Exhibit 10.32
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SECOND AMENDED AND RESTATED
EQUITY PURCHASE AGREEMENT
BY AND AMONG
COMPLETEL LLC
AND
THE PURCHASERS LISTED ON
THE SIGNATURE PAGES ATTACHED HERETO
November 23, 1999
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TABLE OF CONTENTS
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Page
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Section 1. Authorization and Closings................................................ 2
1A. Authorization of the Preferred Units...................................... 2
1B. [Intentionally Omitted]................................................... 2
1C. Purchase and Sale of Incremental Preferred Units.......................... 2
1D. The Closing............................................................... 2
Section 2. Conditions to the Closing................................................. 2
2A. Representations and Warranties; Covenants................................. 2
2B. Amendment and Restatement of LLC Agreement................................ 3
2C. Securityholders Agreement................................................. 3
2D. Registration Agreement.................................................... 3
2E. Performance Vesting Agreement............................................. 3
2F. Sale of Incremental Preferred Units to Each Participating Purchaser....... 3
2G. Securities Law Compliance................................................. 3
2H. Compliance with Applicable Laws........................................... 3
2I. Expenses.................................................................. 4
2J. Closing Documents......................................................... 4
2K. Proceedings............................................................... 4
2L. Waiver.................................................................... 4
Section 3. [INTENTIONALLY OMITTED]................................................... 4
Section 4. Representations and Warranties of the Company............................. 4
4A. Organization, Corporate Power and Licenses................................ 4
4B. Capitalization and Related Matters........................................ 5
4C. Authorization; No Breach.................................................. 5
4D. Financial Statements...................................................... 6
4E. Assets.................................................................... 7
4F. Subsidiaries.............................................................. 7
4G. Contracts and Commitments................................................. 7
4H. Intellectual Property Rights.............................................. 7
4I. Litigation, etc........................................................... 8
4J. Brokerage................................................................. 8
4K. Governmental Consent, etc................................................. 8
4L. Compliance with Laws...................................................... 8
4M. Affiliated Transactions................................................... 8
4N. Disclosure................................................................ 9
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TABLE OF CONTENTS
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Page
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Section 5. Representations and Warranties of the Purchasers.......................... 9
5A. Organization; Authorization............................................... 9
5B. Brokerage................................................................. 10
5C. Purchasers' Investment Representations.................................... 10
Section 6. Covenants................................................................. 11
6A. Financial Statements and Other Information................................ 11
6B. Inspection of Property.................................................... 13
6C. Restrictions.............................................................. 14
6D. Affirmative Covenants..................................................... 18
6E. Compliance with Agreements................................................ 19
6F. Current Public Information................................................ 19
6G. Intellectual Property Rights.............................................. 19
6H. Public Disclosures........................................................ 19
6I. [Intentionally Omitted]................................................... 20
6J. Preemptive Rights......................................................... 20
Section 7. Purchasers' Put Rights.................................................... 21
7A. Put Right................................................................. 21
7B. Duties of the Company..................................................... 22
7C. Repurchase Price.......................................................... 22
7D. Fair Market Value of Securities........................................... 22
Section 8. Transfer of Restricted Securities......................................... 25
8A. General Provisions........................................................ 25
8B. Opinion Delivery.......................................................... 25
8C. Rule 144A................................................................. 25
8D. Legend Removal............................................................ 25
Section 9. Definitions............................................................... 25
9A. Definitions............................................................... 25
9B. Knowledge................................................................. 35
Section 10. Miscellaneous Provisions.................................................. 35
10A. Expenses.................................................................. 35
10B. Remedies.................................................................. 35
10C. Consent to Amendments..................................................... 36
10D. Survival of Representations and Warranties................................ 36
10E. Successors and Assigns.................................................... 36
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TABLE OF CONTENTS
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10F. Severability.............................................................. 36
10G. Counterparts.............................................................. 37
10H. Descriptive Headings; Interpretation; No Strict Construction.............. 37
10I. Governing Law............................................................. 37
10J. Notices................................................................... 37
10K. Business Days............................................................. 39
10L. Delivery by Facsimile..................................................... 39
10M. Effectiveness of Agreement................................................ 40
10N. Waiver of Prior Preemptive Rights......................................... 40
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List of Exhibits
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Exhibit 1 - Third Amended and Restated LLC Agreement
Exhibit 2 - Second Amended and Restated Securityholders Agreement
Exhibit 3 - Second Amended and Restated Registration Agreement
Exhibit 4 - Second Amended and Restated Performance Vesting Agreement
List of Schedules
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Schedule of Prior Purchasers
Schedule of Purchasers
Licenses Schedule
Capitalization Schedule
Subsidiaries Schedule
Intellectual Property Schedule
Litigation Schedule
Consents Schedule
Affiliated Transactions Schedule
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Exhibit 10.32
SECOND AMENDED AND RESTATED
EQUITY PURCHASE AGREEMENT
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THIS SECOND AMENDED AND RESTATED EQUITY PURCHASE AGREEMENT (this
"Agreement") is made as of November 23, 1999, by and among CompleTel LLC
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(formerly known as CableTel Europe LLC), a Delaware limited liability company
(the "Company"), Madison Dearborn Capital Partners II, L.P. ("MDCP"), ▇▇▇▇▇▇▇▇
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Holdings Limited Partnership ("▇▇▇▇▇▇▇▇ Holdings"), Meritage Private Equity
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Fund, L.P. ("Meritage"), ▇▇▇▇▇ ▇. ▇▇▇▇▇ ("▇▇▇▇▇"), ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇"),
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▇▇▇▇▇▇ ▇. ▇▇▇▇ ("▇▇▇▇"), ▇▇▇▇ ▇. ▇▇▇▇▇ ("▇▇▇▇▇"), ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ("Karafiol"),
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ("▇▇▇▇▇▇"), Northwestern University ("Northwestern"), Silver
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Cross Investors LLC ("SCI"), Dovey Company LLC ("Dovey LLC"), ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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("▇▇▇▇▇▇▇"), Haj LLC ("▇▇▇▇▇▇▇ LLC #2"), ▇▇▇▇▇▇▇▇▇ Company LLC ("▇▇▇▇▇▇▇▇▇
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LLC"), and ▇▇▇▇▇ ▇. ▇▇▇▇▇ ("▇▇▇▇▇"). MDCP, ▇▇▇▇▇▇▇▇ Holdings, Meritage, ▇▇▇▇▇,
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Holland, Laub, Hundt, Karafiol, Kirsch, Northwestern, and SCI are referred to
herein collectively as the "Investors" and individually as an "Investor." Dovey
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LLC, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ LLC #2, ▇▇▇▇▇▇▇▇▇ LLC, and Lacey are referred to herein
collectively as the "Executives" and individually as an "Executive." The
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Investors and the Executives are referred to herein collectively as the
"Purchasers," and each Investor and Executive is referred to herein individually
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as a "Purchaser." Capitalized terms used but not otherwise defined herein have
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the meanings ascribed to such terms in Section 9.
As of May 18, 1998, the Company and MDCP, ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
("▇▇▇▇▇▇▇▇"), ▇▇▇▇▇ ▇. ▇▇▇▇▇ ("Dovey"), ▇▇▇▇▇▇▇, and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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("▇▇▇▇▇▇▇▇▇") entered into an Equity Purchase Agreement (the "Prior Agreement").
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As of January 28, 1999, the Purchasers other than Meritage, ▇▇▇▇▇▇▇ LLC #2,
Karafiol, Kirsch, Northwestern, and SCI (collectively, the "Prior Purchasers")
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entered into a First Amended and Restated Equity Purchase Agreement (the "First
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Amended Agreement"), amending and restating the Prior Agreement in its entirety.
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Prior to the date hereof, the Prior Purchasers have acquired from the Company
the respective numbers of Series A Preferred Units and Common Units set forth on
the attached Schedule of Prior Purchasers in exchange for the capital
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contributions set forth on the Schedule of Prior Purchasers.
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The parties hereto desire that, effective as of the date hereof, (i)
each of the Purchasers other than ▇▇▇▇▇▇▇ (collectively, the "Participating
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Purchasers") shall, subject to the terms and conditions of this Agreement,
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purchase Series B Preferred Units from the Company, (ii) Meritage, ▇▇▇▇▇▇▇ LLC
#2, Karafiol, Kirsch, Northwestern, and SCI shall be admitted as members of the
Company, and (iii) the First Amended Agreement shall be amended and restated in
its entirety (except as expressly set forth in Sections 4 and 10D hereof) as set
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forth herein.
NOW, THEREFORE, in consideration of the mutual promises made herein
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto, intending to be legally bound,
agree as follows:
Section 1. Authorization and Closings.
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1A. Authorization of the Preferred Units. The Company shall
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authorize the issuance and sale to the Participating Purchasers of an aggregate
of 18,320 Series B Preferred Units (the "Incremental Preferred Units"), each
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having the rights and preferences set forth with respect thereto in the LLC
Agreement, such that the total number of authorized Preferred Units (which
consist of the Series A Preferred Units issued prior to the date hereof (the
"Prior Preferred Units") and the Incremental Preferred Units to be issued to the
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Participating Purchasers pursuant to this Agreement) shall be 84,070. The
Preferred Units are convertible into the Company's Common Units, in the manner
and on the terms set forth in the LLC Agreement.
1B. [Intentionally Omitted].
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1C. Purchase and Sale of Incremental Preferred Units. At the Closing
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(as defined below), subject to the terms and conditions set forth herein, the
Company shall sell to each Participating Purchaser, and each Participating
Purchaser shall purchase from the Company, the number of Incremental Preferred
Units set forth opposite such Participating Purchaser's name on the Schedule of
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Purchasers. The aggregate purchase price to be paid at the Closing by each such
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Participating Purchaser (such Participating Purchaser's "Incremental Purchase
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Price") is set forth opposite such Participating Purchaser's name on the
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attached Schedule of Purchasers. The sale of Incremental Preferred Units to each
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Participating Purchaser at the Closing shall constitute a separate sale
hereunder.
1D. The Closing. The closing of the separate purchases and sales of
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the Incremental Preferred Units (the "Closing") shall take place at the offices
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of Holme ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP in Denver, Colorado on November 23, 1999, or at such
other place or on such other date as may be mutually agreeable to the Company
and the Participating Purchasers (the date of the Closing, the "Closing Date").
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At the Closing, the Company shall deliver to each Participating Purchaser
certificates evidencing the Incremental Preferred Units to be purchased by such
Participating Purchaser, registered in such Participating Purchaser's name (or
if such Incremental Preferred Units are uncertificated, shall enter such
Participating Purchaser's name in the Company's books and records as the record
holder of such Incremental Preferred Units), upon such Participating Purchaser's
payment of the purchase price therefor by delivery to the Company of a cashier's
or certified check, or wire transfer of immediately available funds to an
account designated by the Company, in an aggregate amount equal to such
Participating Purchaser's Incremental Purchase Price.
Section 2. Conditions to the Closing. The obligation of each
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Participating Purchaser to purchase and pay for the Incremental Preferred Units
at the Closing is subject to the satisfaction as of the Closing of the following
conditions:
2A. Representations and Warranties; Covenants. The representations
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and warranties contained in Sections 4 and 5 hereof shall be true and correct in
all material respects at
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and as of the Closing (except to the extent of changes caused by the
transactions expressly contemplated herein), and the Company shall have
performed in all material respects all of the covenants required to be performed
by it hereunder prior to the Closing.
2B. Amendment and Restatement of LLC Agreement. The Second Amended
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and Restated Limited Liability Company Agreement dated as of January 28, 1999,
governing the affairs of the Company shall have been amended and restated in
form and substance as set forth in Exhibit 1 hereto (as so amended and restated,
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the "LLC Agreement"), shall be in full force and effect under the laws of
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Delaware as of the Closing, and shall not have been further amended or modified.
2C. Securityholders Agreement. The First Amended and Restated
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Securityholders Agreement dated as of January 28, 1999, by and among the Company
and certain of its Securityholders (as amended from time to time in accordance
with its terms, the "Securityholders Agreement"), shall have been amended and
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restated in form and substance as set forth in Exhibit 2 attached hereto, shall
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be in full force and effect as of the Closing, and shall not have been further
amended or modified.
2D. Registration Agreement. The First Amended and Restated
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Registration Agreement dated as of January 28, 1999, by and among the Company
and certain of its securityholders (as amended from time to time in accordance
with its terms, the "Registration Agreement"), shall have been amended and
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restated in form and substance as set forth in Exhibit 3 attached hereto, shall
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be in full force and effect as of the Closing, and shall not have been further
amended or modified.
2E. Performance Vesting Agreement. The First Amended and Restated
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Performance Vesting Agreement dated as of January 28, 1999, by and among the
Company, the Investors, and certain holders of Executive Securities (as amended
from time to time in accordance with its terms, the "Performance Vesting
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Agreement"), shall have been amended and restated in form and substance as set
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forth in Exhibit 4 attached hereto, shall be in full force and effect as of the
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Closing, and shall not have been further amended or modified.
2F. Sale of Incremental Preferred Units to Each Participating
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Purchaser. The Company shall have simultaneously sold to each Participating
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Purchaser the Incremental Preferred Units to be purchased by such Participating
Purchaser hereunder at the Closing and shall have received payment therefor in
full as specified in Section 1D hereof.
2G. Securities Law Compliance. The Company shall have made all
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filings under all applicable federal and state securities laws necessary to
consummate the issuance, in compliance with such laws, of the Incremental
Preferred Units to be issued at the Closing pursuant to this Agreement.
2H. Compliance with Applicable Laws. The purchase of Incremental
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Preferred Units by each Participating Purchaser hereunder at the Closing shall
not be prohibited by any
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applicable law or governmental rule or regulation and shall not subject such
Purchaser to any penalty, liability or, in such Purchaser's reasonable judgment,
other onerous condition under or pursuant to any applicable law or governmental
rule or regulation.
2I. Expenses. At the Closing, the Company shall have reimbursed the
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Investors for their reasonable out-of-pocket expenses as provided in paragraph
10A hereof, to the extent then known.
2J. Closing Documents. The Company shall have delivered to each
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Participating Purchaser all of the following documents:
(i) an Officer's Certificate, dated the Closing Date, stating
that the conditions specified in paragraphs 1A-1D and 2A-2H, inclusive,
have been fully satisfied; and
(ii) such other documents relating to the transactions
contemplated by this Agreement as any Participating Purchaser or its
special counsel may reasonably request.
2K. Proceedings. All corporate and other proceedings taken or
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required to be taken by the Company in connection with the transactions to occur
at the Closing shall be consummated at or prior to the Closing and all documents
incident thereto shall be reasonably satisfactory in form and substance to the
Participating Purchasers and their respective special counsel.
2L. Waiver. Any condition specified in this Section 2 may be waived
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if such waiver is consented to by each Participating Purchaser; provided that no
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such waiver shall be effective against any Purchaser unless it is set forth in a
writing executed by such Purchaser.
Section 3. [INTENTIONALLY OMITTED].
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Section 4. Representations and Warranties of the Company.
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Notwithstanding anything herein to the contrary, the representations and
warranties made by the Company under Section 4 of the First Amended Agreement
shall survive the execution hereof and shall remain in full force and effect for
the benefit of the Prior Purchasers in accordance with the terms of the First
Amended Agreement. In addition, as a material inducement to the Participating
Purchasers to enter into this Agreement and to purchase the Incremental
Preferred Units hereunder, the Company hereby represents and warrants to such
Participating Purchasers that the representations and warranties set forth below
are true and correct at and as of the date of the Closing (except to the extent
of changes caused by the transactions expressly contemplated herein):
4A. Organization, Corporate Power and Licenses. The Company is a
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limited liability company duly organized, validly existing and in good standing
under the laws of Delaware and is qualified to do business in every jurisdiction
in which its ownership of property or conduct
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of business requires it to qualify. The Company possesses all requisite power
and authority and, except as set forth in the "Licenses Schedule" attached
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hereto, all material licenses, permits and authorizations necessary to own and
operate its properties, to carry on its businesses as presently conducted and to
carry out the transactions contemplated by this Agreement. The copies of the
Company's LLC Agreement which have been furnished to the Investors' respective
special counsel reflect all amendments made thereto at any time prior to the
date of this Agreement and are correct and complete.
4B. Capitalization and Related Matters.
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(i) As of the Closing and immediately thereafter, the authorized
equity capital of the Company shall consist of: (a) 84,070 Preferred Units, all
of which shall be issued and outstanding; (b) 131,494 Common Units, 25,907 of
which shall be issued and outstanding (7,422 of which shall be subject to
performance vesting under the Performance Vesting Agreement and 18,485 of which
shall not be subject to performance vesting under the Performance Vesting
Agreement), 100 of which shall be reserved for issuance to management and other
key employees ("Key Employees") of the Company and its Subsidiaries in
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accordance with terms of the LLC Agreement (30 of which shall be subject to
performance vesting under the Performance Vesting Agreement and 70 of which
shall not be subject to performance vesting under the Performance Vesting
Agreement), and 105,487 of which shall be reserved for issuance upon conversion
of the outstanding Preferred Units; (c) an unlimited number of Class A Senior
Units, all of which shall in accordance with the LLC Agreement be reserved for
issuance upon a repurchase of Common Units from the Executives or other Key
Employees of the Company and its Subsidiaries pursuant to the provisions of the
Executive Securities Agreements; and (d) an unlimited number of Class B Senior
Units, all of which shall in accordance with the LLC Agreement be reserved for
issuance upon the forfeiture of Preferred Units pursuant to the provisions of
the Performance Vesting Agreement. Except as set forth on the attached
"Capitalization Schedule" or in the first sentence of this Section 4B(i), as of
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the Closing, the Company shall not have outstanding any equity securities
(including any options, warrants or other rights to acquire equity securities of
the Company).
(ii) There are no statutory or, to the best of the Company's
knowledge, contractual securityholders' preemptive rights or rights of first
refusal with respect to the issuance of the Preferred Units hereunder or the
issuance of the Common Units upon conversion of any of the Preferred Units
(except for rights under Section 6J of the First Amended Agreement which are
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expressly waived pursuant to Section 10N hereof). The Company has not violated
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any applicable federal or state securities laws in connection with the offer,
sale or issuance of any of its equity securities, and the offer, sale and
issuance of the Preferred Units hereunder do not require registration under the
Securities Act or any applicable state securities laws. To the best of the
Company's knowledge, there are no agreements between the Company's
securityholders with respect to the voting or transfer of the Company's equity
securities or with respect to any other aspect of the Company's affairs, except
for this Agreement, the LLC Agreement, the Executive Securities Agreements, the
Performance Vesting Agreement, the Registration Agreement, and the
Securityholders Agreement.
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4C. Authorization; No Breach. The execution, delivery and
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performance of this Agreement, the Registration Agreement, the Securityholders
Agreement, the Executive Securities Agreements, the Performance Vesting
Agreement, and all other agreements contemplated hereby to which the Company is
a party, and the amendment and restatement of the LLC Agreement, have been duly
authorized by the Company. This Agreement, the Registration Agreement, the
Securityholders Agreement, the Executive Securities Agreements, the Performance
Vesting Agreement, and all other agreements contemplated hereby to which the
Company is a party each constitutes a valid and binding obligation of the
Company, enforceable in accordance with its terms, except as enforceability may
be limited by bankruptcy, insolvency, reorganization, moratorium or other laws
affecting creditors' rights generally and limitations on the availability of
equitable remedies. The execution and delivery by the Company of this Agreement,
the Registration Agreement, the Securityholders Agreement, the Executive
Securities Agreements, the Performance Vesting Agreement, and all other
agreements contemplated hereby to which the Company is a party and the
consummation of the transactions contemplated hereby and thereby, the offering,
sale and issuance of the Preferred Units hereunder (including under all
predecessor agreements hereto) and the Common Units under the Executive
Securities Agreements, the issuance of the Company's equity securities under the
Permitted Securities Plan (as defined below), the issuance of the Common Units
upon conversion of the Preferred Units, the amendment and restatement of the LLC
Agreement, and the fulfillment of and compliance with the respective terms
hereof and thereof by the Company, do not and shall not (i) conflict with or
result in a breach of the terms, conditions or provisions of, (ii) constitute a
default under, (iii) result in the creation of any lien, security interest,
charge or encumbrance upon the Company's or any Subsidiary's equity securities
or assets pursuant to, (iv) give any third party the right to modify, terminate
or accelerate any obligation under, (v) result in a violation of, or (vi)
require any authorization, consent, approval, exemption or other action by or
notice or declaration to, or filing with, any court or administrative or
governmental body or agency, pursuant to, the LLC Agreement of the Company, or
any law, statute, rule or regulation to which the Company or any Subsidiary is
subject, or any agreement, instrument, order, judgment or decree to which the
Company or any Subsidiary is subject.
4D. Financial Statements. The Prospectus contains true, correct, and
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complete copies of (i) the audited consolidated financial statements of the
Company dated as of December 31, 1998, (ii) the unaudited consolidated financial
statements of the Company dated as of June 30, 1999, and (iii) the unaudited
consolidated financial statements of the Company dated as of September 30, 1999
(collectively, including in all cases the notes thereto (if any), the "Financial
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Statements"). Each of the Financial Statements is accurate and complete in all
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material respects, is consistent with the Company's books and records (which, in
turn, are accurate and complete in all material respects), presents fairly the
Company's financial condition and results of operations as of the times and for
the periods referred to therein, and has been prepared in accordance with
generally accepted accounting principles consistently applied, subject in the
case of any unaudited interim statements to changes resulting from normal year-
end adjustments or recurring accruals (none of which would, alone or in the
aggregate, be materially adverse to the business, financial condition, operating
results, assets, operations, or business prospects of the Company) and to the
absence of footnote disclosure. Except as set forth in the Financial Statements,
none of the Company or its Subsidiaries has any obligation
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or liability (whether accrued, absolute, contingent, unliquidated or otherwise,
whether or not known, whether due or to become due, and regardless of when
asserted) which (alone or in the aggregate) could reasonably be expected to have
a material adverse effect on the business, financial condition, operating
results, assets, operations, or business prospects of the Company.
4E. Assets. The Company and each of its Subsidiaries has good and
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marketable title to, or a valid leasehold interest in, all of its material
assets, free and clear of all Liens, and such assets constitute all of the
assets necessary for the conduct of the respective businesses of the Company and
its Subsidiaries as presently conducted.
4F. Subsidiaries. The attached "Subsidiaries Schedule" correctly
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sets forth the name of each of the Company's Subsidiaries and the Persons owning
the outstanding capital stock or other equity securities of each Subsidiary.
All of the outstanding equity securities of each Subsidiary are validly issued,
fully paid and nonassessable, and (except for a maximum of 7% of the outstanding
equity securities of CompleTel Holdings LLC) all such securities are owned by
the Company or another Subsidiary, free and clear of any Lien and not subject to
any option or right to purchase any such securities. As soon as reasonably
practicable after the Closing, the Company will use the proceeds from the
issuance of Series B Preferred Units at the Closing to acquire additional
membership interests in CompleTel Holdings LLC, such that the minority interest
in CompleTel Holdings LLC will be reduced to not more than 6%. Except as set
forth on the Subsidiaries Schedule, neither the Company nor any of its
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Subsidiaries owns or holds any shares of stock or any other securities or
interests in or any rights to acquire any shares of stock or any other security
or interest in any other Person.
4G. Contracts and Commitments.
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(i) With respect to each contract, agreement, or instrument of the
Company or its Subsidiaries that is required by applicable law or regulation to
be filed as an exhibit to the Registration Statement, a true, correct, and
complete copy of such contract, agreement, or instrument (including any
amendments thereto) has been filed as an exhibit to the Registration Statement.
(ii) All of such contracts, agreements and instruments are valid,
binding and enforceable in accordance with their respective terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium, or other laws affecting creditors' rights generally and limitations
on the availability of equitable remedies.
(iii) Neither the Company nor any of its Subsidiaries (nor, to the
knowledge of the Company, any other party thereto) is in breach of or in default
under any such contract, agreement, or instrument.
4H. Intellectual Property Rights. Except as set forth on the
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attached "Intellectual Property Schedule": (a) the Company or one of its
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Subsidiaries owns all right, title and interest to, or has the right to use
pursuant to a valid license, all Intellectual Property Rights necessary for the
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operation of the businesses of the Company and its Subsidiaries as presently
conducted, free and clear of all Liens, (b) there have been no claims made
against the Company or any Subsidiary asserting the invalidity, misuse, or
unenforceability of any of such Intellectual Property Rights, and to the
Company's knowledge there are no valid grounds for the same, and (c) neither the
Company nor any Subsidiary has received any notices of, and is not aware of any
facts which indicate the likelihood of, any infringement or misappropriation by,
or conflict with, any third party with respect to such Intellectual Property
Rights (including, without limitation, any demand or request that the Company or
any Subsidiary license any rights from a third party).
4I. Litigation, etc. Except as set forth on the attached "Litigation
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Schedule," there are no actions, suits, proceedings, orders, investigations or
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claims pending or, to the best of the Company's actual knowledge, threatened
against or affecting the Company or any Subsidiary (or to the best of the
Company's actual knowledge, pending or threatened against or affecting any of
the officers, directors or employees of the Company and its Subsidiaries with
respect to the Company's and its Subsidiaries' businesses or proposed business
activities), or pending or threatened by the Company or any Subsidiary against
any third party, at law or in equity, or before or by any governmental
department, commission, board, bureau, agency or instrumentality (including,
without limitation, any actions, suits, proceedings or investigations with
respect to the transactions contemplated by this Agreement); neither the Company
nor any Subsidiary is subject to, to the best of the Company's actual knowledge,
any governmental investigations or inquiries (including, without limitation,
inquiries as to the qualification to hold or receive any license or permit);
and, to the best of the Company's knowledge, there is no basis for any of the
foregoing. Neither the Company nor any Subsidiary is subject to any judgment,
order or decree of any court or other governmental agency.
4J. Brokerage. There are no claims for brokerage commissions,
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finders' fees or similar compensation in connection with the transactions
contemplated by this Agreement based on any arrangement or agreement binding
upon the Company. The Company shall pay, and hold each Purchaser harmless
against, any liability, loss or expense (including, without limitation,
reasonable attorneys' fees and out-of-pocket expenses) arising in connection
with any such claim; provided that the Company need not indemnify pursuant to
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this Section 4J any Purchaser that had actual knowledge of such arrangement or
agreement prior to the Closing Date.
4K. Governmental Consent, etc. Except as set forth on the attached
-------------------------
"Consents Schedule," no permit, consent, approval or authorization of, or
-----------------
declaration to or filing with, any governmental authority is required in
connection with the execution, delivery and performance by the Company of this
Agreement or the other agreements contemplated hereby, or the consummation by
the Company of any other transactions contemplated hereby or thereby.
4L. Compliance with Laws. Neither the Company nor any Subsidiary has
--------------------
violated any law or any governmental regulation or requirement in any material
respect.
-8-
4M. Affiliated Transactions. Except for this Agreement and the other
-----------------------
agreements expressly contemplated hereby, and except as set forth on the
attached "Affiliated Transactions Schedule," no officer, director, executive
--------------------------------
employee, or Affiliate of the Company or any Subsidiary or any individual
related by blood, marriage or adoption to any such individual or any entity in
which any such Person or individual owns at least a 2% beneficial interest, is a
party to any agreement, contract, commitment or transaction with the Company or
any Subsidiary (other than customary and reasonable employment arrangements and
except as otherwise expressly contemplated by this Agreement) or has any
material interest in any material property owned or used by the Company or any
of its Subsidiaries.
4N. Disclosure. Neither this Agreement nor any of the exhibits,
----------
schedules, or attachments hereto contains any untrue statement of a material
fact or omits a material fact necessary to make each statement contained herein
or therein not misleading. None of the written statements, documents,
certificates or other written items supplied to any Purchaser or any other
holder of Purchaser Securities by or on behalf of the Company with respect to
the transactions contemplated hereby (including, without limitation, the
Prospectus), as of the date it was supplied (or, in the case of the Prospectus,
as of its date), contained any untrue statement of a material fact or omitted a
material fact necessary to make each statement contained therein not misleading.
There is no fact which the Company has not disclosed to the Purchasers and the
holders of Purchaser Securities in writing and of which any of its or any of its
Subsidiaries' officers or directors is aware and which would reasonably be
expected to have a material adverse effect upon the business, financial
condition, operations, assets, or business prospects of the Company and its
Subsidiaries taken as a whole.
Section 5. Representations and Warranties of the Purchasers. As a
------------------------------------------------
material inducement to the Company to enter into this Agreement and to engage in
the transactions and enter into the agreements contemplated hereby (including,
without limitation, issuing the Preferred Units hereunder), each of the
Purchasers hereby represents and warrants for itself, severally and not jointly,
that:
5A. Organization; Authorization. Such Purchaser (if an entity) is
---------------------------
duly organized, validly existing, and in good standing under the laws of the
jurisdiction of its organization. If such Purchaser is an entity, the execution,
delivery, and performance of this Agreement, the LLC Agreement, the Registration
Agreement, the Securityholders Agreement, the Performance Vesting Agreement, and
the other agreements contemplated hereby to which such Purchaser is a party by
such Purchaser and the consummation of the transactions contemplated hereby and
thereby have been duly and validly authorized by all requisite action on the
part of such Purchaser and the partners, stockholders, members, or other owners
thereof, and no other proceedings on its or their part (other than giving notice
of drawdowns on fund capital commitments) is necessary to authorize the
execution, delivery or performance of this Agreement or such other agreements.
If such Purchaser is an individual, such Purchaser has all requisite capacity
and authority to execute and deliver this Agreement, the Registration Agreement,
the Securityholders Agreement, the Performance Vesting Agreement, and the other
agreements contemplated hereby to which such
-9-
Purchaser is a party, and to perform and consummate the transactions
contemplated hereby and thereby. This Agreement constitutes, and each of the
other agreements contemplated hereby to which such Purchaser is a party will
when executed constitute, a valid and binding obligation of such Purchaser,
enforceable in accordance with their terms, except as enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium or other laws
affecting creditors' rights generally and limitations on the availability of
equitable remedies. If such Purchaser is an entity, the execution, delivery, and
performance by such Purchaser of this Agreement, the Registration Agreement, the
Securityholders Agreement, the Performance Vesting Agreement, and the other
agreements contemplated hereby to which such Purchaser is a party do not and
shall not conflict with or constitute a default, breach, or violation of the
terms, conditions, or provisions of such Purchaser's partnership agreement,
certificate of incorporation, or similar organizational document.
5B. Brokerage. There are no claims for brokerage commissions,
---------
finders' fees or similar compensation in connection with the transactions
contemplated by this Agreement based on any arrangement or agreement binding
upon such Purchaser. Each Purchaser shall pay, and hold the Company and each
other Purchaser harmless against, any liability, loss or expense (including,
without limitation, reasonable attorneys' fees and out-of-pocket expenses)
arising in connection with any such arrangement or agreement binding upon such
Purchaser; provided that such an indemnifying Purchaser need not indemnify
--------
pursuant to this Section 5B any Purchaser that had actual knowledge of such
arrangement or agreement prior to the Closing Date.
5C. Purchasers' Investment Representations. Each Purchaser hereby
--------------------------------------
represents that (i) it is an "accredited investor" as defined in Rule 501 of
Regulation D promulgated by the Securities and Exchange Commission under the
Securities Act (other than SCI), (ii) it is sophisticated in financial matters
and is able to evaluate the risks and benefits of the investment in the
Preferred Units, (iii) it has had an opportunity to ask questions and receive
answers concerning the terms and conditions of its purchase of the Preferred
Units issued hereunder and has had full access to such other information
concerning the Company (including, without limitation, the Prospectus and copies
of the agreements referred to herein) as it has requested, (iv) it is acquiring
the Restricted Securities purchased hereunder or acquired pursuant hereto for
its own account with the present intention of holding such securities for
purposes of investment, and (v) it has no intention of selling such securities
in a public distribution in violation of the federal securities laws or any
applicable state securities laws; provided that nothing contained herein shall
--------
prevent any Purchaser or any subsequent holders of Restricted Securities from
transferring such securities in compliance with the provisions of Section 8
hereof. Each certificate or instrument representing Restricted Securities shall
be imprinted with a legend in substantially the following form:
"The securities represented by this certificate were originally
issued on __________________, and have not been registered under
the Securities Act of 1933, as amended. The transfer of the
securities represented by this certificate is subject to the
conditions specified in the Second Amended and Restated Equity
Purchase Agreement dated as of November 23, 1999, as amended and
modified from time to time, between the issuer (the "Company")
and the initial holder of these
-10-
securities. The Company reserves the right to refuse the transfer
of such securities until such conditions have been fulfilled with
respect to such transfer. A copy of such conditions shall be
furnished by the Company to the holder hereof upon written
request and without charge."
Section 6. Covenants.
---------
6A. Financial Statements and Other Information. The Company shall
------------------------------------------
deliver to each of MDCP, ▇▇▇▇▇▇▇▇ Holdings, and Meritage (so long as such Person
holds any Purchaser Securities) and to any subsequent holder of at least 20% of
the Purchaser Securities then outstanding (each of MDCP, ▇▇▇▇▇▇▇▇ Holdings, and
Meritage and each such subsequent 20% holder, a "Qualified Holder") all the
----------------
information described in this paragraph 6A:
(i) as soon as available but in any event within 30 days after
the end of each monthly accounting period in each fiscal year: (a)
unaudited consolidating (unless the Company has only one operating
Subsidiary) and consolidated statements of income and cash flows of the
Company and its Subsidiaries for such monthly period and for the period
from the beginning of the fiscal year to the end of such month, and
unaudited consolidating (unless the Company has only one operating
Subsidiary) and consolidated balance sheets of the Company and its
Subsidiaries as of the end of such monthly period, setting forth in each
case comparisons to the Company's annual budget and to the corresponding
period in the preceding fiscal year, and all such statements shall be
prepared in accordance with GAAP (subject to the absence of footnote
disclosures and to changes resulting from normal year-end adjustments for
recurring accruals), and shall be certified by the Company's chief
financial officer, and (b) a status report prepared by the Company's chief
financial officer, indicating whether the Company has met its budgeted
financial goals (including, without limitation, those specified in any
Approved Business Plan and those delivered pursuant to subparagraph (v)
below), discussing the reasons for any variation from such goals, and
describing what actions the Company and its Subsidiaries have taken and
propose to take in order to meet budgeted financial targets in the future;
(ii) within 45 days after the end of each quarterly accounting
period in each fiscal year, an Officer's Certificate stating that the
Company is not in default under this Agreement or the Registration
Agreement, and that neither the Company nor any of its Subsidiaries is in
default under any of its other material agreements or, if any such default
exists, specifying the nature and period of existence thereof and what
actions the Company and its Subsidiaries have taken and propose to take
with respect thereto;
(iii) within 90 days after the end of each fiscal year,
consolidating and consolidated statements of income and cash flows of the
Company and its Subsidiaries for such fiscal year, and consolidating and
consolidated balance sheets of the Company and its Subsidiaries as of the
end of such fiscal year, setting forth in each case comparisons to the
Company's annual budget and to the preceding fiscal year, all prepared in
accordance with
-11-
GAAP, and accompanied by (a) with respect to the consolidated portions of
such statements, an opinion containing no exceptions or qualifications
(except for qualifications regarding specified contingent liabilities) of
an independent accounting firm of recognized national standing acceptable
to the holders of a majority of the Purchaser Securities, (b) a certificate
from such accounting firm, addressed to the Board, stating that in the
course of its examination nothing came to its attention that caused it to
believe that there was any default specified in paragraph 6A(ii) in
existence or that there was any other default by the Company or any
Subsidiary in the fulfillment of or compliance with any of the terms,
covenants, provisions or conditions of any material agreement to which the
Company or any Subsidiary is a party or, if such accountants have reason to
believe any such default by the Company or any Subsidiary exists, a
certificate specifying the nature and period of existence thereof, and (c)
a copy of such firm's annual management letter to the Board;
(iv) promptly upon receipt thereof, any additional reports,
management letters or other detailed information concerning significant
aspects of the Company's operations or financial affairs given to the
Company by its independent accountants (and not otherwise contained in
other materials provided hereunder);
(v) at least 30 days but not more than 90 days prior to the
beginning of each fiscal year, an annual budget prepared on a monthly basis
for the Company and its Subsidiaries for such fiscal year (displaying
anticipated statements of income and cash flows and balance sheets and
budgeted capital expenditures), which annual budget shall have been
approved by the holders of a majority of the Purchaser Securities then
outstanding (as approved, an "Approved Budget"), and promptly upon
---------------
preparation thereof any other significant budgets prepared by the Company
and any revisions of such annual or other budgets (it being understood
that any revisions of any Approved Budget must be approved by the holders
of a majority of the Purchaser Securities then outstanding);
(vi) promptly (but in any event within five business days)
after the discovery or receipt of notice of any default under any material
agreement to which the Company or any of its Subsidiaries is a party, any
condition or event which is reasonably likely to result in any material
liability under any federal, state, local or foreign statute or regulation
relating to public health and safety, worker health and safety or pollution
or protection of the environment or any other material adverse change,
event or circumstance affecting the Company or any Subsidiary (including,
without limitation, the filing of any material litigation against the
Company or any Subsidiary or the existence of any dispute with any Person
which involves a reasonable likelihood of such litigation being commenced),
an Officer's Certificate specifying the nature and period of existence
thereof and what actions the Company and its Subsidiaries have taken and
propose to take with respect thereto;
(vii) within ten days after transmission thereof, copies of all
financial statements, proxy statements, reports and any other general
written communications which the Company sends to its stockholders and
copies of all registration statements and all
-12-
regular, special or periodic reports which it files, or (to its knowledge)
any of its officers or directors files with respect to the Company, with
the Securities and Exchange Commission or with any securities exchange on
which any of its securities are then listed, and copies of all press
releases and other statements made available generally by the Company to
the public concerning material developments in the Company's and its
Subsidiaries' businesses; and
(viii) with reasonable promptness, such other information and
financial data concerning the Company and its Subsidiaries as any Qualified
Holder may reasonably request.
Each of the financial statements referred to in subparagraphs 6A(i) and (iii)
shall be true and correct in all material respects as of the dates and for the
periods stated therein, subject in the case of the unaudited financial
statements to changes resulting from normal year-end adjustments for recurring
accruals (none of which would, alone or in the aggregate, be materially adverse
to the financial condition, operating results, assets, operations or business
prospects of the Company and its Subsidiaries taken as a whole).
Notwithstanding the foregoing, the provisions of this paragraph 6A shall cease
to be effective so long as the Company (a) is subject to the periodic reporting
requirements of the Securities Exchange Act and continues to comply with such
requirements and (b) promptly provides to each Qualified Holder all reports and
other materials filed by the Company with the Securities and Exchange Commission
pursuant to the periodic reporting requirements of the Securities Exchange Act;
provided that so long as any Preferred Units remain outstanding, the Company
shall continue to deliver to each Qualified Holder the information specified in
subparagraphs 6A(ii), 6A(iii)(b), 6A(v), 6A(vi), and 6A(viii).
Except as otherwise required by law or judicial order or decree or requested by
any governmental agency or authority, or as specified in the immediately
following proviso, each Person entitled to receive information regarding the
Company and its Subsidiaries under paragraph 6A or 6B shall not disclose any
such information to any third party (other than such Person's advisors or
representatives); provided that such a Person may disclose such information (i)
--------
in connection with the sale or transfer of any Purchaser Securities if such
Person's prospective transferee agrees in writing to be bound by the provisions
of this paragraph, (ii) if such Person is a partnership, limited liability
company or corporation, to such Person's partners, members and shareholders, as
the case may be, in the ordinary course of its business, or (iii) if such
information is available to the public other than by reason of any breach of
this provision.
For purposes of this Agreement, all holdings of Preferred Units or other
Purchaser Securities by Persons who are Affiliates shall be aggregated for
purposes of meeting any threshold tests under this Agreement.
6B. Inspection of Property. To the extent not otherwise prohibited
----------------------
by law or regulation, the Company shall permit any representatives designated by
any Qualified Holder, upon reasonable notice and during normal business hours
and at such other times as any such Qualified
-13-
Holder may reasonably request to (i) visit and inspect any of the properties of
the Company and its Subsidiaries, (ii) examine the corporate and financial
records of the Company and its Subsidiaries and make copies thereof or extracts
therefrom and (iii) discuss the affairs, finances and accounts of any such
corporations with the directors, officers, key employees and independent
accountants of the Company and its Subsidiaries. The presentation of an executed
copy of this Agreement (or photocopy thereof) by any Qualified Holder or
representative thereof to the Company's independent accountants shall constitute
the Company's permission to its independent accountants to participate in
discussions with such Persons.
6C. Restrictions. Prior to the consummation of a Public Offering,
------------
the Company shall not, without the prior written consent of the holders of a
majority of the Purchaser Securities then outstanding (or, in the case of
clauses (i), (ii), (vii), and (ix), without the prior written consent of the
holders of at least 80% of the Purchaser Securities then outstanding):
(i) directly or indirectly declare or pay any dividends or
make any distributions upon any of its equity securities other than the
Preferred Units pursuant to the terms of the LLC Agreement;
(ii) directly or indirectly redeem, purchase or otherwise
acquire, or permit any Subsidiary to redeem, purchase or otherwise acquire,
any of the Company's or any Subsidiary's capital stock or other equity
securities (including, without limitation, any warrants, options and other
rights to acquire such capital stock or other equity securities), except
for (A) cancellations of the Company's equity securities pursuant to the
Performance Vesting Agreement; (B) repurchases of equity securities
(including, without limitation, any warrants, options and other rights to
acquire capital stock or other equity securities) pursuant to the terms of
any Permitted Securities Plan (as defined below), (C) repurchases of the
Company's securities pursuant to the terms of the Executive Securities
Agreements, or (D) repurchases of the Company's securities pursuant to the
terms of Section 7 (Purchasers' Put Rights) hereof,
(iii) except for (w) issuances of Preferred Units at the Closing
as contemplated under this Agreement or of Common Units upon conversion of
such Preferred Units, (x) issuances of Common Units as contemplated under
the Executive Securities Agreements or to Key Employees as contemplated
under the LLC Agreement, (y) issuances of Senior Units in accordance with
the LLC Agreement pursuant to the repurchase provisions set forth in the
Executive Securities Agreements or pursuant to the forfeiture provisions
set forth in the Performance Vesting Agreement, or (z) issuances of
securities pursuant to the terms of a Permitted Securities Plan (as defined
below), authorize, issue or enter into any agreement providing for the
issuance (contingent or otherwise) of (a) any notes or debt securities
containing equity features (including, without limitation, any notes or
debt securities convertible into or exercisable or exchangeable for capital
stock or other equity securities, issued in connection with the issuance of
capital stock or other equity securities or containing profit participation
features), other than as may be expressly specified in any
-14-
Approved Business Plan or Approved Budget, or (b) any capital stock or
other equity securities (or any securities convertible into or exercisable
or exchangeable for any capital stock or other equity securities);
(iv) make, or permit any Subsidiary to make, any loans or
advances to, guarantees for the benefit of, or Investments in, any Person
(other than a Wholly Owned Subsidiary established under the laws of a
jurisdiction of the United States or any of its territorial possessions or
under the laws of any country that is a member of the European Union),
except for (a) reasonable advances to employees or customers in the
ordinary course of business, (b) acquisitions permitted under subparagraph
(viii) below, and (c) Investments having a stated maturity no greater than
one year from the date the Company makes such Investment in (1) obligations
of the United States government or any agency thereof or obligations
guaranteed by the United States government, (2) certificates of deposit of
commercial banks having combined capital and surplus of at least $500
million or (3) commercial paper with a rating of at least "Prime-1" by
-------
▇▇▇▇▇'▇ Investors Service, Inc. (or the equivalent rating from another,
comparably reputable rating agency);
(v) merge or consolidate with any Person or, except as
permitted under subparagraph (viii) below, permit any Subsidiary to merge
or consolidate with any Person (other than a merger between Wholly Owned
Subsidiaries);
(vi) sell, lease or otherwise dispose of, or permit any
Subsidiary to sell, lease or otherwise dispose of, any assets, where such
assets (together with all other assets disposed of by the Company and its
Subsidiaries in such transaction or a series of related transactions)
represent more than 10% of the consolidated assets of the Company and its
Subsidiaries (computed on the basis of book value, determined in accordance
with GAAP, or fair market value, determined by the Board in its reasonable
good faith judgment), or sell or permanently dispose of any of its or any
Subsidiary's material Intellectual Property Rights;
(vii) liquidate, dissolve or effect a recapitalization or
reorganization, or permit any Subsidiary to liquidate, dissolve or effect a
recapitalization or reorganization, in any form of transaction (including,
without limitation, any reorganization of a corporation into a limited
liability company, a partnership or any other non-corporate entity which is
treated as a partnership for federal income tax purposes, or vice versa),
except as expressly provided in the LLC Agreement or Securityholders
Agreement;
(viii) acquire, or permit any Subsidiary to acquire, any interest
in any company or business (whether by a purchase of assets, purchase of
stock, merger or otherwise), or enter into any joint venture
(in each case, other than as may be expressly specified in any Approved
Business Plan or Approved Budget);
-15-
(ix) enter into, or permit any Subsidiary to enter into, the
ownership, active management or operation of any business other than the
provision of wireline telecommunications services in markets in Europe;
(x) become subject to, or permit any of its Subsidiaries to
become subject to (including, without limitation, by way of amendment to or
modification of) any agreement or instrument which by its terms would
(under any circumstances) restrict (a) the right of any Subsidiary to make
loans or advances or pay dividends to, transfer property to, or repay any
Indebtedness owed to, the Company or another Subsidiary or (b) the
Company's performance of its obligations under the provisions of this
Agreement (including, without limitation, the provisions of Section 7 (Put
Rights) hereof), the Securityholders Agreement, the Registration Agreement,
or the LLC Agreement (including, without limitation, provisions relating to
the making of distributions with respect to the Preferred Yield on, and the
conversion of, any Preferred Units);
(xi) except as expressly contemplated by this Agreement, make
any amendment to the LLC Agreement;
(xii) enter into, amend, modify or supplement, or permit any
Subsidiary to enter into, amend, modify or supplement, any agreement,
transaction, benefit plan, commitment or arrangement with any of its or any
Subsidiary's executive officers, directors or Affiliates or with any
individual related by blood, marriage or adoption to any such individual or
with any entity in which any such Person or individual owns at least a 2%
beneficial interest, except for customary and reasonable employment
arrangements and except as otherwise expressly contemplated by this
Agreement;
(xiii) establish or acquire any Subsidiaries other than Wholly
Owned Subsidiaries organized under the laws of a jurisdiction of the United
States or any of its territorial possessions or under the laws of any
country that is a member of the European Union;
(xiv) create, incur, assume or suffer to exist, or permit any
Subsidiary to create, incur, assume or suffer to exist, Indebtedness on a
consolidated basis in an aggregate outstanding principal amount in excess
of $100,000 at any time (other than intercompany Indebtedness among the
Company and its Wholly Owned Subsidiaries and Indebtedness expressly
specified in any Approved Business Plan or Approved Budget);
(xv) create, incur, assume or suffer to exist, or permit any
Subsidiary to create, incur, assume or suffer to exist, any Liens other
than Permitted Liens;
(xvi) make any capital expenditures or permit any Subsidiary to
make any capital expenditures (including, without limitation, payments with
respect to capitalized leases, as determined in accordance with GAAP)
exceeding $100,000 in the aggregate on a
-16-
consolidated basis during any 12-month period (other than capital
expenditures expressly specified in any Approved Business Plan or Approved
Budget);
(xvii) enter into, or permit any Subsidiary to enter into, any
leases or other rental agreements (excluding capitalized leases, as
determined in accordance with GAAP) under which the amount of the aggregate
lease payments for all such agreements exceeds $100,000 on a consolidated
basis for any 12-month period, provided that the Company and its
--------
Subsidiaries shall be allowed to enter into any leasing arrangements
(including, but not limited to, leasing telecommunications networks) that
are expressly specified in any Approved Business Plan or Approved Budget;
(xviii) change its fiscal year or permit any Subsidiary to change
its fiscal year;
(xix) adopt any option plan or employee securities ownership
plan or issue any equity securities (including any options, warrants, or
other rights to acquire equity securities) to any Key Employee other than
(a) in accordance with the LLC Agreement, (b) in accordance with the
repurchase provisions set forth in the Executive Securities Agreements, or
in accordance with the forfeiture provisions set forth in the Performance
Vesting Agreement, or (c) pursuant to a securities plan, the terms of which
shall be approved by the holders of a majority of the Purchaser Securities
then outstanding, under which employees may be granted equity securities
(including options, warrants, or other rights to acquire equity securities)
representing up to 2.5% of the Company's Common Units (or, without
duplication, the equivalent portion of the capital stock of a Subsidiary),
determined immediately after giving-effect to the transactions contemplated
hereby on a fully diluted and as-if-converted basis (a "Permitted
---------
Securities Plan");
---------------
(xx) issue or sell any shares of the capital stock or other
equity securities (including, without limitation, any warrants, options,
and other rights to acquire such capital stock or other equity securities)
of any Subsidiary to any Person other than the Company or a Wholly Owned
Subsidiary;
(xxi) terminate the employment of, hire, or enter into, amend
or modify any employment agreement or arrangement with the Company's chief
executive officer;
(xxii) grant, or permit any of its Subsidiaries to grant, any
registration rights (including, without limitation, any demand or piggyback
registration rights) with respect to any of its capital stock or other
equity securities, other than pursuant to the Registration Agreement and
the Equity Registration Agreement as in effect on the Closing Date;
(xxiii) amend, waive, or otherwise modify any Approved Business
Plan;
(xxiv) use the proceeds from the sale of the Preferred Units
hereunder other than for working capital and budgeted general corporate
purposes reflected in any Approved
-17-
Business Plan or Approved Budget, or for such other purposes as are
contemplated by any Approved Business Plan or Approved Budget;
(xxv) select, retain, or enter into, amend, terminate, or
modify any retention arrangement with, any underwriter, manager, or
financial advisor to advise the Company and its Subsidiaries with respect
to any proposed Sale of the Company or to underwrite, or advise the Company
with respect to, a Public Offering or any acquisitions or financing
transactions;
(xxvi) change any of the accounting principles or practices
utilized by the Company or its Subsidiaries, or select, retain, or amend,
terminate, or modify any retention arrangement with any accounting firm
engaged to audit the Company's or its Subsidiaries' financial statements;
or
(xxvii) agree or commit to any of the foregoing.
6D. Affirmative Covenants. So long as any Purchaser Securities
---------------------
remain outstanding, the Company shall, and shall cause each Subsidiary (if any)
to, unless it has received the prior written consent of the holders of a
majority of the Purchaser Securities then outstanding:
(i) at all times cause to be done all things necessary to
maintain, preserve and renew its corporate or other entity existence;
(ii) at all times take all actions and cause to be done all
things necessary to obtain, maintain, preserve, and renew all material
licenses, authorizations, orders, permits, and other governmental approvals
necessary to the conduct of its businesses as presently conducted and as
hereafter conducted;
(iii) maintain and keep its material properties in good repair,
working order and condition, and from time to time make all necessary or
desirable repairs, renewals and replacements, so that its businesses may be
properly and advantageously conducted in all material respects at all
times;
(iv) pay and discharge when payable all taxes, assessments and
governmental charges imposed upon its properties or upon the income or
profits therefrom (in each case before the same becomes delinquent and
before penalties accrue thereon) and all material claims for labor,
materials or supplies which if unpaid would by law become a Lien upon any
of its property unless and to the extent that the same are being contested
in good faith and by appropriate proceedings and adequate reserves (as
determined in accordance with GAAP) have been established on its books with
respect thereto;
(v) comply with all other material obligations which it
incurs pursuant to any contract or agreement, whether oral or written,
express or implied, as such obligations become due, unless and to the
extent that the same are being contested in good faith and by
-18-
appropriate proceedings and adequate reserves (as determined in accordance
with GAAP) have been established on its books with respect thereto;
(vi) comply in all material respects with all applicable laws,
rules and regulations of the Securities and Exchange Commission, the ART
(and other comparable governmental bodies) and all other governmental
authorities to which any of the Company or its Subsidiaries are subject;
(vii) apply for and continue in force with good and responsible
insurance companies adequate insurance covering risks of such types and in
such amounts as are customary for corporations of similar size engaged in
similar lines of business; and
(viii) maintain proper books of record and account which present
fairly in all material respects its financial condition and results of
operations and make provisions on its financial statements for all such
proper reserves as in each case are required in accordance with GAAP.
6E. Compliance with Agreements. The Company shall perform and
--------------------------
observe all of its obligations to each holder of Preferred Units or other
Purchaser Securities as set forth in the LLC Agreement, the Securityholders
Agreement, and the Registration Agreement.
6F. Current Public Information. At all times after the Company has
--------------------------
filed a registration statement with the Securities and Exchange Commission
pursuant to the requirements of, or otherwise becomes subject to the periodic
reporting requirements of, either the Securities Act or the Securities Exchange
Act, the Company shall file all reports required to be filed by it under the
Securities Act and the Securities Exchange Act and the rules and regulations
adopted by the Securities and Exchange Commission thereunder and shall take such
further action as any holder or holders of Restricted Securities may reasonably
request, all to the extent required to enable such holders to sell Restricted
Securities pursuant to (i) Rule 144 adopted by the Securities and Exchange
Commission under the Securities Act (as such rule may be amended from time to
time) or any similar rule or regulation hereafter adopted by the Securities and
Exchange Commission or (ii) a registration statement on Form S-2 or S-3 or any
similar registration form hereafter adopted by the Securities and Exchange
Commission. Upon request, the Company shall deliver to any holder of Restricted
Securities a written statement as to whether it has complied with such
requirements.
6G. Intellectual Property Rights. The Company shall, and shall cause
----------------------------
each Subsidiary to, possess and maintain all material Intellectual Property
Rights necessary to the conduct of their respective businesses and own all
right, title and interest in and to, or have a valid license for, all such
Intellectual Property Rights. Neither the Company nor any Subsidiary shall take
any action, or fail to take any action, which would result in the invalidity,
abandonment, misuse or unenforceability of such Intellectual Property Rights or
which would infringe upon or misappropriate any rights of other Persons.
-19-
6H. Public Disclosures. The Company shall not, nor shall it permit
------------------
any Subsidiary to, disclose any Investor's or any holder of Investor Securities'
name or identity as an investor in the Company in any press release or other
public announcement or in any document or material filed with any governmental
entity, without the prior written consent of such Person, unless such disclosure
is required by applicable law or governmental regulations or by order of a court
of competent jurisdiction, in which case prior to making such disclosure the
Company shall give written notice to such Person describing in reasonable detail
the proposed content of such disclosure and shall permit such Person to review
and comment upon the form and substance of such disclosure.
6I. [Intentionally Omitted].
---------------------
6J. Preemptive Rights.
-----------------
(i) If the Company authorizes the issuance or sale of any Common
Units (or any securities containing options or rights to acquire any Common
Units), other than an Exempt Issuance (as defined below), the Company shall
first offer to sell to each holder of Purchaser Securities or Fully Vested
Securities a portion of the securities to be issued equal to the number of
securities to be issued multiplied by the quotient obtained by dividing (1) the
-------------
number of Purchaser Securities and Fully Vested Securities held by such holder,
by (2) the total number of Purchaser Securities and Fully Vested Securities then
outstanding. Each such holder shall be entitled to purchase such securities at
the most favorable price and on the most favorable terms as such securities are
to be offered to any other Persons; provided that if all Persons entitled to
--------
purchase or receive such securities are required to also purchase other
securities of the Company, the holders exercising their rights pursuant to this
paragraph shall also be required to purchase the same strip of securities (on
the same terms and conditions) that such other Persons are required to purchase.
The purchase price for all securities offered to such holders hereunder shall be
payable in cash.
(ii) In order to exercise its purchase rights hereunder, a holder of
Purchaser Securities or Fully Vested Securities must within 30 days after
receipt of written notice from the Company describing in reasonable detail the
securities being offered, the purchase price thereof, the payment terms and such
holder's percentage allotment, deliver a written notice to the Company
describing such holder's election hereunder. If all of the securities offered
to the holders of Purchaser Securities and Fully Vested Securities are not fully
subscribed, the remaining stock and securities shall be reoffered by the Company
to the holders purchasing their full allotment upon the terms set forth in this
paragraph, except that such holders must exercise their rights within 5 business
days after receipt of such reoffer.
(iii) Upon the expiration of the offering periods described above,
the Company shall be entitled to sell such securities which the holders of
Purchaser Securities and Fully Vested Securities have not elected to purchase
during the 180 days following such expiration at a price not less and on other
terms and conditions no more favorable to the purchasers thereof than that
offered to such holders. Any securities offered or sold by the Company after
such 180-day period must be
-20-
reoffered to the holders of Purchaser Securities and Fully Vested Securities
pursuant to the terms of this paragraph.
(iv) The rights of the holders of Purchaser Securities and Fully
Vested Securities under this paragraph 6J shall terminate upon the consummation
of the first to occur of (x) a Qualified Public Offering and (y) a Sale of the
Company.
(v) For purposes of this Agreement, "Exempt Issuance" shall mean
---------------
any issuance (a) of Preferred Units at the Closing as contemplated under this
Agreement, (b) of Common Units as contemplated under the Executive Securities
Agreements or to Key Employees as contemplated under the LLC Agreement, (c) of
securities upon conversion or exercise of, or in exchange for, any securities of
the Company or any options or other rights to acquire securities of the Company,
(d) to employees of the Company and its Subsidiaries pursuant to the terms of a
Permitted Securities Plan (as defined above), (e) of the Company's securities in
connection with the acquisition of another company or business, (f) as a pro
rata distribution with respect to the Company's Common Units, (g) pursuant to
any securities split, securities dividend, recapitalization or reorganization
that does not dilute the economic interest of any holder of Common Units, (h) of
warrants or equity securities issued to a lender in connection with its loan to
the Company or any of its Subsidiaries, (i) of Senior Units in accordance with
the LLC Agreement pursuant to the repurchase provisions set forth in the
Executive Securities Agreements or pursuant to the forfeiture provisions set
forth in the Performance Vesting Agreement, or (j) pursuant to a Public
Offering.
(vi) Each of the parties to this Agreement accepts, acknowledges,
and agrees that the provisions of this Section 6 are entered into for the
benefit of the holders of Fully Vested Securities as third-party beneficiaries,
and that such provisions shall be enforceable by the holders of Fully Vested
Securities as provided herein.
Section 7. Purchasers' Put Rights.
----------------------
7A. Put Right.
---------
(i) At any time and from time to time on or after the seventh
anniversary of the date of the Prior Agreement, but not after the consummation
of a Qualified Public Offering or a Sale of the Company, each holder of
Purchaser Securities and Class B Senior Units shall have the right to require
the Company to repurchase all, but not less than all, of the outstanding
Purchaser Securities and Class B Senior Units held by such holder at the
Repurchase Price (as defined below) by giving written notice to the Company of
such holder's exercise of this right (the "Exercise Notice").
---------------
(ii) Within 10 days after receipt of an Exercise Notice, the Company
shall give written notice (the "Repurchase Notice") to each other holder of
-----------------
Purchaser Securities and Class B Senior Units, setting forth the identity of the
holder tendering such Exercise Notice, the number of Purchaser Securities and
Class B Senior Units to be repurchased from such holder, and a reasonable
-21-
approximation of the fair market value of the Company's assets (net of any
liabilities) and of each Purchaser Security and Class B Senior Unit at the time
of such Repurchase Notice. Each other holder of Purchaser Securities or Class B
Senior Units shall be entitled to join in such repurchase and require the
Company to purchase all, but not less than all, of the Purchaser Securities and
Class B Senior Units held by such holder at the same closing, at the same price,
and on the same terms as the holder tendering the Exercise Notice by giving
Exercise Notice within 20 days after the date of the Repurchase Notice.
(iii) Promptly (but in any event within five days after the end of
this 20-day period), the Company shall send each holder of Purchaser Securities
and Class B Senior Units written notice updating the information contained in
the Repurchase Notice (the "Revised Repurchase Notice").
-------------------------
(iv) Within 10 days after the Repurchase Price (as defined below)
for the Purchaser Securities and Class B Senior Units to be repurchased at any
repurchase hereunder has been determined as set forth below, the Company shall
send a notice to each holder of Purchaser Securities and Class B Senior Units
setting forth the consideration to be paid for the Purchaser Securities and
Class B Senior Units to be repurchased, as well as a time and place, mutually
agreeable to the Company and the holders of a majority of the total number of
Purchaser Securities and Class B Senior Units to be repurchased (treating the
Purchaser Securities and the Class B Senior Units as a single class for purposes
of such consent), for the closing of the repurchase transaction. At the closing
of the repurchase transaction, the electing holders shall sell to the Company
and the Company shall purchase from such holders the Purchaser Securities and
Class B Senior Units specified in the Revised Repurchase Notice at the
Repurchase Price (as defined below).
7B. Duties of the Company. The Company shall do everything within
---------------------
its power under the law and the LLC Agreement, including but not limited to
assuming or refinancing debt, obtaining consents or waivers from its or its
Subsidiaries' lenders, recapitalizing the Company, consummating a Public
Offering, or selling the Company or one or more of its Subsidiaries, to enable
the Company to satisfy its repurchase obligations under this Section 7 (and each
holder of Purchaser Securities shall vote all Company securities over which it
has voting control, and shall take all such further actions, as may be necessary
or desirable to effectuate the foregoing).
7C. Repurchase Price. The repurchase price for each Purchaser
----------------
Security or Class B Senior Unit repurchased by the Company under this Section 7
(the "Repurchase Price") shall be equal to (i) in the case of any Preferred
----------------
Unit, the greater of (A) the "Liquidation Value" of such Preferred Unit
(together with all accrued but unpaid "Preferred Yield" thereon) as of the date
of valuation as calculated under the LLC Agreement and (B) the Fair Market Value
for such Preferred Unit, and (ii) in the case of any other Purchaser Security or
any Class B Senior Unit, the Fair Market Value for such security.
-22-
7D. Fair Market Value of Securities.
-------------------------------
(i) The "Fair Market Value" of any Purchaser Securities and Class B
-----------------
Senior Units to be repurchased hereunder (the "Valued Securities") shall be
-----------------
determined in accordance with this paragraph 7D.
(ii) The holders of the Valued Securities to be repurchased and the
holders of the Company's Common Units (other than Valued Securities) (determined
on a fully diluted, as-if-converted basis, but excluding all Un-Performance-
Vested Securities) shall attempt in good faith to agree on the Fair Market Value
of the Valued Securities to be repurchased. Any agreement reached by the holders
of a majority of the Valued Securities, on the one hand, and the holders of a
majority of the Company's Common Units (other than Valued Securities)
(determined on a fully diluted, as-if-converted basis, but excluding all Un-
Performance-Vested Securities), on the other hand, shall be final and binding on
all parties hereto.
(iii) If such Persons are unable to reach such agreement within 20
days after the giving of any Repurchase Notice, the Fair Market Value of any
Valued Securities that are publicly traded shall be the average, over a period
of 21 days consisting of the date of the Exercise Notice and the 20 consecutive
business days prior to that date, of the average of the closing prices of the
sales of such securities on the principal securities exchange on which such
securities may at that time be listed, or, if there have been no sales on such
exchange on any day, the average of the highest bid and lowest asked prices on
such exchange at the end of such day, or, if on any day such securities are not
so listed, the average of the representative bid and asked prices quoted in the
Nasdaq System as of 4:00 P.M., New York time, or, if on any day such securities
are not quoted in the Nasdaq System, the average of the highest bid and lowest
asked prices on such day in the domestic over-the-counter market as reported by
the National Quotation Bureau Incorporated, or any similar successor
organization.
(iv) If such Persons are unable to reach agreement pursuant to
subparagraph (ii) within 20 days after the giving of such Repurchase Notice, and
to the extent any Valued Securities are not publicly traded:
(a) The holders of a majority of the Valued Securities to be
repurchased, on the one hand, and the holders of a majority of the
Company's Common Units (other than Valued Securities) (determined on a
fully diluted, as-if-converted basis, but excluding all Un-Performance-
Vested Securities), on the other hand, shall each, within 10 days
thereafter, choose one investment banker or other appraiser with experience
in valuing companies such as the Company, and the two investment
bankers/appraisers so selected shall together select a third investment
banker/appraiser similarly qualified.
(b) The three investment bankers/appraisers shall first
appraise the fair market value of the Company's equity (based on the
assumption of an orderly, arm's length sale (structured to produce the
highest price to the equity holders of the Company, whether
-23-
such structure is a merger, combination, sale of equity securities, sale of
assets, or otherwise) to a willing unaffiliated buyer (or to a willing
affiliated strategic buyer, provided that the investment bankers/appraisers
--------
shall not consider any premium that such affiliated strategic buyer would
be willing to pay to the extent such premium is attributable solely to such
Person's then current affiliation with the Company, unless the Company or
its equityholders have received a fully financed, firm Commitment offer
(with no material conditions) from such affiliated strategic buyer to
purchase a majority (based on common equity equivalents) of the Company's
outstanding equity at a price that includes such premium, it being
--------
understood, however, that the investment bankers/appraisers shall consider,
-------------------
without the need for such a firm commitment offer, the premium, if any,
that is attributable to such Person's future expected synergies to be
generated by combining such Person's operations with those of the Company
and its Subsidiaries if such Person were to acquire the Company). The three
investment bankers/appraisers shall then appraise the fair market value of
such non-publicly-traded Valued Securities as follows:
(1) the fair market value of each Common Unit (or
equivalent common equity security) shall be equal to the fair market
value of the Company's equity divided by the total number of Common
----------
Units (or equivalent common equity securities) outstanding on the date
of the giving of the Exercise Notice (determined on a fully diluted,
as-if-converted basis, but excluding all Un-Performance-Vested
Securities);
(2) the fair market value of each Preferred Unit shall be
equal to the greater of (x) the Liquidation Value (as defined in the
LLC Agreement) of such Preferred Unit, together with all accrued but
unpaid Preferred Yield (as defined in the LLC Agreement) thereon, and
(y) the fair market value (determined in accordance with subparagraph
(1) above) of the Common Units (including fractional units) into which
such Preferred Unit is convertible on the date of the giving of the
Exercise Notice;
(3) the fair market value of each Class B Senior Unit shall
be equal to the Class B Senior Value (as defined in the LLC Agreement)
of such Class B Senior Unit, together with all accrued but unpaid
Class B Senior Yield (as defined in the LLC Agreement) thereon, on the
date of the giving of the Exercise Notice; and
(4) the fair market value of any other non-publicly-traded
Valued Securities shall be the fair value of such securities,
determined on the basis of an orderly, arm's length sale to a willing,
unaffiliated buyer, taking into account all relevant factors
determinative of value.
The three investment bankers/appraisers shall, within thirty days of their
retention, provide the written results of such appraisals to the holders of
a majority of the Valued Securities to be repurchased, on the one hand, and
the holders of a majority of the Company's Common
-24-
Units (other than Valued Securities) (determined on a fully diluted, as-if-
converted basis, but excluding all Un-Performance-Vested Securities), on
the other hand.
(c) The "Fair Market Value" of the non-publicly-traded Valued
-----------------
Securities to be repurchased shall be the average of the two appraisals
closest to each other, and such amount shall be final and binding on all
parties hereto; provided that any Person electing to have Purchaser
--------
Securities repurchased hereunder may at any time within five days after
receiving written notice of such determination rescind its prior exercise
of such Person's put rights by giving written notice of such revocation to
the Company, and upon such revocation the revoking party will be treated as
if it had never exercised such put right hereunder.
(d) The costs of such appraisal shall be borne by the Company.
Section 8. Transfer of Restricted Securities.
---------------------------------
8A. General Provisions. Restricted Securities are transferable only
------------------
pursuant to (i) public offerings registered under the Securities Act, (ii) Rule
144 or Rule 144A of the Securities and Exchange Commission (or any similar rule
or rules then in force) if such rule is available, and (iii) subject to the
various conditions and prohibitions set forth in this Agreement (including,
without limitation, paragraph 8B below) and in the other agreements contemplated
hereby (including, without limitation, the Securityholders Agreement, the
Executive Securities Agreements, and the Performance Vesting Agreement), any
other legally available means of transfer.
8B. Opinion Delivery. In connection with the transfer of any
----------------
Restricted Securities (other than a transfer described in paragraph 8A(i) or
(ii) above), the holder thereof shall deliver written notice to the Company
describing in reasonable detail the transfer or proposed transfer, together with
an opinion of ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ or other counsel which (to the Company's
reasonable satisfaction) is knowledgeable in securities law matters to the
effect that such transfer of Restricted Securities may be effected without
registration of such Restricted Securities under the Securities Act. In
addition, if the holder of the Restricted Securities delivers to the Company an
opinion of ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ or such other counsel that no subsequent transfer of
such Restricted Securities shall require registration under the Securities Act,
the Company shall promptly upon such contemplated transfer deliver new
certificates for such Restricted Securities which do not bear the Securities Act
legend set forth in paragraph 5C above. If the Company is not required to
deliver new certificates for such Restricted Securities not bearing such legend,
the holder thereof shall not transfer the same until the prospective transferee
has confirmed to the Company in writing its agreement to be bound by the
conditions contained in this Section 8 and paragraph 5C.
8C. Rule 144A. Upon the request of any holder of Purchaser
---------
Securities, the Company shall promptly supply to such Person or its prospective
transferees all information regarding the Company required to be delivered in
connection with a transfer pursuant to Rule 144A of the Securities and Exchange
Commission.
-25-
8D. Legend Removal. If any Restricted Securities become eligible for
--------------
sale pursuant to Rule 144(k), the Company shall, upon the request of the holder
of such Restricted Securities, remove the legend set forth in paragraph 5C from
the certificates for such Restricted Securities.
Section 9. Definitions.
-----------
9A. Definitions. For the purposes of this Agreement, the following
-----------
terms have the meanings set forth below:
"Affiliate" of any particular Person means (i) any other Person
---------
controlling, controlled by or under common control with such particular Person,
where "control" means the possession, directly or indirectly, of the power to
direct the management and policies of a Person whether through the ownership of
voting securities, by contract or otherwise, and (ii) if such Person (other than
the Company) is a partnership, any partner thereof.
"▇▇▇▇▇" has the meaning set forth with respect thereto in the
-----
preamble.
"Approved Budget" has the meaning set forth with respect thereto in
---------------
Section 6A(v).
"Approved Business Plan" means a business proposal submitted by the
----------------------
chief executive officer of the Company to the Board and to the Investors,
setting forth: (i) the proposed business activities of the Company in a
specified geographical area during a specified period of time; (ii) projections
of revenues, expenses, and income from such business activities during such
period; (iii) projections of the amounts, timing, and proposed terms for vendor
financing and other financing to be obtained by the Company to support such
business activities during such period; (iv) the expected amounts and
anticipated timing of periodic capital drawdowns that the Company's management
deems necessary to support such business activities during such period; and (v)
a budget of proposed expenditures of such capital; provided, however, that no
--------
such business proposal shall constitute an Approved Business Plan unless and
until it has been approved by the Board and the holders of a majority of the
Purchaser Securities then outstanding.
"ART" means the French Autorite de Regulation des Telecommunications
---
and includes and governmental body or agency succeeding to the functions
thereof.
"Board" means the board of managers of the Company or, if the Company
-----
is hereafter converted into a corporation or other entity form, the board of
directors or comparable governing body of the Company.
"Class A Senior Units" means the Class A Senior Units of the Company,
--------------------
having the rights and preferences set forth with respect thereto in the LLC
Agreement.
-26-
"Class B Senior Units" means the Class B Senior Units of the Company,
--------------------
having the rights and preferences set forth with respect thereto in the LLC
Agreement.
"Class B Senior Value" has the meaning ascribed to such term in the
--------------------
LLC Agreement.
"Class B Senior Yield" has the meaning ascribed to such term in the
--------------------
LLC Agreement.
"▇▇▇▇▇▇▇▇▇" has the meaning set forth with respect thereto in the
---------
preamble.
"▇▇▇▇▇▇▇▇▇ LLC" has the meaning set forth with respect thereto in the
-------------
preamble.
"Closing" has the meaning set forth with respect thereto in Section
-------
1D.
"Closing Date" has the meaning set forth with respect thereto in
------------
Section 1D.
"Common Units" means the Common Units of the Company, having the
------------
rights and preferences set forth with respect thereto in the LLC Agreement.
"Company" has the meaning set forth with respect thereto in the
-------
preamble (including any successor described in Section 10.1 of the LLC
Agreement).
"▇▇▇▇▇▇▇▇" has the meaning set forth with respect thereto in the
--------
preamble.
"▇▇▇▇▇▇▇▇ Holdings" has the meaning set forth with respect thereto in
-----------------
the preamble.
"Dovey" has the meaning set forth with respect thereto in the
-----
preamble.
"Dovey LLC" has the meaning set forth with respect thereto in the
---------
preamble.
"Equity Registration Agreement" means that certain Equity Registration
-----------------------------
Rights Agreement dated as of February 16, 1999, by and among the Company,
certain of its Subsidiaries, certain shareholders of the Company and CompleTel
Holdings LLC, and the other parties listed on the signature pages thereto (as
amended or modified from time to time in accordance with its terms).
"Executive" and "Executives" have the meanings set forth with respect
--------- ----------
thereto in the preamble.
"Executive Securities" means (i) the Common Units issued under the
--------------------
Executive Securities Agreements (including to Key Employees in accordance with
the LLC Agreement), and (ii) any securities issued directly or indirectly with
respect to any Executive Securities by way of a stock split, stock dividend, or
other division of securities, or in connection with a combination of securities,
recapitalization, merger, consolidation, or other reorganization; provided that
--------
Executive Securities shall not include any Senior Units. As to any particular
securities constituting Executive
-27-
Securities, such securities shall cease to be Executive Securities when they
have been (a) effectively registered under the Securities Act and disposed of in
accordance with the registration statement covering them, (b) distributed to the
public through a broker, dealer or market maker pursuant to Rule 144 under the
Securities Act (or any similar provision then in force), or (c) repurchased or
otherwise acquired by the Company (or its assignees). Any reference herein to a
"majority of the Executive Securities" or the "number of Executive Securities"
for purposes of comparison shall refer, with respect to any particular Executive
Securities, to the number of Common Units (or equivalent common equity
securities of the Company) then represented by such Executive Securities (on a
fully diluted, as-if-converted basis, but excluding any Un-Performance-Vested
Securities).
"Executive Securities Agreement" shall mean any of the executive
------------------------------
securities agreements (or employee securities agreements) heretofore entered
into between the Company and an Executive or another employee of the Company or
its Subsidiaries, pursuant to which such employee has purchased Common Units of
the Company, as well as any executive securities agreement (or employee
securities agreements) substantially similar thereto, entered into by and
between the Company and any Key Employee of the Company and its Subsidiaries,
pursuant to which such Key Employee purchases securities of the Company in
accordance with the LLC Agreement.
"Exempt Issuance" has the meaning set forth with respect thereto in
---------------
Section 6J.
"Exercise Notice" has the meaning set forth with respect thereto in
---------------
Section 7A(i).
"Fair Market Value" has the meaning and shall be determined in the
-----------------
manner set forth with respect thereto in Section 7D.
"First Amended Agreement" has the meaning set forth with respect
-----------------------
thereto in the preamble.
"Fully Vested Securities" means Executive Securities as of the date of
-----------------------
any determination to be made hereunder (and after giving effect to any vesting
which would occur under the Performance Vesting Agreement with respect to any
sale of securities on such date) which both (A) have time vested pursuant to the
provisions of the Executive Securities Agreements and (B) are not Un-
Performance-Vested Securities.
"GAAP" means United States generally accepted accounting principles
----
consistently applied; provided that with respect to the separate financial
--------
statements of any Subsidiary of CompleTel Europe N.V. (but not with respect to
the consolidated financial statements of CompleTel Europe N.V. or any entity of
which it is a Subsidiary), "GAAP" will mean the generally accepted accounting
principles of such Subsidiary's jurisdiction of incorporation.
"Holland" has the meaning set forth with respect thereto in the
-------
preamble.
-28-
"▇▇▇▇▇" has the meaning set forth with respect thereto in the
-----
preamble.
"Incremental Preferred Units" has the meaning set forth with respect
---------------------------
thereto in Section 1A.
"Incremental Purchase Price" has the meaning set forth with respect
--------------------------
thereto in Section 1C.
"Indebtedness" means at a particular time, without duplication, (i)
------------
any indebtedness for borrowed money or indebtedness issued in substitution for
or exchange of indebtedness for borrowed money, (ii) any indebtedness evidenced
by any note, bond, debenture or other debt security, (iii) any indebtedness for
the deferred purchase price of property or services with respect to which a
Person is liable, contingently or otherwise, as obligor or otherwise (other than
trade payables and other current liabilities incurred in the ordinary course of
business which are not more than six months past due), (iv) any commitment by
which a Person assures a creditor against loss (including, without limitation,
contingent reimbursement obligations with respect to letters of credit), (v) any
indebtedness guaranteed in any manner by a Person (including, without
limitation, guarantees in the form of an agreement to repurchase or reimburse),
(vi) any obligations under capitalized leases with respect to which a Person is
liable, contingently or otherwise, as obligor, guarantor or otherwise, or with
respect to which obligations a Person assures a creditor against loss, (vii) any
indebtedness secured by a Lien on a Person's assets and (viii) any unsatisfied
obligation for "withdrawal liability" to a "multiemployer plan" as such terms
are defined under the Employee Retirement Income Security Act of 1974, as
amended ("ERISA").
-----
"Intellectual Property Rights" means all (i) patents, patent
----------------------------
applications, patent disclosures and inventions, (ii) trademarks, service marks,
trade dress, trade names, logos and corporate names and registrations and
applications for registration thereof together with all of the goodwill
associated therewith, (iii) copyrights (registered or unregistered) and
copyrightable works and registrations and applications for registration thereof,
(iv) mask works and registrations and applications for registration thereof, (v)
computer software, data, data bases and documentation thereof, (vi) trade
secrets and other confidential information (including, without limitation,
ideas, formulas, compositions, inventions (whether patentable or unpatentable
and whether or not reduced to practice), know-how, manufacturing and production
processes and techniques, research and development information, drawings,
specifications, designs, plans, proposals, technical data, copyrightable works,
financial and marketing plans and customer and supplier lists and information),
(vii) other intellectual property rights and (viii) copies and tangible
embodiments thereof (in whatever form or medium).
"Investment" as applied to any Person means (i) any direct or indirect
----------
purchase or other acquisition by such Person of any notes, obligations,
instruments, stock, securities or ownership interest (including partnership
interests and joint venture interests) of any other Person and (ii) any capital
contribution by such Person to any other Person.
-29-
"Investor" and "Investors" have the meanings set forth with respect
-------- ---------
thereto in the preamble.
"Investor Securities" means (i) the Preferred Units issued to the
-------------------
Investors hereunder (including under any predecessor agreement hereto), (ii) any
Common Units issued or issuable upon conversion of the Preferred Units referred
to in paragraph (i), and (iii) any securities issued directly or indirectly with
respect to any of the foregoing securities by way of a stock split, stock
dividend, or other division of securities, or in connection with a combination
of securities, recapitalization, merger, consolidation, or other reorganization;
provided that Investor Securities shall not include any Senior Units. As to any
--------
particular securities constituting Investor Securities, such securities shall
cease to be Investor Securities when they have been (a) effectively registered
under the Securities Act and disposed of in accordance with the registration
statement covering them, (b) distributed to the public through a broker, dealer
or market maker pursuant to Rule 144 under the Securities Act (or any similar
provision then in force), or (c) repurchased or otherwise acquired by the
Company or forfeited pursuant to the terms of the Performance Vesting Agreement.
Any reference herein to a "majority of the Investor Securities" or the "number
of Investor Securities" for purposes of comparison shall refer, with respect to
any particular Investor Securities, to the number of Common Units (or equivalent
common equity securities of the Company) then represented by such Investor
Securities (on a fully diluted, as-if-converted basis).
"Karafiol" has the meaning set forth with respect thereto in the
--------
preamble.
"Key Employees" has the meaning set forthwith respect thereto in
-------------
Section 4B(i).
"▇▇▇▇▇▇" has the meaning set forth with respect thereto in the
------
preamble.
"Lacey" has the meaning set forth with respect thereto in the
-----
preamble.
"▇▇▇▇" has the meaning set forth with respect thereto in the preamble.
----
"Lien" means any mortgage, pledge, security interest, encumbrance,
----
lien or charge of any kind (including, without limitation, any conditional sale
or other title retention agreement or lease in the nature thereof), any sale of
receivables with recourse against the Company, any of its Subsidiaries or any
Affiliate, any filing or agreement to file a financing statement as debtor under
the Uniform Commercial Code or any similar statute other than to reflect
ownership by a third party of property leased to the Company or any of its
Subsidiaries under a lease which is not in the nature of a conditional sale or
title retention agreement, or any subordination arrangement in favor of another
Person (other than any subordination arising in the ordinary course of
business).
"Liquidation Value" has the meaning ascribed to such term in the LLC
-----------------
Agreement.
"LLC Agreement" has the meaning set forth with respect thereto in
-------------
Section 2B.
-30-
"MDCP" has the meaning set forth with respect thereto in the preamble.
----
"Northwestern" has the meaning set forth with respect thereto in the
------------
preamble.
"Officer's Certificate" means a certificate signed by the Company's
---------------------
president or its chief financial officer, stating that (i) the officer signing
such certificate has made or has caused to be made such investigations as are
reasonably necessary in order to permit him to verify the accuracy of the
information set forth in such certificate and (ii) such certificate does not
misstate any material fact and does not omit to state any fact necessary to make
the certificate not misleading.
"Participating Purchasers" has the meaning set forth with respect
------------------------
thereto in the preamble.
"▇▇▇▇▇▇▇" has the meaning set forth with respect thereto in the
-------
preamble.
"▇▇▇▇▇▇▇ LLC #2" has the meaning set forth with respect thereto in the
--------------
preamble.
"Performance Vesting Agreement" has the meaning set forth with respect
-----------------------------
thereto in Section 2E.
"Permitted Lien" means:
--------------
(i) tax liens with respect to taxes not yet due and payable or
which are being contested in good faith by appropriate proceedings and for
which appropriate reserves have been established in accordance with GAAP;
(ii) deposits or pledges made in connection with, or to secure
payment of, utilities or similar services, workers' compensation,
unemployment insurance, old age pensions or other social security
obligations;
(iii) purchase money security interests in any property acquired
by the Company or any Subsidiary to the extent permitted by this Agreement;
(iv) interests or title of a lessor under any lease permitted
by this Agreement;
(v) mechanics', materialmen's or contractors' liens or
encumbrances or any similar lien or restriction for amounts not yet due and
payable;
(vi) easements, rights-of-way, restrictions and other similar
charges and encumbrances not interfering with the ordinary conduct of the
business of the Company and its Subsidiaries or detracting from the value
of the assets of the Company and its Subsidiaries; and
-31-
(vii) security interests in the assets of the Company and its
Subsidiaries granted to the Company's and its Subsidiaries' lenders to
secure Indebtedness permitted under Section 6C above.
"Permitted Securities Plan" has the meaning set forth with respect
-------------------------
thereto in Section 6C(xix).
"Person" means an individual, a partnership, a corporation, a limited
------
liability company, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization and a governmental entity or any
department, agency or political subdivision thereof.
"Preferred Units" means the Preferred Units of the Company, having the
---------------
rights and preferences set forth with respect thereto in the LLC Agreement.
Pursuant to the terms of the LLC Agreement, Preferred Units issued prior to the
date hereof are referred to as "Series A Preferred Units," and Preferred Units
------------------------
issued contemporaneously with the date hereof are referred to as "Series B
--------
Preferred Units."
---------------
"Preferred Yield" has the meaning ascribed to such term in the LLC
---------------
Agreement.
"Prior Agreement" has the meaning set forth with respect thereto in
---------------
the preamble.
"Prior Preferred Units" has the meaning set forth with respect thereto
---------------------
in Section 1A.
"Prior Purchasers" has the meaning set forth with respect thereto in
----------------
the preamble.
"Prospectus" means the Company's Final Prospectus dated October 14,
----------
1999, covering its offer to exchange all outstanding 14% Senior Discount Notes
due 2009 for 14% Series B Senior Discount Notes due 2009, which was filed with
the Securities and Exchange Commission in connection with the Registration
Statement (together with the supplements to such Final Prospectus which were
filed with the Securities and Exchange Commission on October 28, 1999, and
November 12, 1999).
"Public Offering" means any underwritten sale of the Company's common
---------------
stock pursuant to an effective registration statement under the Securities Act
filed with the Securities and Exchange Commission on Form S-1 (or a successor
form adopted by the Securities and Exchange Commission); provided that the
following shall not be considered a Public Offering: (i) any issuance of common
stock as consideration for a merger or acquisition, and (ii) any issuance of
common stock or rights to acquire common stock to existing securityholders or to
employees of the Company or its Subsidiaries on Form S-4 or Form S-8 (or any
successor forms adopted by the Securities and Exchange Commission) or otherwise.
"Purchaser" and "Purchasers" have the meanings set forth with respect
--------- ----------
thereto in the preamble.
-32-
"Purchaser Securities" means (i) the Preferred Units issued to the
--------------------
Purchasers hereunder (including under any predecessor agreement hereto), (ii)
any Common Units issued or issuable upon conversion of the Preferred Units
referred to in paragraph (i), and (iii) any securities issued directly or
indirectly with respect to any of the foregoing securities by way of a stock
split, stock dividend, or other division of securities, or in connection with a
combination of securities, recapitalization, merger, consolidation, or other
reorganization; provided that Purchaser Securities shall not include any Senior
--------
Units. As to any particular securities constituting Purchaser Securities, such
securities shall cease to be Purchaser Securities when they have been (a)
effectively registered under the Securities Act and disposed of in accordance
with the registration statement covering them, (b) distributed to the public
through a broker, dealer or market maker pursuant to Rule 144 under the
Securities Act (or any similar provision then in force), or (c) repurchased or
otherwise acquired by the Company (or its assignee) or forfeited pursuant to the
terms of the Performance Vesting Agreement. Any reference herein to a "majority
of the Purchaser Securities" or the "number of Purchaser Securities" for
purposes of comparison shall refer, with respect to any particular Purchaser
Securities, to the number of Common Units (or equivalent common equity
securities of the Company) then represented by such Purchaser Securities (on a
fully diluted, as-if-converted basis).
"Qualified Holder" has the meaning set forth with respect thereto in
----------------
Section 6A.
"Qualified Public Offering" means a Public Offering where both
------------------------- ----
(i) the proceeds (net of underwriting discounts and commissions)
received by the Company in exchange for its issuance of shares of common
stock in such Public Offering equal or exceed $60 million, and
---
(ii) the price per share of common stock paid to the Company in such
Public Offering equals or exceeds the product of (x) 3.0 times (y) the
-----
quotient of (A) the aggregate capital contributions (including the initial
purchase price and all subsequent contributions) made on or prior to the
date of such Public Offering with respect to all Purchaser Securities then
outstanding which are derived from the Series A Preferred Units, divided by
(B) the number of shares of the Company's common stock represented by all
Purchaser Securities (on a fully diluted, as-if-converted basis)
outstanding immediately prior to the consummation of such Public Offering
which are derived from the Series A Preferred Units.
"Registration Agreement" has the meaning set forth with respect
----------------------
thereto in Section 2D.
"Registration Statement" means the Company's Registration Statement on
----------------------
Form S-4 filed under the Securities Act of 1933, covering its offer to exchange
all outstanding 14% Senior Discount Notes due 2009 for 14% Series B Senior
Discount Notes due 2009, which was declared effective by the Securities and
Exchange Commission on October 14, 1999 (together with the post-effective
supplements thereto filed with the Securities and Exchange Commission on October
28, 1999, and November 12, 1999).
-33-
"Repurchase Notice" has the meaning set forth with respect thereto in
-----------------
Section 7A(ii).
"Repurchase Price" has the meaning set forth with respect thereto in
----------------
Section 7C.
"Restricted Securities" means (i) the Preferred Units issued hereunder
---------------------
(including under any predecessor agreement hereto), (ii) the Common Units issued
upon conversion of the Preferred Units, and (iii) any securities issued with
respect to the securities referred to in clauses (i) or (ii) above by way of a
stock dividend or stock split or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization. As to any
particular Restricted Securities, such securities shall cease to be Restricted
Securities when they have (a) been effectively registered under the Securities
Act and disposed of in accordance with the registration statement covering them,
(b) become eligible for sale pursuant to Rule 144 (or any similar provision then
in force) under the Securities Act or (c) been otherwise transferred and new
certificates for them not bearing the Securities Act legend set forth in
paragraph 5C have been delivered by the Company in accordance with paragraph 8B.
Whenever any particular securities cease to be Restricted Securities, the holder
thereof shall be entitled to receive from the Company, without expense, new
securities of like tenor not bearing a Securities Act legend of the character
set forth in paragraph 5C.
"Sale of the Company" means the arm's length sale of the Company to a
-------------------
third party or group of third parties acting in concert, pursuant to which such
party or parties acquire (i) equity securities of the Company possessing the
voting power under normal circumstances to control the Company, or (ii) all or
substantially all of the Company's assets determined on a consolidated basis (in
either case, whether by merger, consolidation, sale or transfer of the Company's
equity securities, or sale or transfer of the Company's consolidated assets).
"SCI" has the meaning set forth with respect thereto in the preamble.
---
"Securities Act" means the Securities Act of 1933, as amended, or any
--------------
similar federal law then in force.
"Securities and Exchange Commission" means the United States
----------------------------------
Securities and Exchange Commission and includes any governmental body or agency
succeeding to the functions thereof.
"Securities Exchange Act" means the Securities Exchange Act of 1934,
-----------------------
as amended, or any similar federal law then in force.
"Securityholders Agreement" has the meaning set forth with respect
-------------------------
thereto in Section 2C.
"Senior Units" means the Company's Class A Senior Units and Class B
------------
Senior Units.
-34-
"Subsidiary" means, with respect to any Person, any corporation,
----------
limited liability company, partnership, association or other business entity of
which (i) if a corporation, a majority of the total voting power of shares of
stock entitled (without regard to the occurrence of any contingency) to vote in
the election of directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by that Person or one or more of the other
Subsidiaries of that Person or a combination thereof, or (ii) if a limited
liability company, partnership, association or other business entity, a majority
of the partnership or other similar ownership interest thereof is at the time
owned or controlled, directly or indirectly, by any Person or one or more
Subsidiaries of that Person or a combination thereof. For purposes hereof, a
Person or Persons shall be deemed to have a majority ownership interest in a
limited liability company, partnership, association or other business entity if
such Person or Persons shall be allocated a majority of limited liability
company, partnership, association or other business entity gains or losses or
shall be or control any managing director, manager or general partner of such
limited liability company, partnership, association or other business entity.
For purposes of this Agreement, if the context does not otherwise indicate in
respect of which Person the term "Subsidiary" is used, the term "Subsidiary"
---------- ----------
shall refer to any Subsidiary of the Company.
"Un-Performance-Vested Securities" means any Executive Securities
--------------------------------
which are subject to performance vesting, but have not yet performance vested,
pursuant to the provisions of the Performance Vesting Agreement.
"Wholly Owned Subsidiary" means, with respect to any Person, a
-----------------------
Subsidiary of which all of the outstanding capital stock or other ownership
interests (other than director shares) are owned by such Person or another
Wholly Owned Subsidiary of such Person. For purposes of this Agreement, if the
context does not otherwise indicate in respect of which Person the term "Wholly
------
Owned Subsidiary" is used, the term "Wholly Owned Subsidiary" shall refer to any
---------------- -----------------------
Wholly Owned Subsidiary of the Company. Notwithstanding the foregoing, CompleTel
Holdings LLC will for purposes of this definition be considered a Wholly Owned
Subsidiary of the Company so long as the Company owns not less than 94.0% of the
outstanding common equity securities of CompleTel Holdings LLC.
9B. Knowledge. As used in Section 4, the terms "knowledge" or "aware"
---------
in respect of the Company shall mean and include (i) the actual knowledge or
awareness of Dovey, Pearson, Clevenger, and Lacey, and (ii) with respect to each
of the Persons identified in clause (i) above, the knowledge or awareness which
a prudent business person would have obtained in the conduct of his business
after making reasonable inquiry and reasonable diligence with respect to the
particular matter in question.
Section 10. Miscellaneous Provisions.
------------------------
10A. Expenses. The Company shall pay, and hold each of the Investors
--------
harmless against liability for the payment of, the reasonable out-of-pocket
expenses of the Investors, including the reasonable fees and expenses of
counsel, arising in connection with (i) the performance of due
-35-
diligence investigations concerning the Company and its operations and
management, the negotiation and execution of this Agreement, the LLC Agreement,
and the other agreements contemplated hereby, and the consummation of the
transactions to occur at the Closing as contemplated hereby, (ii) any amendments
or waivers (whether or not the same become effective) under or in respect of
this Agreement, the LLC Agreement, or any of the other agreements contemplated
hereby, (iii) the enforcement of the rights granted under this Agreement, the
LLC Agreement, or any of the other agreements contemplated hereby, (iv) any
filing with any governmental agency with respect to such Investor's investment
in the Company or any other filing with any governmental agency with respect to
the Company or any of its Subsidiaries which mentions such Investor, and (v)
stamp and other taxes which may be payable in respect of the execution and
delivery of this Agreement or the issuance, delivery or acquisition of any
Preferred Units or any Common Units issuable upon conversion of any Preferred
▇▇▇▇▇.
▇▇▇. Remedies. Each holder of Purchaser Securities shall have all
--------
rights and remedies set forth in this Agreement and the LLC Agreement and all
rights and remedies which such holders have been granted at any time under any
other agreement or contract and all of the rights which such holders have under
any law or at equity. Any Person having any rights under any provision of this
Agreement shall be entitled to enforce (upon demonstration of irreparable harm)
such rights specifically (without posting a bond or other security), to recover
damages by reason of any breach of any provision of this Agreement, and to
exercise all other rights granted by law.
10C. Consent to Amendments. Except as otherwise expressly provided
---------------------
herein, the provisions of this Agreement may be amended, modified, or waived,
and the Company may take any action herein prohibited, or omit to perform any
act herein required to be performed by it, only if the Company has obtained the
prior written consent of the holders of a majority of the Purchaser Securities
outstanding at the time such amendment or waiver becomes effective; provided
--------
that if any such amendment, modification or waiver would adversely affect any
holder of Purchaser Securities relative to the holders of Purchaser Securities
voting in favor of such amendment, modification, or waiver, such amendment,
modification or waiver shall also require the written consent of the holders of
a majority of the Purchaser Securities held by all holders so adversely
affected; and provided further that if any such amendment, modification or
--------------------
waiver would adversely affect the holders of Executive Securities relative to
the holders of Purchaser Securities voting in favor of such amendment,
modification, or waiver, such amendment, modification or waiver shall also
require the written consent of the holders of a majority of the Executive
Securities held by all holders so adversely affected; and provided further that
--------------------
if any such amendment, modification or waiver is to a provision in this
Agreement that requires a specific vote to take an action thereunder or to take
an action with respect to the matters described therein, such amendment,
modification or waiver shall not be effective unless such vote is obtained with
respect to such amendment, modification or waiver. No course of dealing between
the Company and any holder of Purchaser Securities or any delay by such holder
in exercising any rights hereunder or under the LLC Agreement shall operate as a
waiver of any rights of such holder.
-36-
10D. Survival of Representations and Warranties. All representations
------------------------------------------
and warranties contained herein or made in writing by any party in connection
herewith (including the representations and warranties made by the Company to
the Prior Purchasers under the First Amended Agreement, which expressly survive
the execution of this Agreement pursuant to Section 4 hereof) shall survive the
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby, regardless of any investigation made by any
Purchaser or on its behalf.
10E. Successors and Assigns. Except as otherwise expressly provided
----------------------
herein, all covenants and agreements contained in this Agreement by or on behalf
of any of the parties hereto shall bind and inure to the benefit of the
respective successors and assigns of the parties hereto whether so expressed or
not. In addition, and whether or not any express assignment has been made, the
provisions of this Agreement which are for any Purchaser's benefit as a
Purchaser or holder of Purchaser Securities are also for the benefit of, and
enforceable by, any subsequent holder of such Purchaser Securities.
10F. Severability. Whenever possible, each provision of this
------------
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law, such provision shall be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of this Agreement.
10G. Counterparts. This Agreement may be executed simultaneously in
------------
two or more counterparts, any one of which need not contain the signatures of
more than one party, but all which counterparts taken together shall constitute
one and the same Agreement.
10H. Descriptive Headings; Interpretation; No Strict Construction.
------------------------------------------------------------
The descriptive headings of this Agreement are inserted for convenience only and
do not constitute a substantive part of this Agreement. Whenever required by the
context, any pronoun used in this Agreement shall include the corresponding
masculine, feminine or neuter forms, and the singular forms of nouns, pronouns,
and verbs shall include the plural and vice versa. Reference to any agreement,
document, or instrument means such agreement, document, or instrument as amended
or otherwise modified from time to time in accordance with the terms thereof,
and if applicable hereof. The use of the words "include" or "including" in this
Agreement shall be by way of example rather than by limitation. The use of the
words "or," "either" or "any" shall not be exclusive. The parties hereto have
participated jointly in the negotiation and drafting of this Agreement. If an
ambiguity or question of intent or interpretation arises, this Agreement shall
be construed as if drafted jointly by the parties hereto, and no presumption or
burden of proof shall arise favoring or disfavoring any party by virtue of the
authorship of any of the provisions of this Agreement. The parties agree that
prior drafts of this Agreement shall be deemed not to provide any evidence as to
the meaning of any provision hereof or the intent of the parties hereto with
respect hereto.
10I. Governing Law. All issues and questions concerning the
-------------
construction, validity, enforcement and interpretation of this Agreement and the
exhibits and schedules
-37-
hereto shall be governed by, and construed in accordance with, the laws of the
State of Delaware, without giving effect to any choice of law or conflict of law
rules or provisions (whether of the State of Delaware or any other jurisdiction)
that would cause the application of the laws of any jurisdiction other than the
State of Delaware. In furtherance of the foregoing, the internal law of the
State of Delaware shall control the interpretation and construction of this
Agreement (and all schedules and exhibits hereto), even though under that
jurisdiction's choice of law or conflict of law analysis, the substantive law of
some other jurisdiction would ordinarily apply.
10J. Notices. All notices, demands or other communications to be
-------
given or delivered under or by reason of the provisions of this Agreement shall
be in writing and shall be deemed to have been given when (a) delivered
personally to the recipient, (b) telecopied to the recipient (with hard copy
sent to the recipient by reputable overnight courier service (charges prepaid)
that same day) if telecopied before 5:00 p.m. Chicago, Illinois time on a
business day, and otherwise on the next business day, or (c) one business day
after being sent to the recipient by reputable overnight courier service
(charges prepaid). Such notices, demands and other communications shall be sent
to the following Persons at the following addresses:
To MDCP:
-------
Three First ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
▇▇▇▇▇ ▇. ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy (which shall not constitute notice) to:
--------------------------------------------------
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
-38-
To ▇▇▇▇▇▇▇▇ Holdings:
--------------------
c/o LPL Investment Group Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy (which shall not constitute notice) to:
--------------------------------------------------
Winthrop, Stimson, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
To Meritage:
-----------
Meritage Private Equity Fund, L.P.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy (which shall not constitute notice) to:
--------------------------------------------------
Holme ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: W. ▇▇▇▇ ▇▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
-39-
To the Company:
--------------
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Executive Officer
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address or to the attention of such other person as the
recipient party has specified by prior written notice to the sending party.
10K. Business Days. If any time period for giving notice or taking
-------------
action hereunder expires on a day which is a Saturday, Sunday, or legal holiday
in the State of Colorado, the Republic of France or the jurisdiction in which
the Company's principal office is located, the time period shall automatically
be extended to the business day immediately following such Saturday, Sunday, or
legal holiday.
10L. Delivery by Facsimile. This Agreement, the agreements referred
---------------------
to herein, and each other agreement or instrument entered into in connection
herewith or therewith or contemplated hereby or thereby, and any amendments
hereto or thereto, to the extent signed and delivered by means of a facsimile
machine, shall be treated in all manner and respects as an original agreement or
instrument and shall be considered to have the same binding legal effect as if
it were the original signed version thereof delivered in person. At the request
of any party hereto or to any such agreement or instrument, each other party
hereto or thereto shall reexecute original forms thereof and deliver them to all
other parties. No party hereto or to any such agreement or instrument shall
raise the use of a facsimile machine to deliver a signature or the fact that any
signature or agreement or instrument was transmitted or communicated through the
use of a facsimile machine as a defense to the formation or enforceability of a
contract and each such party forever waives any such defense.
10M. Effectiveness of Agreement. This Agreement shall be valid,
--------------------------
binding, and effective against each Purchaser when it has been signed by such
Purchaser. Pursuant to Section 10C of the First Amended Agreement, this
Agreement amending and restating the First Amended
-40-
Agreement shall be valid, binding, and effective against all Purchasers when it
has been signed by the holders of a majority of the Purchaser Securities.
10N. Waiver of Prior Preemptive Rights. As a material inducement to
---------------------------------
the Company and the Participating Purchasers to enter into this Agreement and
consummate the transactions contemplated hereby, and as a precondition thereto,
each of the parties hereto accepts, acknowledges, and agrees that, upon
execution of this Agreement as set forth in Section 10M, each of the parties
hereto and beneficiaries hereof will be deemed to have waived any and all
preemptive rights, rights of first refusal, or similar rights which any such
Person may have arising under any agreement or otherwise (including, without
limitation, any preemptive rights under Section 6J of the First Amended
Agreement) with respect to the issuance of the Incremental Preferred Units at
the Closing. Nothing herein shall in any way be construed to waive any rights of
the parties hereto other than those set forth in the immediately preceding
sentence, nor to waive any preemptive rights, rights of first refusal, or
similar rights which any Person may possess with respect to any issuance of
securities other than the issuance of the Incremental Preferred Units at the
Closing.
* * * * *
-41-
IN WITNESS WHEREOF, the parties hereto have executed this Second
Amended and Restated Equity Purchase Agreement as of the date first above
written.
COMPANY:
--------
COMPLETEL LLC
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇, its Chairman and CEO
INVESTORS:
----------
▇▇▇▇▇▇▇▇ HOLDINGS LIMITED PARTNERSHIP
By LPL Investment Group, Inc., its general partner
By /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------------------------------
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, its Chairman
MADISON DEARBORN CAPITAL PARTNERS II, L.P.
By Madison Dearborn Partners II, L.P., its general
partner
By Madison Dearborn Partners, Inc., its general partner
By /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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Its Managing Director
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MERITAGE PRIVATE EQUITY FUND, L.P.
By Meritage Investment Partners, LLC, its general
partner
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Managing Member
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
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▇▇▇▇▇ ▇. ▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇▇
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇
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▇▇▇▇ ▇. ▇▇▇▇▇
EXECUTIVES:
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DOVEY FAMILY PARTNERS LLLP
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
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▇▇▇▇▇ ▇. ▇▇▇▇▇, its general partner
DOVEY COMPANY LLC
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
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▇▇▇▇▇ ▇. ▇▇▇▇▇, its manager
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
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▇▇▇▇▇ ▇. ▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
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▇▇▇▇▇ ▇. ▇▇▇▇▇
HAJ LLC
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, its manager
▇▇▇▇▇▇▇▇▇ COMPANY LLC
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, its manager
ADDITIONAL INVESTORS:
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/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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▇▇▇▇▇ ▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
NORTHWESTERN UNIVERSITY
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Its Vice President and CIO
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SILVER CROSS INVESTORS LLC
By /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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Its Manager
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SCHEDULE OF PRIOR PURCHASERS
----------------------------
This chart describes (i) the Prior Preferred Units purchased prior to the date
hereof that are held by the Prior Purchasers immediately prior to giving effect
to this Agreement, and (ii) the total capital contributions made by the Prior
Purchasers with respect to the Prior Preferred Units prior to the date hereof.
Number of Series A Total Capital
Preferred Units Held Contributions with
(immediately prior to respect to Prior
giving effect to this Preferred Units prior
Prior Purchaser Agreement) to date hereof
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MDCP 45,005 $45,005,000
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▇▇▇▇▇▇▇▇ Holdings 18,563 $18,563,000
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▇▇▇▇▇ 500 $ 500,000
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Holland 500 $ 500,000
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▇▇▇▇ 100 $ 100,000
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▇▇▇▇▇ 75 $ 75,000
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Dovey LLC 530 $ 530,000
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Pearson 53 $ 53,000
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▇▇▇▇▇▇▇▇▇ LLC 371 $ 371,000
------------------------------------------------------------------------
Lacey 53 $ 53,000
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TOTAL 65,750 $65,750,000
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SCHEDULE OF PURCHASERS
----------------------
This chart describes (i) the Prior Preferred Units purchased prior to the date
hereof that are held by the Purchasers immediately prior to giving effect to
this Agreement, (ii) the Incremental Preferred Units to be purchased at the
Closing, (iii) the Incremental Purchase Price to be paid by the Participating
Purchasers at the Closing, and (iv) the Purchasers' total capital contributions
for the Prior Preferred Units and the Incremental Preferred Units.
====================================================================================================================
Total capital Incremental
contributions Purchase Total
made prior to Price to be Number of Total capital
the Closing paid at Preferred contributions
Number of with respect Number of Closing for Units (afterwith respect
Prior to Prior Incremental Incremental giving to all
Preferred Preferred Preferred Preferred effect to Preferred
Purchaser Units held Units Units Units Closing) Units
====================================================================================================================
MDCP 45,005 $45,005,000 8,712.91 $20,039,700 53,717.91 $ 65,044,700
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▇▇▇▇▇▇▇▇ Holdings 18,563 $18,563,000 3,625 $ 8,337,500 22,188 $ 26,900,500
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Meritage Private Equity 4,575 $10,522,500 4,575 $ 10,522,500
Fund, L.P.
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Meritage Private Equity 559 $ 1,285,700 559 $ 1,285,700
Parallel Fund, L.P.
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Meritage Entrepreneurs 83 $ 190,900 83 $ 190,900
Fund, L.P.
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▇▇▇▇▇ 500 $ 500,000 98 $ 225,400 598 $ 725,400
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Holland 500 $ 500,000 98 $ 225,400 598 $ 725,400
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▇▇▇▇ 100 $ 100,000 20 $ 46,000 120 $ 146,000
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▇▇▇▇▇ 75 $ 75,000 15 $ 34,500 90 $ 109,500
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Karafiol 21.74 $ 50,000 21.74 $ 50,000
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▇▇▇▇▇▇ 21.74 $ 50,000 21.74 $ 50,000
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Northwestern 10.87 $ 25,000 10.87 $ 25,000
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SCI 21.74 $ 50,000 21.74 $ 50,000
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Dovey LLC 530 $ 530,000 210 $ 483,000 740 $ 1,013,000
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Pearson 53 $ 53,000 53 $ 53,000
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Pearson LLC #2 87 $ 200,100 87 $ 200,100
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▇▇▇▇▇▇▇▇▇ LLC 371 $ 371,000 74 $ 170,200 445 $ 541,200
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Lacey 53 $ 53,000 87 $ 200,100 140 $ 253,100
----- ------------ ----- ------------ ----- --------------
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TOTAL 65,750 $65,750,000 18,320 $42,136,000 84,070 $107,886,000
====================================================================================================================