Securities")
held by such holders that are to be included in such registration pursuant to
the exercise of such rights, or (y) if such registration is being effected by
the Corporation for its own account, up to the full amount of Other Securities
the Corporation proposes to sell for its own account ("Corporation Securities"),
(ii) second, if such registration is an Other Holder Demand Registration, up to
the full number of Corporation Securities to be sold in such offering which, in
the good faith view of such investment banking firm, can be so sold without
adversely affecting such offering, (iii) third, up to the full number of Senior
Securities held by Senior Holders that are requested to be included in such
registration in excess of the number of Other Holder Demand Securities and
Corporation Securities to be sold in such offering which, in the good faith view
of such investment banking firm, can be so sold without so adversely affecting
such offering, (iv) fourth, up to the full number of Registrable Securities held
by the Holders of Registrable Securities (and holders of other securities of the
Corporation who have registration rights that are pari passu with the Holder's
rights (which includes Xxxxxx XxxxxxXxx'x securities issued pursuant to the
Corporation's acquisition of USXchange, Inc.) that are requested to be included
in such registration in excess of the number of Other Holder Demand Securities,
Corporation Securities and Senior Securities to be sold in such offering which,
in the good faith view of such investment banking firm, can be so sold without
so adversely affecting such offering; provided, that in the event that such
investment banking firm advises the Corporation in writing that less than all of
such Registrable Securities should be included in such offering, such number
shall be allocated pro rata among the Holder and such holders who are pari passu
with the Holder on the basis of the number of securities requested to be
included therein by the Holder and each such other holder, and (v) fifth, up to
the full number of the Other Securities (other than Other Holder Demand
Securities, Corporation Securities and Senior Securities), if any, in excess of
the number of Other Holder Demand Securities, Corporation Securities, Senior
Securities and Registrable Securities to be sold in such offering which, in the
good faith view of such investment banking firm, can be so sold without so
adversely affecting such offering;
(c) the Corporation shall not be required to effect any
registration of Registrable Securities under this Section 2.1 incidental to the
registration of any of its securities in connection with mergers, acquisitions,
exchange offers, subscription offers, dividend reinvestment plans or stock
option or other executive or employee benefit or compensation plans; and
(d) the Holder shall have no rights under this Section 2.1 at
any time on or after the first date on which (i) the Holder no longer holds any
Registrable Securities, or (ii) the Holder no longer owns at least fifty percent
(50%) of the Original Securities.
SECTION 2.2. Expenses. Except as provided herein, the Corporation
shall pay all Registration Expenses (exclusive of underwriting discounts and
commissions, if any) with respect to a particular offering (or proposed
offering).
SECTION 2.3. Registration and Qualification. If and whenever the
Corporation is required to effect the registration of any Registrable
Securities under the Securities Act as provided in Section 2.1, the Corporation
shall as promptly as practicable:
(a) prepare, file and use its reasonable best efforts to cause
to become effective a registration statement under the Securities Act relating
to the Registrable Securities to be offered in accordance with the intended
method of disposition thereof;
(b) prepare and file with the Securities and Exchange Commission
such amendments and supplements to such registration statement and the
prospectus used in connection therewith as may be necessary to keep such
registration statement effective and to comply with the provisions of the
Securities Act with respect to the disposition of all Registrable Securities
until such time as all of such Registrable Securities have been disposed of in
accordance with the intended methods of disposition set forth in such
registration statement; provided that the Corporation will, at least five (5)
business days prior to filing a registration statement or prospectus or any
amendment or supplement thereto, furnish to the Selling Holder copies of such
registration statement or prospectus (or amendment or supplement) as proposed to
be filed (including, upon the request of such Selling Holder, documents to be
incorporated by reference therein) which documents will be subject to the
reasonable review and comments of such Selling Holder (and its attorneys) during
such five (5)-business-day period and the Corporation will not file any
registration statement, any prospectus or any amendment or supplement thereto
(or any such documents incorporated by reference) containing any statements with
respect to such Selling Holder to which such Selling Holder shall reasonably
object in writing;
(c) furnish to the holders of Registrable Securities and to any
underwriter of such Registrable Securities such number of conformed copies of
such registration statement and of each such amendment and supplement thereto
(in each case including all exhibits), such number of copies of the prospectus
included in such registration statement (including each preliminary prospectus
and any summary prospectus), in conformity with the requirements of the
Securities Act, such documents incorporated by reference in such registration
statement or prospectus, and such other documents, as the Selling Holders or
such underwriter may reasonably request, and a copy of any and all transmittal
letters or other correspondence to or received from, the Securities and Exchange
Commission or any other governmental agency or self-regulatory body or other
body having jurisdiction (including any domestic or foreign securities exchange)
relating to such offering;
(d) after the filing of the registration statement, promptly
notify each Selling Holder in writing of the effectiveness thereof and of any
stop order issued or threatened by the Securities and Exchange Commission and
take all reasonable actions required to prevent the entry of such stop order or
to promptly remove it if entered and promptly notify such Selling Holder of such
lifting or withdrawal of such order;
(e) use its reasonable best efforts to cause all Registrable
Securities covered by such registration statement to be registered with or
approved by such other governmental agencies or authorities as may be necessary
to enable the Selling Holders to consummate the disposition of such Registrable
Securities;
(f) use its best efforts to register or qualify all Registrable
Securities covered by such registration statement under the securities or blue
sky laws of such jurisdictions as the Holders of such Registrable Securities or
any underwriter of such Registrable Securities shall request, and use its best
efforts to obtain all appropriate registrations, permits and consents in
connection therewith, and do any and all other acts and things which may be
necessary or advisable to enable the Holders of Registrable Securities or any
such underwriter to consummate the disposition in such jurisdictions of its
Registrable Securities covered by such registration statement; provided, that
the Corporation shall not for any such purpose be required to qualify generally
to do business as a foreign corporation in any such jurisdiction wherein it is
not so qualified or to consent to general service of process in any such
jurisdiction;
(g) (i) use its best efforts to furnish to any underwriter of
such Registrable Securities an opinion of counsel for the Corporation addressed
such underwriter and dated the date of the closing under the underwriting
agreement (if any), and (ii) use its best efforts to furnish to any underwriter
of such Registerable Securities a "cold comfort" letter addressed to such
underwriter and signed by the independent public accountants who have audited
the financial statements of the Corporation included in such registration
statement, in each such case covering substantially the same matters with
respect to such registration statement (and the prospectus included therein) as
are customarily covered in opinions of issuer's counsel and in accountants'
letters delivered to underwriters in connection with the consummation of
underwritten public offerings of securities and such other matters as the
underwriter may reasonably request and, in the case of such accountants' letter,
with respect to events subsequent to the date of such financial statements;
(h) as promptly as practicable, notify the Selling Holders in
writing (i) at any time when a prospectus relating to a registration pursuant to
Section 2.1 is required to be delivered under the Securities Act of the
happening of any event as a result of which the prospectus included in such
registration statement, as then in effect, includes an untrue statement of a
material fact or omits to state any material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, and (ii) of any request by the Securities
and Exchange Commission or any other regulatory body or other body having
jurisdiction for any amendment of or supplement to any registration statement or
other document relating to such offering, and in either such case, at the
request of the Selling Holders prepare and furnish to the Selling Holders a
reasonable number of copies of a supplement to or an amendment of such
prospectus as may be necessary so that, as thereafter delivered to the
purchasers of such Registrable Securities, such prospectus shall not include an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances under which they are made, not misleading;
(i) if requested by the lead or managing underwriters, use its
best efforts to list all such Registrable Securities covered by such
registration on each securities exchange and automated inter-dealer quotation
system on which the Common Stock of the Corporation is then listed;
(j) send appropriate officers of the Corporation to attend any
"road shows" and rating agency, analyst and investor presentations scheduled in
connection with any such registration and use its reasonable best efforts to
cooperate as reasonably requested by the underwriter in the marketing of the
Registrable Securities, and all reasonable out-of-pocket costs and expenses
incurred by the Corporation or such officers in connection with such attendance
or co-operation shall be paid by the Corporation;
(k) furnish for delivery in connection with the closing of any
offering of Registrable Securities pursuant to a registration effected pursuant
to Section 2.1 unlegended certificates representing ownership of the Registrable
Securities being sold in such denominations as shall be requested by the
underwriters; and
(l) choose the auditors, Company legal counsel and financial
printer to be engaged by the Corporation in any such registration.
SECTION 2.4 Indemnification and Contribution.
(a) The Corporation agrees to indemnify and hold harmless a
Selling Holder and each Person, if any, who controls each Selling Holder within
the meaning of either Section 15 of the Securities Act or Section 20 of the
Securities Exchange Act from and against any and all losses, claims, damages and
liabilities (including, without limitation, any legal or other costs, fees and
expenses reasonably incurred in connection with defending or investigating any
such action or claim) insofar as such losses, claims, damages or liabilities are
caused by any untrue statement or alleged untrue statement of a material fact
contained in any registration statement or any amendment thereof, any
preliminary prospectus or prospectus (as amended or supplemented if the
Corporation shall have furnished any amendments or supplements thereto) relating
to the Registrable Securities, 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 or liabilities are caused by any such untrue statement or omission or
alleged untrue statement or omission which is based upon information relating to
a Selling Holder which is furnished to the Corporation in writing by a Selling
Holder expressly for use therein. The Corporation also agrees to indemnify any
underwriter of the Registrable Securities so offered and each Person, if any,
who controls such underwriter on substantially the same basis as that of the
indemnification by the Corporation of each Selling Holder provided in this
Section 2.4(a).
(b) Each Selling Holder agrees to indemnify and hold harmless
the Corporation, its directors, the officers who sign the Registration Statement
and each Person, if any who controls the Corporation within the meaning of
either Section 15 of the Securities Act or Section 20 of the Securities Exchange
Act, from and against any and all losses, claims, damages and liabilities
(including, without limitation, any legal or other costs, fees and expenses
reasonably incurred in connection with defending or investigating any such
action or claim) insofar as such losses, claims, damages or liabilities are
caused by any untrue statement or alleged untrue statement of a material fact
contained in any registration statement or any amendment thereof, any
preliminary prospectus or prospectus (as amended or supplemented if the
Corporation shall have furnished any amendments or supplements thereto) relating
to the Registrable Securities, 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, but only with reference to information
relating to a Selling Holder furnished in writing by or on behalf of a Selling
Holder expressly for use in a registration statement, any preliminary
prospectus, prospectus or any amendments or supplements thereto. Each Selling
Holder also agrees to indemnify any underwriter of the Registrable Securities so
offered and each Person, if any, who controls such underwriter on substantially
the same basis as that of the indemnification by such Selling Holder of the
Corporation provided in this Section 2.4(b). Notwithstanding any other provision
of this Section 2.4, no Selling Holder's obligations to indemnify pursuant to
this Section 2.4 shall exceed the amount of net proceeds received by such
Selling Holder in connection with any offering of its Registrable Securities.
Each Selling Holder's obligations to indemnify pursuant to this Section are
several in the proportion that the net proceeds of the offering received by such
Selling Holder bear to the total net proceeds of the offering received by all
Selling Holders and not joint.
(c) Each party indemnified under paragraph (a) or (b) above
shall, promptly after receipt of notice of a claim or action against such
indemnified party in respect of which indemnity may be sought hereunder, notify
the indemnifying party in writing of the claim or action and the indemnifying
party shall assume the defense thereof, including the employment of counsel
reasonably satisfactory to such indemnified party, and shall assume the payment
of all fees and expenses; provided that the failure of any indemnified party so
to notify the indemnifying party shall not relieve the indemnifying party of its
obligations hereunder except to the extent that the indemnifying party is
materially prejudiced by such failure to notify. In any such action, any
indemnified party shall have the right to retain its own counsel, but the fees
and expenses of such counsel shall be at the sole expense of such indemnified
party unless (i) the indemnifying party and the indemnified party shall have
mutually agreed to the retention of such counsel or (ii) in the reasonable
judgment of such indemnified party 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 shall be at
the sole expense of the indemnifying party. It is understood that the
indemnifying party shall not, in connection with any claim or action or related
proceeding 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) at any time for all such indemnified parties, and that all such fees
and expenses shall be reimbursed as they are incurred. In the case of any such
separate firm for the Holders as indemnified parties, such firm shall be
designated in writing by the indemnified party that had the largest number of
Registrable Securities included in such registration. The indemnifying party
shall not be liable for any settlement of any claim or action effected without
its written consent, which consent shall not be unreasonably withheld or
delayed, but if settled with such consent, or if there be a final judgment for
the plaintiff, the indemnifying party shall 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. No indemnifying party shall,
without the prior written consent of the indemnified party, effect any
settlement of any pending or threatened claim or action in respect of which any
indemnified party is or could have been a party and indemnity could have been
sought hereunder by such indemnified party, unless such settlement includes an
unconditional release of such indemnified party from all liability arising out
of such proceeding.
(d) If the indemnification provided for in this Section 2.4
shall for any reason be unavailable (other than in accordance with its terms) to
an indemnified party in respect of any loss, liability, cost, claim or damage
referred to therein, then each indemnifying party shall, in lieu of indemnifying
such indemnified party, contribute to the amount paid or payable by such
indemnified party as a result of such loss, liability, cost, claim or damage (A)
as between the Corporation and the underwriters, (i) in such proportion as is
appropriate to reflect the relative benefits received by the Corporation on the
one hand and the underwriters on the other hand from the offering of the
Registrable Securities or (ii) if the allocation provided by clause (i) above is
not permitted by applicable law, in such proportion as is appropriate to reflect
not only the relative benefits referred to in clause (i) above but also the
relative fault of the indemnifying party or parties on the one hand and of the
indemnified party or parties on the other hand in connection with the statements
or omissions that resulted in such losses, claims, damages or liabilities, as
well as any other relevant equitable considerations, and (B) as between (x) the
Corporation and the Selling Holders, or (y) the Selling Holders and the
underwriters, in such proportion as is appropriate to reflect the relative fault
of the indemnifying party or parties on the one hand and of the indemnified
party or parties on the other hand in connection with the statements or
omissions that resulted in such losses, claims, damages or liabilities, as well
as any other relevant equitable considerations. The relative benefits received
by the Corporation on the one hand and the underwriters on the other hand in
connection with the offering of the Registrable Securities shall be deemed to be
in the same respective proportions as the net proceeds from the offering of the
Registrable Securities (before deducting expenses) (as if, for purposes of this
clause (d), the Corporation had received the proceeds of any secondary offering)
and the total underwriting discounts and commissions received by the
underwriters, in each case as set forth in the table on the cover of a
prospectus, bear to the aggregate public offering price of the Registrable
Securities. The relative fault of the Corporation, the Selling Holders and the
underwriters shall 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 the
Corporation, by a Selling Holder or by the underwriters and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The amount paid or payable by an indemnified
party as a result of the loss, cost, claim, damage or liability, or action in
respect thereof, referred to above in this paragraph (d) shall be deemed to
include, for purposes of this paragraph (d), any legal or other costs, fees and
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. The Corporation and the
Selling Holders agree that it would not be just and equitable if contribution
pursuant to this Section 2.4 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 this paragraph. Notwithstanding any other provision of this
Section 2.4, no Selling Holder shall be required to contribute any amount in
excess of the amount by which the net proceeds of the offering received by such
Selling Holder exceed the amount of any damages which such Selling Holder has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. Each Selling Holder's obligations to
contribute pursuant to this Section are several in the proportion that the net
proceeds of the offering received by such Selling Holder bears to the total net
proceeds of the offering received by all the Selling Holders and not joint. No
Person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any Person
who was not guilty of such fraudulent misrepresentation.
(e) Indemnification and contribution similar to that specified
in the preceding paragraphs of this Section 2.4 (with appropriate modifications)
shall be given by the Corporation, a Selling Holder and the underwriters with
respect to any required registration or other qualification of securities under
any state law or regulation or governmental authority.
(f) The obligations of the parties under this Section 2.4 shall
be in addition to any liability which any party may otherwise have to any other
party.
SECTION 2.5. Holdback Agreement. If any registration pursuant to which
this Article 2 shall apply shall be in connection with an underwritten public
offering of Registrable Securities, each Holder agrees not to effect any sale or
distribution, including any sale under Rule 144, of any equity security of the
Corporation (otherwise than through the registered public offering then being
made), within seven (7) days prior to or ninety (90) days (or such lesser period
as the lead or managing underwriters may permit) after the effective date of the
registration statement (or the commencement of the offering to the public of
such Registrable Securities in the case of a Rule 415 Offering); provided that
the foregoing shall not apply to any Holder (i) that together with its
Affiliates, beneficially owns (within the meaning of Rule 13d-3 and Rule 13d-5
promulgated under the Securities Exchange Act) in the aggregate less than five
percent (5%) of the aggregate amount of outstanding Common Stock, and (ii) that
does not have a director on the Board designated or nominated by it or its
Affiliate; provided, that this Section 2.5 shall not apply if any director or
any person beneficially owning at least five percent (5%) of the aggregate
amount of outstanding Common Stock is not comparably restricted.
SECTION 2.6. Limitation on Granting Other Registration Rights. From and
after the date of this Agreement, the Corporation shall not, without the prior
written consent of the Holder, enter into any agreement with any holder or
prospective holder of any securities of the Corporation who has received or
would receive such securities as consideration in a merger, sale or similar
business combination transaction which would allow such holder or prospective
holder to include such securities in any registration in which the Holder is
entitled to participate pursuant to this Agreement unless, under the terms of
such agreement, such holder's or prospective holder's right to include such
securities in any such registration are pari passu with or subordinate to the
rights of the Holder granted pursuant to Section 2.01.
ARTICLE 3
PREEMPTIVE RIGHTS
SECTION 3.1. Preemptive Rights.
(a) If the Corporation issues or sells any Common Stock, or
securities exercisable for, convertible into or exchangeable for Common Stock,
the Holder shall be entitled to participate in such issuance or sale unless (i)
such issuance or sale is in connection with any merger, acquisition, exchange
offer, conversion of outstanding convertible securities, exercise of outstanding
options or warrants, dividend reinvestment plan, stock option or other executive
or employee benefit or compensation plan, (ii) the Corporation receives any form
of non-cash consideration in connection with such issuance or sale and the
Holder is unable to provide consideration in a substantially identical form of
such non-cash consideration, (iii) such issuance or sale occurs at any time on
or after the first date on which the Holder no longer owns at least fifty
percent (50%) of the Original Securities, or (iv) the issuance or sale is a
Public Offering and the Holder has exercised its rights under Section 2.1
hereof.
(b) If the Corporation proposes to conduct an issuance or sale
in which the Holder is entitled to participate pursuant to Section 3.1, the
Corporation shall give the Holder written notice of such proposed issuance or
sale. Such notice shall state that the Holder shall be entitled to participate
in such issuance or sale on the same terms and conditions as are offered to
other purchasers (including purchase price and the form of consideration) in the
same ratio as the number of shares of Common Stock held by Holder bears to the
total number of issued and outstanding shares of Common Stock of the Corporation
at such time (such that if the Holder owns 3% of the issued and outstanding
Common Stock of the Corporation, the Holder may acquire a number of shares equal
to 3% of the shares issued or sold).
(c) In the case of a private placement of securities, upon the
written request of the Holder made within twenty (20) days after the receipt of
the Corporation's notice (which request shall specify the number of shares of
Common Stock intended to be acquired) the Corporation shall, upon receipt of the
consideration therefor, issue or sell to the Holder up to the number of shares
of Common Stock the Holder is entitled to purchase under this Section 3.1 so
long as such issuance or sale is not prohibited by applicable law and subject to
such restrictions as may be required by applicable law. Nothing in this
paragraph (c) shall prevent the Corporation from consummating the private
placement; provided that the Holder is given the opportunity to purchase the
applicable percentage of Common Stock after such private placement (in which
case the number of shares which the Holder can purchase shall be determined
based on the aggregate number of the shares issued in the private placement and
the shares acquired by the Holder, if any).
(d) In the event of a Public Offering, the Corporation shall
give the Holder notice of the proposed Public Offering of Common Stock not less
than ten (10) days prior to the anticipated pricing date of the proposed Public
Offering. Within two (2) hours after the Holder is given written notice of the
offering price to the public in the offering, the Holder shall give irrevocable
written confirmation of its intent to purchase the Common Stock (which
confirmation shall specify the number of shares of Common Stock intended to be
acquired) and, if such confirmation is not made within such period, the Holder's
rights under this Section 3.1 with respect to such offering shall automatically
expire. If the Holder timely makes such a confirmation, on the next business day
following the date of the confirmation the Holder shall deposit the purchase
price for the shares being purchased in a brokerage account acceptable to the
underwriter and grant an irrevocable power of attorney to an officer of the
Corporation (which power of attorney shall be in a customary form) authorizing
such officer to take any actions necessary to effectuate the purchase. If the
Holder has made the confirmation and the deposit as required, the Corporation
shall issue or sell, or cause the underwriter to issue and sell, such Common
Stock to the Holder upon delivery of the consideration therefor to the
Corporation or underwriter, as applicable, so long as such issuance or sale is
not prohibited by applicable law and subject to such restrictions as may be
required by applicable law.
(e) In the event that the Corporation amends the terms of its
outstanding Series A Senior Cumulative Preferred Stock so that such preferred
stock is convertible or exchangeable into Common Stock (or securities
exercisable for, convertible into or exchangeable for Common Stock), the
Corporation shall offer to sell and issue to the Holder securities having terms
identical to such preferred stock, which securities represent the percentage of
such preferred stock equal to the Holder's percentage interest in the
outstanding Common Stock of the Corporation, for a consideration per share equal
to the same consideration per share paid by the existing holders of such
preferred stock for the shares of such preferred stock outstanding as of
November 7, 2001.
(f) The Holder shall have no rights under this Section 3.1 as a
result of any notice given hereunder by the Corporation if the proposed issuance
or sale with respect to which such notice is given is not consummated for any
reason.
ARTICLE 4
MISCELLANEOUS
SECTION 4.1. Remedies. Each Holder and each party hereto shall have all
rights and remedies set forth in this Agreement and all rights and remedies
which such parties have been granted at any time under any other agreement or
contract and all of the rights which such parties have under any law or at
equity. Any Person having rights under any provision of this Agreement shall 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. The parties hereto agree and acknowledge that money
damages may not be an adequate remedy for any breach of the provisions of this
Agreement and that any party may in its sole discretion apply to any court of
law or equity of competent jurisdiction (without posting any bond or other
security) for specific performance and for other injunctive relief in order to
enforce or prevent violation of the provisions of this Agreement.
SECTION 4.2. Successors and Assigns. The rights granted to the Holder
under this Agreement may not be assigned or transferred in any manner (including
a change in control of Holder) without the prior written consent of the
Corporation. All covenants and agreements contained in this Agreement by or on
behalf of any of the parties hereto shall bind and inure to the benefit of the
respective successors and permitted assigns of the parties hereto whether so
expressed or not.
SECTION 4.3. Severability. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law, such provision shall be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of this Agreement.
SECTION 4.4. Counterparts. This Agreement 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.
SECTION 4.5. Descriptive Headings; Interpretation; No Strict
Construction. The descriptive headings of this Agreement are inserted for
convenience only and do not constitute a substantive part of this Agreement.
Whenever required by the context, any pronoun used in this Agreement shall
include the corresponding masculine, feminine or neuter forms, and the singular
form of nouns, pronouns and verbs shall include the plural and vice versa. The
use of the word "including" in this Agreement shall be by way of example rather
than by limitation. Reference to any agreement, document or instrument means
such agreement, document or instrument as amended or otherwise modified from
time to time in accordance with the terms thereof, and if applicable hereof. The
use of the words "or," "either" and "any" shall not be exclusive. The parties
hereto have participated jointly in the negotiation and drafting of this
Agreement. In the event an ambiguity or question of intent or interpretation
arises, it is the intent of the parties that this Agreement shall be construed
as if drafted jointly by the parties hereto, and no presumption or burden of
proof shall arise favoring or disfavoring any party by virtue of the authorship
of any of the provisions of this Agreement.
SECTION 4.6. Governing Law. This Agreement shall be governed by, and
construed under, the laws of the State of New York, all rights and remedies
being governed by said laws, without regard to conflict of laws principles. Any
party may make service on the other party by sending or delivering a copy of the
process to the party to be served at the address and in the manner provided for
the giving of notices in Section 4.7 below. Nothing in this Section 4.6,
however, shall affect the right of any party to serve legal process in any other
manner permitted by law or in equity. Each party agrees that a final judgment in
any action or proceeding so brought shall be conclusive and may be enforced by
suit on the judgment or in any other manner provided by law or in equity.
SECTION 4.7. Addresses and Notices. All notices, requests or other
communications to any party hereunder shall be in writing (including facsimile
transmission) and shall be given,
FairPoint Communications Solutions Corp.
000 Xxxx Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxx, Xx.
Facsimile: 000-000-0000
with a copy to:
Paul, Hastings, Xxxxxxxx & Xxxxxx, LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxxxx, Esq.
Facsimile: (000) 000-0000
if to the Corporation, to:
Choice One Communications Inc.
000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxxx
Facsimile: (000) 000-0000
with a copy to:
Xxxxx Peabody LLP
0000 Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxx, III, Esq.
Facsimile: (000) 000-0000
All such notices, requests and other communications shall be deemed
received on the date of receipt by the recipient thereof if received prior to 5
p.m. in the place of receipt and such day is a business day in the place of
receipt. Otherwise, any such notice, request or communication shall be deemed
not to have been received until the next succeeding business day in the place of
receipt.
SECTION 4.8 Business Days. If any time period for giving notice or
taking action hereunder expires on a day which is a Saturday, Sunday or legal
holiday in the state in which the Corporation's chief executive office is
located, the time period shall automatically be extended to the business day
immediately following such Saturday, Sunday or legal holiday.
* * *
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.
CHOICE ONE COMMUNICATIONS INC.
By:____/s/ Xxxxx X. Xxxxxx
--------------------------
Xxxxx X. Xxxxxx
Chairman and Chief Executive
Officer
FAIRPOINT COMMUNICATIONS SOLUTIONS
CORP.
By:___/s/ Xxxxxx X. Xxxxx, Xx.
-----------------------------
Xxxxxx X. Xxxxx, Xx.
Senior Vice President and
Chief Financial Officer
