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EXHIBIT 10.4
SHAREHOLDERS AGREEMENT
This Shareholders 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, LDI and the Advent Entities have entered into a Stock Purchase
Agreement of even date herewith ("Stock Purchase Agreement"), whereby the Advent
Entities are purchasing shares of Series B Preferred Stock, par value $0.001 per
share, of LDI ("Series B Preferred") and warrants (as amended, supplemented,
reissued or replaced from time to time pursuant to the terms thereof, the
"Warrants") to purchase shares of the common stock of LDI, par value $0.001 per
share ("Common Stock");
WHEREAS, Xxxxxxxxx is the Chairman of LDI, and Xxxxxxxx is the
President of LDI;
WHEREAS, Xxxxxxxxx and Xxxxxxxx each owns shares of Common Stock, and
WHEREAS, in connection with the Advent Entities' investment in the
Company, the parties to this Agreement wish to specify certain terms and
conditions with respect to their rights and obligations as shareholders;
NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, LDI, the Advent Entities, Xxxxxxxxx, and Xxxxxxxx agree as
follows:
Section 1. Definitions and Interpretation.
Capitalized terms shall have the following meanings when used in this
Agreement:
a. "Affiliate" means a Person that is any one or more of the
following: (a) in relation to any Person, another Person that
controls, is controlled by or is
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under common control with such Person; (b) in relation to any
Shareholder which holds Shares as trustee, the beneficial
owner of those Shares or a trustee for the same beneficial
owner; (c) in relation to either Principal Shareholder, a
Family Donee of such Shareholder.
b. "Equity" means the Common Stock outstanding on a fully diluted
basis assuming the conversion of all securities convertible
into Common Stock and the exercise of all vested options and
warrants to purchase Common Stock.
c. "Exempt Transfer" means, with respect to shares of Common
Stock held by a Principal Shareholder, (i) a gift or
assignment of shares of Common Stock by such shareholder,
whether on death or inter vivos, to (A) a spouse, (B) any
other member of his immediate family (i.e., parents, children,
including those adopted, children's direct descendants,
brothers, sisters, and the spouses of the foregoing), (C) a
trust the beneficiaries of which consist solely of one or more
members of his immediate family or (D) a custodian under the
Uniform Gifts to Minors Act or similar fiduciary for the
exclusive benefit of his children; or (ii) a transfer of
shares of Common Stock to the legal representatives of a
shareholder upon his death or adjudication of incompetency or
by any such legal representatives to any person to whom such
shareholder could have transferred such shares pursuant to
subclause (A), (B), (C) or (D) of clause (i) of this
definition.
d. "Family Donee" means a Person to whom an Exempt Transfer is
made.
e. "Person" means an individual, partnership, company,
corporation or other legal entity, as the context requires.
f. "Principal Shareholder" means either of Xxxxxxxxx or Xxxxxxxx.
g. "Redemption Event" has the same meaning as in the Articles of
Amendment to the Second Restated Articles of Incorporation
filed with the Florida Secretary of State on July 23, 1997.
h. "Shares" means shares of any class or series of the capital
stock of the Company.
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i. "Shareholder" means any Person holding Shares beneficially or
of record.
Section 2. Tag-Along Rights.
a. If either Principal Shareholder proposes to sell, assign,
transfer or dispose of any Shares to any Person that is not an
Affiliate of such Principal Shareholder, then such Principal
Shareholder shall give written notice (a "Tag-Along Notice")
to the Advent Entities at least 45 days prior to the closing
of such sale or transfer. The Tag-Along Notice shall describe
in reasonable detail the proposed transaction including,
without limitation, the number and kind of Shares to be sold
or transferred, the nature of such sale or transfer, the
consideration to be paid, and the name and address of the
prospective purchaser or transferee.
b. Each of the Advent Entities shall have the right, exercisable
upon written notice to such Principal Shareholder within 30
days after the Tag-Along Notice is given, to participate in
such transaction on the same terms and conditions specified in
the Tag-Along Notice. To the extent that one or more of the
Advent Entities exercise such right of participation in
accordance with the terms and conditions set forth below, the
amount of securities that the Principal Shareholder may sell
in the transaction shall be correspondingly reduced.
c. The Advent Entities may sell all or any part of that number of
Shares owned by them determined in accordance with this
subsection.
i. If the Principal Shareholder proposes to sell Common Stock,
securities convertible into Common Stock, and/or options and warrants to
purchase Common Stock, then the Advent Entities shall be entitled to sell Common
Stock, securities convertible into Common Stock, and/or options and warrants to
purchase Common Stock (though not necessarily securities of the same kind as, or
in the same proportion as, the securities to be sold by the Principal
Shareholder) equal to the product obtained by multiplying (i) the aggregate
number of shares of Common Stock covered by the Tag-Along Notice (assuming the
conversion by the Principal Shareholder of all securities convertible into
Common Stock and the exercise by him of all options and warrants to purchase
Common Stock) by (ii) a fraction (the "Advent Sale Ratio"), the numerator of
which is the number of shares of Common Stock owned by the Advent Entities
(assuming the conversion by them of all
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securities convertible into Common Stock and the exercise by them of all options
and warrants to purchase Common Stock) at the time of the sale or transfer, and
the denominator of which is the aggregate number of shares of Common Stock owned
by the Principal Shareholder (assuming the conversion by him of all securities
convertible into Common Stock and the exercise by him of all options and
warrants to purchase Common Stock) and the Advent Entities (assuming the
conversion by them of all securities convertible into Common Stock and the
exercise by them of all options and warrants to purchase Common Stock) at the
time of the Tag-Along Notice.
ii. If the Principal Shareholder proposes to sell securities
other than Common Stock, securities convertible into Common Stock, and options
and warrants to purchase Common Stock (collectively, "Non-Common-Stock
Securities"), then with respect to such the Advent Entities shall be entitled to
sell LDI securities of any type, class or series with a fair market value equal
to the product of (x) the fair market value of the Non-Common-Stock Securities
to be sold by the Principal Shareholder, and (y) the Advent Sale Ratio.
d. The Advent Entities shall decide among themselves which of the
Advent Entities shall be entitled to participate in the
transaction pursuant to this Section 2 and in what
proportions.
e. To the extent that any prospective purchaser refuses to
purchase securities from the Advent Entities, the Principal
Shareholder shall not sell any securities to such prospective
purchaser unless and until, simultaneously with such sale,
such Principal Shareholder shall purchase from the Advent
Entities the securities that the Advent Entities would have
otherwise been entitled to sell to the prospective purchaser
pursuant to Section 2(c) at the price that the Advent Entities
would have been entitled to receive from such prospective
purchaser.
f. The exercise or non-exercise of the rights of the Advent
Entities hereunder to participate in one or more sales of
Common Stock made by the Principal Shareholder shall not
adversely affect their rights to participate in subsequent
sales of Common Stock.
g. If none of the Advent Entities elect to participate in the
sale described in the Tag-Along Notice, the Principal
Shareholder may, not later than 150 days
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following the date that the Tag-Along Notice is given to the
Advent Entities, consummate the transaction contemplated in
the Tag-Along Notice but only on terms and conditions and at a
price not more favorable to the Principal Shareholder than
those described in the Tag-Along Notice. If such transaction
is not consummated with such 150-day period, such transaction
shall again be subject to the requirements described in this
Section 2.
h. A Principal Shareholder shall not transfer any Shares to such
Principal Shareholder's Affiliate unless and until such
Affiliate shall have executed and delivered to the Advent
Entities a written agreement in form and substance reasonably
acceptable to the Advent Entities requiring such Affiliate to
apply the provisions of this Section 2 mutatis mutandis to any
proposed sale, transfer, assignment or disposition of the
Shares such Affiliate is receiving.
i. A Principal Shareholder shall not pledge, hypothecate, or in
any way encumber any Shares except in a bona fide loan
transaction that creates a mere security interest and only
provided that the pledgee shall have executed and delivered to
the Advent Entities an acknowledgment in form and substance
reasonably acceptable to the Advent Entities requiring such
pledgee to comply with the provisions of this Section 2
mutatis mutandis in connection with any proposed sale,
transfer, assignment or disposition by such pledgee of the
Shares such pledgee is receiving.
j. Any attempt by a Principal Shareholder to transfer Shares in
violation of this Section 2 shall be void, and LDI agrees it
will not effect a transfer in violation of this Section 2 nor
will it treat any alleged transferee resulting from a transfer
in violation of this Section 2 as the holder of such shares
without the written consent of the Advent Entities.
k. The Principal Shareholders agree that money damages would be
an inadequate remedy for its breach of their obligations under
this Section 2, and therefore each Principal Shareholder
consents to the entry of an injunction or a decree of specific
performance to remedy any such breach.
Section 3. Drag-Along Rights.
a. In the event that either:
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i. an offeror makes a bona fide binding offer to acquire all
of the Equity of the Company, and the offer is accepted by Persons holding 51%
or more of the Equity of the Company, provided that acceptances by any Advent
Entity shall be disregarded in calculating such percentage, and the Advent
Entities also accept such offer,
or
ii. an offeror makes a bona fide binding offer to acquire all
or substantially all of the assets of LDI, or to acquire all the issued or
outstanding Shares by means of a merger, and the offer is accepted (subject to
Board of Directors or other required approval) by Persons holding 51% or more of
the Equity of the Company, provided that acceptances by any Advent Entity shall
be disregarded in calculating such percentage, and the Advent Entities also
accept such offer,
b. then each party to this Agreement:
i. in the case of (a)(i) above, subject to subsection (c),
undertakes to accept the offer in accordance with its terms and to execute all
such documents and to do all such other acts or things which are necessary to
transfer his Shares to the offeror in accordance with the terms of the offer;
and
ii. in the case of (a)(ii) above, subject to subsection (c),
undertakes to take all steps necessary or desirable to cause LDI to accept the
offer in accordance with its terms and to consummate the transactions proposed
in the offer.
c. If, in the case of (a)(i) above, one or more holders of Equity
do not accept the offer and are not legally bound to do so
(such holders being referred to collectively as "Dissenters"),
then the parties to this Agreement shall be released from
their obligations under subsection (b)(i) unless the offeror
is willing to consummate the proposed acquisition
substantially in accordance with the offer notwithstanding the
failure of the Dissenters to participate, in which case the
parties to this Agreement shall not be released from such
obligations. If, in the case of (a)(ii) above, one or more
holders of Equity do not take all steps necessary or desirable
to cause LDI to accept the offer and consummate the proposed
transactions, and such holders are not legally bound to do so,
and as a result LDI does not accept the offer or does not
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consummate the proposed transactions, the parties to this
Agreement shall be released from their obligations under
subsection (b)(ii).
d. Each party to this Agreement agrees that money damages would
be an inadequate remedy for its breach of its obligations
under this Section 3, and therefore consents to the entry of
an injunction or a decree of specific performance to remedy
any such breach.
e. A party to this Agreement shall not transfer any Shares to
such party's Affiliate unless and until such Affiliate shall
have executed and delivered to the other parties a written
agreement in form and substance reasonably acceptable to such
other parties requiring such Affiliate to apply the provisions
of this Section 3 mutatis mutandis to any proposed sale,
transfer, assignment or disposition of the Shares such
Affiliate is receiving.
f. A party to this Agreement shall not pledge, hypothecate, or in
any way encumber any Shares except in a bona fide loan
transaction that creates a mere security interest and only
provided that the pledgee shall have executed and delivered to
the other parties to this Agreement an acknowledgment in form
and substance reasonably acceptable to such other parties
requiring such pledgee to comply with the provisions of this
Section mutatis mutandis in connection with any proposed sale,
transfer, assignment or disposition by such pledgee of the
Shares such pledgee is receiving.
Section 4. Advent Entities' Information Rights.
For as long as the Advent Entities own Shares, LDI shall furnish each
of the following documents to the Advent Entities:
a. Within 60 days after the end of each of the first three fiscal
quarters in each fiscal year, (i) LDI's unaudited consolidated
financial statements, with consolidating schedules, for such
fiscal quarter, certified by its principal financial officer,
prepared in accordance with U.S. GAAP (except as otherwise
noted in the accompanying footnotes);
b. Within 45 days following the end of each quarter, management
reports of LDI; and
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c. Within 120 days after the end of each fiscal year, LDI's
audited consolidated financial statements, with consolidating
schedules, covering such fiscal year, certified by a firm of
independent auditors as having been prepared in accordance
with U.S. GAAP.
Section 5. Termination.
a. Upon the disposition by a party to this Agreement other than
LDI of all of Shares owned by such party, such Person shall
have no further rights under this Agreement. If not earlier
terminated pursuant to its terms, this Agreement shall
terminate on the first date on which no Shareholder who is a
party to this Agreement owns any Shares.
b. If not earlier terminated pursuant to its terms, this
Agreement will terminate on the twentieth anniversary of the
death or dissolution of the longest-living or longest-existing
Shareholder who is a party to this Agreement.
Section 6. Further Assurances. Each party to this Agreement 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 7. INTENTIONALLY OMITTED.
Section 8. Notice.
a. All notices and other communications to be given under this
Agreement, including without limitation a Tag-Along Notice,
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;
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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):
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:
c/o Long Distance International Inc.
000 X. Xxxxxxx Xxxxxx, Xxxxx 000
Xx. Xxxxxxxxxx, Xxxxxxx 00000
Facsimile: (000) 000-0000
If to Xxxxxxxxx:
c/o Long Distance International Inc.
000 X. Xxxxxxx Xxxxxx, Xxxxx 000
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Ft. Xxxxxxxxxx, Xxxxxxx 00000
Facsimile: (000) 000-0000
Section 9. Miscellaneous.
a. This Agreement supersedes all prior agreements among the
parties 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.
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 Shareholders 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. In this Agreement, where the context permits, words denoting a
specific gender shall be construed as including every gender.
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i. 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.
j. 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.
k. Except as otherwise provided in this Section 9(k), each
certificate or other instrument evidencing any Shares owned by
any party to this Agreement shall bear a legend in
substantially the following form:
"The shares of stock represented by this certificate are subject to the
terms and conditions of a Shareholders Agreement among the Company, the
holder of these shares, and certain other holders of shares of the
Company, dated as of July 28, 1997, which contains, among other
provisions, restrictions on transfer, sale or other disposition of the
shares. A copy of such agreement is on file in the offices of the
Company."
Any holder of any such certificate or instrument bearing the foregoing legend
shall be entitled to promptly receive from LDI, without expense, a new
certificate or instrument of identical tenor representing the same kind of
securities and the same number or other amount thereof not bearing such legend
if such securities shall have been sold or otherwise disposed of in accordance
with the terms of this Agreement.
l. Any claim, suit, action, or proceeding among any or all of the
parties hereto relating to this Shareholders Agreement, to any
document, instrument, or agreement delivered pursuant hereto,
referred to herein, or contemplated hereby, or in any other
manner arising out of or relating to the transactions
contemplated by or referenced in this Shareholders Agreement,
shall be commenced and maintained exclusively in the United
States District Court for the Southern District of New York,
or, if such Court lacks jurisdiction
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over the subject matter, in a state court of competent
subject-matter jurisdiction sitting in the State of New York.
The parties hereby submit themselves unconditionally and
irrevocably to the personal jurisdiction of such courts. The
parties further agree that venue shall be exclusively in New
York County in the State of New York. The parties irrevocably
waive any objection to such personal jurisdiction or venue
including, but not limited to, the objection that any suit,
action, or proceeding brought in the State of New York has
been brought in an inconvenient forum. The parties irrevocably
agree that process issuing from such courts may be served on
them, either personally or by certified mail, return receipt
requested, at the addresses given in Section 8 hereof; and
further irrevocably waive any objection to service of process
made in such manner and at such addresses, including without
limitation any objection that service in such manner and at
such addresses is not authorized by the local or procedural
laws of the State of New York.
IN WITNESS WHEREOF, LDI and the Advent Entities have caused
this Agreement to be duly executed by their respective officers, each of whom is
duly authorized, all 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
_______________________
