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Exhibit 10.5
EXECUTION COPY
INVESTOR RIGHTS AGREEMENT
by and among
Intercontinental Telecommunications Corp.
Capital Communications CDPQ Inc.,
and
The undersigned shareholders of
Intercontinental Telecommunications Corp.
May 31, 2000
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Table of Contents
Page
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1. Registration Rights......................................................................................1
1.1 Definitions......................................................................................1
1.2 Request for Registration.........................................................................3
1.3 Company Registration.............................................................................5
1.4 Form S-3 Registration............................................................................7
1.5 Obligations of the Company.......................................................................8
1.6 Information from Holder.........................................................................11
1.7 Expenses of Registration........................................................................11
1.8 Preparation; Reasonable Investigation...........................................................12
1.9 Delay of Registration...........................................................................12
1.10 Indemnification.................................................................................12
1.11 Reports Under Securities Exchange Act of 1934...................................................15
1.12 Assignment of Registration Rights...............................................................15
1.13 Limitations on Subsequent Registration Rights...................................................16
1.14 "Market Stand-Off"Agreement.....................................................................16
1.15 Termination of Registration Rights..............................................................16
2. Covenants of the Company and the Shareholders...........................................................16
2.1 Right of First Offer............................................................................17
2.2 Resolutions.....................................................................................17
2.3 Actions Requiring Board Approval................................................................19
2.4 Third Party Offer; Right of First Refusal.......................................................19
2.5 Tag-Along Rights................................................................................20
2.6 Terms of Sales..................................................................................22
2.7 Information Rights..............................................................................22
3. Other Agreements........................................................................................23
3.1 Board of Directors..............................................................................23
4. Representations and Warranties..........................................................................23
4.1 Representations and Warranties of the Company...................................................24
4.2 Representations and Warranties of the Shareholders..............................................24
5. Covenants of the Shareholders...........................................................................25
5.1 Pledges.........................................................................................25
5.2 General Undertakings and Agreements by the Shareholders.........................................26
5.3 Non-Compete and Confidentiality.................................................................26
5.4 Further Assurances..............................................................................27
6. Indemnification.........................................................................................27
6.1 Indemnification.................................................................................27
6.2 Contribution....................................................................................28
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6.3 Indemnification Procedure.......................................................................28
6.4 Survival........................................................................................29
7. Miscellaneous...........................................................................................29
7.1 Successors and Assigns..........................................................................29
7.2 Governing Law...................................................................................29
7.3 Counterparts....................................................................................30
7.4 Titles and Subtitles............................................................................30
7.5 Notices.........................................................................................30
7.6 Expenses........................................................................................30
7.7 Entire Agreement: Amendments and Waivers........................................................30
7.8 Severability....................................................................................30
7.9 Arbitration.....................................................................................31
7.10 Third Party Beneficiaries.......................................................................32
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INVESTOR RIGHTS AGREEMENT
THIS INVESTOR RIGHTS AGREEMENT is made as of the 31st day of May, 2000 by
and among Intercontinental Telecommunications Corp., a Florida corporation (the
"Company"), Capital Communications CDPQ Inc. (the "Investor") and the
shareholders of the Company who are signatories to this Agreement (excluding the
Investor, each a "Shareholder" and together, the "Shareholders").
RECITALS
WHEREAS, the Company and the Investor are parties to that certain
Subscription Agreement of even date herewith (the "Subscription Agreement"),
pursuant to which the Investor is subscribing for 4,914,005 shares of Series A
Preferred Stock, par value $0.0001 per share (the "Series A Preferred Stock"),
of the Company;
WHEREAS, pursuant to the Subscription Agreement, the Company filed a
Certificate of Designation with the Secretary of State of the State of Florida
(the "Certificate of Designation") covering the Series A Preferred Stock;
WHEREAS, the parties agree that the Investor and the Company shall have
certain rights and obligations with respect to the Investor's investment in the
Company and that it is in their best interests to set forth their respective
rights and obligations herein.
NOW, THEREFORE, THE PARTIES HEREBY AGREE AS FOLLOWS:
1. REGISTRATION RIGHTS. The Company covenants and agrees as follows:
1.1 DEFINITIONS. For purposes of this Section 1:
(a) The term "Act" means the Securities Act of 1933, as amended.
(b) The term "Common Stock" means the common stock of the
Company, par value $0.0001 per share.
(c) The term "Competing Business" shall mean an enterprise
established to provide vertically integrated web-based solutions over a
broadband network to business/corporate, government or small office/home office
and residential customers via either wireless local access or dedicated links.
(d) The term "Dollars" and the symbol "$" means United States
Dollars.
(e) The term "Form S-3" means such form under the Act as in
effect on the date hereof or any registration form under the Act subsequently
adopted by the SEC
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that permits the incorporation of substantial information by reference to other
documents filed by the Company with the SEC.
(f) The term "Change of Control" shall mean when the shareholders
who are parties to this Agreement on the date hereof collectively cease to own
at least a majority of the Shares entitled to vote or cease to have the right to
appoint a majority of the members of the Board of Directors.
(g) The term "Holder" means any person owning or having the right
to acquire Registrable Securities or any assignee thereof in accordance with
Section 1.11 hereof.
(h) The term "Initial Offering" means the Company's first public
offering of its securities pursuant to an effective registration statement under
the Act.
(i) The term "1934 Act" means the Securities Exchange Act of
1934, as amended.
(j) The term "Parties" shall mean the Company, the Shareholders
and the Investor.
(k) The term "Permissible Transferee" shall mean, with respect to
any Shareholder that is a natural person, a relative of such Shareholder, and,
with respect to any Shareholder that is a legal person, any Person that is
directly or indirectly, controlling, controlled by, or under common control with
such Shareholder, and in each case agrees to become a party to this Agreement.
For the purposes of this definition, (x) one Person shall be deemed to control a
Shareholder if such Person, directly or indirectly, beneficially owns at least
80% of the economic and voting interests of the Shareholder; (y) one Person
shall be deemed to be controlled by a Shareholder if the Shareholder, directly
or indirectly, beneficially owns at least 80% of the economic and voting
interests of each of such Person; (z) one Person shall be deemed to be under
common control with a Shareholder if, in aggregate, the same Person or Persons
who, directly or indirectly, beneficially own at least 80% of the economic and
voting interests of the Shareholder also beneficially own, directly or
indirectly, at least 80% of the economic and voting interests of such commonly
controlled Person. In the event a Shareholder is in the process of dissolving,
Permissible Transferee shall include such Person's constituent shareholders,
partners or members pursuant to a pro rata distribution in connection with such
dissolution. It is understood that with respect to the Investor, a Permissible
Transferee shall include one or more subsidiaries of the Investor or an
investment vehicle created by the Investor or an Affiliate of the Investor such
that the exercise of the voting rights attached to the Shares owned by the
Investor will be held by the Investor or an Affiliate of the Investor, or by
Telinvest Management Corporation or an Affiliate of Telinvest Management
Corporation, or by executives of Telinvest Management Corporation.
(l) The term "Qualified Offering" has the meaning given it in the
Subscription Agreement.
(m) The term "register," "registered," and "registration" refer
to a registration effected by preparing and filing a registration statement or
similar document in
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compliance with the Act, and the declaration or ordering of effectiveness of
such registration statement or document.
(n) The term "Registrable Securities" means (i) the Series A
Preferred Stock, (ii) the Common Stock issuable or issued upon conversion of the
Series A Preferred Stock, and (iii) any Common Stock of the Company issued as
(or issuable upon the conversion or exercise of any warrant, right or other
security that is issued as) a dividend or other distribution with respect to, or
in exchange for, or in replacement of, the shares referenced in (i) above,
excluding in all cases, however, any Registrable Securities sold by a person in
a transaction in which his or its rights under this Section 1 are not assigned.
(o) The number of shares of "Registrable Securities" outstanding
shall be determined by adding the number of shares of Common Stock outstanding,
plus the number of shares of Common Stock issuable pursuant to then exercisable
or convertible securities that are, Registrable Securities.
(p) The term "Restricted Period" shall mean the period commencing
on the date of this Agreement and ending one (1) year after the Investor ceases
to be a shareholder of the Company.
(q) The term "SEC" shall mean the United States Securities and
Exchange Commission.
(r) The term "Territory" means any jurisdiction where any
Transaction Party has operations.
(s) The term "Transfer" means a sale, transfer, assignment,
pledge, hypothecation or other disposition or encumbrance of capital stock or an
interest therein.
In addition, capitalized terms used herein and not otherwise defined herein
shall have the meaning assigned to them in the Subscription Agreement.
1.2 REQUEST FOR REGISTRATION.
(a) Subject to the conditions of this Section 1.2, if the Company
shall receive at any time after the earlier of (i) January 15, 2003 or (ii) 180
days after the effective date of the Initial Offering, a written request from
the Holders of at least thirty percent (30%) or more of the shares of Common
Stock and Series A Preferred Stock then outstanding (the "Initiating Holders")
that the Company effect a registration under the Act covering the registration
of at least such number of shares as shall have an anticipated aggregate
offering price of at least $5,000,000 (net of underwriting discounts and
commissions), then the Company shall, within twenty (20) days of the receipt
thereof, give written notice of such request to all Holders, and subject to the
limitations of this Section 1.2, use its best efforts to effect, as soon as
practicable, the registration (including, without limitation, filing
post-effective amendments) under the Act of all Registrable Securities that the
Holders request to be registered in a written request received by the Company
within twenty (20) days of the mailing of the Company's notice pursuant to this
Section 1.2(a).
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(b) If the Initiating Holders intend to distribute the
Registrable Securities covered by their request by means of an underwriting,
they shall so advise the Company as a part of their request made pursuant to
this Section 1.2 and the Company shall include such information in the written
notice referred to in Section 1.2(a). In such event the right of any Holder to
include its Registrable Securities in such registration shall be conditioned
upon such Holder's participation in such underwriting and the inclusion of such
Holder's Registrable Securities in the underwriting (unless otherwise mutually
agreed by a majority in interest of the Initiating Holders and such Holder) to
the extent provided herein. All Holders proposing to distribute their
Registrable Securities through such underwriting shall enter into such
agreements or other arrangement with the underwriter as are reasonable and
customary. Notwithstanding any other provision of this Section 1.2, if the
managing underwriter advises the Company in writing that the number of
securities requested to be included in the relevant registration is such as to
materially and adversely affect the success of such offering, then the Company
shall so advise all Holders of Registrable Securities that would otherwise be
underwritten pursuant hereto, and the then Registrable Securities shall be
included in the underwritten offering in the following order of priority:
(i) first, any shares of Series A Preferred Stock or Common
Stock received upon conversion of the Series A Preferred Stock requested to be
included;
(ii) second, any shares to be sold by the Company; and
(iii) third, any shares of Common Stock requested to be
included by other shareholders of the Company.
(c) Any Registrable Securities excluded or withdrawn from such
underwriting shall be withdrawn from the registration.
(d) The Company shall not be required to effect a registration
pursuant to this Section 1.2:
(i) after the Company has effected two (2) registrations
pursuant to this Section 1.2;
(ii) three years after the closing of the Initial Offering;
(iii) if the Initiating Holders propose to dispose of
Registrable Securities that may be registered on Form S-3 pursuant to Section
1.4 hereof in which case the request for registration under this Section 1.2
shall not count towards the limit set forth in Section 1.2(d)(i);
(iv) if the Company shall furnish to Holders requesting a
registration statement pursuant to this Section 1.2, a certificate signed by the
Company's Chief Executive Officer or Chairman of the Board stating that in the
good faith judgment of a majority of the Board of Directors of the Company, it
would be detrimental to the Company and its shareholders for such registration
statement to be effected at such time, in which event the Company shall have the
right to defer such filing for a period of not more than ninety (90) days
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after receipt of the request of the Initiating Holders, provided that such right
to delay a request shall be exercised by the Company not more than once in any
twelve (12)-month period; or
(v) during the period starting with the date sixty (60) days
prior to the Company's good faith estimate of the date of the filing of, and
ending on a date one hundred eighty (180) days following the effective date of,
a registration initiated pursuant to this Section 1.2 or a Company-initiated
registration subject to Section 1.3 below, provided that the Company is actively
employing in good faith all reasonable efforts to cause such registration
statement to become effective.
(e) If requested by the underwriters for any underwritten
offering by Holders pursuant to a registration requested under this Section 1.2,
the Company will enter into an underwriting agreement with such underwriters for
such offering, such agreement to be reasonably satisfactory in form and
substance to the Company, the Holders and the underwriters, and to contain such
representations and warranties by the Company and such other terms as are
generally prevailing in agreements of this type in accordance with the
requirements existing in the United States, including, without limitation,
indemnities to the effect and to the extent provided in Section 1.10 hereof,
customary indemnities by the underwriters and, if requested by the underwriters,
such other indemnity and contribution provisions as are customary for such
underwriters in similar offerings. The Holders will cooperate with the Company
in the negotiation of the underwriting agreement and the Company will give
consideration to the reasonable suggestions of the Holders regarding the form
thereof, provided that nothing herein contained shall diminish the foregoing
obligations of the Company. The Holders shall be a party to such underwriting
agreement and shall be required to make their proportionate share of the
representations and warranties required to be made by the Holders and share in
the indemnities to the effect and to the extent provided in Section 1.10 hereof,
provided that the liability of each Holder shall be limited to the proceeds to
be received by such Holder from the sale of shares in such offering and each
Holder's liability shall be pro rata in accordance with the number of shares
sold by such Holder as compared to the aggregate number of shares being offered
and the Company's other securities sold in such underwritten offering.
(f) A registration requested pursuant to this Section 1.2 shall
not be deemed to have been effected (i) unless a registration statement with
respect thereto has become effective under the Act, or (ii) if, after it has
become effective, such registration is interfered with by any stop order,
injunction or other order or requirement of, in the case of a registration under
the Act, the SEC or other governmental authority or court for any reason or
(iii) if the conditions to closing specified in the purchase agreement or
underwriting agreement entered into in connection with such registration are not
satisfied.
1.3 COMPANY REGISTRATION.
(a) NOTICE; REGISTRATION RIGHTS. If (but without any obligation
to do so) the Company proposes to register (including for this purpose a
registration effected by the Company for shareholders other than the Holders or
pursuant to Sections 1.2 or 1.4 hereof) any of its stock or other securities
under the Act in connection with the public offering of such securities (other
than a registration relating solely to the sale of securities to participants in
a Company stock plan, or a registration relating to a corporate reorganization
or other transaction
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under Rule 145 of the Act), the Company shall, at such time, promptly, and in no
event later than sixty (60) days prior to the first of any proposed filing with
the SEC, give each Holder written notice of such registration. Upon the written
request of each Holder given within twenty (20) days after mailing of such
notice by the Company in accordance with Section 7.5, the Company shall, subject
to the provisions of Section 1.3(c), use its best efforts to cause to be
registered under the Act (and any related qualification under blue sky laws or
other compliance) all of the Registrable Securities that each such Holder has
requested to be registered. Notwithstanding the foregoing, the rights set forth
in this Section 1.3 shall not be available (i) after the fifth anniversary of
the effective date of the Initial Offering and (ii) to a Holder if such Holder
is permitted, under applicable securities laws (including Rule 144 or any
successor rule promulgated under the Act), to sell the shares of Common Stock
into which the Series A Preferred Stock is convertible for which Holder is
seeking registration on an unrestricted basis in one transaction immediately
following the effective date of the Company's registration.
(b) RIGHT TO TERMINATE REGISTRATION. The Company shall have the
right to terminate or withdraw any registration initiated by it under this
Section 1.3 prior to the effectiveness of such registration whether or not any
Holder has elected to include securities in such registration. The expenses of
such withdrawn registration shall be borne by the Company in accordance with
Section 1.7 hereof. The right of the Company to terminate or withdraw any
registration pursuant to this Section 1.3(b) shall be without prejudice to the
rights of Holders pursuant to Sections 1.2 and 1.4.
(c) UNDERWRITING REQUIREMENTS. In connection with any offering
involving an underwriting of shares of the Company's capital stock, the Company
shall not be required under this Section 1.3 to include any of the Holders'
securities in such underwriting unless they accept the terms of the underwriting
as agreed upon between the Company and the underwriters selected by it (or by
other persons entitled to select the underwriters) and enter into an
underwriting agreement in customary form with an underwriter or underwriters
selected by the Company, and then only in such quantity as the managing
underwriter determines will not materially and adversely affect success of the
offering by the Company, provided that the liability of the Holders of capital
stock shall be limited to the proceeds to be received by such Holders from the
sale of the shares of capital stock and such Holders' liability shall be pro
rata in accordance with the number of shares sold by such Holders as compared to
the aggregate number of shares being offered by the other Holders and other
securities sold in such underwritten offering and no Holder shall be required to
provide any indemnification except to the extent set forth in Section 1.10. If
the total amount of securities, including Registrable Securities, requested by
shareholders to be included in such offering exceeds the amount of securities
that the managing underwriter determines is compatible with the success of the
offering, then the Company shall be required to include in the offering only
that number of such securities, including Registrable Securities, that the
managing underwriter determines will not jeopardize the success of the offering
(the securities so included to be apportioned as follows: first, to the Company;
second, to the Holders of shares of Series A Preferred Stock or Common Stock
received upon conversion of the Series A Preferred Stock based on the total
number of shares of Series A Preferred Stock or Common Stock received upon
conversion of the Series A Preferred Stock, as the case may be, held by such
selling Holders or in such other proportions as shall mutually be agreed to by
such selling Holders; third, to any other shareholder of the Company; provided
that after a Qualified Offering, the amount of
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securities of the selling Holders of shares of Series A Preferred Stock included
in the offering shall not be reduced below twenty percent (20%) of the total
amount of securities included in such offering. For purposes of the preceding
parenthetical concerning apportionment, for any selling shareholder that is a
Holder of Registrable Securities and that is a partnership or corporation, the
partners, retired partners and shareholders of such Holder, or the estates and
family members of any such partners and retired partners and any trusts for the
benefit of any of the foregoing persons shall be deemed to be a single "selling
Holder," and any pro rata reduction with respect to such "selling Holder" shall
be based upon the aggregate amount of Registrable Securities owned by all such
related entities and individuals.
(d) No registration effected under this Section 1.3 shall relieve
the Company of its obligations to effect any registration upon request under
Sections 1.2 or 1.4, nor shall any such registration hereunder be deemed to have
been effected pursuant to Sections 1.2 or 1.4.
1.4 FORM S-3 REGISTRATION. In case the Company shall receive from the
Holders of at least ten percent (10%) of the Registrable Securities a written
request or requests that the Company effect a registration on Form S-3 and any
related qualification or compliance with respect to all or a part of the
Registrable Securities owned by such Holder or Holders, the Company shall:
(a) promptly give written notice of the proposed registration,
and any related qualification or compliance, to all other Holders; and
(b) use its best efforts to effect, as soon as practicable, such
registration and all such qualifications and compliances as may be so requested
and as would permit or facilitate the sale and distribution of all or such
portion of such Holders' Registrable Securities as are specified in such
request, together with all or such portion of the Registrable Securities of any
other Holders joining in such request as are specified in a written request
given within thirty (30) days after receipt of such written notice from the
Company, provided, however, that the Company shall not be obligated to effect
any such registration, qualification or compliance, pursuant to this section
1.4:
(i) if Form S-3 is not available under applicable rules and
regulations of the SEC for such offering by the Holders;
(ii) if the Holders, together with the holders of any other
securities of the Company entitled to inclusion in such registration, propose to
sell Registrable Securities and such other securities (if any) at an aggregate
price to the public (net of any underwriters' discounts or commissions) of less
than $500,000;
(iii) if the Company shall furnish to the Holders a
certificate signed by the Chief Executive Officer or Chairman of the Board of
the Company stating that in the good faith judgment of a majority of the Board
of Directors of the Company, it would be detrimental to the Company and its
shareholders for such Form S-3 Registration to be effected at such time, in
which event the Company shall have the right to defer the filing of the Form S-3
registration statement for a period of not more than ninety (90) days after
receipt of the
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request of the Holder or Holders under this Section 1.4; provided, however, that
the Company shall not utilize this right more than once in any twelve month
period; or
(iv) if the Company has, within the six (6) month period
preceding the date of such request, already effected one registration on Form
S-3 for the Holders pursuant to this Section 1.4;
(c) subject to the foregoing, file a registration statement
covering the Registrable Securities and other securities so requested to be
registered as soon as practicable after receipt of the request or requests of
the Holders. Registrations effected pursuant to this Section 1.4 shall not be
counted as requests for registration effected pursuant to Sections 1.2.
(d) notwithstanding anything herein to the contrary, (i) have the
right from time to time to require any Holder of Registrable Securities not to
sell Registrable Securities pursuant to any Form S-3 or to suspend the
effectiveness thereof during the period starting with the date 30 days prior to
the Company's good faith estimate, as certified in writing by an executive
officer of the Company to the Holders of Registrable Securities, of the proposed
date of filing of a registration statement or a preliminary prospectus
supplement relating to an underwritten public offering of equity securities of
the Company for the account of the Company, and ending on the date 120 days
following the delivery of such estimate and (ii) be entitled to require the
Holders of Registrable Securities not to sell Registrable Securities pursuant to
any Form S-3 or to suspend the effectiveness thereof (but not for a period
exceeding 90 days) if the Company determines, based on the opinion of legal
counsel, that such offering or continued effectiveness would materially
interfere with any material financing, acquisition, disposition, corporate
reorganization or other material transaction involving the Company or any of its
subsidiaries because public disclosure thereof would be required prior to the
time such disclosure might otherwise be required. In any event, the Company
shall not be entitled to exercise the rights granted to the Company pursuant to
this Section 1.4(d) more than two times in any one year period.
1.5 OBLIGATIONS OF THE COMPANY. Whenever required under this Section 1
to effect the registration of any Registrable Securities, the Company shall, as
expeditiously as reasonably possible:
(a) within ninety (90) days of receiving a request from Holders,
prepare and file with the SEC a registration statement with respect to such
Registrable Securities and use its best efforts to cause such registration
statement to become effective within ninety (90) days from the filing thereof,
provided, however, that before filing such registration statement or any
amendments thereto, the Company will furnish to Holders participating in such
registration copies of all such documents proposed to be filed, which documents
will be subject to the review and reasonable comment of such Holders' counsel;
and,
(b) upon the request of the Holders of a majority of the
Registrable Securities registered thereunder, keep such registration statement
effective for a period of up to one hundred and eighty (180) days or, if
earlier, until the distribution contemplated in the registration statement has
been completed;
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(c) prepare and file with the SEC such amendments and supplements
to such registration statement and the prospectus used in connection with such
registration statement as may be necessary to comply with the provisions of the
Act with respect to the disposition of all securities covered by such
registration statement;
(d) furnish to the Holders such number of conformed copies of
such registration statement and of each amendment and supplement thereto and
such number of copies of a prospectus, including a preliminary prospectus, in
conformity with the requirements of the Act, and such other documents as they
may reasonably request in order to facilitate the disposition of Registrable
Securities owned by them;
(e) use its best efforts to register and qualify the securities
covered by such registration statement under such other securities or Blue Sky
laws of such jurisdictions as shall be reasonably requested by the Holders,
provided that the Company shall not be required in connection therewith or as a
condition thereto to qualify to do business or to file a general consent to
service of process in any such states or jurisdictions;
(f) use its 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
Holders thereof to consummate the disposition of such Registrable Securities;
(g) in the event of any underwritten public offering, enter into
and perform its obligations under an underwriting agreement, in usual and
customary form, with the managing underwriter of such offering;
(h) notify each Holder of Registrable Securities covered by such
registration statement at any time when a prospectus relating thereto is
required to be delivered under the Act or 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 a
material fact required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances then existing; and at
the request of any such Holder promptly prepare and furnish to such Holder a
reasonable number of copies of a supplement or amendment of such prospectus as
shall be necessary so that as thereafter delivered to the purchasers of
securities, such prospectus shall not include an untrue statement of material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein not misleading in light of the circumstances then
existing;
(i) cause all such Registrable Securities registered pursuant
hereunder to be listed on each securities exchange on which similar securities
issued by the Company are then listed;
(j) provide a transfer agent and registrar for all Registrable
Securities registered pursuant hereunder and a CUSIP number for all such
Registrable Securities, in each case not later than the effective date of such
registration;
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(k) furnish to each Holder a signed counterpart, addressed to the
Holders and to the underwriters, if any, of:
(i) an opinion of counsel for the Company, dated the
effective date of such registration statement (and, if such registration
includes an underwritten public offering, an opinion dated the date of the
closing under the underwriting agreement), reasonably satisfactory in form and
substance to such Holder covering such matters as are customarily covered in
opinions of legal counsel and such other matters as the Holders may reasonably
request, and
(ii) a "comfort" letter, dated the effective date of such
registration statement signed by the independent public accountants who have
certified the Company's financial statements included in such registration
statement, each covering substantially the same matters with respect to such
registration statement (and the prospectus included therein) and, in the case of
the accountants' letter, with respect to events subsequent to the date of such
financial statements, as are customarily covered in accountants' letters
delivered to the underwriters in underwritten public offerings of securities
and, such other financial matters as the Holders (and the underwriters, if any)
may reasonably request;
(l) notify the Holders, and the managing underwriter or
underwriters, if any, promptly and confirm such advice in writing promptly
thereafter:
(i) when the registration statement, the prospectus or any
prospectus supplement related thereto or post-effective amendment to the
registration statement has been filed, and, with respect to the registration
statement or any post-effective amendment thereto, when the same has become
effective;
(ii) of any request by the SEC for amendments or supplements
to the registration statement or the prospectus or for additional information;
and
(iii) of the issuance by the SEC of any cease trading order
suspending the trading of the securities of the Company or by the SEC of any
stop order or similar order suspending the effectiveness of the registration or
the initiation of any proceedings by any Person for that purpose;
(m) use its best efforts to obtain the withdrawal of any order
suspending the effectiveness of the registration statement at the earliest
possible moment;
(n) use its best efforts to obtain the withdrawal of any cease
trading order suspending the trading of the Registrable Securities at the
earliest possible moment;
(o) otherwise use its best efforts to comply with all applicable
rules and regulations of the SEC, and will furnish to the Holders at least five
(5) Business Days prior to the filing thereof a copy of any amendment or
supplement to such registration statement or prospectus and shall not file any
amendment or supplement thereof to which any such seller shall have reasonably
objected on the grounds that such amendment or supplement does not comply in all
material respects with the requirements of the rules or regulations thereunder
or
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any applicable securities laws or any other applicable act, rule or regulation
within the local or foreign jurisdiction in which a registration may be
requested;
(p) make available for inspection by representatives of the
Holders and any underwriter participating in any disposition pursuant to the
registration and any attorney or accountant retained by the Holders or
underwriter (each, an "Inspector"), all financial and other records, pertinent
corporate documents and properties of the Company, and cause the Company's
officers, directors, employees, counsel and independent accountants to supply
all such information reasonably requested by any such Inspector in connection
with such registration;
(q) provide and cause to be maintained a transfer agent and
registrar for all Registrable Securities covered by such registration statement
from and after a date not later than the effective date of such registration
statement; and
(r) use its best efforts to take all other steps necessary to
effect the registration of the Registrable Securities contemplated hereby.
1.6 INFORMATION FROM HOLDER. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to this Section 1 with
respect to the Registrable Securities of any selling Holder that such Holder
shall furnish to the Company such information regarding itself, the Registrable
Securities held by it, and the intended method of disposition of such securities
as shall be required to effect the registration of such Holder's Registrable
Securities.
1.7 EXPENSES OF REGISTRATION. All expenses relating to a registration
effected pursuant to Section 1.2 (other than underwriting discounts and
commissions, which shall be paid by the participating Holders) incurred in
connection with registrations, filings or qualifications pursuant to this
Section 1, including (without limitation) all registration, filing and
qualification fees, printers' fees and fees and disbursements of accountants and
counsel for the Company and one counsel for the Holders of Registrable
Securities shall be borne by the Company. Notwithstanding the foregoing, the
Company shall not be required to pay for any expenses of any registration
proceeding begun pursuant to Section 1.2 if the registration request is
subsequently withdrawn at the request of the Holders of a majority of the
Registrable Securities to be registered (in which case all participating Holders
shall bear such expenses pro rata based upon the number of Registrable
Securities that were to be requested in the withdrawn registration).
(b) All expenses relating to a registration effected pursuant to
Section 1.3 (other than underwriting discounts and commissions, and counsel, if
any, for the Holders of Registrable Securities, which shall be paid by the
participating Holders) incurred in connection with registrations, filings or
qualifications pursuant to this Section 1, including (without limitation) all
registration, filing and qualification fees, printers' fees and fees and
disbursements of accountants and counsel for the Company shall be borne by the
Company.
(c) All expenses relating to a registration effected pursuant to
Section 1.4 incurred in connection with registrations, filings or qualifications
pursuant to this
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Section 1, including (without limitation) all registration, filing and
qualification fees, printers' fees and fees and disbursements of accountants and
counsel for the Company shall be borne by the participating Holders and, to the
extent the Company participates, the Company in proportion to the number of
Registrable Securities sold by each such Person.
1.8 PREPARATION; REASONABLE INVESTIGATION. In connection with the
preparation and filing of each registration statement under the Act covering the
Registrable Securities, pursuant to this Agreement, the Company will give the
Holders, its underwriters, if any, and its respective counsel and accountants,
access to its books and records and such opportunities to discuss the business
of the Company with its officers and the independent public accountants who have
certified its financial statements as shall be necessary, in the opinion of the
Holders and such underwriters' respective counsel, to conduct a reasonable
investigation within the meaning of the Act.
1.9 DELAY OF REGISTRATION. No Holder shall have any right to obtain or
seek an injunction restraining or otherwise delaying any such registration as
the result of any controversy that might arise with respect to the
interpretation or implementation of this Section 1.
1.10 INDEMNIFICATION. In the event any Registrable Securities are
included in a registration statement under this Section 1:
(a) The Company will indemnify and hold harmless each Holder, the
partners or officers, directors and shareholders of each Holder, legal counsel
and accountants for each Holder, any underwriter (as defined in the Act) for
such Holder and each person, if any, who controls such Holder or underwriter
within the meaning of the Act or the 1934 Act, against any losses, claims,
damages or liabilities (joint or several) to which they may become subject under
the Act, the 1934 Act or any state securities laws, insofar as such losses,
claims, damages, or liabilities (or actions in respect thereof) arise out of or
are based upon any of the following statements, omissions or violations
(collectively a "Violation"): (i) any untrue statement or alleged untrue
statement of a material fact contained in such registration statement, including
any preliminary prospectus or final prospectus contained therein or any
amendments or supplements thereto, (ii) the omission or alleged omission to
state therein a material fact required to be stated therein, or necessary to
make the statements therein not misleading, or (iii) any violation or alleged
violation by the Company of the Act, the 1934 Act, any state securities laws or
any rule or regulation promulgated under the Act, the 1934 Act or any state
securities laws; and the Company will reimburse each such Holder, underwriter or
controlling person for any legal or other expenses reasonably incurred by them
in connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the indemnity agreement contained
in this subsection 1.10(a) shall not apply to amounts paid in settlement of any
such loss, claim, damage, liability or action if such settlement is effected
without the consent of the Company (which consent shall not be unreasonably
withheld), nor shall the Company be liable in any such case for any such loss,
claim, damage, liability or action to the extent that it arises out of or is
based upon a Violation that occurs in reliance upon and in conformity with
written information furnished expressly for use in connection with such
registration by any such Holder, underwriter or controlling person; provided
further, however, that the foregoing indemnity agreement with respect to any
preliminary prospectus shall not
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inure to the benefit of any Holder or underwriter, or any person controlling
such Holder or underwriter, from whom the person asserting any such losses,
claims, damages or liabilities purchased shares in the offering, if a copy of
the prospectus (as then amended or supplemented if the Company shall have
furnished any amendments or supplements thereto) was not sent or given by or on
behalf of such Holder or underwriter to such person, if required by law so to
have been delivered, at or prior to the written confirmation of the sale of the
shares to such person, and if the prospectus (as so amended or supplemented)
would have cured the defect giving rise to such loss, claim, damage or
liability.
(b) Each selling Holder will indemnify and hold harmless the
Company, each of its directors, each of its officers who has signed the
registration statement, each person, if any, who controls the Company within the
meaning of the Act, legal counsel and accountants for the Company, any
underwriter, any other Holder selling securities in such registration statement
and any controlling person of any such underwriter or other Holder, against any
losses, claims, damages or liabilities (joint or several) to which any of the
foregoing persons may become subject, under the Act, the 1934 Act or any state
securities laws, insofar as such losses, claims, damages or liabilities (or
actions in respect thereto) arise out of or are based upon any Violation, in
each case to the extent (and only to the extent) that such Violation occurs in
reliance upon and in conformity with written information furnished by such
Holder expressly for use in connection with such registration; and each such
Holder will reimburse any person intended to be indemnified pursuant to this
subsection 1.10(b), for any legal or other expenses reasonably incurred by such
person in connection with investigating or defending any such loss, claim,
damage, liability or action; provided, however, that the indemnity agreement
contained in this subsection 1.10(b) shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of the Holder (which consent shall
not be unreasonably withheld).
(c) Promptly after receipt by an indemnified party under this
Section 1.10 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect thereof
is to be made against any indemnifying party under this Section 1.10, deliver to
the indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party
(together with all other indemnified parties that may be represented without
conflict by one counsel) shall have the right to retain one separate counsel,
with the fees and expenses to be paid by the indemnifying party, if
representation of such indemnified party by the counsel retained by the
indemnifying party would be inappropriate due to actual or potential differing
interests between such indemnified party and any other party represented by such
counsel in such proceeding. No indemnifying party shall, without the consent of
the indemnified party, consent to entry of any judgment or enter into any
settlement of any such action which does not include as an unconditional term
thereof the giving by the claimant or plaintiff to such indemnified party of a
complete and full release from all liability in respect of such claim or
litigation. No indemnified party shall consent to entry of any judgment or enter
into any settlement of any such action the defense of which has been assumed by
an indemnifying party without the consent of such indemnifying party.
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(d) If the indemnification provided for in this Section 1.10 is
held by a court of competent jurisdiction to be unavailable to an indemnified
party with respect to any loss, liability, claim, damage or expense referred to
herein, then the indemnifying party, in lieu of indemnifying such indemnified
party hereunder, shall contribute to the amount paid or payable by such
indemnified party as a result of such loss, liability, claim, damage or expense
in such proportion as is appropriate to reflect the relative fault of the
indemnifying party on the one hand and of the indemnified party on the other in
connection with the statements or omissions that resulted in such loss,
liability, claim, damage or expense, as well as any other relevant equitable
considerations. The relative fault of the indemnifying party and of the
indemnified party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission to state a material fact relates to information supplied by the
indemnifying party or by the indemnified party and the parties' relative intent,
knowledge, access to information, and opportunity to correct or prevent such
statement or omission.
(e) Notwithstanding the foregoing, to the extent that the
provisions on indemnification and contribution contained in the underwriting
agreement entered into in connection with the underwritten public offering are
in conflict with the foregoing provisions, the provisions in the underwriting
agreement shall control.
(f) Indemnification similar to that specified in the preceding
subparagraphs (a) and (c) of this Section 1.10 (with appropriate modifications)
shall be given by the Company with respect to any required registration or other
qualification of securities under any federal or state law or regulation of any
governmental authority, other than the Act.
(g) Notwithstanding the provisions of this Section 1.10, no
Holder shall be required to contribute any amount in excess of the net proceeds
received by it from the sale of Registrable Securities, less the amount of any
damages that such Holder has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission. No Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation.
(h) The obligations of the Company and Holders under this Section
1.10 shall survive (i) the completion of any offering of Registrable Securities
in a registration statement under this Section 1, (ii) any investigation made by
or on behalf of any indemnified party or by or on behalf of the Company, and
(iii) the consummation of the sale or successive resale of the Registrable
Securities.
1.11 REPORTS UNDER SECURITIES EXCHANGE ACT OF 1934. With a view to
making available to the Holders the benefits of Rule 144 promulgated under the
Act and any other rule or regulation of the SEC that may at any time permit a
Holder to sell securities of the Company to the public without
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registration or pursuant to a registration on Form S-3, the Company agrees to
use its best efforts to:
(a) make and keep public information available, as those terms
are understood and defined in SEC Rule 144, at all times after the effective
date of the Initial Offering;
(b) file with the SEC in a timely manner all reports and other
documents required of the Company under the Act and the 1934 Act; and
(c) furnish to any Holder, so long as the Holder owns any
Registrable Securities, forthwith upon request (i) a written statement by the
Company that it has complied with the reporting requirements of SEC Rule 144 (at
any time after ninety (90) days after the effective date of the first
registration statement filed by the Company), the Act and the 1934 Act (at any
time after it has become subject to such reporting requirements), or that it
qualifies as a registrant whose securities may be resold pursuant to Form S-3
(at any time after it so qualifies), (ii) a copy of the most recent annual or
quarterly report of the Company and such other reports and documents so filed by
the Company, and (iii) such other information as may be reasonably requested in
availing any Holder of any rule or regulation of the SEC that permits the
selling of any such securities without registration or pursuant to such form.
1.12 ASSIGNMENT OF REGISTRATION RIGHTS. The rights to cause the
Company to register Registrable Securities pursuant to this Section 1 may be
assigned (but only with all related obligations) by a Holder to a transferee or
assignee of such securities that (i) is a Holder or subsidiary, parent, partner,
limited partner, retired partner or shareholder of a Holder, (ii) is a Holder's
family member or trust for the benefit of an individual Holder, or (iii) after
such assignment or transfer, holds at least 100,000 shares of Registrable
Securities (subject to appropriate adjustment for stock splits, stock dividends,
combinations and other recapitalizations), provided: (a) the Company is, within
thirty (30) days after such transfer, furnished with written notice of the name
and address of such transferee or assignee and the securities with respect to
which such registration rights are being assigned; and (b) such transferee or
assignee agrees in writing to be bound by and subject to the terms and
conditions of this Agreement, including without limitation the provisions of
Section 1.14 below.
1.13 LIMITATIONS ON SUBSEQUENT REGISTRATION RIGHTS. From and after the
date of this Agreement, the Company shall not, without the prior written consent
of the Holders of a majority of the Registrable Securities, enter into any
agreement with any holder or prospective holder of any securities of the Company
that would allow such holder or prospective holder (a) to include such
securities in any registration filed under Section 1.3 hereof, unless under the
terms of such agreement, such holder or prospective holder may include such
securities in any such registration only to the extent that the inclusion of
such securities will not reduce the amount of the Registrable Securities of the
Holders that are included or (b) to demand registration of their securities.
1.14 "MARKET STAND-OFF" AGREEMENT. Each Holder hereby agrees that it
will not, without the prior written consent of the Company, during the period
commencing on the effective date of any registration statement covering
Registrable Securities and ending on the date specified by the Company (such
period not to exceed one hundred eighty (180) days)
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(i) lend, offer, pledge, sell, contract to sell, sell any option or contract to
purchase, purchase any option or contract to sell, grant any option, right or
warrant to purchase, or otherwise transfer or dispose of, directly or
indirectly, any shares of Common Stock or any securities convertible into or
exercisable or exchangeable for Common Stock (whether such shares or any such
securities are then owned by the Holder or are thereafter acquired), or (ii)
enter into any swap or other arrangement that transfers to another, in whole or
in part, any of the economic consequences of ownership of the Common Stock,
whether any such transaction described in clause (i) or (ii) above is to be
settled by delivery of Common Stock or such other securities, in cash or
otherwise. The foregoing provisions of this Section 1.14 shall not apply to the
sale of any shares to an underwriter pursuant to an underwriting agreement, and
shall only be applicable to the Holders if all officers and directors enter into
similar agreements. The underwriters in connection with the Company's initial
public offering are intended third party beneficiaries of this Section 1.14 and
shall have the right, power and authority to enforce the provisions hereof as
though they were a party hereto.
In order to enforce the foregoing covenant, the Company may impose
stop-transfer instructions with respect to the Registrable Securities of each
Holder (and the shares or securities of every other person subject to the
foregoing restriction) until the end of such period.
1.15 TERMINATION OF REGISTRATION RIGHTS. In addition to the other
limitations contained herein, no Holder shall be entitled to exercise any right
provided for in this Section 1 after five (5) years following the consummation
of the Initial Offering or, as to any Holder, such earlier time at which all
Registrable Securities held by such Holder (and any affiliate of the Holder with
whom such Holder must aggregate its sales under Rule 144) can be sold in any one
transaction without registration in compliance with Rule 144 of the Act.
2. COVENANTS OF THE COMPANY AND THE SHAREHOLDERS.
2.1 RIGHT OF FIRST OFFER. Subject to the terms and conditions
specified in this paragraph 2.1, the Company hereby grants to the Investor a
right of first offer with respect to future sales by the Company of its Shares
(as hereinafter defined).
Each time the Company proposes to offer any shares of, or securities
convertible into or exchangeable or exercisable for any shares of, any class of
its capital stock ("Shares"), the Company shall first make an offering of such
Shares to the Investor in accordance with the following provisions:
(a) The Company shall deliver a notice in accordance with Section
7.5 ("Notices") to the Investor stating (i) its bona fide intention to offer
such Shares, (ii) the number of such Shares to be offered, and (iii) the price
and terms upon which it proposes to offer such Shares.
(b) By written notification received by the Company, within
thirty (30) calendar days after receipt of the Notice, the Investor may elect to
purchase or obtain, at the price and on the terms specified in the Notice, up to
that portion of such Shares that equals
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the proportion that the number of shares of Common Stock issued and held, or
issuable upon conversion of the Series A Preferred Stock then held, by the
Investor bears to the total number of shares of Common Stock of the Company then
outstanding (assuming full conversion of all convertible securities), so that
the Investor shall have the right to maintain (but not increase) its
proportionate equity interest in the Company.
(c) If all Shares that Investor is entitled to obtain pursuant to
subsection 2.1(b) are not elected to be obtained as provided in subsection
2.1(b) hereof, the Company may, during the ninety (90) day period following the
expiration of the period provided in subsection 2.1(b) hereof, offer the
remaining unsubscribed portion of such Shares to any person or persons at a
price not less than, and upon terms no more favorable to the offeree than those
specified in the Notice. If the Company does not enter into an agreement for the
sale of the Shares within such period, or if such agreement is not consummated
within 90 days of the execution thereof, the right provided hereunder shall be
deemed to be revived and such Shares shall not be offered unless first reoffered
to the Investor in accordance herewith.
(d) The right of first offer in this paragraph 2.1 shall not be
applicable to (i) the issuance or sale of Common Stock (or options therefor) to
employees, directors and consultants pursuant to any stock incentive plan in
existence on the date of this Agreement or approved by the holders of a majority
of the shares of Series A Preferred Stock, (ii) the issuance of securities
pursuant to a Qualified Offering, (iii) the issuance of securities in connection
with a bona fide business acquisition of or by the Company, whether by merger,
consolidation, sale of assets, sale or exchange of stock or otherwise, (iv) the
issuance of securities pursuant to the conversion or exercise of convertible or
exercisable securities, and (v) the issuance of securities following the Initial
Offering.
2.2 RESOLUTIONS. (a).
(1) COMPANY RESOLUTIONS. For as long as the Investor owns at least 5%
of the Company's outstanding Shares (it being understood that for purposes of
this Section 2.2, the Investor shall be deemed to own Shares that it had a right
to obtain pursuant to 2.1, whether or not the Investor exercises its rights
pursuant to Section 2.1), which amount shall include, without limitation, Common
Stock and Series A Preferred Stock (taking into account, without duplication,
the number of shares of Common Stock into which each share of Series A Preferred
Stock is convertible and securities convertible into such Common Stock and
Series A Preferred Stock) but shall exclude options hereafter issued under any
employee incentive plan in existence as of the date of this Agreement or
approved by holders of a majority of the shares of Series A Preferred Stock, the
Company shall not, without first obtaining the written consent of the holders of
a majority of the outstanding shares of Series A Preferred Stock, take any
action that: (i) alters or changes the rights, preferences and privileges of the
Series A Preferred Stock, (ii) creates, by reclassification or otherwise, any
new class or series of stock having rights, preferences and privileges senior to
those of the Series A Preferred Stock, (iii) causes the Company to redeem any of
its outstanding stock, regardless of class or series, (iv) changes any stock
option or purchase plan to modify the number of shares covered thereby, (v)
causes any liquidation, acquisition, merger (in which the Company does not
survive), change in control or sale of the Company of all or substantially all,
of its assets, (vi) creates any new subsidiary or affiliate of the Company
outside the scope of the business as contemplated in the Company's business
plan,
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(vii) changes the Company's fiscal year, (viii) causes the Company to become a
guarantor or debtor with respect to any commitment or commitments in excess of
an aggregate of $5,000,000.00, (ix) transfers or grants rights in any of the
Company's technology other than through limited licenses that may be incidental
to the Company's ordinary course of business, (x) adopts long-term strategic
plans, or causes the Company to engage in material business activities not
contemplated in the business plan originally or subsequently approved by the
Investor, (xi) causes the Company to enter into transactions with shareholders
of the Company or their affiliates (including Vitech America, Inc.) outside the
ordinary course of business or other than on such terms that the Company could
obtain in transactions with unrelated entities, (xii) causes the Company to
invest in or acquire the securities of any other business or company, whether
related or not, having a purchase price in excess of $500,000, (xiii) causes
dispositions of any portion of the Company's business or causes a significant
change in the business of the Company or any of its Subsidiaries, (xiv) causes
the Company to file for protection under applicable bankruptcy or similar laws
in effect from time to time, (xv) amends the Company's charter or bylaws in a
manner which adversely affects the rights of the holders of Series A Preferred
Stock, (xvi) causes the Company to declare or pay any dividends or (xvii) causes
the issuance or sale of any shares of any of the Company's subsidiaries, a
change in control or the sale of all or substantially all, of any of the
Company's subsidiaries' assets. Prior to taking any action described in this
Section 2.2, the Company shall have given the holders of shares of Series A
Preferred Stock at least ten (10) days' prior written notice (which notice shall
include sufficient information regarding the proposed action to permit Investor
to evaluate the proposed action) requesting Investor's consent, which shall not
be unreasonably withheld. If Investor fails to respond by the expiration of such
ten-day period, it shall be deemed to have given its consent. These rights shall
expire upon the consummation by the Company of the Initial Offering.
(b) The Company agrees and acknowledges that it will not cause or
permit any Subsidiary to take any action that would require the written consent
of the holders of a majority of the outstanding shares of Series A Preferred
Stock if such action were taken by the Company. In addition, the Company shall
not cause or permit any Subsidiary to issue any capital stock to any Person
other than the Company without the prior written consent of the holders of a
majority of the outstanding shares of Series A Preferred Stock. Prior to causing
any Subsidiary to take any action referred to in this Section 2.2(b), the
Company shall give the holders of shares of Series A Preferred Stock at least
ten (10) days' prior written notice requesting Investor's consent, which shall
not be unreasonably withheld. If Investor fails to respond by the expiration of
such ten-day period, it shall be deemed to have given its consent.
(2) SHAREHOLDERS RESOLUTIONS. Each Shareholder agrees not to cause,
and to vote its shares in such way not to permit, the Company to take any of the
actions listed in Section 2.2(a)(1)(i) to (xvii) above that has been
presented to the Shareholders for their approval without the Company first
having obtained the written consent of the holders of a majority of the
outstanding shares of Series A Preferred Stock.
2.3 ACTIONS REQUIRING BOARD APPROVAL. In addition to those matters set
forth in the Company's Articles of Incorporation and Bylaws, the following
actions shall require approval of the Company's Board of Directors: (i) hiring
and appointing executive officers of the Company, (ii) adopting or implementing
compensation programs, including base
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salaries and bonus programs of all officers and key employees of the Company,
(iii) adopting stock option programs and issuing stock options, (iv) adopting
budgets and operating, capital and long-term strategic plans and any revisions
thereto, (v) entering into real estate leases and acquiring real property, (vi)
entering into obligations or commitments, including capital equipment leases or
purchases, with total value greater than $500,000, or which are not contemplated
by the Company's most recent business plan or budget approved by the Board of
Directors, (vii) issuing debt or equity securities of the Company, (viii)
granting to third parties security interests or similar rights in any property
of the Company or any subsidiary of the Company, (ix) disposing of any portion
of the Company's business, or causing a significant change in the business of
the Company or any of its subsidiaries, (x) filing for protection under
applicable bankruptcy or similar laws in effect from time to time, (xi)
selecting the Company's legal counsel, outside auditors or investment banking
firm or (xii) entering into any transaction outside the normal course of
business of the Company.
2.4 THIRD PARTY OFFER; RIGHT OF FIRST REFUSAL.
(a) THIRD PARTY OFFER. If any Shareholder (the "Shareholder
Offeree") receives a bona fide written offer (the "Offer") from a potential
transferee other than a Permissible Transferee (the "Offeror") to purchase
Shares owned by the Shareholder Offeree and the Shareholder Offeree proposes to
accept the Offer, the Shareholder Offeree must comply with the provisions of
this Section 2.4 prior to taking any such action. Within ten (10) days of the
receipt of the Offer, the Shareholder Offeree shall obtain from the Offeror a
statement in writing addressed to the Shareholder Offeree and signed by the
Offeror in as many counterparts as may be necessary (collectively, the
"Statement") setting forth (i) the date of the Statement (the "Statement Date");
(ii) the number of Shares covered by the Offer, the price per Share to be paid
by the Offeror (the "Third Party Price") and the terms of payment of such Third
Party Price, which shall be payable wholly in cash; (iii) the Offeror's
willingness to be bound by the terms of this Agreement if the Offer is accepted;
(iv) the Offeror's name, address and telephone number; and (v) the Offeror's
willingness to supply any additional information about himself as may be
reasonably requested by any of the other shareholders (the "Other
Shareholders").
(b) NOTICE. Within fifteen (15) days following the Statement
Date, the Shareholder Offeree shall give notice (the "Notice") to the Company
and the Other Shareholders stating that he or it proposes to accept the Offer.
The Shareholder Offeree shall deliver with the Notice (i) the Statement, (ii) a
copy of the Offer, (iii) evidence reasonably satisfactory to the Other
Shareholders as to the Offeror's financial ability to consummate the proposed
purchase; and (v) an opinion of counsel reasonably satisfactory to the Other
Shareholders that the proposed transaction would be in compliance with Section
2.4.
(c) PURCHASE OPTION. Subject to Section 2.5, the Other
Shareholders shall thereupon have the irrevocable and exclusive option, but not
the obligation (the "Purchase Option"), to purchase all, but not less than all,
of the Shares identified in the Statement (the "Subject Shares") at the Closing
referred to in Section 2.6(a) and for the purchase price and on the terms set
forth in Section 2.6(b). The Purchase Option shall be exercised by the Other
Shareholders by giving notice (the "Purchase Option Notice") to the Shareholder
Offeree and the Company within twenty-five (25) days following the expiration of
the 15-day period referred to in Section 2.4(b) that such Other Shareholders
elect to exercise the Purchase Option.
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Any purchase of the Subject Shares by the Other Shareholders pursuant to this
Section 2.4(c) shall be pro rata among the Other Shareholders electing to
purchase such Shares, according to such Other Shareholders' respective ownership
of Shares, unless such Other Shareholders shall otherwise agree. Upon exercise
of the Purchase Option, the exercising Other Shareholders shall have the
obligation to purchase the Subject Shares on and subject to the terms and
conditions hereof. Failure by any Other Shareholder entitled to exercise the
Purchase Option to give a Purchase Option Notice within the period herein
specified shall be deemed an election by it not to exercise the Purchase Option.
(d) PURCHASE OF LESS THAN ALL SHARES. Notwithstanding anything in
this Section 2.4 to the contrary, if the Purchase Option is exercised for less
than all of the Subject Shares, then it shall be a condition to the purchase by
the Other Shareholders of the Subject Shares that they purchase all, but not
less than all, of the Subject Shares upon exercise of the Purchase Option.
2.5 TAG-ALONG RIGHTS.
No shareholder, other than the Investor, may Transfer any of its shares,
except in compliance with this Section 2.5:
(a) if a shareholder, other than the Investor (the "Offeror")
determines to sell all or any part of its Shares other than to a Permissible
Transferee, such Offeror shall provide the Investor with a written notice
("Offer Notice") which shall specify the name of the prospective purchaser, the
number of Shares it intends to sell to the prospective purchaser, the percentage
of the Offeror's total Shares represented by such number of Shares (assuming
full exercise of any warrant, option or other right of conversion if the Offer
Notice relates to warrants, options or other securities convertible into or
exercisable for capital stock) ("Offeror Percentage") and the cash price such
prospective purchaser is willing to pay therefor, and which shall include a copy
of any written offer from the prospective purchaser.
(b) The Investor shall have fifteen (15) Business Days following
receipt of the Offer Notice to deliver an irrevocable written notice
("Participation Notice") to the Offeror whereby the Investor elects to include a
portion or all of its Shares in the proposed sale to the prospective purchaser
(thereby becoming a "Participating Shareholder") up to (i) a percentage of its
Shares equivalent to the Offeror Percentage if the Transfer of the Shares
identified in the Offer Notice will not result in a Change of Control, or (ii)
all of its Shares if the Transfer of the Shares identified in the Offer Notice
will result in a Change of Control. The Participation Notice shall indicate the
number of Shares ("Tag Along Shares") that the Investor wishes to include in the
sale transaction to the prospective purchaser.
(c) If the Investor declines to become a Participating
Shareholder or if it fails to deliver a Participation Notice within fifteen (15)
Business Days following receipt of the Offer Notice, the Offeror may effect its
proposed Transfer without further compliance with this Section 2.5 as long as
the sale to the prospective purchaser is completed within sixty (60) days
following the delivery of the Offer Notice and on the same terms as contained in
the Offer Notice.
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(d) If the Investor delivers a Participation Notice indicating a
desire to participate in the prospective sale, the Offeror may effect the
proposed Transfer if, but only if (i) the prospective purchaser purchases the
Tag Along Shares for the same type of consideration as the prospective purchaser
pays to the Offeror and in an amount not less than the purchase price set out in
the Offer Notice (without any commissions, fees, rebates or other similar
payments to or for the benefit of the purchaser) prior to purchasing any Shares
of the Offeror, (ii) the prospective purchaser purchases all of the Shares,
including any Tag Along Shares, at the same purchase price and on the same terms
applicable to the sale of the Offeror's stock, including, without limitation,
the assumption of any guarantees or any portion thereof, and (iii) the sale to
the prospective purchaser is completed within sixty (60) days following the
delivery of the Offer Notice.
(e) If the Investor elects to include a portion or all of its
Shares in the proposed sale to the prospective purchaser, in accordance with
Section 2.5(b):
(i) the Offeror shall provide the Investor with such
information and instructions as shall be necessary to enable it to participate
in the sale transaction on the same terms as the Offeror;
(ii) the Offeror shall ensure that the consideration due to
the Investor shall be delivered to it on the same date as such consideration is
received or was expected to be received by the Offeror;
(iii) the Investor shall cooperate in such transaction by
providing the Offeror all materials, such as executed purchase and sale
agreements and stock transfer documentation, as the Offeror shall reasonably
require; and
(iv) the Investor shall be deemed to have waived its rights
to exercise the right of first refusal set forth in Section 2.4.
2.6 TERMS OF SALES.
(a) CLOSING. If any Shares are purchased by the Other
Shareholders pursuant to the Purchase Option or any shares are included in the
sale to a third party pursuant to the Offer Notice, then such purchases and
sales shall, unless the parties thereto otherwise agree, be completed at a
closing (the "Closing") to be held at the principal office of the Company's
legal counsel in Miami, Florida at 10:00 a.m. local time on the tenth business
day following the exercise of any of the Purchase Option or as set forth in the
Offer Notice.
(b) PURCHASE PRICE. The purchase price for any Shares sold
pursuant to the Purchase Option shall be an amount equal to the Statement. The
purchase and sale shall otherwise be on the applicable terms and conditions of
the Offer.
(c) CONVERTIBLE SECURITIES. For purposes of Sections 2.5 and 2.6,
an offer to purchase options, warrants or other instruments convertible into
Common Stock, other than options issued pursuant any incentive option plan
("Convertible Instruments") shall be treated as an offer to purchase Common
Stock and the total number of shares of Common Stock shall include all shares of
Common Stock
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into which the Convertible Instruments are convertible.
(d) PERMITTED TRANSFERS. Notwithstanding the foregoing transfers
of shares to any person who is a Permissible Transferee shall not be subject to
the requirements of Sections 2.4 or 2.5.
(e) RESTRICTIONS FOLLOWING TRANSFER. If any Shareholder transfers
Shares to a Permissible Transferee pursuant to Section 2.6(d), such Permissible
Transferee shall take and hold such Shares, and such Shares shall be, subject to
this Agreement and to all of the rights, obligations and restrictions provided
herein.
(f) TERMINATION OF OBLIGATIONS. The obligations of the parties
hereto under Sections 2.4 and 2.5 shall terminate upon the closing of the
Initial Offering.
2.7 INFORMATION RIGHTS. The Company will: (i) maintain the accounts
and records of the Company in English and in accordance with generally accepted
accounting principles in the United States, consistently applied, which accounts
and records shall be adequate to provide information reasonably necessary for
the filing of tax returns by the Shareholders and the Investor for the
satisfaction of each Shareholder's and the Investor's reasonable financial
information requirements; (ii) provide the Investor a copy of all tax returns
filed by the Company and its Subsidiaries; and (iii) provide the Investor with
any additional information reasonably requested by the Investor regarding the
Company or any Subsidiary.
3. OTHER AGREEMENTS.
3.1 BOARD OF DIRECTORS.
(a) Each of the parties hereto agree that so long as the Investor
owns at least 5% of the Company's outstanding Shares (it being understood that
for purposes of this Section 3.1, the Investor shall be deemed to own Shares
that it had a right to obtain pursuant to Section 2.1, whether or not the
Investor exercises its rights pursuant to Section 2.1), which amount shall
include, without limitation, Common Stock and Series A Preferred Stock (taking
into account, without duplication, the number of shares of Common Stock into
which each share of Series A Preferred Stock is convertible and securities
convertible into such Common Stock and Series A Preferred Stock) but shall
exclude options hereafter issued under any employee incentive plan in existence
as of the date of this Agreement or approved by holders of a majority of the
shares of Series A Preferred Stock, the Company's Board of Directors shall
consist of no more than seven members and the Investor shall have the right to
designate two members of the Company's Board of Directors (the "Investor
Designees").
(b) The Company and each Shareholder agree that all meetings of
the Board of Directors shall require the presence of a quorum and that, for this
purpose, a quorum shall not be deemed to exist unless at least one Investor
Designee is present at such meeting unless the Investor shall otherwise consent.
Subject to the last sentence of this Section, for all Board meetings, including
rescheduled and adjourned meetings, held in the United States, the Investor
shall be deemed to have waived this quorum requirement if notice of such meeting
has been properly sent to the Investor and the Investor Designees with a minimum
of 10 days'
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prior notice, and no Investor Designee appears at the meeting. For all Board
meetings held outside the United States, including rescheduled and adjourned
meetings, the Investor shall be deemed to have waived this quorum requirement
only if at least 30 days' prior notice of such meeting has been properly sent to
the Investor and each Investor Designee, and no Investor Designee appears at the
meeting. Notwithstanding anything to the contrary contained in this Section 3.1,
the Investor shall not be deemed to have waived the quorum requirement provided
in this Section if the Investor provides the Company with written notice of its
inability to attend such meeting at least seven days' prior to the scheduled
date of such meeting, in which case the proposed meeting shall be rescheduled.
(c) All decisions of the Board shall require the consent of a
majority of members of the Board attending any Board meeting.
(d) Meetings of the Board shall be held at least quarterly unless
the entire Board shall otherwise agree.
(e) The Company shall reimburse all Board members for all
reasonable out-of-pocket expenses incurred in connection with or relating to any
meeting of the Board or any committee thereof. Further, non-employee members of
the Board shall be eligible for such fees or other compensation, including stock
options as determined by the Compensation Committee of the Board.
4. REPRESENTATIONS AND WARRANTIES.
4.1 REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants that:
(a) The Company is a corporation duly organized and validly
existing under the laws of the State of Florida and has the power (corporate and
other) and authority to conduct its business as presently conducted.
(b) The Company has full power (corporate and other) and
authority to enter into this Agreement and for this purpose has been duly
authorized by all proper and necessary corporate action; and that no consent or
approval of stockholders is required as a condition to the validity or
performance of this Agreement.
(c) All authorizations, consents, approvals, registrations,
exemptions and licenses with or from governmental authorities which are
necessary for the validity hereof, the execution and delivery of this Agreement
and the performance by the Company of his obligations hereunder have been
effected or obtained.
(d) This Agreement has been duly authorized, executed and
delivered by the Company and constitutes the valid and legally binding
obligation of the Company, enforceable in accordance with its terms.
(e) Neither the entering into this Agreement nor the compliance
with any of their respective terms will conflict with, violate or result in a
breach of any of the terms, conditions or provisions of, or constitute a default
or require any consent under,
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any shareholders agreement, indenture, mortgage, agreement or other instrument
or arrangement to which the Company is a party or by which it is bound or
violate any of the terms or provisions of the Company's Articles of
Incorporation or Bylaws or any judgment, decree or order or any statute, rule or
regulation applicable to the Company.
4.2 REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS. Each
Shareholder represents and warrants that:
(a) If it is a legal person, it is duly organized and validly
existing under the laws of the jurisdiction of its organization and has the
power (corporate and other) and authority to conduct its business as presently
conducted.
(b) The Shareholders have full power (corporate and other) and
authority to enter into this Agreement and for this purpose have been duly
authorized by all proper and necessary corporate action, if applicable; and that
no consent or approval of stockholders is required as a condition to the
validity or performance of this Agreement. All authorizations, consents,
approvals, registrations, exemptions and licenses with or from governmental
authorities which are necessary for the validity hereof, the execution and
delivery of this Agreement and the performance by the Shareholders of their
obligations hereunder have been effected or obtained.
(c) This Agreement has been duly authorized, executed and
delivered by the Shareholders and constitutes the valid and legally binding
obligation of the Shareholders, enforceable in accordance with its terms.
(d) Neither the entering into this Agreement nor the compliance
with any of their respective terms will conflict with, violate or result in a
breach of any of the terms, conditions or provisions of, or constitute a default
or require any consent under, any shareholders agreement, indenture, mortgage,
agreement or other instrument or arrangement to which the Shareholders are a
party or by which it is bound, including, but not limited to the Sponsors
Agreement, or violate any of the terms or provisions of the Shareholders'
Articles of Association, bylaws or equivalent documents or any judgment, decree
or order or any statute, rule or regulation applicable to the Shareholders.
(e) No Shareholder is engaged in or is the subject of any
significant litigation, arbitration, administrative regulatory compliance
proceedings, or investigations, nor are there any significant litigation,
arbitration, administrative regulatory compliance proceedings or investigations
pending or threatened before any court or arbitrator or before or by any
governmental authority, nor is the Shareholder aware of any facts likely to give
rise to any significant such proceedings.
(f) Each of the representations and warranties made by the
Company in this Agreement and the Subscription Agreement are true and correct.
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5. COVENANTS OF THE SHAREHOLDERS.
5.1 PLEDGES.
(a) Until the consummation of the Initial Offering, no
Shareholder shall pledge as collateral, mortgage, hypothecate or assign any of
its Shares or any shares of a Subsidiary that the Company owns or take any
similar action or any other action that would produce the result, actual, likely
or foreseeable, that such Shareholder loses control of its Shares or voting
rights associated therewith. Any such purported transaction shall be null and
void ab initio.
(b) Until the consummation of the Initial Offering, each
certificate representing a Share shall include a legend that reads as follows:
"This security is subject to the provisions of an Investors
Rights Agreement, dated May 31, 2000, among Intercontinental
Telecommunications Corp., Capital Communications CDPQ Inc.,
and the other shareholders of Intercontinental
Telecommunications Corp., which agreement contains certain
provisions restricting the transfer of this security, copies
of which Investors Rights Agreement are on file at the
principal office of Intercontinental Telecommunications Corp.
Intercontinental Telecommunications Corp. shall furnish,
without charge to any shareholder of Intercontinental
Telecommunications Corp., copies of such Investor Rights
Agreement."
5.2 GENERAL UNDERTAKINGS AND AGREEMENTS BY THE SHAREHOLDERS. Each
Shareholder agrees to at all times:
(a) exercise or cause to be exercised its voting and other rights
as a shareholder in a manner that is consistent with Applicable Law and not
contrary to the provisions of the Documents;
(b) not (i) pay, offer or promise to pay, or authorize the
payment, directly or indirectly through any other Person or firm, of any monies
or anything of value to (A) any Person or firm employed by or acting for or on
behalf of any Person, whether private or governmental, or (B) any government
official or employee or any political party or candidate for political office,
for the purpose of illegally or improperly inducing or rewarding any action by
any official favorable to such Person, any Transaction Party or an Affiliate of
any Transaction Party in connection with the business of any Transaction Party
and their Affiliates or (ii) take any other act that, if taken by a Person
subject to U.S. law, would be reasonably likely to violate the FCPA; and
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(c) do everything within its reasonable control, including but
not limited to instructing any Director nominated by such Shareholder, to cause
each Transaction Party to conduct itself in accordance with the terms of this
Agreement and the other Documents.
5.3 NON-COMPETE AND CONFIDENTIALITY.
(a) (i) The Shareholders shall not, and shall cause each of their
Affiliates and the Transaction Parties to not, directly or indirectly, during
the Restricted Period, through a separate division or legal entity or otherwise,
(A) engage in a Competing Business that does business in the Territory or
solicit existing or prospective customers of any Transaction Party or its
Affiliates in the Territory (except as specifically provided in the Joint
Marketing Agreement), or (B) acquire an interest in, or provide financing to,
any Person engaged in a Competing Business that does business in the Territory,
unless, in each case, the Shareholders, their Affiliates or the Transaction
Parties, as the case may be, shall have first presented to the Company the
opportunity to participate in such opportunity and the Board of Directors of the
Company shall have determined not to cause the Company to participate in the
opportunity.
(ii) During the Restricted Period, each of the Shareholders,
their Affiliates and the Transaction Parties shall keep secret and retain in
strictest confidence, and shall not use for the benefit of itself or others, all
confidential information of the Transaction Parties, including, without
limitation, sales figures, profit margins, profit and loss figures, customers,
clients, suppliers and customer lists (the "Confidential Information"), and,
during the Restricted Period, shall not disclose such Confidential Information
to anyone except with the express written consent of the Investor and except for
Confidential Information which (A) is at the time of receipt or thereafter
becomes publicly known through no wrongful act, (B) is received from a third
party under no obligation to keep such information confidential and without
breach of this Agreement or any other agreement or (C) is already in the
possession of the receiving party as evidenced by written records.
(b) If any Shareholder, any of their respective Affiliates or any
Transaction Party breaches, or threatens to commit a breach of, any of the
provisions of this Section 5.3 (the "Restrictive Covenants"), the Investor
shall, notwithstanding Section 7.9, have the right and remedy to have the
Restrictive Covenants specifically enforced (without posting any bond) by any
court having equity jurisdiction, including, without limitation, the right to an
entry against such breaching Party or breaching Affiliate and restraining orders
and injunctions (preliminary, mandatory, temporary and permanent) against
violations, threatened or actual, and whether or not then continuing, of such
covenants, it being acknowledged and agreed that any such breach or threatened
breach will cause irreparable injury to the Investor and that money damages will
not provide an adequate remedy to the other Parties.
(c) If any court determines that any of the Restrictive
Covenants, or any part thereof, is invalid or unenforceable, the remainder of
the Restrictive Covenants shall not thereby be affected and shall be given full
effect, without regard to the invalid portions.
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(d) If any court determines that any of the Restrictive
Covenants, or any part thereof, is unenforceable because of the duration of such
provision or the area covered thereby, such court shall have the power to reduce
the duration or area of such provisions and, in its reduced form, such provision
shall then be enforceable and shall be enforced.
5.4 FURTHER ASSURANCES. The Parties hereby covenant and agree to
execute and deliver such further and other instruments, agreements and writings
and do and perform, and cause to be done and performed, such further and other
acts and things that may be necessary or desirable in order to give full effect
to the Documents.
6. INDEMNIFICATION
6.1 INDEMNIFICATION. The Company and each of Georges St. Laurent III
and Xxxxxxx St. Laurent agrees to indemnify and hold the Investor and its
officers, directors, employees, Affiliates, advisors, consultants and agents,
and any successors thereto (and any officers, directors, employees, Affiliates
and agents of such successors) harmless from any liability, damage, deficiency,
demand, claim, suit, action, or cause of action, fine, penalty, loss, cost,
expense, including without limitation, reasonable attorney fees ("Damages")
incurred or suffered as a result of the failure of any representation or
warranty made by the Company or any Shareholder pursuant to this Agreement, any
schedule or exhibit to this Agreement or any certificates delivered pursuant
thereto to be true and correct as of the date hereof and on the Closing Date or
any breach by the Company or any Shareholder of an obligation or covenant
contained herein.
6.2 CONTRIBUTION. To the extent that the undertaking to indemnify, pay
or hold harmless the Investor pursuant to Section 6.1 of this Agreement may be
unenforceable, the Company and each Shareholder shall make the maximum
contribution to the payment and satisfaction of each of the indemnified
liabilities which is permissible under Applicable Law.
6.3 INDEMNIFICATION PROCEDURE. The Party making a claim for
indemnification under this Section 6.3 is hereinafter referred to as the
"Indemnified Party" and the Party against whom such claim is asserted under this
Section 6.3 is hereinafter referred to as the "Indemnifying Party". All claims
by an Indemnified Party shall be asserted and resolved as provided for in this
Section 6.3.
(a) In the event that any Indemnified Party receives notice of
the commencement of any action or proceeding that asserts a claim by a third
party or the imposition of any penalty or assessment for which indemnity may be
sought pursuant to this Section 6.3 (a "Third Party Claim") or suffers any
Damages, and such Indemnified Party may be entitled to seek indemnity, such
Indemnified Party shall promptly after receiving such notice provide the
Indemnifying Party with notice of such Third Party Claim or at any time after
determining the existence of a Damages in which a third party is involved.
(b) The Indemnifying Party shall, upon receipt of such notice, be
entitled to participate in or, at the Indemnifying Party's option, assume the
defense, appeal or settlement of such Third Party Claim with respect to which
such indemnity has been invoked
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with counsel of its own choosing, and the Indemnified Party shall fully
cooperate with the Indemnifying Party in connection therewith including
contesting such Third Party Claim or making any counterclaim against the Person
asserting such Third Party Claim; provided, however, that the Indemnified Party
shall be entitled to employ one counsel to represent itself if the Indemnified
Party receives an opinion of counsel that an actual conflict of interest exists
(provided that the existence of the indemnity shall not be deemed to constitute
a conflict) between the Indemnifying Party and the Indemnified Party in respect
of such Third Party Claim and, in that event, the reasonable fees and expenses
of such additional counsel shall be paid by the Indemnifying Party; and
provided, further, that any Indemnified Party is hereby authorized prior to the
date on which it receives written notice from the Indemnifying Party that it
intends to assume the defense, appeal or settlement of such Third Party Claim,
to file any motion, answer or other pleading and take such other action that it
shall reasonably deem necessary to protect its interest or that of the
Indemnifying Party until the date on which the Indemnified Party receives such
notice from the Indemnifying Party. In the event that the Indemnifying Party
fails to assume the defense, appeal or settlement of such Third Party Claim
within ten (10) days after receipt of notice thereof from the Indemnified Party,
such Indemnified Party shall have the right to undertake the defense or appeal
of or settle or compromise such Third Party Claim on behalf of and for the
account and risk of the Indemnifying Party.
(c) No claim or demand may be settled by an Indemnified Party
without the consent of the Indemnifying Party, which consent shall not be
unreasonably withheld, except as set forth in the last sentence of Section
6.3(b) above. Unless the Indemnifying Party shall have agreed in writing that
any and all damages to the Indemnified Party related to a claim or demand are
fully covered by the indemnities provided herein, no such claim or demand may be
settled by the Indemnifying Party without the consent of the Indemnified Party,
which consent shall not be unreasonably withheld.
(d) To the extent it shall subsequently be determined by
arbitration or litigation that the Indemnified Party shall have no right
pursuant to this Section 6.3 to be indemnified by the Indemnifying Party, the
Indemnified Party shall promptly pay to the Indemnifying Party any amounts
previously paid or advanced by the Indemnifying Party to the Indemnified Party
with respect to such matters pursuant to this Section 6.3.
(e) Any indemnifiable claim under this Section 6 that is not a
Third Party Claim shall be asserted by written notice to the Indemnifying Party.
If the Indemnifying Party does not respond within sixty (60) days after receipt
of such notice, it shall not have the right to contest the validity of such
claim. Any uncontested claim or portion thereof shall be paid by the
Indemnifying Party within fifteen (15) days of receipt of notice of such claim.
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6.4 SURVIVAL. Except as expressly provided in this Agreement, the
covenants contained in this Agreement shall survive the Closing Date
indefinitely. The representations and warranties of the Company and the
Shareholders contained in this Agreement and the schedules and certificates
delivered in connection herewith shall survive without time limit.
7. MISCELLANEOUS.
7.1 SUCCESSORS AND ASSIGNS. Except as otherwise provided herein, the
terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the respective successors and assigns of the parties (including
transferees of any shares of Registrable Securities), provided that no party
hereto may assign or transfer its rights hereunder except, in the case of the
Shareholders and the Investor, to a Permissible Transferee that agrees to be
bound by the terms of this Agreement. Nothing in this Agreement, express or
implied, is intended to confer upon any party other than the parties hereto or
their respective successors and assigns any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement.
7.2 GOVERNING LAW. This Agreement shall be governed by and construed
under the laws of the State of New York applicable to agreements entered into
and to be performed entirely within the State of New York, without regard to any
conflict of law rule or principle that would give effect to the laws of another
jurisdiction (other than Section 5-1401 of the General Obligations Law of the
State of New York).
7.3 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
7.4 TITLES AND SUBTITLES. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
7.5 NOTICES. Unless otherwise provided, any notice required or
permitted under this Agreement shall be given in writing and shall be deemed
effectively given upon personal delivery to the party to be notified or upon
delivery by confirmed telecopier, facsimile transmission, nationally recognized
overnight courier service, or upon deposit with the United States Post Office,
by registered or certified mail, postage prepaid and addressed to the party to
be notified at the address indicated for such party in the Subscription
Agreement, or at such other address as such party may designate by ten (10)
days' advance written notice to the other parties. The parties may exchange
communication by any other means including, without limitation, via Internet,
but in no event such communication shall be considered a notice under this
Agreement.
7.6 EXPENSES. If any action at law or in equity is necessary to
enforce or interpret the terms of this Agreement, the prevailing party shall be
entitled to reasonable attorneys' fees, costs and necessary disbursements in
addition to any other relief to which such party may be entitled.
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7.7 ENTIRE AGREEMENT: AMENDMENTS AND WAIVERS. This Agreement
(including the Exhibits hereto, if any) constitutes the full and entire
understanding and agreement among the parties with regard to the subjects hereof
and thereof. Any term of this Agreement may be amended and the observance of any
term of this Agreement may be waived (either generally or in a particular
instance and either retroactively or prospectively), only with the written
consent of each party hereto.
7.8 SEVERABILITY. If one or more provisions of this Agreement are held
to be unenforceable under applicable law, such provision shall be excluded from
this Agreement and the balance of the Agreement shall be interpreted as if such
provision were so excluded and shall be enforceable in accordance with its
terms.
7.9 ARBITRATION. (a) Any dispute, controversy or claim arising out of,
relating to, or in connection with, this Agreement, or breach, termination or
validity hereof (the "Dispute") shall be settled by mediation first, and if not
possible, by arbitration, and the results of such mediation or arbitration, as
the case may be, shall be final and binding upon the parties hereto. The
arbitration shall be conducted in accordance with the International Arbitration
Rules of the American Arbitration Association in effect at the time of the
arbitration, except as they may be modified herein or by the mutual agreement of
the parties. The seat of the arbitration shall be Miami, Florida, and all
arbitration proceedings shall be conducted in the English language.
(b) If the Dispute involves two parties, the party initiating
arbitration (the "Claimant") shall appoint its arbitrator in its request for
arbitration (the "Request"). The other party (the "Respondent") shall appoint
its arbitrator within 30 days of receipt of the Request and shall notify the
Claimant of such appointment in writing. If the Respondent fails to appoint an
arbitrator within such 30-day period, the arbitrator named in the Request shall
decide the controversy or claim as sole arbitrator. Otherwise, the two
arbitrators appointed by the parties shall appoint a third arbitrator within 30
days after the Respondent has notified the Claimant of the appointment of the
Respondent's arbitrator. When the arbitrators appointed by the Claimant and
Respondent have appointed a third arbitrator and the third arbitrator has
accepted the appointment, the two arbitrators shall promptly notify the parties
of the appointment of the third arbitrator. If the two arbitrators appointed by
the parties fail or are unable to appoint a third arbitrator or so notify the
parties, then the appointment of the third arbitrator shall be made by the
American Arbitration Association, which shall promptly notify the parties of the
appointment of the third arbitrator. The third arbitrator shall act as chairman
of the panel.
(c) If the Dispute involves more than two parties, the Claimant
shall deliver a Request to the Respondents that will submit the Dispute to the
American Arbitration Association. The President of the American Arbitration
Association shall appoint three arbitrators and indicate the chairman of the
panel.
(d) The arbitral award shall be in writing and shall be final and
binding on the parties. The award may include an award of costs, including
reasonable attorneys' fees and disbursements. Judgment upon the award may be
entered by any court having jurisdiction thereof or having jurisdiction over the
parties or their assets.
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(e) Each of the parties hereto hereby irrevocably acknowledges
and consents that any legal Action or Proceeding brought with respect to any of
the obligations arising under or relating to this Agreement shall only be
brought in accordance with this Section 7.9, and each of the parties hereto
hereby irrevocably submits to and accepts with regard to any such action
proceeding, for itself and in respect of its property, generally and
unconditionally, the jurisdiction of the aforesaid arbitration panel. Each party
hereby further irrevocably waives any claim that any such arbitration panel lack
jurisdiction over such party, and agrees not to plead or claim, in any legal
Action or Proceeding with respect to this Agreement or the transactions
contemplated hereby brought in any of the aforesaid courts, that any such
arbitration panel lacks jurisdiction over such party. Each party irrevocably
consents to the service of process in any such Action or Proceeding by the
mailing of copies thereof by registered or certified mail, postage prepaid, to
such party, at its address for notices set forth in Section 7.5. Each party
hereby irrevocably waives any objection to such service of process and further
irrevocably waives and agrees not to plead or claim in any Action or Proceeding
commenced hereunder or under any other documents contemplated hereby that
service of process was in any way invalid or ineffective. The foregoing shall
not limit the rights of any party to serve process in any other manner permitted
by law. The foregoing consents to jurisdiction shall not constitute general
consents to service of process for any purpose except as provided above and
shall not be deemed to confer rights on any Person other than the respective
parties to this Agreement.
(f) To the fullest extent permitted by applicable law, each of
the parties hereto hereby irrevocably waives the objection which it may or may
not or hereafter have to the laying of the venue of any suit, Action or
Proceeding arising out of or relating to this Agreement or the transactions
contemplated hereby in Miami, Florida, and hereby further irrevocably waives and
agrees not to plead or claim that such venue is not a convenient forum for any
such proceeding.
7.10 THIRD PARTY BENEFICIARIES. Each Party intends that this Agreement
shall not benefit or create any right or cause of action in or on behalf of any
Person other than the Parties (and, in the case of the Investor, its
transferees) and those Persons entitled to indemnification pursuant to Section 6
hereof.
[signature page follows]
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35
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
THE COMPANY:
INTERCONTINENTAL TELECOMMUNICATIONS CORP.
By: /s/ Xxxxxxx St. Laurent
--------------------------------
Name: Xxxxxxx St. Laurent
--------------------------
Title:
--------------------------
SHAREHOLDERS:
/s/ Georges St. Laurent, Jr.
------------------------------------
Georges St. Laurent, Jr.
/s/ Georges St. Laurent, III
------------------------------------
Georges St. Laurent, III
/s/ Xxxxxxx St. Laurent
------------------------------------
Xxxxxxx St. Xxxxxxx
XXXX PARTNERS
By: /s/ Xxxxxxx St. Laurent
--------------------------------
Name:
--------------------------
Title:
--------------------------
THE INVESTOR:
CAPITAL COMMUNICATIONS CDPQ INC.
By: /s/ Xxxxx Xx Xxxxxxxx
--------------------------------
Name: Xxxxx Xx Xxxxxxxx
--------------------------
Title: Vice-President
--------------------------
By: /s/ Xxxxxxxxx Xxxxxxx
--------------------------------
Name: Xxxxxxxxx Xxxxxxx
--------------------------
Title: Manager
--------------------------
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