Exhibit 10.8
STOCKHOLDERS AGREEMENT
This Stockholders Agreement (this "AGREEMENT") is entered into as of
October 29, 1999 by and among XX.Xxx Holdings, Limited, a Delaware corporation
(the "COMPANY"), Xxxx Xxxxx ("XXXXX"), Xxxxx Xxxxx, Treg Ventures LLC ("TREG"),
Xxxx Telecom Ventures, Inc. ("XXXX"), PF Telecom Holdings, LLC ("PF TELECOM"),
GLW Ventures LLC ("GLW"), Xxxxxxxxx Xxxxx, Odyssey Coinvestors, LLC
("COINVESTORS"), Odyssey Investment Partners Fund, LP ("ODYSSEY" and, together
with Coinvestors, the "ODYSSEY STOCKHOLDERS"), UBS Capital II LLC ("UBS
Capital"), Warburg Dillon Read LLC ("WDR"), Credit Suisse First Boston ("CSFB")
and Lucent Technologies Inc. ("LUCENT").
RECITALS
A. Upon the consummation of the transactions contemplated by that certain
Subscription Agreement, dated as of October 29, 1999, among the Company,
Odyssey, Coinvestors and UBS Capital, each of Odyssey, Coinvestors and UBS
Capital will own shares of Senior Preferred Stock (as defined below) and Dark
Fiber Warrants (as defined below), and each of Xxxx and PF Telecom will own
shares of Common Stock (as defined below) and Original Owners Warrants (as
defined below).
B. The parties hereto desire to enter into this Agreement to, among other
things: (i) assure continuity in the ownership of the Company, (ii) impose
certain restrictions and obligations on the ownership, retention and disposition
of the Securities (as defined below) and (iii) provide the registration rights
set forth herein.
C. The parties hereto acknowledge that WDR and CSFB are parties hereto
solely with respect to the Finance Warrants (as defined below) and Lucent is a
party hereto solely with respect to the Lucent Warrants (as defined below), in
each case, including any shares of Common Stock issued upon exercise thereof,
and in each case solely for purposes of setting forth certain registration
rights and other rights and restrictions related to the transfer of such
securities.
NOW, THEREFORE, in consideration of the mutual agreements contained herein
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties agree as follows:
1. CERTAIN DEFINITIONS. In addition to the terms defined elsewhere herein, the
following terms have the following meanings when used herein with initial
capital letters:
"ACTIVELY PUBLICLY TRADED" shall mean, with respect to the Common Stock,
that an offering (or series of offerings) of the Common Stock has been
consummated pursuant to one or more registration statements following which
shares of the Common Stock representing (a) at least 10% of the outstanding
shares of the Common Stock and (b) an aggregate Current Market Price of at least
$50 million, have been sold to the public and are listed on a national
securities exchange or the Nasdaq Stock Market.
"AFFILIATE" shall mean, with respect to any Person, any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified Person. For purposes of this definition,
"control" (including, with correlative meanings, the terms "controlling,"
"controlled by" and "under common control with"), as used with respect to any
Person, shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of such Person,
whether through the ownership of voting securities, by agreement or otherwise;
provided that beneficial ownership of 10% or more of the voting securities of a
Person shall be deemed to be control; and provided further, that without
limiting the foregoing, the following Persons shall be deemed to be "Affiliates"
of the Company: Odyssey, Xxxx, XX Telecom, Treg, Irwin, Xxxxx Xxxxx, GLW, Xxxxx
and Xxxxxxxxx Xxxxx.
"AT&T HOLDERS" shall mean AT&T Corp. and all transferees of AT&T Warrants
and shares of Common Stock issued upon exercise thereof.
"AT&T WARRANTS" shall mean the warrants to purchase 70,707,070 shares of
Common Stock, dated as of the date hereof issued to AT&T Corp.
"BLOCK TRANSFERS" means any sale, transfer, conveyance or other disposition
of 5% or more of the Fully Diluted Common Stock, in one or a series of related
transactions, to a single purchaser or group of purchasers that would be a
"person" for purposes of Section 13(d)(3) of the Exchange Act, whether or not
pursuant to a Public Offering. Notwithstanding the foregoing, the term "Block
Transfer" shall not apply to any distribution by any Person to holders of equity
interests in such Person (whether or not such holders might otherwise
collectively be deemed a person for purposes of Section 13(d)(3) of the Exchange
Act), except to the extent that any individual acquires 5% or more of the Fully
Diluted Common Stock, and then only with respect to such individual.
"BRIDGE LOAN AGREEMENT" shall mean the bridge loan agreement, dated as of
the date hereof, among the Company, the lenders party thereto and WDR, as Joint
Lead Arranger and Syndication Agent and CSFB, as Joint Lead Arranger and
Administrative Agent.
"CERTIFICATE OF DESIGNATIONS" means the Certificate of Designations setting
forth the rights, preferences and privileges of the Senior Preferred Stock.
"COMMON STOCK" shall mean the common stock, par value $0.01 per share, of
the Company and any successor(s) to such common stock.
"CONVERTIBLE SECURITIES" shall mean any evidence of indebtedness, shares of
stock (other than Common Stock) or other securities directly or indirectly
convertible into or exchangeable or exercisable for shares of Common Stock,
including without limitation, the Senior Preferred Stock.
"CURRENT MARKET PRICE" means, with respect to any particular security on
any date of determination, the average over the 20 trading days ending on the
date immediately preceding the date of such determination of the last reported
sale price, or, if no such sale takes place on any such day, the closing bid
price, in either case as reported for consolidated transactions on the principal
national securities exchange (including the Nasdaq Stock Market) on which such
security is listed or admitted for trading.
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"DARK FIBER WARRANTS" shall mean the warrants to purchase shares of Common
Stock issued pursuant to the Subscription Agreement.
"DISINTERESTED DIRECTOR" means, in connection with any Affiliate
Transaction, each member of the Board who is not an officer, employee, director
or other Affiliate of the party with whom the Company is entering into such
Affiliate Transaction.
"EQUIVALENT SHARES" shall mean: (i) as to any outstanding Options or any
outstanding Convertible Securities, the maximum number of shares of Common Stock
for which or into which such Options or Convertible Securities may then be
exercised or converted and (ii) as to any PF Telecom Shares held by any Xxxxx
Holder or Treg Holder, the number of shares of Common Stock attributable to such
PF Telecom Shares, determined as though PF Telecom had immediately prior to such
determination distributed all of the shares of Common Stock then held by PF
Telecom pro rata to the shareholders of PF Telecom, including such Xxxxx Holder
or Treg Holder. Notwithstanding the foregoing, clause (i) of the definition of
"Equivalent Shares" shall include, without limitation, shares of Common Stock
issuable upon exercise of the Finance Warrants.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as amended.
"EXEMPT ISSUANCE" shall mean, (i) the issuance of the Senior Preferred
Stock pursuant to the terms of the Subscription Agreement, (ii) the conversion
of the Senior Preferred Stock into Common Stock, (iii) any adjustment to the
conversion price, or the number of shares of Common Stock issuable upon
conversion, of the shares of Senior Preferred Stock in accordance with the terms
thereof (including, without limitation, as a result of the accretion of
dividends as increases in liquidation preference), (iv) the issuance of the AT&T
Warrants, the Lucent Warrants, the Dark Fiber Warrants, the Finance Warrants and
the Original Owners Warrants, (v) the issuance of Common Stock upon exercise of
warrants issued in accordance with clause (iv) and any adjustment to the
exercise price, or increase in the number of shares issuable upon exercise, of
any warrant issued pursuant to clause (iv), (vi) Common Stock, or options to
purchase Common Stock, issued to the Company's employees under bona fide
employee compensation or benefit packages or plans adopted by the Board and
approved by the holders of Common Stock when required by law, (vii) Common Stock
issued to acquire, or in the acquisition of, all or any portion of a business as
a going concern, in an arm's-length transaction between the Company and an
unaffiliated third party, whether such acquisition shall be effected by purchase
of assets, exchange of securities, merger, consolidation or otherwise, (viii)
Common Stock issued in (A) a bona fide public offering pursuant to a firm
commitment underwriting or (B) a private placement pursuant to a plan of
distribution that involves resales into a diverse market of "qualified
institutional buyers" (as such term is used in Rule 144A under the Securities
Act) that is broadly marketed by one or more nationally recognized investment
banks, or (ix) warrants (including vesting) issued to lenders or bond purchasers
that are unaffiliated third parties in any financing transaction on arm's-length
terms.
"EXEMPT TRANSFEREES" shall mean any Initial Stockholder.
"FINANCE WARRANTS HOLDERS" shall mean any holder of Finance Warrants or
shares of Common Stock issued upon exercise of Finance Warrants.
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"FINANCE WARRANTS" shall mean the warrants to purchase up to 6,913,580
shares of Common Stock issued as of the date hereof in escrow to a warrant agent
(as defined in the Bridge Loan Agreement) to WDR and CSFB pursuant to the terms
of the Escrow Agreement (as defined in the Bridge Loan Agreement).
"FULLY DILUTED COMMON STOCK" means, as of any date of determination, the
total number of shares of Common Stock outstanding as of such date (calculated
assuming exercise of all outstanding Options, that as of such date are permitted
by their terms to be exercised for shares of Common Stock and conversion of all
outstanding Convertible Securities that as of such date are permitted by their
terms to be converted into shares of Common Stock). Notwithstanding the
foregoing, the definition of "Fully Diluted Common Stock" shall include, without
limitation, shares of Common Stock issuable upon exercise of the Finance
Warrants.
"GLW HOLDER" means Xxxxxxxxx Xxxxx and all Permitted GLW Transferees that
have acquired GLW Shares and become parties hereto.
"GLW SHARES" shall mean any equity interests in GLW.
"HOLDING COMPANY" shall mean XX.Xxx Corp., a wholly-owned Subsidiary of the
Company.
"INDEPENDENT INVESTMENT BANKING FIRM" means any nationally recognized
investment banking firm which does not hold any equity interest (including any
preferred equity interest) in the Company or in any shareholder of the Company.
"INDIVIDUAL STOCKHOLDER" shall mean any Stockholder who is an individual.
"INITIAL PUBLIC OFFERING" shall mean the first firm commitment underwritten
public offering pursuant to an effective registration statement under the
Securities Act covering the offer and sale of the Common Stock to the public
which is underwritten by one or more Underwriters and following which the Common
Stock is Actively Publicly Traded.
"INITIAL STOCKHOLDER" means any of the Odyssey Stockholders, UBS Capital,
Xxxx, XX Telecom, Xxxxx, GLW, Treg or Xxxxx Xxxxx, individually and "INITIAL
STOCKHOLDERS" means all of them collectively.
"XXXXX" shall mean Xxxxxxx Xxxxx.
"XXXXX GROUP" shall mean Xxxxx Xxxxx, Treg and all Permitted Treg
Transferees that have acquired shares of Common Stock (including Equivalent
Shares).
"XXXXX HOLDERS" means Xxxxx Xxxxx and all Permitted Xxxxx Transferees that
have acquired Treg Shares.
"XXXX AGREEMENTS" shall mean the Amended and Restated Fiber Networks
Development Agreement (including all attachments, schedules and exhibits
thereto), dated as of the date hereof, by and between Sea Breeze Communication
Company and Holding Company and the related IRU Agreements between Sea Breeze
Communication Company and Holding Company.
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"XXXX HOLDERS" shall mean Xxxx and all Permitted Xxxx Transferees that have
acquired securities of the Company and become parties hereto.
"LUCENT HOLDERS" shall mean Lucent and all Permitted Lucent Transferees
that have acquired securities of the Company and become parties hereto.
"LUCENT SECURITIES" shall mean the Lucent Warrants and any shares of Common
Stock issued upon exercise of the Lucent Warrants
"LUCENT WARRANTS" shall mean the warrants to purchase 1,414,141 shares of
Common Stock to be issued to Lucent by the Company.
"ODYSSEY" shall mean Odyssey Investment Partners Fund, LP and its
successors and permitted assigns.
"ODYSSEY CO-INVESTOR" means (a) with respect to any Odyssey Holder, any
transferee (other than another Odyssey Holder) of shares of Senior Preferred
Stock or Common Stock from such Odyssey Holder which acquires shares of Senior
Preferred Stock or Common Stock pursuant to Section 6(b) below and (b) any
Person (other than Odyssey Holders) which acquires shares of Senior Preferred
Stock from the Company pursuant to the terms and conditions of the Subscription
Agreement. The definition of "Odyssey Co-Investor" shall include, without
limitation, UBS Capital.
"ODYSSEY CO-INVESTOR HOLDERS" shall mean the Odyssey Co-Investors and the
Permitted Odyssey Co-Investors Transferees that have acquired securities of the
Company and become parties hereto.
"ODYSSEY HOLDERS" shall mean the Odyssey Stockholders and all Permitted
Odyssey Transferees that have acquired securities of the Company and become
parties hereto.
"OPTIONS" shall mean any options or warrants to subscribe for, purchase or
otherwise acquire Common Stock or Convertible Securities.
"ORIGINAL OWNERS WARRANTS" shall mean those warrants to purchase up to an
aggregate of 10,101,012 shares of Common Stock issued by the Company to Xxxx and
PF Telecom.
"PERMITTED GLW TRANSFEREES" means all Permitted Xxxxx Transferees.
"PERMITTED XXXXX TRANSFEREES" means all Permitted Treg Transferees.
"PERMITTED XXXX TRANSFEREE" means with respect to any Xxxx Holder, any
corporation, partnership, limited liability company or other entity which is a
direct or indirect Subsidiary of Xxxx Industries, Inc.
"PERMITTED LUCENT TRANSFEREE" means with respect to Lucent, (i) any
Subsidiary of Lucent and (ii) any Lender (as defined in the Credit Agreement,
dated as of the date hereof, among XX.Xxx Corp., the Lenders party thereto and
Lucent, as Administrative Agent and Syndication Agent).
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"PERMITTED ODYSSEY CO-INVESTOR TRANSFEREE" means with respect to any
Odyssey Co-Investor, any corporation, partnership, limited liability company or
other entity which is a Subsidiary of such Odyssey Co-Investor; provided that
with respect to UBS Capital, such term shall include any corporation,
partnership, limited liability company or other entity which is a direct or
indirect Subsidiary of UBS AG.
"PERMITTED ODYSSEY TRANSFEREE" means with respect to any Odyssey Holder,
any corporation, partnership, limited liability company or other entity which is
controlled by Odyssey Investment Partners, LLC, except with respect to any
proposed Transfer that would cause the Senior Preferred Stock holdings of the
Odyssey Stockholders, together with any unfunded Commitment (as defined in the
Subscription Agreement) of Odyssey, to be reduced below $60 million in aggregate
initial liquidation preference. For purposes of this definition, the term
"controlled by" means the power to direct or cause the direction of the
management or policies of such corporation, partnership, limited liability
company or other entity. Notwithstanding the foregoing, no Person that (a)
acquires shares of Preferred Stock or Common Stock, either from an Odyssey
Stockholder pursuant to Section 6(b) below or from the Company pursuant to the
Subscription Agreement, and (b) is identified as an "Odyssey Co-Investor" in a
written instrument delivered to the Company by Odyssey or such Odyssey
Co-Investor, shall be considered a "Permitted Odyssey Transferee" for purposes
of this Agreement.
"PERMITTED PF TELECOM TRANSFEREE" means with respect to any PF Telecom
Holder, (a) Xxxxx, any Permitted Xxxxx Transferee, Treg or any Permitted Treg
Transferee, except with respect to any proposed Transfer that would cause (i)
the Xxxxx Group to hold shares of Common Stock and Equivalent Shares in an
aggregate amount that is less than 80% of the Equivalent Shares set forth beside
the name, "XXXXX GROUP" on Schedule 1 hereto or (ii) the Xxxxx Group to hold
shares of Common Stock (including Equivalent Shares) in an aggregate amount that
is less than 80% of the Equivalent Shares set forth beside the name "Xxxxx
Group" on Schedule 1 hereto and (b) any shareholder of PF Telecom in connection
with a general pro rata distribution of Common Stock to all shareholders of PF
Telecom.
"PERMITTED TRANSFEREE" means a Permitted Odyssey Co-Investor Transferee, a
Permitted Xxxxx Transferee, a Permitted Xxxx Transferee, a Permitted Odyssey
Transferee, a Permitted PF Telecom Transferee, a Permitted Lucent Transferee or
a Permitted Xxxxx Transferee, and "PERMITTED TRANSFEREES" means any one or more
of the foregoing.
"PERMITTED TREG TRANSFEREE" means with respect to any Treg Holder or any PF
Telecom Holder, (A) the Company, (B) any corporation, partnership or other
entity in which at least 95% of the equity interest is owned (directly or
indirectly), beneficially and of record, collectively by Xxxxx or his spouse,
lineal descendants, siblings, parents or any spouse of any of his lineal
descendants (collectively, "XXXXX AFFILIATES"), (C) any spouse, lineal
descendant, sibling, parent or spouse of a lineal descendant of Xxxxx, or any
heir, executor, administrator, testamentary trustee, legatee or beneficiary of
Xxxxx or of any of the foregoing Persons referred to in this clause (C)
(collectively, "XXXXX ASSOCIATES"), and (D) any trust, the beneficiaries of
which, or any corporation, limited liability company or partnership, the
stockholders, members or general and limited partners of which, include only
Xxxxx, Xxxxx Affiliates or Xxxxx Associates.
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"PERMITTED XXXXX TRANSFEREE" means with respect to any Xxxxx Holder or any
PF Telecom Holder, (A) the Company, (B) any corporation, partnership or other
entity in which at least 95% of the equity interest is owned (directly or
indirectly), beneficially and of record, collectively by Xxxxx or his spouse,
lineal descendants, siblings, parents or any spouse of any of his lineal
descendants (collectively, "XXXXX AFFILIATES"), (C) any spouse, lineal
descendant, sibling, parent or spouse of a lineal descendant of Xxxxx, or any
heir, executor, administrator, testamentary trustee, legatee or beneficiary of
Xxxxx or of any of the foregoing Persons referred to in this clause (C)
(collectively, "XXXXX ASSOCIATES"), and (D) any trust, the beneficiaries of
which, or any corporation, limited liability company or partnership, the
stockholders, members or general and limited partners of which, include only
Xxxxx, Xxxxx Affiliates or Xxxxx Associates.
"PERSON" shall mean an individual, partnership, corporation, limited
liability company, business trust, joint stock company, trust, unincorporated
association, joint venture, governmental authority or other entity of whatever
nature.
"PF TELECOM HOLDERS" shall mean PF Telecom and any Permitted PF Telecom
Transferees that have acquired securities of the Company and become parties
hereto.
"PF TELECOM SHARES" means any equity interests of PF Telecom.
"PUBLIC OFFERING" shall mean a public offering and sale of Common Stock for
cash pursuant to an effective registration statement under the Securities Act.
"REGISTRABLE SECURITIES" shall mean shares of Common Stock (including
without limitation, (i) shares of Common Stock that will be acquired upon the
exercise of any Options and (ii) shares of Common Stock that will be acquired
upon the conversion of any Convertible Securities, including, without
limitation, the Senior Preferred Stock); PROVIDED that such securities shall
cease to be Registrable Securities when (A) a registration statement relating to
such securities shall have been declared effective by the SEC and such
securities shall have been disposed of pursuant to such effective registration
statement or (B) such securities may be sold without registration pursuant to
Rule 144(k).
"REGISTRATION EXPENSES" shall mean (i) all registration and filing fees
with the SEC, (ii) all fees and expenses of compliance with state securities or
blue sky laws (including, without limitation, reasonable fees and disbursements
of a qualified independent Underwriter, if any, counsel in connection therewith
and the reasonable fees and disbursements of counsel in connection with blue sky
qualifications of the Registrable Securities), (iii) all printing expenses, (iv)
all internal expenses of the Company (including, without limitation, all
salaries and expenses of officers and employees performing legal or accounting
duties), (v) the fees and expenses of counsel and independent public accountants
for the Company, (vi) the fees and expenses of any additional experts retained
by the Company in connection with such registration, (vii) all fees and expenses
of listing the Registrable Securities, if any, (viii) all rating agency fees, if
any, and (ix) the reasonable fees and expenses of one counsel for the holders of
Registrable Securities participating in an offering involving the exercise of
registration rights pursuant to Section 9 or 10 hereof, which counsel shall be
selected by the holders holding a majority of the Registrable Securities to be
offered in such offering; PROVIDED that Registration Expenses shall not include
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underwriting discounts and/or commissions and transfer taxes, if any, in
connection with such registration.
"RULE 144" shall mean Rule 144 under the Securities Act, as it may be
amended from time to time (including without limitation clause (k) thereof).
"SEC" shall mean the Securities and Exchange Commission.
"SECURITIES" shall mean the shares of Senior Preferred Stock, shares of
Common Stock (other than Lucent Securities), the Original Owners Warrants and
the Dark Fiber Warrants.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended.
"SENIOR PREFERRED STOCK" shall mean the Series A Senior Cumulative
Convertible Preferred Stock of the Company.
"STOCKHOLDER" means any holder of Securities.
"SUBSCRIPTION AGREEMENT" means the Subscription Agreement, dated as of the
date hereof, by and among the Company, Odyssey, UBS Capital and Coinvestors.
"SUBSIDIARY" of an entity shall mean (i) any corporation, association or
other business entity of which more than 50% of the total voting power of shares
of the voting securities outstanding thereof is at the time owned or controlled,
directly or indirectly, by such entity or one or more of the other Subsidiaries
of that person (or a combination thereof) and (ii) any partnership (a) the sole
general partner or the managing general partner of which is such person or a
Subsidiary of such person or (b) the only general partners of which are such
person or of one or more Subsidiaries of such person (or any combination
thereof).
"TRANSFER" (or any variation thereof used herein) shall mean any direct or
indirect sale, offer, assignment, mortgage, transfer, pledge, hypothecation or
other disposal, in each case, whether voluntary or involuntary.
"TREG HOLDERS" shall mean Treg and all Permitted Treg Transferees that have
acquired PF Telecom Shares and become parties hereto.
"TREG SHARES" shall mean any equity interests of Treg.
"UNDERWRITER" shall mean a securities dealer who purchases any Registrable
Securities as a principal in connection with a distribution of such Registrable
Securities and not as part of such dealer's market making activities, which
underwriter shall be selected by the Company in its sole discretion.
"XXXXX GROUP" shall mean Xxxxx, GLW and all Permitted Xxxxx Transferees
that have acquired shares of Common Stock (including Equivalent Shares).
"XXXXX HOLDERS" shall mean Xxxxx, GLW and all Permitted Xxxxx Transferees
that have acquired PF Telecom Shares and become parties hereto.
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2. LEGEND.
(a) Each party hereto acknowledges and agrees that each certificate (or
certificates) representing the securities subject to this agreement owned or
held by it shall bear the following legend:
"The securities evidenced by this certificate have not been registered
under the Securities Act of 1933, as amended (the "Securities Act"),
and may not be sold or transferred unless there is an effective
registration statement under the Securities Act covering the sale or
transfer of such securities or such sale or transfer is exempt from
the registration and prospectus delivery requirements of the
Securities Act. The securities evidenced by this certificate also are
subject to certain other restrictions on transfer, as set forth in a
Stockholders Agreement, dated as of October 29, 1999, among the
Company and certain stockholders named therein (the "Stockholders
Agreement"). Accordingly, these securities may only be transferred in
compliance with the Stockholders Agreement."
(b) The certificates representing such securities, and each certificate
issued in transfer thereof, also will bear any legend required under any
applicable state securities laws.
(c) Absent an effective registration statement under the Securities Act
covering the disposition of such securities which any party hereto acquires, any
such party will not sell, transfer, assign, pledge, hypothecate or otherwise
dispose of any or all of the securities (A) unless such disposition is exempt
from the registration and prospectus delivery requirements of the Securities Act
and has been registered or qualified under (or is exempt from the registration
and qualification requirements of) any applicable state securities laws and (B)
except in compliance with the terms of this Agreement.
(d) Each of the parties hereto consents to the Company making a notation on
its records or giving instructions to any transfer agent of such securities in
order to implement the restrictions on transfer of securities set forth in this
Section 2.
(e) Any legend endorsed on a certificate evidencing a security and any stop
transfer instructions or notations on the Company's records with respect to such
security pursuant to Section 2(a) and 2(b) hereof shall be removed or lifted and
the Company shall issue a certificate without such legend to the holder of such
security if (a) the transfer of such security has been registered under the
Securities Act or (b) such holder provides the Company with an opinion of
counsel (which counsel and opinion are reasonably satisfactory to the Company)
stating that a public sale or transfer of such security may be made without
registration under the Securities Act and that such legend is not required under
any applicable state securities laws.
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3. ELECTION OF DIRECTORS. Except that in the event that one or more of the
conditions described in Section 6(b) of the Certificate of Designations exists,
each Stockholder agrees to cast all votes in respect of Securities held by such
Stockholder entitled to vote for the election of directors, whether at any
annual or special meeting, by written consent or otherwise, as follows:
(a) NUMBER OF DIRECTORS. Each such Stockholder will vote to fix the number
of members of the board of directors of the Company (the "BOARD") at six (6), or
such other number as may be required by this Section 3 (including without
limitation, Section 3(b)(iv) and 3(c)) or as may be unanimously agreed to by the
Initial Stockholders or as may be required to comply with the terms of the
Certificate of Designations.
(b) ELECTION OF DIRECTORS. Each such Stockholder will vote to elect as
directors of the Company:
(i) (A) until the first anniversary of the date hereof, and thereafter
at all times in which the Odyssey Holders hold fifty percent (50%) or more of
the aggregate shares of Common Stock and Equivalent Shares held by the Odyssey
Holders on the first anniversary of the date hereof, two (2) individuals
designated by Odyssey; (B) at all times after the first anniversary of the date
hereof in which the Odyssey Holders hold twenty-five percent (25%) or more, but
less than fifty percent (50%) of the aggregate shares of Common Stock and
Equivalent Shares held by the Odyssey Holders on the first anniversary of the
date hereof, one (1) individual designated by Odyssey; and (C) at all times
after the first anniversary of the date hereof in which the Odyssey Holders hold
less than twenty-five percent (25%) of the aggregate shares of Common Stock and
Equivalent Shares held by the Odyssey Holders on the first anniversary of the
date hereof, such Stockholders shall not be required to vote for any individual
designated by Odyssey (the director or directors nominated by the Odyssey
Holders pursuant to this Section 3(b)(i) are referred to as the "ODYSSEY
DIRECTORS");
(ii) (A) at all times in which the Xxxx Holders hold fifty percent
(50%) or more of the Securities held by the Xxxx Holders on the date hereof, two
(2) individuals designated by Xxxx; (B) at all times in which the Xxxx Holders
hold twenty-five percent (25%) or more, but less than fifty percent (50%), of
the Securities held by the Xxxx Holders on the date hereof, one (1) individual
designated by Xxxx; and (C) at all times in which the Xxxx Holders hold less
than twenty-five percent (25%) of the aggregate shares of the Securities held by
the Xxxx Holders on the date hereof, such Stockholders shall not be required to
vote for any individual designated by Xxxx (the director or directors nominated
by Xxxx pursuant to this Section 3(b)(ii) are referred to as the "XXXX
DIRECTORS");
(iii) (A) subject to clause (iv) below at all times in which the PF
Telecom Holders hold fifty percent (50%) or more of the Securities held by the
PF Telecom Holders on the date hereof, two (2) individuals designated by PF
Telecom; (B) at all times in which the PF Telecom Holders hold twenty-five
percent (25%) or more, but less than fifty percent (50%), of the Securities held
by the PF Telecom Holders on the date hereof, one (1) individual designated by
PF Telecom; and (C) at all times in which the PF Telecom Holders hold less than
twenty-five percent (25%) of the aggregate shares of the Securities held by the
PF Telecom Holders on the date hereof, such Stockholders shall not be required
to vote for any individual designated by PF
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Telecom (the director or directors nominated by PF Telecom pursuant to this
Section 3(b)(iii) are referred to as the "PF TELECOM DIRECTORS"); and
(iv) the chief executive officer (other than Xxxxx), when such officer has
been employed by the Company with approval of the Board pursuant to the
provisions of Section 4 (provided that if Xxxxx is the chief executive officer,
then Xxxxx shall be deemed to be a designee of PF Telecom pursuant to clause
(iii) above and no separate director shall be designated pursuant to this clause
(iv)).
(c) CO-INVESTOR DIRECTOR. Until the first anniversary of the date hereof,
Odyssey may grant the right to designate one (1) additional director (the
"CO-INVESTOR DIRECTOR") to any one Odyssey Co-Investor requiring the right to
designate such director, subject to the consent of Xxxx and PF Telecom, which
consent shall not be unreasonably withheld. If Odyssey grants such right to
designate an additional director and Xxxx continues to have the right to
designate two (2) directors pursuant to Section 3(b)(ii), Xxxx will have the
right to designate one (1) additional director who shall be deemed a Xxxx
Director. If Odyssey grants such a right to designate an additional director and
PF Telecom continues to have the right to designate two (2) directors pursuant
to Section 3(b)(iii), PF Telecom will have the right to designate one (1)
additional director who shall be deemed a PF Telecom Director. The right of the
Odyssey Co-Investor to designate the Co-Investor Director pursuant to this
Section 3(c) shall terminate on the first date on which the Odyssey Co-Investor
owns less than fifty percent (50%) of its initial holdings calculated as of the
initial date of its acquisition of Securities. Notwithstanding the foregoing,
(y) if the right of the Odyssey Co-Investor to designate the Co-Investor
Director terminates for any reason, the right of Xxxx and PF Telecom to
designate additional directors pursuant to this Section 3(c) shall terminate and
(z) if either the Xxxx Holders or the PF Telecom Holders no longer have the
right to designate two (2) directors pursuant to Section 3(b), then the right of
Xxxx or PF Telecom, as the case may be, to designate an additional director
pursuant to this Section 3(c) shall terminate.
(d) REDUCTION OF BOARD AND REMOVAL OF DIRECTORS. Each holder of Securities
agrees to vote, or consent with respect to, its Securities to remove any
director(s) subject to removal pursuant to Section 3(b) and 3(c) and to decrease
the number of members of the Board by the number of director(s) actually removed
pursuant to this Section 3(d). Notwithstanding the foregoing, if the number of
directors permitted to be designated by a Stockholder is reduced and such
Stockholder so designates a specific individual or individuals of its designees
to be removed, then the other holders agree to vote for the removal of the
individual so designated.
(e) REMOVAL.
(i) Other than as set forth in Section 3(d) above, no Odyssey Director
may be removed without the consent of Odyssey.
(ii) Other than as set forth in Section 3(d) above, no Xxxx Director
may be removed without the consent of Xxxx.
(iii) Other than as set forth in Section 3(d) above, no PF Telecom
Director may be removed without the consent of PF Telecom.
11
(iv) Other than set forth in Section 3(d) above, the Co-Investor
Director may not be removed without the consent of UBS Capital.
(v) No other director at any time in office may be removed without the
unanimous consent of the Board members designated by the Stockholders having the
right to designate Board members.
(f) Odyssey hereby irrevocably grants to UBS Capital the rights set
forth under Section 3(c), and each other party hereby acknowledges and consents
to the grant of such rights.
4. PROTECTIVE PROVISIONS.
(a) Except as set forth in Section 4(c)-(j), the approval of: the Odyssey
Directors, voting as a group; the PF Telecom Directors voting as a group; and
the Xxxx Directors voting as a group, will be required in order for the Company
to consummate, or to cause any of its Subsidiaries to consummate, any of the
following transactions:
(i) any increase or decrease in the number of shares of capital stock
of the Company or any of its Subsidiaries issued or authorized;
(ii) the creation (by reclassification or otherwise) of any new class
or series of capital stock of the Company or any of its Subsidiaries;
(iii) any amendment or waiver of the Company's or any of its
Subsidiaries' certificate of incorporation or bylaws;
(iv) any sale, merger, acquisition or consolidation (other than
pursuant to the Company Sale Right described in Section 16 hereof) involving the
Company or any of its Subsidiaries in excess of $10 million in value;
(v) any financing arrangement in excess of $10 million;
(vi) the employment or termination of any member of senior management
of the Company or any of its Subsidiaries (excluding relatives and Affiliates of
the PF Telecom Holders);
(vii) the approval of each business plan and annual budget of the
Company or any of its Subsidiaries;
(viii) the approval of changes to the business plan or any amendments
to the annual budget of the Company or any of its Subsidiaries, in either case,
that involve increases in expenditures in excess of $10 million in the
aggregate;
(ix) the entering into or amendment of any partnership or joint venture
arrangement or make any other debt or equity investment in any other entity or
form any new Subsidiary or Affiliate involving an investment, performance of
services or delivery of goods or materials of an amount or value in excess of
$10 million;
12
(x) any other contract or any amendment to existing contracts (other
than any agreement with Xxxx and its Affiliates), including any contract
involving performance of services or delivery of goods or materials by the
Company or any of its Subsidiaries of an amount or value in excess of $10
million or having an effect in excess of $10 million on the value of the Company
or any of its Subsidiaries;
(xi) any sale of assets for a price in excess of $10 million;
(xii) any redemption, purchase or other acquisition of capital stock of
the Company;
(xiii) the adoption or amendment of any management incentive plan,
including the granting of awards pursuant to such plan and the terms and
conditions of such awards (including, without limitation, vesting and expiration
provisions);
(xiv) entry into any new line or type of business;
(xv) the resolution or settlement of any third party claim in excess of
$10 million; or
(xvi) the election of each of the members of the board of directors of
each of the Subsidiaries.
(b) Except as set forth in Section 4(c)-(j), the approval of a majority of
the Board will be required in order for the Company to consummate, or to cause
any Subsidiary to consummate, any of the following transactions:
(i) any sale, merger, acquisition or consolidation (other than pursuant
to the Company Sale Right described in Section 16 hereof) involving the Company
or any of its Subsidiaries that is in excess of $5 million and less than or
equal to $10 million in value;
(ii) any financing arrangement in excess of $5 million and less than or
equal to $10 million;
(iii) the approval of changes to the business plan or any amendments to
the annual budget of the Company or any of its Subsidiaries, in either case,
that involve increases in expenditures that are in excess of $5 million in the
aggregate and less than or equal to $10 million in the aggregate;
(iv) enter into or amend any partnership or joint venture arrangement
or make any other debt or equity investment in any other entity or form any new
Subsidiary or Affiliate involving an investment, performance of services or
delivery of goods or materials of an amount or value in excess of $5 million and
less than or equal to $10 million;
(v) any other contract or any amendment to existing contracts (other
than any agreement with Xxxx and its Affiliates), including any contract
involving performance of services or delivery of goods or materials by the
Company or any of its Subsidiaries of an amount or value in excess of $5 million
and less than or equal to $10 million
13
or having an effect on the value of the Company or any of its Subsidiaries in
excess of $5 million and less than or equal to $10 million;
(vi) any sale of assets for a price in excess of $5 million and less
than or equal to $10 million; or
(vii) the resolution or settlement of any third party claim in excess
of $5 million and less than or equal to $10 million.
(c) If at any time any of the Odyssey Holders, the Xxxx Holders or the PF
Telecom Holders has the right to designate fewer than two directors to the Board
pursuant to the requirements of Section 3(b) (a "SELLING HOLDER"), then the
consent of such Selling Holder's designated director shall not be required
pursuant to Section 4(a) in order for the Company to consummate, or to cause any
of its Subsidiaries to consummate, the enumerated transactions; PROVIDED,
HOWEVER, if at any time there is more than one Selling Holder, then the
transactions enumerated in Section 4(a) may be consummated with the approval of
a majority of the Board (voting as individuals).
(d) The approval of the Odyssey Directors (voting as a group) and the Xxxx
Directors (voting as a group) will be required, but will be the only Board
approval required, for the employment or termination of any position or title of
the Company or any Subsidiary (including, without limitation, any title held on
the Board of the Company or any Subsidiary of the Company) held by any Person
that is an Affiliate of or otherwise related to, or previously employed by, any
of the PF Telecom Holders.
(e) The approval of any two of: (i) the Odyssey Directors (voting as a
group); (ii) the Xxxx Directors (voting as a group) and (iii) the PF Telecom
Directors (voting as a group), will be required, but will be the only Board
approval required, for the Company or any Subsidiary to voluntarily commence any
proceeding or file any petition seeking liquidation, reorganization or similar
relief under any federal, state or foreign bankruptcy, insolvency, receivership
or similar law.
(f) The approval of the Odyssey Directors (voting as a group) and the PF
Telecom Directors (voting as a group) will be required, but will be the only
Board approval required, for (i) employment or termination by the Company or any
of its Subsidiaries of any position or title held by any Person that is an
Affiliate of or otherwise related to, or previously employed by, any of the Xxxx
Holders and (ii) the execution of any contract, or the amendment or extension of
any existing contract between the Company or any of its Subsidiaries and Xxxx or
its Affiliates, including without limitation, the Xxxx Agreements and all
agreements related thereto (except but any of the foregoing actions described in
subsection (i) related to Xxxx Xxxxxx, Xxxxx Xxxxxx and Xxx XxXxxxx will require
the approval of only a majority of the directors).
(g) Any sale or lease of dark fiber or conduit by the Company or any of its
Subsidiaries that is made in accordance with, and subject to any limitations
specified in, the business plan and annual budget approved pursuant to Section
4(a) or 4(b) (but only to the extent that the quantity and location of the
assets subject to such sale, the price at which such assets shall be sold or
leased and all other material terms of such sale or lease, are specifically
identified in such
14
business plan and annual budget) will not require the consent of the Board. The
Company acknowledges that the business plan provided to Odyssey prior to the
date hereof does not contemplate any sales or leases by the Company of conduit.
(h) The Company shall not, and shall not permit any of its Subsidiaries to,
make any payment to, or sell, lease, transfer or otherwise dispose of any of its
properties or assets to, or purchase any property or assets from, or enter into
or make or amend any contract, agreement, understanding, loan, advance or
guarantee with, or for the benefit of, any Affiliate (each of the foregoing, an
"AFFILIATE TRANSACTION"), unless (i) such Affiliate Transaction is on terms that
are no less favorable to the Company or the relevant Subsidiary than those that
would have been obtained in a comparable transaction by the Company or such
Subsidiary with an unrelated Person and (ii) a majority of the Disinterested
Directors approves such Affiliate Transaction.
(i) The approval of the Odyssey Directors (voting as a group) will be
required, for any alteration, amendment or termination of the resolutions of the
Board, as in effect on the date hereof, relating to the authorization of the
Senior Preferred Stock and the reservation of shares of Common Stock issuable
upon the conversion of the shares of the Senior Preferred Stock.
(j) Notwithstanding the foregoing, the provisions of this Section 4 shall
not apply, with respect to transactions contemplated by Section 4(a) or Section
4(b) during any period in which one or more of the conditions described in
Section 6(b) of the Certificate of Designations exist and as a result a majority
of the Board consists of individuals elected by the holders of the Senior
Preferred Stock; PROVIDED, HOWEVER, that such provisions shall continue to apply
with respect to each such action to the extent that any of such action is not
related to and does not adversely affect the Company's ability to cure any
condition described in Section 6(b) of the Certificate of Designations. The
exercise by the holders of the Senior Preferred Stock of the rights set forth in
Section 6(b) of the Certificate of Designations shall be accompanied by a
resolution of the holders of the Senior Preferred Stock (which may be passed at
a meeting of the holders of the Senior Preferred Stock or in writing to the
extent permitted under applicable law) instructing such additional directors to
use their good faith effort to cause the Company to cure any condition in
Section 6(b) of the Certificate of Designations as expeditiously as possible.
5. TRANSFER RESTRICTIONS.
(a) Until the earlier of the (i) second anniversary of the date hereof and
(ii) the date on which the Company's equity is Actively Publicly Traded, no
Stockholder shall Transfer any interest in any Securities now or hereafter owned
by it except for Transfers of Securities pursuant to Section 6 hereof. Until the
earlier of (i) the second anniversary of the date hereof and (ii) 180 days after
the date on which the Company's equity is Actively Publicly Traded, no Lucent
Holder shall Transfer any interest in any Lucent Securities issued upon exercise
thereof except for Transfers of Lucent Securities pursuant to Section 6 hereof.
(b) Each party hereto agrees and acknowledges that it will not Transfer any
securities subject to this Agreement now or hereafter owned by it unless such
Transfer complies with the terms and conditions of this Agreement and the
Transfer is in compliance with applicable federal and state securities laws. Any
attempt to Transfer any such securities not in compliance with this
15
Agreement shall be null and void and neither the Company nor any transfer agent
shall give any effect in the Company's stock records to such attempted Transfer.
(c) No Stockholder shall Transfer any interest in any Securities now or
hereafter owned by it, comprising more than 15% of the Fully Diluted Common
Stock, in a single transaction or a series of related transactions, to any
Person or group of Persons that is a "person" as such term is used in Section
13(d)(3) under the Exchange Act (other than the Exempt Transferees) except for a
Transfer of Securities pursuant to, or otherwise permitted under, Sections 6, 9
or 16 hereof.
(d) Except for Transfers of Securities pursuant to Sections 9, 10, 11 and
16 hereof, until the date on which the Common Stock is Actively Publicly Traded,
no Transfers by a Stockholder of any interest in any Securities permitted by
this Agreement shall be effective unless and until the recipient of such
Securities has delivered to the Company a written acknowledgment and agreement
in form and substance reasonably satisfactory to the Company that the Securities
to be received by such recipient are subject to all the provisions of this
Agreement and that such recipient is bound by the obligations herein as a
Stockholder.
(e) Notwithstanding the other provisions of this Agreement, no Transfer of
any interests in PF Telecom Shares, Treg Shares, GLW Shares, Original Owners
Warrants or Dark Fiber Warrants is permitted except pursuant to Section 6(a),
6(b) and 6(d).
(f) Notwithstanding any other provision of this Agreement, prior to any
Transfer of Securities before the Common Stock is Actively Publicly Traded, the
transferring Stockholder must notify the Company and Xxxx in writing of its
intention to effect such a Transfer (a "TRANSFER NOTICE"). The Stockholder shall
not be permitted to effect such a Transfer if (a) such Transfer would constitute
a Transfer to Xxxxxxx X. Xxxx or Xxxxxxxxx Xxxx, any member of the immediate
family of Xxxxxxx X. Xxxx or Xxxxxxxxx Xxxx (spouse, children, or
grandchildren), or any partnership (general or limited), corporation,
association, joint stock company, trust, family trust, joint venture,
unincorporated organization or other entity of any type or nature, that
directly, or indirectly through one or more intermediaries, is controlled, or is
under common control with Xxxxxxx X. Xxxx or Xxxxxxxxx Xxxx, or any member of
the immediate family of Xxxxxxx X. Xxxx or Xxxxxxxxx Xxxx (a "XXXXXXX OR
XXXXXXXXX XXXX TRANSFER") and (b) within 15 business days following receipt of
such Transfer Notice, the Company or Xxxx shall have notified such Stockholder
in writing that the proposed Transfer would constitute a Xxxxxxx or Xxxxxxxxx
Xxxx Transfer and is therefore prohibited by this Section 5(f). For purposes of
the foregoing, "control" (including, with correlative meanings, the terms
"controlling," "controlled by" and "under common control with"), as used with
respect to any person, shall mean the possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of such
person, whether through the ownership of voting securities, by agreement or
otherwise.
(g) Notwithstanding the other provisions of this Agreement, prior to the
date on which the Common Stock is Actively Publicly Traded, no Transfer of any
interests in Securities by an Initial Stockholder or an Odyssey Co-Investor
aggregating less than 2.5% of such Initial Stockholder's or Odyssey
Co-Investor's interest in the Securities (including Equivalent Shares),
calculated as of the date of acquisition, shall be permitted.
16
6. PERMITTED TRANSFERS.
(a) TRANSFERS TO PERMITTED TRANSFEREES. Notwithstanding any of the transfer
restrictions set forth in Section 5, 7 or 8, any of the Odyssey Holders, Xxxx
Holders, Xxxxx Holders, GLW Holders, Treg Holders, Xxxxx Holders, PF Telecom
Holders, Lucent Holders, or the Odyssey Co-Investor Holders may, at any time and
without complying with such restrictions, Transfer any interest in any
Securities, PF Telecom Shares, Treg Shares, GLW Shares or Lucent Securities to
any of their respective Permitted Transferees; PROVIDED, HOWEVER, that no such
Transfer shall be effective until (i) such Permitted Transferee has delivered to
the Company a written acknowledgment and agreement in form and substance
reasonably satisfactory to the Company that the Securities, PF Telecom Shares,
Treg Shares or Lucent Securities to be received by such Permitted Transferee are
subject to all the provisions of this Agreement and that such Permitted
Transferee is bound hereby and a party hereto as a Stockholder and (ii) in the
case of a Transfer by any Individual Stockholder (an "INDIVIDUAL TRANSFEROR"),
the Permitted Transferee has executed and delivered an irrevocable proxy to the
Individual Transferor, in form and substance reasonably satisfactory to the
Company, whereby the voting rights with respect to such Securities are retained
by (a) Xxxxx (or, if Xxxxx shall no longer be a Stockholder as a result of
Xxxxx'x death, the holder of the Securities that were held by Xxxxx immediately
prior to Xxxxx'x death), if such Individual Transferor is a member of the Xxxxx
Group or (b) Xxxxx (or, if Xxxxx shall no longer be a Stockholder as a result of
Xxxxx'x death, the holder of the Securities that were held by Xxxxx immediately
prior to Xxxxx'x death), if such Individual Transferor is a member of the Xxxxx
Group.
(b) ODYSSEY CO-INVESTOR TRANSFERS. Notwithstanding any of the transfer
restrictions set forth in Section 5, 7 or 8, the Odyssey Holders shall be
permitted to Transfer Securities to any Odyssey Co-Investor at any time on or
before the first anniversary of the date hereof without complying with such
restrictions; PROVIDED, HOWEVER, that such Transfers shall be subject to the
approval of each of Xxxx and PF Telecom, which consent shall not be unreasonably
withheld; and PROVIDED FURTHER, that such Transfers shall not cause the Senior
Preferred Stock holdings of the Odyssey Holders to be reduced below $75,000,000
in aggregate initial liquidation preference (not including any dividends added
thereto); and PROVIDED FURTHER, that no such Transfer shall be effective until
(i) such Odyssey Co-Investor has delivered to the Company a written
acknowledgment and agreement in form and substance reasonably satisfactory to
the Company that the Securities to be received by such Odyssey Co-Investor are
subject to all the provisions of this Agreement and that such Odyssey
Co-Investor is bound hereby and a party hereto as a Stockholder. For purposes of
this Section 6(b), each of Xxxx and PF Telecom consent to any one or more of the
following as Odyssey Co-Investors: UBS Capital; any Affiliate of Credit Suisse
First Boston; any Affiliate of First Union Corp.; Newcourt Capital; and General
Electric Capital Corporation.
(c) SALES TO PUBLIC. Notwithstanding any of the transfer restrictions set
forth in Section 5, 6 (a), 7 or 8, after the date the Company's equity is
Actively Publicly Traded, any Stockholder may Transfer any or all of such
Securities in a Public Offering or to the public through a broker, dealer or
market maker pursuant to Rule 144, subject to applicable lock-ups or applicable
law without complying with such restrictions; PROVIDED that Block Transfers will
be subject to the tag-along rights set forth in Section 8.
17
(d) APPROVED TRANSFERS. Notwithstanding any of the transfer restrictions
set forth in Section 5, 7 or 8, any Stockholder may Transfer any interest in any
Securities, PF Telecom Shares or Treg Shares without complying with such
restrictions with the prior written consent of each of Odyssey, Xxxx and PF
Telecom.
(e) FINANCE WARRANT TRANSFERS. Notwithstanding any of the transfer
restrictions set forth in Section 5 (other than Section 5(f)), 7 or 8, WDR or
CSFB may Transfer any interest in the Finance Warrants or any shares of Common
Stock issued upon exercise thereof without complying with such restrictions;
PROVIDED that such Transfers comply with applicable federal and state securities
laws and provided further, that no such Transfer prior to the date on which the
Common Stock is Actively Publicly Traded shall be effective until the transferee
has delivered to the Company a written acknowledgment and agreement in form and
substance reasonably satisfactory to the Company that the Finance Warrants and
any such shares of Common Stock issued upon exercise thereof to be received by
such transferee are subject to all the provisions of this Agreement and that
such transferee is bound hereby and a party hereto as a Finance Warrant Holder.
(f) LUCENT SECURITIES TRANSFER. Following the expiration of the
restrictions set forth in Section 5(a) with respect to Lucent Securities, any
Lucent Holder may Transfer any interest in the Lucent Warrants or any shares of
Common Stock issued upon exercise thereof; provided that such Transfers comply
with applicable federal and state securities laws and provided further, that no
such Transfer prior to the date on which the Common Stock is Actively Publicly
Traded shall be effective until the transferee has delivered to the Company a
written acknowledgment and agreement in form and substance reasonably
satisfactory to the Company that the Lucent Warrants and any such shares of
Common Stock issued upon exercise thereof to be received by such transferee are
subject to all the provisions of this Agreement and that such transferee is
bound hereby and a party hereto as a Lucent Holder.
7. RIGHT OF FIRST REFUSAL.
(a) If, at any time after the second anniversary of the date hereof and
prior to the date the Company's equity is Actively Publicly Traded, any
Stockholder or group of Stockholders, or any Lucent Holder or group of Lucent
Holders (collectively, the "SELLING STOCKHOLDER") receives a bona fide offer to
purchase any or all of its Securities or Lucent Securities, as the case may be
(each, an "OFFER"), from any other Person (which may include another Stockholder
or Lucent Holder) (an "OFFEROR") which the Selling Stockholder wishes to accept,
the Selling Stockholder shall cause such Offer to be reduced to writing and such
Selling Stockholder (other than any Lucent Holder or group of Lucent Holders)
shall promptly notify each of the other Odyssey Holders, PF Telecom Holders,
Xxxx Holders and the Odyssey Co-Investor Holders, in each case, that are not
Offerors (the "OFFEREE STOCKHOLDERS") and such Selling Stockholder (whether or
not a Lucent Holder or Group of Lucent Holders) shall promptly notify the
Company in writing of its wish to accept such Offer (the "SELLER'S NOTICE"). The
Selling Stockholders may, for purposes of determining the recipients of the
Seller's Notice, rely upon a list of securityholders provided by the Company
(which the Company shall provide to any requesting securityholder promptly upon
request). The Seller's Notice shall contain an irrevocable offer to sell to (i)
the Offeree Stockholders, if the Selling Stockholder is any Person other than a
Lucent Holder or a group of Lucent Holders, or (ii) the Company, if the Selling
Stockholder is a Lucent Holder or a group of
18
Lucent Holders, in the manner set forth below such Securities or Lucent
Securities, as the case may be (the "OFFERED SECURITIES"), at a purchase price
equal to the price contained in, and on the same terms and conditions of, such
Offer (provided, that if the Offer includes any consideration other than cash,
then at the sole option of the Offeree Stockholders (or the Company, if the
Selling Stockholder is a Lucent Holder or a group of Lucent Holders), such offer
shall be deemed be made at the equivalent all-cash price, determined in good
faith by the Selling Stockholders) (the "OFFER PRICE"), and shall be accompanied
by a true copy of such Offer (which shall identify the Offeror thereof).
(b) Upon receipt of the Seller's Notice, the Offeree Stockholders (or the
Company, if the Selling Stockholder is a Lucent Holder or group of Lucent
Holders) shall have the irrevocable and exclusive option to buy all, but not
less than all, of the Offered Securities for cash at the Offer Price on the
terms and subject to the conditions of Section 7(c).
(c) The provisions of this Section 7(c) shall apply only if the Selling
Stockholder is a Person other than a Lucent Holder or group of Lucent Holders.
(i) Promptly upon receipt of the Seller's Notice (but in no event later
than five business days thereafter), the Company shall deliver to each Offeree
Stockholder a notice (the "INITIAL COMPANY NOTICE") stating the number of
Offered Securities that such Offeree Stockholder would have the option to
purchase under Section 7(c), which number shall in each case be calculated as
the product of (1) the number of Offered Securities, times (2) a fraction, the
numerator of which shall be the number of Equivalent Shares represented by the
Securities owned by such Offeree Stockholder and the denominator shall be the
number of Equivalent Shares represented by the Securities owned by all Offeree
Stockholders (the "PROPORTIONATE SHARE"). Within ten (10) business days of
receipt of the Initial Company Notice, each Offeree Stockholder who elects to
participate shall deliver to the Company a written notice stating its election
to participate and the maximum number of shares (up to all the Offered
Securities) that it is willing to purchase, and such notice shall constitute an
irrevocable commitment to purchase such shares, if any, as are allocated to such
Offeree Stockholder pursuant to Section 7(c), up to such maximum number of
shares.
(ii) To the extent that any Offeree Stockholder has indicated that it
will not fully subscribe for its Proportionate Share of the Offered Securities,
the Company shall allocate all such shares not subscribed for to the Offeree
Stockholders who have subscribed for more shares than their Proportionate Share
(the "FULLY PARTICIPATING STOCKHOLDERS") in the proportion that the number of
Equivalent Shares represented by the Securities each owns bears to the total
number of Equivalent Shares represented by the Securities owned by all such
Fully Participating Stockholders. If the number of shares so allocated to a
Fully Participating Stockholder exceeds the maximum number of shares that it has
indicated in its notice to the Company it is willing to subscribe for, then the
Company shall allocate any excess over such maximum among all Fully
Participating Stockholders who have subscribed for a maximum number of shares
which exceeds the number of shares allocated to them pursuant to the preceding
sentence, in the proportion that their respective holdings bear to the total
number of Equivalent Shares represented by the Securities owned by all such
Stockholders, and the Company shall follow this procedure, if necessary, until
all shares available for purchase by the Offeree Stockholders have been
allocated to them.
19
(iii) If all of the Offered Securities have not been subscribed for
(the "EXCESS SHARES") pursuant to the procedures set forth in Section 7(c)(ii),
the Company shall deliver to each Offeree Stockholder a notice stating that all
of the Offered Securities have not been subscribed for and the additional number
of Offered Securities that such Offeree Stockholder will have the option to
purchase under this Section 7(c)(iii), which number shall in each case be
calculated as the product of (1) the number of Excess Shares, times (2) a
fraction, the numerator of which shall be the number of Equivalent Shares
represented by the Securities owned by such Offeree Stockholder and the
denominator shall be the number of Equivalent Shares represented by the
Securities owned by all Offeree Stockholders. If the number of Excess Shares so
allocated to a Offeree Stockholder exceeds the maximum number of Excess Shares
that it has indicated in its notice to the Company it is willing to subscribe
for, then the Company shall allocate any excess over such maximum among all
Offeree Stockholders who have subscribed for a maximum number of Excess Shares
which exceeds the number of Excess Shares allocated to them pursuant to the
preceding sentence, in the proportion that their respective holdings bear to the
total number of Equivalent Shares represented by the Securities owned by all
such Stockholders, and the Company shall follow this procedure, if necessary,
until all shares available for purchase by the Offeree Stockholders have been
allocated to them. If, following the completion of the procedures set forth in
this clause (iii), all of the Offered Securities have not been subscribed for,
then the Selling Stockholder shall have the rights set forth in Section 7(e).
(d) The Company shall, within 30 days of the Seller's Notice, notify the
Selling Stockholder and each Offeree Stockholder in writing concerning the final
allocation of the Offered Securities subject to options pursuant to Section 7(c)
or, if the Selling Stockholder is a Lucent Holder or a group of Lucent Holders,
concerning whether the Company elects to exercise its rights under Section 7(b)
(the "FINAL COMPANY NOTICE"). Such notice to the Selling Stockholder shall be
deemed the irrevocable exercise of such options on behalf of each purchaser
named therein.
(e) SELLER'S RIGHTS TO TRANSFER. If the Seller's Notice shall be duly
given, and if the option to purchase the Offered Securities at the Offered Price
as provided in Section 7(c) shall not have been exercised, or if the amount of
Securities with respect to which all options have been exercised is less than
the amount of Offered Securities, then, subject to Section 8, the Selling
Stockholder shall be free, for a period of 40 days from the earlier of (i) the
30th day following the date of the Seller's Notice, and (ii) the date the
Selling Stockholder shall have received written notice from the Company stating
the intention of the Offeree Stockholders (or the Company, if the Selling
Stockholder is a Lucent Holder) not to exercise the options granted under
Section 7 (such earlier date being the "RELEASE DATE"), to offer to sell the
Offered Securities to the proposed transferee, as long as the Offered Securities
so sold are sold at a price equal to or greater than the Offered Price and on
substantially the same terms and conditions; PROVIDED, that no such Transfer
shall be effective until the transferee has delivered to the Company a written
acknowledgment and agreement in form and substance reasonably satisfactory to
the Company that the Securities to be received by such transferee are subject to
all the provisions of this Agreement and that such transferee is bound hereby
and a party hereto as a Stockholder.
20
(f) CLOSING DATE. In the case of the purchase by the Offeree Stockholders
of the Offered Securities pursuant to this Section 7, the parties to such
purchase shall close such transaction on the 30th day after the later of the
date the Final Company Notice is received and the date of receipt of any
required regulatory approvals (and if such day is not a business day, then the
following business day) at the principal executive office of the Company, or at
such other place or time as the parties may agree. If all such Offered
Securities are not duly purchased by the Offeree Stockholders (or the Company,
if the Selling Stockholder is a Lucent Holder), the Selling Stockholder shall
not be obligated to sell any of such Offered Securities to the Offeree
Stockholders (or the Company, if the Selling Stockholder is a Lucent Holder) and
the provisions of Section 7(e) shall apply in respect of such Offered
Securities.
(g) EXCEPTIONS. The provisions of this Section 7 shall not apply to the
following:
(i) Any Transfer of Securities pursuant to Section 6, 9, 10, 11 or 16;
(ii) Any Transfer of Lucent Securities pursuant to Section 6, 9, 10, 11
or 16;
(iii) Any Transfer of Securities or Lucent Securities by a Tag-Along
Offeree pursuant to Section 8; or
(iv) Any Transfers of Securities by an Initial Stockholder or any
Odyssey Co-Investor Transferee aggregating not more than 10% of the
Stockholder's or Odyssey Co-Investor Transferee's interest in the Securities
(including Equivalent Shares) calculated as of the date of acquisition.
8. "TAG-ALONG" RIGHT.
(a) In the event that any Stockholder or Stockholders propose to sell for
cash or any other consideration Securities owned by it or them (such Persons,
the "PROPOSED SELLERS"), in each such case, to any Person or group of Persons (a
"PROPOSED PURCHASER"), after expiration of the periods in Section 7(c) and 7(d),
if applicable, the Proposed Sellers will promptly notify each other Odyssey
Holder, Xxxx Holder, PF Telecom Holder, Finance Warrant Holder, Odyssey
Co-Investor Holder, Lucent Holder and AT&T Holder (collectively, the "TAG-ALONG
OFFEREES") in writing (a "TAG-ALONG NOTICE") of such proposed sale (a "PROPOSED
SALE") and the material terms of the Proposed Sale as of the date of the
Tag-Along Notice (the "MATERIAL TERMS"). The Proposed Sellers may, for purposes
of determining the recipients of the Tag-Along Notice, rely upon a list of
securityholders provided by the Company (which the Company shall provide to any
requesting securityholder promptly upon request). If within 15 days of the
receipt by the Tag-Along Offerees of the Tag-Along Notice, the Proposed Seller
receives a written request (a "TAG-ALONG REQUEST") to include shares of Common
Stock (or shares of Senior Preferred Stock if the Proposed Sellers are proposing
to sell shares of Senior Preferred Stock) (the "TAG-ALONG SECURITIES") held by
one or more Tag-Along Offerees (including without limitation, (i) shares of
Common Stock that will be acquired upon the exercise of any Options and (ii)
shares of Common Stock that will be acquired upon the conversion of any
Convertible Securities, including, without limitation, the Senior Preferred
Stock, the Original Owners Warrants, the Dark Fiber Warrants and the Finance
Warrants) in the Proposed Sale, the Tag-Along Securities so held by such
Tag-Along Offerees shall be so included as provided herein, and the Proposed
21
Seller shall not be permitted to complete such Proposed Sale unless such
Tag-Along Securities are so included in such Transfer; PROVIDED, HOWEVER, that
any Tag-Along Request shall be irrevocable unless (x) there shall be an adverse
change in the Material Terms or (y) otherwise mutually agreed to in writing by
such Tag-Along Offerees and the Proposed Seller.
(b) The number of Tag-Along Securities that each Tag-Along Offeree will be
permitted to include in a Proposed Sale pursuant to a Tag-Along Request will be
the product of (i) the number of Tag-Along Securities then held by such
Tag-Along Offeree multiplied by (ii) a fraction, (A) the numerator of which is
the number of Equivalent Shares represented by the Securities which the Proposed
Seller or Proposed Sellers propose to sell in the Proposed Sale, and (B) the
denominator of which is the number of Equivalent Shares represented by all
Securities outstanding as of such date held by the Proposed Seller or Proposed
Sellers and all Tag-Along Offerees.
(c) Except as may otherwise be provided herein, the Tag-Along Securities
will be included in a Proposed Sale pursuant hereto and to any agreements with
the Proposed Purchaser relating thereto, on the same terms and subject to the
same conditions applicable to the holders of the same type of securities
included in the Proposed Sale (assuming, in the case of the Lucent Warrants, the
Original Owners Warrants, the Dark Fiber Warrants and the Finance Warrants, the
exercise thereof). Such terms and conditions shall include, without limitation,
the sale consideration; the payment of fees, commissions and expenses; the
provision of, and representation and warranty as to, information requested of
the Proposed Seller or Proposed Sellers; and (with respect to the Odyssey
Holders, the PF Telecom Holders, the Xxxx Holders and any other holder of
securities of the Company (including Equivalent Shares) representing 10% or more
of the Fully Diluted Common Stock) the provision of requisite indemnifications;
PROVIDED, HOWEVER, that any indemnification provided by the Tag-Along Offerees
shall (i) be determined pro rata in proportion with the aggregate number of
Securities (including the Tag-Along Securities) to be sold in the Proposed Sale
and (ii) not be structured in a way so as to require additional contributions
from the Tag-Along Offerees; and PROVIDED FURTHER, that no holder of securities
of the Company (including Equivalent Shares) representing less than 10% of the
Fully Diluted Common Stock shall be required to make any representation or
warranty other than with respect to such holder's ownership of the Securities to
be sold in the proposed sale.
(d) Upon delivering a Tag-Along Request, each Tag-Along Offeree will, if
requested by the Proposed Seller, execute and deliver a custody agreement and
power of attorney in form and substance satisfactory to the Proposed Seller (a
"CUSTODY AGREEMENT AND POWER OF ATTORNEY") with respect to the Tag-Along
Securities which are to be included in the Proposed Sale pursuant hereto. The
Custody Agreement and Power of Attorney will provide that the Tag-Along Offeree
will deliver to and deposit in custody with the custodian and attorney-in-fact
named therein a certificate or certificates representing such Tag-Along
Securities (duly endorsed in blank by the registered owner or owners thereof or
accompanied by duly executed stock powers in blank) and irrevocably appoint said
custodian and attorney-in-fact as such Tag-Along Offeree's agent and
attorney-in-fact with full power and authority to act under a custody agreement
and power of attorney on behalf of the such Tag-Along Offeree with respect to
the matters specified herein. Notwithstanding the provisions of this Section
8(d), a Tag-Along Offeree may, at its option and in lieu of delivering a Custody
Agreement and Power of Attorney, deliver to the Proposed Seller such other
assurance as may be reasonably acceptable to the Proposed Seller of such
Tag-Along
22
Offeree's ability to complete the Proposed Sale on the date selected by the
Proposed Seller for completion hereof.
(e) Each Tag-Along Offeree agrees that he or she will execute such other
agreements as the Proposed Seller or Proposed Purchaser may reasonably request
in connection with the consummation of a Proposed Sale and Tag-Along Request and
the transactions contemplated thereby.
(f) EXCEPTIONS. The provisions of this Section 8 shall not apply to the
following:
(i) Any Transfer of Securities pursuant to Section 6, 10 or 11;
(ii) Any Transfers of Securities by an Initial Stockholder or any
Odyssey Co-Investor Transferee aggregating not more than 10% of the
Stockholder's or Odyssey Co-Investor's interest in the Securities (including
Equivalent Shares) calculated as of the date of acquisition; and
(iii) Any Transfer of Securities after the date on which the Company's
equity is Actively Publicly Traded, that is not a Block Transfer.
(g) Notwithstanding any other provision of this Section 8, no Transfer made
pursuant to this Section 8 shall be effective until the transferee has delivered
to the Company a written acknowledgment and agreement in form and substance
reasonably satisfactory to the Company that the Securities to be received by
such transferee are subject to all the provisions of this Agreement and that
such transferee is bound hereby and a party hereto as a Stockholder.
(h) The Company hereby acknowledges that the shares of Common Stock
issuable upon exercise of the AT&T Warrants are subject to tag-along rights
similar to those set forth in this Section 8 ("AT&T TAG-ALONG RIGHTS"). Upon any
proposed transfer of such shares of Common Stock by any AT&T Holder which is
subject to AT&T Tag-Along Rights, the Company shall notify the holders of
securities entitled to participate in such transfer pursuant to the terms of the
AT&T Tag-Along Rights and shall enforce such AT&T Tag-Along Rights on behalf of,
and at the direction of, such holders.
9. "DRAG-ALONG" RIGHT.
(a) In the event that at any time prior to the date on which the Company's
equity is Actively Publicly Traded, (i) Odyssey or any Odyssey Holder designated
in writing by Odyssey propose to initiate a Company Sale pursuant to the Company
Sale Right contained in Section 16 hereof or (ii) there is a sale, lease,
transfer, conveyance or other disposition (including, without limitation, any
merger or consolidation), in single transaction, of all or substantially all of
the equity interests or assets of the Company and its Subsidiaries taken as a
whole, which is approved by the Board pursuant to Section 4 hereof, Odyssey or
any Odyssey Holder designated in writing by Odyssey, in the case of a
transaction pursuant to clause (i) hereof or the Company, in the case of a
transaction pursuant to clause (ii) hereof (each, a "DRAG-ALONG INITIATOR"), may
require (a "DRAG-ALONG RIGHT") all Stockholders, all Lucent Holders and all
Finance Warrant Holders (collectively, "DRAG-ALONG HOLDERS") to participate in
such transaction in accordance with the terms of this Section 9 (any transaction
involving the exercise of such Drag-Along Right
23
shall be referred to as a "DRAG-ALONG SALE"). The Drag-Along Initiator shall
provide the Stockholders, the Lucent Holders and the Finance Warrant Holders
written notice (a "DRAG-ALONG NOTICE") of such Drag-Along Sale and the material
terms thereof not less than 25 days prior to the proposed date of the Drag-Along
Sale (the "DRAG-ALONG SALE DATE") and each of the Drag-Along Holders hereby
agrees to sell to such Proposed Purchaser all Securities, Lucent Securities,
Options or Convertible Securities held by such Drag-Along Holder. No Drag-Along
Holder shall exercise any dissenter's rights with respect to the consummation of
any such Drag-Along Sale.
(b) On the Drag-Along Sale Date, each Drag-Along Holder shall deliver a
certificate or certificates for its Securities, duly endorsed for transfer with
signatures guaranteed, to such Proposed Purchaser in the manner and at the
address indicated in the Drag-Along Notice against delivery of the purchase
price for such Securities, Options or Convertible Securities. The provisions of
this Section 9 shall apply regardless of the form of consideration in the
Drag-Along Sale.
(c) Securities, Options or Convertible Securities subject to a Drag-Along
Right will be included in a Drag-Along Sale pursuant hereto and to any
agreements with the Proposed Purchaser relating thereto, on the same terms and
subject to the same conditions applicable to holders of the same type of
securities included in the Drag-Along Sale. Such terms and conditions shall
include, without limitation, the consideration; the payment of fees, commissions
and expenses; the provision of, and representation and warranty as to,
information requested of the Drag-Along Initiators; and the provision of
requisite indemnifications; PROVIDED, HOWEVER, that any indemnification provided
by the Drag-Along Holders shall (i) be determined pro rata in proportion with
the aggregate number of Securities to be sold in the Drag-Along Sale and (ii)
not be structured in a way so as to require additional contributions from the
Drag-Along Holders.
(d) Each of the Drag-Along Holders will, if requested by the Drag-Along
Initiators, execute and deliver a Custody Agreement and Power of Attorney in
form and substance satisfactory to Drag-Along Initiators with respect to the
Securities, Options or Convertible Securities which are to be included in the
Drag-Along Sale pursuant hereto. The Custody Agreement and Power of Attorney
will provide that the Drag-Along Holder will deliver to and deposit in custody
with the custodian and attorney-in-fact named therein a certificate or
certificates representing such Securities, Options or Convertible Securities
(duly endorsed in blank by the registered owner or owners thereof or accompanied
by duly executed stock powers in blank) and irrevocably appoint said custodian
and attorney-in-fact as such Drag-Along Holders's agent and attorney-in-fact
with full power and authority to act under a custody agreement and power of
attorney on behalf of the such Drag-Along Holder with respect to the matters
specified herein.
(e) Each Drag-Along Holder agrees that he or she will execute such other
agreements as Drag-Along Initiators or the Proposed Purchaser may reasonably
request in connection with the consummation of a Drag-Along Sale and the
transactions contemplated thereby; provided, however, that Xxxx shall not be
required to make any modification to the Xxxx Agreements.
(f) In order to effect the provisions of this Section 9, each Drag-Along
Holder hereby irrevocably constitutes and appoints: Odyssey, in the case of a
transaction specified in Section
24
9(a)(i); or the Board, in case of a transaction specified in Section 9(a)(ii),
as attorney and proxy, with, subject to the consent of Odyssey or the Company,
as applicable, full power of substitution, to receive all notices, and to
represent, vote and consent, with respect to all Securities, Options or
Convertible Securities held by such Drag-Along Holder, in such manner as said
proxies may, in the exercise of their sole and absolute discretion, determine,
and without any prior notice to such Drag-Along Holder (provision of such notice
concurrently or promptly after the taking of any such action being deemed
sufficient for all purposes and any requirement for prior notice being expressly
waived by such Drag-Along Holder), whether or not said representation, vote or
consent benefits the interests of any of said proxies, but only with respect to
any and all of the matters specified in this Section 9.
10. DEMAND REGISTRATION.
(a) Subject to Section 10(d), at any time after 180 days from the effective
date of an Initial Public Offering (or such lesser period of time as agreed
between the managing Underwriter in such Initial Public Offering and the
Company), any one or more of (i) the Odyssey Holders, (ii) the Xxxx Holders,
(iii) PF Telecom or a group of other PF Telecom Holders which certifies that it
represents not less than 25% of the Securities then held by the PF Telecom
Holders or (iv) UBS Capital, may make a written request (any such requesting
Person or a group of Persons, as the case may be, a "DEMAND SELLER") that the
Company effect the registration under the Securities Act of such Demand Seller's
Registrable Securities, and specifying the intended method of disposition
thereof. The Company will promptly give written notice of such requested
registration (a "DEMAND REGISTRATION") at least 25 business days prior to the
anticipated filing date of the registration statement relating to such Demand
Registration to all other holders of Registrable Securities (whether or not
pursuant to this Agreement) who have incidental or piggy-back registration
rights (each such holder having such rights is hereinafter referred to as a
"HOLDER" and collectively as the "HOLDERS"), and thereupon will use its best
efforts to effect, as expeditiously as possible, the registration under the
Securities Act of:
(i) the Registrable Securities then held by the Demand Sellers that the
Company has been so requested to register by the Demand Sellers; and
(ii) subject to Section 10(c), all other Registrable Securities that
any other Holder has requested the Company register by written request received
by the Company within 15 business days after the receipt by each such Holders of
such written notice given by the Company;
all to the extent necessary to permit the disposition (in accordance
with the intended methods thereof as aforesaid) of the Registrable Securities so
to be registered.
(b) The Company will pay all Registration Expenses in connection with any
Demand Registration. Each Holder shall be responsible for the payment of any
discounts and/or commissions of underwriters or placement agents in connection
with resales of its shares of Common Stock subject to any Demand Registration
pursuant to this Section 10.
(c) If a Demand Registration involves an underwritten Public Offering and
the managing Underwriter shall advise the Company and the Demand Sellers that,
in its view, the number of
25
shares of Common Stock requested to be included in such registration, including
shares of Registrable Securities requested to be included by Holders in such
registration and Common Stock which the Company proposes to be included which
are not Registrable Securities, exceeds the largest number of shares of Common
Stock which can be sold without having a substantial adverse effect on such
offering, including, without limitation, the price at which such shares of
Common Stock can be sold (the "MAXIMUM OFFERING SIZE"), the Company will include
in such registration, in the priorities listed below, up to the Maximum Offering
Size:
(i) first, all Registrable Securities requested to be included in such
registration by the Demand Sellers and all Registrable Securities, if any, to be
included in such registration by the Holders (allocated if necessary for the
Public Offering not to exceed the Maximum Offering Size, pro rata among the
Demand Sellers and the Holders on the basis of the relative number of
Registrable Securities requested to be included in such registration by the
Demand Sellers and the Holders); and
(ii) second, any Common Stock proposed to be registered by the Company.
(d) Notwithstanding the foregoing, the Company shall not be obligated to
take any action to effect any Demand Registration pursuant to this Section 10:
(i) if the Demand Seller is any Odyssey Holder and the Company has previously
effected two (2) Demand Registrations in which one or more Odyssey Holders were
Demand Sellers; (ii) if the Demand Seller is any Xxxx Holder and the Company has
previously effected two (2) Demand Registrations in which one or more Xxxx
Holders were Demand Sellers; (iii) if the Demand Seller is any PF Telecom Holder
and the Company has previously effected two (2) Demand Registrations in which
one or more PF Telecom Holders were Demand Sellers; and (iv) if the Demand
Seller is UBS Capital and the Company has previously effected one (1) Demand
Registration in which UBS Capital was a Demand Seller.
(e) A registration of securities by the Company shall not be considered as
a Demand Registration hereunder unless (i) a registration statement filed
pursuant to this Section 10 has been declared effective by the SEC and
maintained continuously effective for a period of at least six months (or such
shorter period as will terminate when all Registrable Securities included
therein have been sold in accordance with such registration statement), and (ii)
the shares of Common Stock registered pursuant to such registration statement
include at least 70% of the Registrable Securities requested to be registered by
the Demand Seller.
(f) Any Transfer of Registrable Securities pursuant to this Section 10
shall not be subject to the provisions of Section 7 and 8.
11. PIGGY-BACK REGISTRATION.
(a) If, at any time after the Initial Public Offering, the Company proposes
to register any of its Common Stock under the Securities Act (other than a
registration (i) on Form S-8 or Form S-4 or any successor or similar forms, (ii)
relating to Common Stock issuable upon exercise of employee stock options or in
connection with any employee benefit or similar plan of the Company, (iii) in
connection with a direct or indirect acquisition by the Company of another
company), whether or not for sale for its own account, it will each such time
give prompt written
26
notice at least 20 days prior to the anticipated filing date of the registration
statement relating to such registration to each of the Odyssey Holders, Xxxx
Holders, PF Telecom Holders, the Odyssey Co-Investor Holders and the Lucent
Holders (the "PIGGY-BACK STOCKHOLDERS"), which notice shall set forth such
Piggy-Back Stockholder's rights under this Section 11 and shall, subject to the
provisions of Section 11(b), offer such Piggy-Back Stockholders the opportunity
to include in such registration statement such number of Registrable Securities
as each such Piggy-Back Stockholder may request. Subject to the foregoing, upon
the written request of any Piggy-Back Stockholder made within 10 days after the
receipt of notice from the Company (which request shall specify the number of
Registrable Securities intended to be disposed of by such Piggy-Back Stockholder
and the intended method of disposition thereof), the Company will use its best
efforts to effect the registration under the Securities Act of all Registrable
Securities which the Company has been so requested to register by such
Piggy-Back Stockholders, to the extent required to permit the disposition of the
Registrable Securities so to be registered; PROVIDED that (A) if such
registration involves an underwritten Public Offering, all such Piggy-Back
Stockholders requesting to be included in the Company's registration must sell
their Registrable Securities to the Underwriters selected as provided in Section
14(a)(viii) on the same terms and conditions as apply to the Company and (B) if,
at any time after giving written notice of its intention to register any
Registrable Securities pursuant to this Section 11(a) and prior to the effective
date of the registration statement filed in connection with such registration,
the Company or, if pursuant to Section 10, the Demand Sellers, shall determine
for any reason not to register such Registrable Securities, the Company shall
give written notice to all such Piggy-Back Stockholders and, thereupon, shall be
relieved of its obligation to register any Registrable Securities pursuant to
this Section 11 in connection with such registration. No registration effected
under this Section 11 shall relieve the Company of its obligations to effect a
Demand Registration to the extent required by Section 10. The Company will pay
all Registration Expenses in connection with each registration of Registrable
Securities requested pursuant to this Section 11. Each Piggy-Back Stockholder
shall be responsible for the payment of any discounts and/or commissions of
underwriters or placement agents in connection with resales of its shares of
Common Stock subject to any registration pursuant to this Section 11.
(b) If a registration pursuant to this Section 11 involves an underwritten
Public Offering (other than in the case of an underwritten Public Offering
requested by any Demand Seller in a Demand Registration, in which case the
provisions with respect to priority of inclusion in such offering set forth in
Section 10(c) shall apply) and the managing Underwriter advises the Company
that, in its view, the number of shares of Common Stock that the Company, the
Piggy-Back Stockholders and the Holders (other than the Piggy-Back Stockholders)
intend to include in such registration exceeds the Maximum Offering Size, the
Company will include in such registration, in the following priority, up to the
Maximum Offering Size:
(i) first, so much of the Common Stock proposed to be registered by the
Company as would not cause the offering to exceed the Maximum Offering Size; and
(ii) second, all Registrable Securities requested to be included in
such registration by the Holders (allocated, if necessary for the offering not
to exceed the Maximum Offering Size, pro rata among such Holders on the basis of
the relative number of shares of Registrable Securities so requested to be
included in such registration).
27
(c) Any Transfer of Registrable Securities pursuant to this Section 11
shall not be subject to the provisions of Section 7 and 8.
12. HOLDBACK AGREEMENTS.
Each Stockholder and each Finance Warrant Holder agrees that for so long as
such Stockholder or Finance Warrant Holder owns any Registrable Securities, if
any shares of Common Stock (or securities convertible into or exchangeable or
exercisable for Common Stock) are offered pursuant to a Public Offering, such
Stockholder, or Finance Warrant Holder will not, subject to any exceptions
agreed to by the managing Underwriter and the Company, effect any sale or
distribution, including, without limitation, any sale pursuant to Rule 144 or
any successor provision under the Securities Act, of any Common Stock, and will
not effect any sale or distribution of any stock convertible into or
exchangeable or exercisable for any Common Stock of the Company (in each case,
other than as part of such Public Offering) during the 14 days prior to the
effective date of such registration statement or during the period after such
effective date equal to the lesser of (i) such period of time as agreed between
such managing Underwriter in such Public Offering and the Company and (ii) 180
days.
13. SHELF REGISTRATION RIGHTS.
(a) The Company shall, prior to the date that is the later of (a) 180 days
after the effective date of an Initial Public Offering (or such lesser period of
time as agreed between the managing underwriter in such Initial Public Offering
and the Company) and (b) 20 days following receipt by the Company in writing of
all information regarding the Finance Warrant Holders required to be included
therein, prepare and file with the SEC a registration statement with respect to
the Registrable Securities issued upon exercise of the Finance Warrants that are
held in the aggregate by the Finance Warrant Holders (the "SHELF REGISTRATION").
The Shelf Registration shall be effected pursuant to a filing on (a) Form S-3
(or, if such form is superseded by a successor form, such successor form) or (b)
if Form S-3 is not available with respect to the registration of the Registrable
Securities, any form on which the registration of the Registrable Securities is
permitted under the Securities Act. The Company shall use all reasonable efforts
to cause such registration statement to be declared effective under the
Securities Act as promptly as practicable following such filing. Solely for
purposes of this Section 13, the term "Registrable Securities" shall mean only
the shares of Common Stock issued upon exercise of the Finance Warrants.
(b) With respect to any registration effecting a Shelf Registration that
becomes effective under the Securities Act, the Company shall, subject to the
provisions of Section 14 hereof, prepare and file with the SEC such amendments
and post-effective amendments to the registration statement as may be necessary
to keep each such registration statement effective with respect to the
Registrable Securities subject thereto for a period ending on the second
anniversary of the date of issuance of the Finance Warrants.
14. REGISTRATION PROCEDURES.
(a) REGISTRATION PROCEDURES. Whenever the holders of Registrable Securities
have requested that any Registrable Securities be registered pursuant to this
Agreement, the Company will use all reasonable efforts to effect the
registration and the sale of such Registrable Securities
28
in accordance with the intended method of disposition thereof and pursuant
thereto the Company will as expeditiously as possible:
(i) in the case of a registration pursuant to Section 10 or 11 hereof,
prepare and file within 90 days of such request with the SEC a registration
statement with respect to such Registrable Securities including all
exhibits and financial statements required by the SEC on any form for which
the Company then qualifies and which form shall be available for the sale
of the Registrable Securities to be registered thereunder in accordance
with the intended method of distribution thereof, and use all reasonable
efforts to cause such registration statement to become effective;
(ii) prepare and file with the SEC such amendments and supplements to
such registration statement and the prospectus and in connection therewith
as may be necessary to comply with the provisions of the Securities Act
with respect to the disposition of all securities covered by such
registration statement, or any such amendment or supplement reasonably
requested by any participating holder of Registrable Securities;
(iii) notify each holder of Registrable Securities being so registered
and counsel for such holders promptly and, if requested by such holder or
such holder's counsel, confirm such advice in writing promptly (A) when a
registration statement has become effective with respect to such
Registrable Securities and when any post-effective amendments and
supplements thereto become effective, (B) of any request by the SEC or any
state securities authority for post-effective amendments and supplements to
any such registration statement and prospectus or for additional
information after the registration statement has become effective, (C) of
the issuance by the SEC or any state securities authority of any stop order
suspending the effectiveness of any such registration statement or the
initiation of any proceedings for that purpose, (D) if, between the
effective date of any such registration statement and the closing of any
sale of Registrable Securities covered thereby, the representations and
warranties of the Company contained in any underwriting agreement,
securities sales agreement or other similar agreement, if any, relating to
such offering cease to be true and correct in all material respects, (E) of
the receipt by the Company of any notification with respect to the
suspension of the qualification of any such Registrable Securities for sale
in any jurisdiction or the initiation or threatening of any proceeding for
such purpose, (F) of the happening of any event or the discovery of any
facts during the period such registration statement is effective which
makes any statement made in such registration statement or the related
prospectus untrue in any material respect or which requires the making of
any changes in such registration statement or prospectus in order to make
the statements therein not misleading and (G) of any determination by the
Company that a post-effective amendment to a registration statement would
be appropriate;
(iv) furnish to each seller of Registrable Securities such number of
copies of such registration statement, each amendment and supplement
thereto, the prospectus included in such registration statement (including
each preliminary prospectus) and such other documents as such seller may
reasonably request in order to facilitate the disposition of the
Registrable Securities owned by such seller;
29
(v) use its reasonable best efforts to register or qualify such
Registrable Securities under such other securities or blue sky laws of such
jurisdictions as any seller reasonably requests and do any and all other
acts and things which may be reasonably necessary to enable such seller to
consummate the disposition in such jurisdictions of the Registrable
Securities owned by such seller (provided that the Company will not be
required to (A) qualify generally to do business in any jurisdiction where
it would not otherwise be required to qualify but for this subparagraph,
(B) subject itself to taxation in any such jurisdiction or (C) consent to
general service of process in any such jurisdiction);
(vi) use its reasonable best efforts to cause all such Registrable
Securities to be listed on each securities exchange on which similar
securities issued by the Company are then listed and, if not so listed, to
be listed on a national securities exchange or quoted on any national
quotation system;
(vii) provide a transfer agent and registrar for all such Registrable
Securities not later than the effective date of such registration
statement;
(viii) enter into such customary agreements (including underwriting
agreements in customary form) and take all such other actions as the
underwriters reasonably request in order to expedite or facilitate the
disposition of such Registrable Securities (including, without limitation,
effecting a stock split or a combination of shares);
(ix) make available for inspection by any seller of Registrable
Securities, any underwriter participating in any disposition pursuant to
such registration statement and any attorney, accountant or other agent
retained by any such seller or underwriter, all financial and other
records, pertinent corporate documents and properties of the Company, and
cause the Company's officers, directors, employees and independent
accountants to supply all information reasonably requested by any such
seller, underwriter, attorney, accountant or agent in connection with such
registration statement;
(x) otherwise use its reasonable best efforts to comply with all
applicable rules and regulations of the SEC, and make available to its
security holders, as soon as reasonably practicable, an earnings statement
covering the period of at least twelve months beginning with the first day
of the Company's first full calendar quarter after the effective date of
the registration statement, which earnings statement shall satisfy the
provisions of Section 11(a) of the Securities Act and Rule 158 thereunder;
(xi) in the event of the issuance of any stop order suspending the
effectiveness of a registration statement, or of any order suspending or
preventing the use of any related prospectus or suspending the
qualification of any Registrable Securities included in such registration
statement for sale in any jurisdiction, the Company will use its reasonable
best efforts promptly to obtain the withdrawal of such order;
(xii) use its reasonable best efforts to obtain a comfort letter from
the Company's independent public accountants in customary form and covering
such matters
30
of the type customarily covered by cold comfort letters as the holders of a
majority of the Registrable Securities being sold reasonably request;
(xiii) upon the occurrence of any event or the discovery of any facts,
each as contemplated by Section 14(a)(iii)(A), (B), (C) and (F) hereof, use
its best efforts to prepare a supplement or post-effective amendment to a
registration statement or the related prospectus or any document
incorporated therein by reference or file any other required document so
that, as thereafter delivered to the purchasers of the Registrable
Securities, such prospectus will not contain at the time of such delivery
any untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading. The Company agrees to notify
each holder of Registrable Securities covered by such registration
statement to suspend use of the prospectus as promptly as practicable after
the occurrence of such an event, and each such holder hereby agrees to
suspend use of the prospectus until the Company has amended or supplemented
the prospectus to correct such misstatement or omission. At such time as
such public disclosure is otherwise made or the Company determines that
such disclosure is not necessary, in each case to correct any misstatement
of a material fact or to include any omitted material fact, the Company
agrees promptly to notify each such holder of such determination and to
furnish each such holder such numbers of copies of the prospectus, as
amended or supplemented, as such holder may reasonably request;
(xiv) each holder of Registrable Securities covered by such
registration statement agrees that, upon receipt of any notice from the
Company of the happening of any event or the discovery of any facts, each
of the kind described in Section 14(a)(iii)(B)-(F) hereof, such holder will
forthwith discontinue disposition of Registrable Securities pursuant to
such registration statement until such holder's receipt of the copies of
the supplemented or amended prospectus contemplated by Section 14(a)(xiii)
hereof;
(xv) cause the senior executive officers of the Company to participate
in the customary "road show" presentations that may be reasonably requested
by the holders of Registrable Securities or the managing Underwriter and
otherwise facilitate, cooperate with and participate in each proposed
offering and customary selling efforts related thereto; and
(xvi) in the event that any broker-dealer registered under the
Exchange Act shall underwrite any Securities or participate as a member of
an underwriting syndicate or selling group or "assist in the distribution"
(within the meaning of the Conduct Rules (the "Rules") of the National
Association of Securities Dealers, Inc. ("NASD")) thereof, whether as a
holder of such Securities or as an underwriter, a placement or sales agent
or a broker or dealer in respect thereof, or otherwise, the Company will
assist such broker-dealer in complying with the requirements of such Rules,
including, without limitation, by (i) if such Rules, including Rule 2720,
shall so require, engaging a "qualified independent underwriter" (as
defined in Rule 2720) to participate in the preparation of the Registration
Statement relating to such Securities, to exercise usual standards of due
diligence in respect thereto and, if any portion of the offering
contemplated by such Registration Statement is an underwritten offering or
is made through a placement or
31
sales agent to recommend the yield of such Securities, (ii) indemnifying
any such qualified independent underwriter to the extent of the
indemnification of underwriters provided in Section 14(c) hereof and (iii)
providing such information to such broker-dealer as may be required in
order for such broker-dealer to comply with the requirements of the Rules.
(b) STOCKHOLDER INFORMATION. The Company may require each holder of
Registrable Securities being registered pursuant to this Agreement to promptly
furnish in writing to the Company such information regarding the plan of
distribution of such Registrable Securities and such other information as the
Company may from time to time reasonably request in connection with such
registration.
(c) INDEMNIFICATION BY THE COMPANY. The Company agrees to indemnify and
hold harmless (i) each holder of Registrable Securities being registered
pursuant to Section 10 or Section 11, (ii) each Person, if any, who controls
each such holder within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act (any of the persons referred to in this clause
(ii) being hereinafter referred to as a "controlling person") and (iii) the
respective officers, directors, partners, employees, representatives and agents
of any such holder of Registrable Securities or any controlling person (any
person referred to in clause (i), (ii) or (iii) may hereinafter be referred to
as an "INDEMNIFIED PERSON") from and against any and all losses, claims,
damages, liabilities and expenses (including, without limitation and as
incurred, reimbursement of all reasonable costs of investigating, preparing,
pursuing or defending any claim or action, or any investigation or proceeding by
any governmental agency or body, commenced or threatened, including the
reasonable fees and expenses of counsel to any Indemnified Person), directly or
indirectly caused by, related to, based upon, arising out of or in connection
with any untrue statement or alleged untrue statement of a material fact
contained in any registration statement or prospectus relating to such
Registrable Securities (or any amendment or supplement thereto) or any
preliminary prospectus, or caused by any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, except insofar as such losses, claims,
damages, liabilities or expenses are caused by any such untrue statement or
omission or alleged untrue statement or omission based upon information
furnished in writing to the Company by or on behalf of such Indemnified Person
expressly for use therein. The Company also agrees to reimburse each Indemnified
Person for any and all fees and expenses (including, without limitation, the
fees and expenses of counsel) as they are incurred in connection with enforcing
such Indemnified Person's rights under this Section 14(c). The Company also
agrees, if requested, to provide reasonable and customary indemnification to any
Underwriters of the Registrable Securities, their officers and directors and
each Person who controls such Underwriters.
(d) INDEMNIFICATION BY HOLDERS. Each holder of Registrable Securities being
registered pursuant to Section 10 or Section 11 agrees, severally but not
jointly, to indemnify and hold harmless the Company, its officers and directors
and each Person, if any, who controls the Company within the meaning of either
Section 15 of the Securities Act or Section 20 of the Exchange Act and its
officers, directors, partners, employees, representatives and agents of each
such Person to the same extent as the foregoing indemnity from the Company to
such holder, but only with reference to information related to such holder
furnished in writing by or on behalf of such holder expressly for use in any
registration statement or prospectus relating to the
32
Registrable Securities, or any amendment or supplement thereto or any
preliminary prospectus. Each such holder of Registrable Securities also agrees
to indemnify and hold harmless any Underwriters of the Registrable Securities,
their officers and directors and each Person who controls such Underwriters on
substantially the same basis as that of the indemnification of the Company
provided in this Section 14(d). The Company and the holders of the Registrable
Securities hereby acknowledge and agree that, unless otherwise expressly agreed
to in writing by such holders to the contrary, for all purposes of this
Agreement the only information furnished or to be furnished to the Company by
such holders for use in any registration statement or prospectus relating to the
Registrable Securities, or any amendment or supplement thereto or any
preliminary prospectus are statements specifically relating to (a) transactions
between such holder and its Affiliates, on the one hand, and the Company, on the
other hand, (b) the beneficial ownership of shares of Common Stock by such
holder and its Affiliates and (c) the name and address of such holder. If any
additional information about such holder or the plan of distribution (other than
for an underwritten offering) is required by law to be disclosed in any such
document, then such holder shall not unreasonably withhold its agreement
referred in the immediately preceding sentence of this Section 14(d).
Notwithstanding the foregoing, no holder of Registrable Securities being
registered pursuant to Section 10 or Section 11 will be required to indemnify
the Company for any amount in excess of the total price at which the Registrable
Securities of such holder were sold to the public (less underwriting discounts
and commissions, if any).
(e) CONDUCT OF INDEMNIFICATION PROCEEDINGS. In case any proceeding
(including any governmental investigation) is instituted involving any Person in
respect of which indemnity may be sought pursuant to Section 14(c) or Section
14(d), such Person will promptly notify the Person against whom such indemnity
may be sought in writing and the indemnifying party upon request of the
indemnified party will retain counsel reasonably satisfactory to the indemnified
party to represent the indemnified party and any others the indemnifying party
may designate in such proceeding and will pay the fees and disbursements of such
counsel related to the proceeding. Notwithstanding the foregoing, the failure to
give notice shall not relieve the indemnifying party of the obligation to
indemnify the indemnified party, except to the extent of actual prejudice or
damages suffered as a result thereof. In any such proceeding, any indemnified
party will have the right to retain its own counsel, but the fees and expenses
of such counsel will be at the expense of such indemnified party unless (i) the
indemnifying party and the indemnified party have mutually agreed to the
retention of such counsel or (ii) the named parties to any such proceeding
(including any impleaded parties) include both the indemnified party and the
indemnifying party (or any Persons designated by the indemnifying party to be
represented in such proceeding by counsel selected by the indemnifying party)
and representation of both parties by the same counsel would be inappropriate
due to actual or potential differing interests between them, in which case the
fees and expenses of such counsel will be paid by the Company. It is understood
that the indemnifying party will not, in connection with any proceeding or
related proceedings in the same jurisdiction, be liable for the reasonable fees
and expenses of more than one separate firm of attorneys (in addition to any
local counsel) at any time for all such indemnified parties, and that all such
fees and expenses will be reimbursed as they are incurred. In the case of the
retention of any such separate firm for the indemnified parties, such firm will
be designated in writing by the indemnified parties. The indemnifying party will
not be liable for any settlement of any proceeding effected without its consent,
but if settled with such consent, or if there be a final judgment for the
plaintiff, the
33
indemnifying party will indemnify and hold harmless such
indemnified parties from and against any loss or liability (to the extent stated
above) by reason of such settlement or judgment.
(f) CONTRIBUTION.
(i) If the indemnification provided for herein is for any reason
unavailable to the indemnified parties in respect of any losses, claims, damages
or liabilities referred to herein, then each such indemnifying party, in lieu of
indemnifying such indemnified party, will contribute to the amount paid or
payable by such indemnified party as a result of such losses, claims, damages or
liabilities in such proportion as is appropriate to reflect the relative fault
of the Company, the holders of Registrable Securities being registered pursuant
to Section 10 or Section 11 and any Underwriter in connection with the
statements or omissions which resulted in such losses, claims, damages or
liabilities, as well as any other relevant equitable considerations. The
relative fault of the Company, such holders of Registrable Securities and such
Underwriter will be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by such party,
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
(ii) The Company and each holder of Registrable Securities being registered
pursuant to Section 10 or Section 11 agree that it would not be just and
equitable if contribution pursuant to this Section 14(f)(ii) were determined by
pro rata allocation (even if the Underwriters were treated as one entity for
such purpose) or by any other method of allocation which does not take account
of the equitable considerations referred to in the immediately preceding
subsection. The amount paid or payable by an indemnified party as a result of
the losses, claims, damages or liabilities referred to in the immediately
preceding subsection will be deemed to include, subject to the limitations set
forth above, any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any such action or claim. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) will be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. The obligations of the
holders of Registrable Securities being registered pursuant to Section 10 or
Section 11 to contribute pursuant to this Section 14(f) are several in
proportion to the respective principal amount of Securities held by each of such
holders hereunder and not joint.
(g) PARTICIPATION IN UNDERWRITTEN REGISTRATIONS. No Person may participate
in any underwritten registration hereunder unless such Person (i) agrees to sell
such Person's securities on the basis provided in any underwriting arrangements
approved by the Company (in the case of any registration other than pursuant to
Section 10) or the Demand Seller (in the case of any registration pursuant to
Section 10) and (ii) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents reasonably
required under the terms of such underwriting arrangements and these
registration rights. No underwriting agreement (or other agreement in connection
with such offering) shall require any holder of Registrable Securities to make
any representations or warranties to or agreements with the Company or the
Underwriters other than representations, warranties or agreements regarding such
holder in its capacity as a stockholder or controlling person, the ownership of
such holder's Registrable Securities and such holder's intended method or
methods of disposition and any
34
other representation required by law or to furnish any indemnity to any Person
which is broader than the indemnity furnished by such holder in Section 14(d).
15. PREEMPTIVE RIGHTS.
(a) Notwithstanding any other provision hereof, for so long as the Common
Stock is not Actively Publicly Traded, the Company shall not, after the date
hereof, issue any (a) capital stock of the Company, (b) securities convertible
or exchangeable for capital stock of the Company or (c) options, warrants or
rights carrying any rights to purchase capital stock of the Company (the
securities described in clauses (a)-(c) are referred to herein collectively as
the "PARTICIPATION SECURITIES"), in each case referred to in clauses (a)-(c), to
any Affiliate of the Company without offering to each of the Odyssey Holders,
Xxxx Holders, PF Telecom Holders and the Odyssey Co-Investor Holders
(collectively, the "PREEMPTIVE HOLDERS"), the right to purchase or subscribe for
up to that number of additional Participation Securities (a "PRO RATA SHARE")
which represents the product of (i) the total number of Participation Securities
to be issued by the Company multiplied by (ii) a fraction, (A) the numerator of
which is the number of Equivalent Shares represented by all Securities owned by
such Preemptive Holder, and (B) the denominator of which is the number of
Equivalent Shares represented by all Securities outstanding immediately prior to
such issuance held by all Preemptive Holders and all other Persons that have
similar pre-emptive rights (it being understood and agreed that the Company will
accordingly be required to reduce the number of shares of Participation
Securities to be issued or sold to Persons other than the Preemptive Holders);
provided that the provisions of this Section 15 shall not apply to any Exempt
Issuance.
(b) In the event the Company proposes to issue or sell any Participation
Securities in a transaction giving rise to the preemptive rights provided for in
this Section 15, the Company shall send a written notice (the "PREEMPTIVE
NOTICE") to each Preemptive Holder setting forth the number of such
Participation Securities that the Company proposes to sell or issue, the price
(before any commission or discount) at which such securities are proposed to be
issued (or, in the case of an underwritten or privately placed offering in which
the price is not known at the time the Preemptive Notice is given, the method of
determining such price and an estimate thereof), the other material terms of the
transaction and its Pro Rata Share of the Participation Securities. At any time
within 15 business days after its receipt of the Preemptive Notice, the
Preemptive Holders may exercise their preemptive rights to purchase or subscribe
for Participation Securities as provided for in this Section 15, by so informing
the Company in writing (an "EXERCISE NOTICE"). Each Exercise Notice shall state
the percentage of the proposed sale or issuance that each Preemptive Holder
elects to purchase (up to all the Participation Securities that could be
purchased by all Preemptive Holders and all other Persons that have similar
preemptive rights).
(c) To the extent that any Preemptive Holder has indicated that it will not
fully subscribe for its Pro Rata Share of the Participation Securities, the
Company shall allocate all such Participation Securities not subscribed for to
the Preemptive Holders who have subscribed for more Participation Securities
than their Pro Rata Share (the "FULLY PARTICIPATING PREEMPTIVE HOLDERS") in the
proportion that the number of Equivalent Shares represented by the Securities
each owns bears to the total number of Equivalent Shares represented by the
Securities owned by all such Fully Participating Preemptive Holders. If the
number of Participation Securities so
35
allocated to a Fully Participating Preemptive Holder exceeds the maximum number
of Participation Securities that it has indicated in its notice to the Company
it is willing to subscribe for, then the Company shall allocate any excess over
such maximum among all Fully Participating Preemptive Holders who have
subscribed for a maximum number of Participation Securities which exceeds the
number of Participation Securities allocated to them pursuant to the preceding
sentence, in the proportion that their respective holdings bear to the total
number of Equivalent Shares represented by the Securities owned by all such
Fully Participating Preemptive Holders, and the Company shall follow this
procedure, if necessary, until all Participation Securities available for
purchase by the Preemptive Holders have been allocated to them.
(d) TERMS OF SALE. The purchase or subscription by the Preemptive Holders,
pursuant to this Section 15(d) shall be on the same price and other terms and
conditions, including the date of sale or issuance, as are applicable to the
purchasers or subscribers of the additional Participation Securities whose
purchases or subscriptions give rise to the preemptive rights, which price and
other terms and conditions shall be as stated in the relevant Preemptive Notice.
(e) TIMING OF SALE. If, with respect to any Preemptive Notice, the
Preemptive Holders fail to deliver an Exercise Notice within the requisite time
period, the Company shall have 90 days after the expiration of the time in which
the Exercise Notice is required to be delivered in which to sell not less than
90% and not more than 110% of the number of shares of Participation Securities
of the Company described in the Preemptive Notice at a price of not less than
the estimated price set forth in the Preemptive Notice. If, at the end of such
90 day period, the Company has not completed the sale or issuance of
Participation Securities of the Company in accordance with the terms described
in the Preemptive Notice, or in the event of any contemplated sale or issuance
within such 90 day period but outside such price parameters, the Company shall
again be obligated to comply with the provisions of this Section 15 with respect
to, and provide the opportunity to participate in, any proposed sale or issuance
of Participation Securities of the Company.
16. COMPANY SALE RIGHT.
(a) At any time after the fifth anniversary of the date hereof and prior to
the date that the Company's equity is Actively Publicly Traded, and provided
that the Odyssey Holders hold in the aggregate twenty-five percent (25%) or more
of the shares of Common Stock and Equivalent Shares held in the aggregate by the
Odyssey Holders on the first anniversary of the date hereof, Odyssey or any
Odyssey Holder designated in writing by Odyssey shall have the right (the
"COMPANY SALE RIGHT") to initiate a sale or recapitalization (including, without
limitation, any merger or consolidation) (a "COMPANY SALE") of the Company
pursuant to an Initial Public Offering or an auction sale process (in any such
case, involving the services of an Independent Investment Banking Firm to assist
in structuring and completing such transaction with the intention of achieving
the best execution and the highest valuation in any such transaction and
consulting with the Xxxx Holders and the PF Telecom Holders concerning the
nature of such transaction, the manner and timing of its execution and related
matters) pursuant to the procedures of Section 16(b).
36
(b) The Odyssey Holders shall send a written notice (the "COMPANY SALE
RIGHT NOTICE") to each of the Company, PF Telecom and Xxxx indicating that the
Odyssey Holders are exercising their Company Sale Right pursuant to Section
16(a). Each of PF Telecom and Xxxx shall have 90 days following delivery of the
Company Sale Right Notice to send a written offer (a "COMPANY SALE OFFER") to
the Odyssey Holders to purchase all of the equity interests or assets of the
Company for cash, including the Securities held by the Odyssey Holders. The
Company Sale Offer shall contain evidence satisfactory to Odyssey of the
financial ability of the offeror to complete the transaction contemplated by the
Company Sale Offer and shall state that such Company Sale Offer will be
irrevocable during the period set forth therein, which period shall not be less
than 90 days (the "IRREVOCABILITY PERIOD"). Such Company Sale Offer shall be
subject only to the conditions that (a) the consummation thereof shall not be
prohibited by applicable law and (b) there shall not occur any event which has,
or which could reasonably be expected to have, a material adverse effect on the
financial condition or results of operations of the Company (other than an
effect caused by a change in general market conditions); PROVIDED that the
occurrence of any such material adverse effect shall not be a condition to such
Company Sale Offer unless PF Telecom or Xxxx, as the case may be, shall have
notified Odyssey prior to the acceptance by the Odyssey Holders of such Company
Sale Offer that a material adverse effect has occurred. Upon the occurrence of a
failure of a closing condition referred to in clause (a) or (b) of the
immediately preceding sentence, the Irrevocability Period shall automatically
terminate. In the event that the Odyssey Holders desire to accept the Company
Sale Offer, Odyssey shall so notify PF Telecom or Xxxx, as the case may be, in
writing, which acceptance shall be irrevocable for a period of 90 days from the
date such acceptance shall have been delivered, subject only to the condition
that the consummation thereof shall not be prohibited by applicable law. If
Odyssey delivers such an acceptance prior to the termination of the
Irrevocability Period, the parties agree to use their respective best efforts to
complete the Company Sale as expeditiously as possible.
(c) If the Company Sale Offer is not accepted by the Odyssey Holders, the
Odyssey Holders shall use their diligent efforts to commence and pursue a
Company Sale during the Irrevocability Period; PROVIDED that the Odyssey Holders
shall not effect, or enter into any definitive agreement to effect, a Company
Sale (other than an Initial Public Offering) during the Irrevocability Period
that includes an aggregate purchase price for all of the outstanding equity
interests or assets of the Company that is less than or equal to the purchase
price for all of the outstanding equity interests or assets of the Company that
is contained in the Company Sale Offer (or, in the event that each of PF Telecom
and Xxxx shall have delivered separate Company Sale Offers, the higher of the
two Company Sale Offers), including, for purposes of such determination, the
implied purchase price for any such equity interests that are then held by the
Person making such Company Sale Offer (or the higher of the two such Company
Sale Offers) and therefore are not included in such Company Sale Offer. In the
event that the Odyssey Holders do not effect, or enter into any definitive
agreement to effect, a Company Sale prior to the expiration of such
Irrevocability Period, Odyssey shall not be permitted to effect a Company Sale
unless it first delivers a new Company Sale Right Notice. The remaining
provisions of this Section 16(c) shall apply fully to any such new Company Sale
Right Notice.
(d) Each of the Stockholders, the Lucent Holders, Finance Warrant Holders
and the Company agree to reasonably cooperate with the Odyssey Holders to
provide for an orderly process to effect the Company Sale and take all actions
(whether in such Stockholder's capacity
37
as a stockholder, director, member of a board committee or officer of the
Company or otherwise, including without limitation, attendance at meetings in
person or by proxy for purposes of obtaining a quorum, execution of written
consents in lieu of meetings and approval of amendments and/or restatements of
the Company's certificate of incorporation or bylaws) within its control to
effect a Company Sale; provided, however, that Xxxx shall not be required to
make any modification to the Xxxx Agreements.
17. RECAPITALIZATIONS, ETC.
The provisions of this Agreement shall apply, to the full extent set forth
herein, to any and all Securities (whether owned on the date hereof or hereafter
acquired) of the Company or any capital stock, partnership units or any other
security evidencing ownership interests in any successor or assign of the
Company (whether by merger, consolidation, sale of assets or otherwise) which
may be issued in respect of, in exchange for, or in substitution of the Common
Stock, by reason of any stock dividend, split, reverse split, combination,
recapitalization, liquidation, reclassification, merger, consolidation or
otherwise.
18. BINDING EFFECT.
The provisions of this Agreement shall be binding upon and accrue to the
benefit of the parties hereto and their respective heirs, legal representatives,
successors and assigns.
19. AMENDMENT, MODIFICATION, ETC.
This Agreement may be amended, modified, extended or terminated and the
provisions hereof may be waived, only by a written instrument signed by each of
Odyssey, PF Telecom, Xxxx and UBS Capital. Notwithstanding the foregoing, (a)
the consent of the holders of at least 50% of the Common Stock (including
Equivalent Shares) issued or issuable upon exercise of the Finance Warrants
shall be required for any amendment, modification, extension, termination or
waiver which has an adverse effect on the rights of Finance Warrant Holders and
(b) the consent of the holders of at least 50% of the Common Stock (including
Equivalent Shares) issued or issuable upon exercise of the Lucent Warrants shall
be required for any amendment, modification, extension, termination or waiver
which has an adverse effect on the rights of Lucent Holders. Each amendment,
modification, extension, termination and waiver pursuant to this Section 19
shall be binding upon each party hereto.
20. APPLICABLE LAW.
The laws of the State of New York shall govern the interpretation, validity
and performance of the terms of this Agreement, regardless of the law that might
be applied under principles of conflicts of law.
21. NOTICES.
All notices and other communications provided for herein shall be in
writing and shall be deemed to have been duly given if delivered by hand
(whether by overnight courier or otherwise) or sent by registered or certified
mail, return receipt requested, postage prepaid, or sent by facsimile or email
to the party to whom it is directed:
38
(a) If to the Company, to:
XX.Xxx Holdings, Limited
0000 X Xxxxxx
Xxxxxxxxx, XX 00000
Attn: Xxxx Xxxxx
Fax: (000) 000-0000
Email: x00xx@xxx.xxx
and to:
Attn: Xxxxxxx Xxxxx, Esq.
Fax: (000) 000-0000
Email: xxxxxxxxx@xxx.xxx
with a copy to:
Cleary, Gottlieb, Xxxxx & Xxxxxxxx
Xxx Xxxxxxx Xxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxxx Check, Esq.
Fax: (000) 000-0000
Email: xxxxxx@xxxx.xxx
(b) If to any Odyssey Holder, to:
c/o Odyssey Investment Partners, LLC
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxx Xxxxx
Fax: (000) 000-0000
Email: xxxxxx@xxxxxxxxxxxxxxxxx.xxx
with a copy to:
Xxxxxx & Xxxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxx X. Xxxxxxxxx, Esq.
Fax: (000) 000-0000
Email: xxxx.xxxxxxxxx@xx.xxx
39
(c) If to any Xxxx Holder, to:
Xxxx Telecom Ventures, Inc.
00000 X. Xxxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000
Attn: Xxxxxx Xxxxxxx
Fax: (000) 000-0000
Email: xxxxxxxx@xxxxxxx.xxx
with a copy to:
Xxxx Industries, Inc.
0000 Xxxx 00xx Xxxxxx Xxxxx
Xxxxxxx, XX 00000
Attn: Xxx X. Xxxxxxx, Esq.
Fax: (000) 000-0000
Email: xxxxxxxx@xxxxxxx.xxx
and to:
Skadden, Arps, Slate, Xxxxxxx
& Xxxx LLP
000 Xxxx Xxxxxx Xxxxx
Xxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxxx, Xx., Esq.
Fax: (000) 000-0000
Email: xxxxxxxx@xxxxxxx.xxx
(d) If to any PF Telecom Holder, to:
PF Telecom Holdings, LLC
0000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxx, XX 00000
Attn: Xxxx Xxxxx
Fax: (000) 000-0000
Email: x00xx@xxx.xxx
and to:
Attn: Xxxxxxx Xxxxx, Esq.
Fax: (000) 000-0000
Email: xxxxxxxxx@xxx.xxx
40
with a copy to:
Cleary, Gottlieb, Xxxxx & Xxxxxxxx
Xxx Xxxxxxx Xxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxxx Check, Esq.
Fax: (000) 000-0000
Email: xxxxxx@xxxx.xxx
(e) If to any Xxxxx Holder or GLW Holder, to:
Xxxx Xxxxx
X.X. Xxx 0000
Xxxxxxxxx, XX 00000-0000
Fax (000) 000-0000
Email: x00xx@xxx.xxx
with a copy to:
Cleary, Gottlieb, Xxxxx & Xxxxxxxx
Xxx Xxxxxxx Xxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxxx Check, Esq.
Fax: (000) 000-0000
Email: xxxxxx@xxxx.xxx
(f) If to any Treg Holder or Xxxxx Xxxxxx, to:
Xxxxxxx Xxxxx, Esq.
00 Xxxxxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
Fax: (000) 000-0000
Email: xxxxxxxxx@xxx.xxx
with a copy to:
Cleary, Gottlieb, Xxxxx & Xxxxxxxx
Xxx Xxxxxxx Xxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxxx Check, Esq.
Fax: (000) 000-0000
Email: xxxxxx@xxxx.xxx
(g) If to any Finance Warrant Holder, to:
UBS AG, Stamford Branch
41
000 Xxxxxxxxxx Xxxx.
Xxxxxxxx, XX 00000
Attn: Xxx Xxxxx
Fax: (000) 000-0000
Email: xxx.xxxxx@xxx.xxx
and
Credit Suisse First Boston
Eleven Madison Avenue
New York, NY 10010
Attn: Xxxxxxx Xxxxxxxx
Fax: (000) 000-0000
Email: xxxxxxx.xxxxxxxx@xxxx.xxx
with a copy to:
Xxxxxx Xxxxxx & Xxxxxxx
00 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxx X. Xxxxx, Esq.
Fax: (000) 000-0000
Email: xxxxxx@xxxxxx.xxx
(h) If to UBS or its Permitted Transferees, to:
UBS Capital
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxxx X. Xxxxx
Fax: (000) 000-0000
Email: xxxxxxx.xxxxx@xxx.xxx
with a copy to:
Xxxx, Scholer, Fierman, Xxxx & Handler, LLP
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxx X. Xxxxx, Esq.
Fax: (000) 000-0000
Email: xxxxxx@xxxxxxxxxxx.xxx
44
(i) If to any Lucent Holder, to:
Lucent Technologies Inc.
000 Xxxx Xxxxxx Xxxx
Xxxxxx, XX 00000
Attn: Assistant Treasurer-Project Finance
Fax: (000) 000-0000
with a copy to:
Xxxxxx, Xxxxxxxxxx & Xxxxxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxx X. Xxxxx, Xx., Esq.
Fax: (000) 000-0000
Email: xxxxxx@xxxxxx.xxx
or at such other address as the party shall have specified by notice in writing
to the other parties in accordance with this Section 21.
22. HEADINGS.
The headings in this Agreement are for convenience of reference only and
will not control or affect the meaning or construction of any provisions hereof.
23. ENTIRE AGREEMENT.
This Agreement constitutes the entire agreement between the parties with
respect to the subject matter of this Agreement. This Agreement supersedes all
prior agreements and understandings, both oral and written, between the parties
with respect to the subject matter of this Agreement. This Agreement is not
intended to confer upon any Person other than the parties hereto and thereto any
rights or remedies hereunder or thereunder.
24. SEVERABILITY.
The invalidity or unenforceability of any provisions of this Agreement in
any jurisdiction will not affect the validity, legality or enforceability of the
remainder of this Agreement in such jurisdiction or the validity, legality or
enforceability of this Agreement, including any such provision, in any other
jurisdiction, it being intended that all rights and obligations of the parties
hereunder will be enforceable to the fullest extent permitted by law.
25. COUNTERPARTS.
This Agreement may be executed in any number of counterparts, each of which
will be an original with the same effect as if the signatures thereto and hereto
were upon the same instrument.
42
26. REMEDIES.
The parties hereby acknowledge that money damages would not be adequate
compensation for certain of the damages that a party would suffer by reason of a
failure of any other party to perform any of the obligations under this
Agreement. Therefore, each party hereto hereby waives the claim or defense that
any other party has an adequate remedy at law.
27. REPRESENTATIONS.
Each of PF Telecom, Xxxxx, GLW and Treg represents and warrants to the
other Stockholders that as of the date hereof, their respective economic and
voting interests in PF Telecom (stated as a percentage of the total of such
interests in PF Telecom outstanding as of the date hereof) are as set forth on
Schedule 1 hereto. No holder of any interests in PF Telecom, other than Xxxxx,
GLW and Treg, holds, beneficially or of record, more than 10% of the total
economic or voting interests in PF Telecom, or otherwise has the right to direct
the actions of PF Telecom as they relate to the performance of PF Telcom's
obligations hereunder. Xxxxx Xxxxx represents and warrants to the other
Stockholders that as of the date hereof, all equity interests of Treg are held,
beneficially and of record, by Xxxxx Xxxxx. Xxxxxxxxx Xxxxx represents and
warrants to the other Stockholders that as of the date hereof, the equity
interests of GLW are held, beneficially and of record, by Xxxxxxxxx Xxxxx.
28. ACKNOWLEDGMENTS.
The parties hereto acknowledge that WDR and CSFB are parties hereto solely
with respect to the Finance Warrants and Lucent is a party hereto solely with
respect to the Lucent Warrants, in each case, including any shares of Common
Stock issued upon exercise thereof, and in each case solely for purposes of
setting forth certain registration rights and other rights and restrictions
related to the transfer of such securities.
29. ASSIGNEES.
The parties agree that any Assignee (as defined in the Subscription
Agreement) shall accede to this Agreement and become a party hereto upon the
closing of such Assignee's purchase of Senior Preferred Stock pursuant to the
Subscription Agreement.
[Signature Page Follows]
43
IN WITNESS WHEREOF, the parties have executed this Stockholders Agreement
as of the date first above written.
XX.XXX HOLDINGS, LIMITED
By: /S/ XXXXXXX XXXXX
-------------------------------------------
Name: Xxxxxxx Xxxxx
Title: Vice Chairman and Executive Vice
President
ODYSSEY INVESTMENT PARTNERS FUND, LP
By: ODYSSEY CAPITAL PARTNERS, LLC,
its general partner
By: /S/ XXXXX XXXXX
-------------------------------------------
Name: Xxxxx Xxxxx
Title: Managing Member
ODYSSEY COINVESTORS, LLC
By: ODYSSEY INVESTMENT PARTNERS, LLC,
its managing member
By: /S/ XXXXX XXXXX
-------------------------------------------
Name: Xxxxx Xxxxx
Title: Managing Member
XXXX TELECOM VENTURES, INC.
By: /S/ XXXXXX XXXXXXX
-------------------------------------------
Name: Xxxxxx Xxxxxxx
Title: Vice President
PF TELECOM HOLDINGS, LLC
By: /S/ XXXX XXXXX
-------------------------------------------
Name: Xxxx Xxxxx
Title: Chairman and CEO
XXXX XXXXX
/S/ XXXX XXXXX
----------------------------------------------
XXXXX XXXXX
/S/ XXXXX XXXXX
----------------------------------------------
TREG VENTURES LLC
By: /S/ XXXXX XXXXX
-------------------------------------------
Name: Xxxxx Xxxxx
Title:
WARBURG DILLON READ LLC
By: /S/ XXXXXX X. XXXXXXXX
-------------------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: Managing Director
By: /S/ XXXXXXX XX
-------------------------------------------
Name: Xxxxxxx Xx
Title: Executive Director
CREDIT SUISSE FIRST BOSTON
By: /S/ XXXX X'XXXX
-------------------------------------------
Name: Xxxx X'Xxxx
Title: Vice President
UBS CAPITAL II LLC
By: /S/ XXXXXXX XXXXX
-------------------------------------------
Name: Xxxxxxx Xxxxx
Title: Pricinpal
By: /S/ XXXX XXXXX
-------------------------------------------
Name: Xxxx Xxxxx
Title: Chief Financial Officer
LUCENT TECHNOLOGIES INC.
By: /S/ XXXXXXX X. XXXXX
-------------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Director
GLW VENTURES LLC
By: /S/XXXXXXXXX XXXXX
-------------------------------------------
Name: Xxxxxxxxx Xxxxx
Title:
XXXXXXXXX XXXXX
By: /S/ XXXXXXXXX XXXXX
-------------------------------------------
SCHEDULE 1
SHAREHOLDINGS OF PF TELECOM HOLDINGS, LLC
-----------------------------------------
Percentage of Outstanding Number of
Holder PF Telecom Shares Equivalent Shares
------ ------------------------- ---------------------
Xxxx Xxxxx 48% 9,600,000
Treg Ventures LLC 19% 3,800,000
GLW Ventures LLC 10% 2,000,000
------------------------------------- -- ---------------------------------- ----------------------------
Xxxxx Group 58% 11,600,000
Xxxxx Group 19% 3,800,000
SCHEDULE 2
SHAREHOLDINGS OF TREG VENTURES LLC
----------------------------------
Percentage of Outstanding
Holder Treg Shares
------ --------------------------
Xxxxx Xxxxx 100.00%
SCHEDULE 3
SHAREHOLDINGS OF GLW VENTURES LLC
Percentage of Outstanding
Holder Equity Shares
------ --------------------------
Xxxxxxxxx Xxxxx 100.00%
