EXHIBIT 10.4
CYPRESS COMMUNICATIONS, INC.
THIRD AMENDED AND RESTATED
STOCKHOLDERS AGREEMENT
Dated effective as of
October 8, 1999
TABLE OF CONTENTS
ARTICLE I CERTAIN DEFINITIONS............................................... 1
ARTICLE II REGISTRATION RIGHTS.............................................. 5
2.1 Demand Registrations.............................................. 5
2.2 Piggyback Registrations........................................... 7
2.3 Expenses of Registration.......................................... 8
2.4 Registration Procedures........................................... 8
2.5 Indemnification................................................... 9
2.6 Other Obligations................................................. 12
2.7 Certain Information............................................... 12
2.8 Termination of Registration Rights................................ 12
ARTICLE III RESTRICTIONS ON TRANSFER........................................ 13
3.1 Transfer of Shares of Common Stock................................ 13
3.2 Rights of First Refusal - Founding Stock.......................... 13
3.3 Right of First Offer - Investor Stock............................. 14
3.4 Participation Rights.............................................. 15
3.5 Exempt Transactions............................................... 15
3.6 Management Holder Put Rights...................................... 16
ARTICLE IV SUBSEQUENT OFFERINGS............................................. 17
4.1 Right of First Refusal............................................ 17
4.2 Notice of Election................................................ 18
4.3 Participation..................................................... 18
ARTICLE V COVENANTS OF THE COMPANY.......................................... 19
5.1 Basic Financial Information....................................... 19
5.2 Additional Information Rights..................................... 19
5.3 Prompt Payment of Taxes, Etc...................................... 20
5.4 Maintenance of Properties and Leases.............................. 21
5.5 Insurance......................................................... 21
5.6 Accounts and Records.............................................. 21
5.7 Independent Accountants........................................... 21
5.8 Compliance with Laws.............................................. 21
5.9 Maintenance of Corporate Existence, Etc........................... 21
ARTICLE VI CORPORATE GOVERNANCE............................................. 22
6.1 Board of Directors................................................ 22
6.2 Meetings of the Board............................................. 23
6.3 Committees........................................................ 23
6.4 Reimbursement of Expenses......................................... 24
6.5 Observation Rights................................................ 24
ARTICLE VII MISCELLANEOUS................................................... 24
7.1 Governing Law..................................................... 24
7.2 Successors and Assigns............................................ 24
7.3 Entire Agreement: Amendment and Waiver............................ 24
7.4 Notices, Etc...................................................... 25
7.5 Delays or Omissions............................................... 25
7.6 Severability...................................................... 25
7.7 Counterparts...................................................... 26
7.8 Termination....................................................... 26
7.9 Specific Enforcement.............................................. 26
THIRD AMENDED AND RESTATED
STOCKHOLDERS AGREEMENT
This Third Amended and Restated Stockholders Agreement (this "Agreement")
dated effective as of October 8, 1999, is by and among CYPRESS COMMUNICATIONS,
INC., a Delaware corporation (the "Company"), CENTENNIAL FUND V, L.P., a
Delaware limited partnership ("Centennial"), CENTENNIAL ENTREPRENEURS FUND V,
L.P., a Delaware limited partnership ("Entrepreneurs Fund"), ALTA COMMUNICATIONS
VI, L.P., a Delaware limited partnership ("Alta"), ALTA-COMM S BY S, LLC, a
Massachusetts limited liability company ("Alta-Comm"), BUILDING COMMUNICATIONS
LLC, a Delaware limited liability company ("Building Communications"), TENANT
COMMUNICATIONS, INC., a Massachusetts corporation ("Tenant Communications"),
INVESTOR COMMUNICATIONS, LLC, a Delaware limited liability company ("ICL"), NAS
PARTNERS L.L.C., a Delaware limited liability company ("NAS"), NASSAU CAPITAL
PARTNERS III, L.P., a Delaware limited partnership ("Nassau"), TRANSWESTERN
COMMERCIAL SERVICES, L.L.C., a Delaware limited liability company
("Transwestern"), GRAMMERCY CYPRESS LLC, a Delaware limited liability company
("Grammercy"), CYCOM INVESTMENT, L.L.C., a Delaware limited liability company
("Cycom"), AEW PARTNERS III, L.P., a Delaware limited partnership ("AEW") (NAS,
Nassau, Transwestern, Grammercy, Cycom and AEW are collectively referred to
herein as the "New Investors"), and the founding and other stockholders of the
Company (the "Founding Stockholders") identified on the signature pages hereto
or that have otherwise agreed to be bound by the provisions hereof. Centennial,
Entrepreneurs Fund, Alta, Alta-Comm, Building Communications, Tenant
Communications, ICL, NAS, Nassau, Transwestern, Grammercy, Cycom, and AEW are
collectively referred to herein as the "Investors." The Investors and the
Founding Stockholders are referred to collectively herein as the "Stockholders."
Certain of the Stockholders and the Company entered into a Second Amended
and Restated Stockholders Agreement, dated as of September 30, 1998, as amended
(the "Prior Agreement"). In connection with the sale of the Company's Series C
Preferred Stock and Series C-1 Preferred Stock pursuant to the terms of the
Series C Preferred and Series C-1 Preferred Stock Purchase Agreement of even
date herewith (together with the Exhibits and Schedules attached thereto, the
"Series C and Series C-1 Purchase Agreement"), the Company and each of the
Founders and the Investors desire to enter into this Agreement to replace the
Prior Agreement.
NOW, THEREFORE, in consideration of the mutual promises and covenants set
forth herein, the parties hereto agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
As used in this Agreement, the following terms shall have the following
respective meanings:
1.1 "Affiliate" shall mean affiliate as defined in Rule 12b-2 of the
regulations promulgated under the Exchange Act.
1.2 "Cause" shall mean a Management Holder's refusal or failure to
perform his obligations under this Agreement; acts or omissions by such
Management Holder constituting gross neglect or dereliction of duties with
respect to the Company; fraud; dishonesty in connection with any dealings with
the Board of Directors of the Company; dishonesty that is materially injurious
to the Company or any Investor; a felony; or willful or repeated failure to
follow the reasonable instructions of the Board of Directors of the Company.
1.3 "Commission" shall mean the Securities and Exchange Commission or
any other federal agency at the time administering the Securities Act.
1.4 "Common Stock" shall mean the Company's Common Stock, $.001 par
value per share.
1.5 "Exchange Act" shall mean the Securities Exchange Act of 1934 (or
any similar successor federal statute), as amended, and the rules and
regulations thereunder, all as the same shall be in effect from time to time.
1.6 "Founding Stock" shall mean (i) shares of Common Stock, including
Reserved Employee Stock, that are owned by any Founding Stockholder or any
Permitted Transferee thereof, (ii) shares of Common Stock issued or issuable
upon the conversion or exercise of any stock, warrants, options or other
securities of the Company owned by any Founding Stockholder or any Permitted
Transferee; and (iii) shares of Common Stock issued as a dividend or other
distribution with respect to or in exchange for or in replacement of the shares
referenced in (i) and (ii) above; provided, however, that "Founding Stock" shall
not include shares of Common Stock issued or issuable upon the conversion or
exercise of Senior Preferred Stock or Common Stock issued as a dividend or other
distribution with respect to or in exchange for Senior Preferred Stock.
1.7 "Fully Diluted Basis" shall mean, when used with reference to Common
Stock, at any date as of which the number of shares thereof is to be determined,
all shares of Common Stock outstanding at such date and all shares of Common
Stock issuable in respect of the conversion of any stock, including any Senior
Preferred Stock or securities convertible into shares of Common Stock
outstanding on such date which would be deemed outstanding in accordance with
GAAP for purposes of determining net income per share.
1.8 "Initiating Holders" shall mean (i) collectively, Centennial and
Entrepreneurs Fund and their transferees permitted under this Agreement, (ii)
collectively, Alta and Alta-Comm and their transferees permitted under this
Agreement, (iii) collectively, Building Communications, Tenant Communications
and ICL, (iv) collectively, NAS and Nassau, and their transferees permitted
under this Agreement, (v) collectively, Grammercy and its transferees permitted
under this Agreement, (vi) collectively, AEW and its transferees permitted under
this Agreement, (vii) collectively, Cycom and its transferees permitted under
this Agreement, (viii) collectively, Transwestern and its transferees permitted
under this Agreement, (ix) collectively, upon their purchase of Series C
Preferred Stock and their execution of this Agreement, the REIT
Investors and their transferees permitted under this Agreement, and (x)
collectively, Founding Stockholders holding Registrable Securities representing
not less than sixty-five percent (65%) of the then-outstanding Founding Stock
(excluding any outstanding Reserved Employee Stock).
1.9 "Investor Stock" shall mean (i) shares of Common Stock owned by any
Investor or any transferee thereof; (ii) Common Stock issued or issuable upon
the conversion or exercise of any stock (including, without limitation, the
Senior Preferred Stock), warrants, options or other securities of the Company
owned by any Investor, (iii) shares of Common Stock issued or issuable upon the
conversion or exercise of the Senior Preferred Stock owned by any Founding
Stockholder or any Permitted Transferee thereof, and (iv) any shares of Common
Stock issued as a dividend or other distribution with respect to or in exchange
for or in replacement of the shares referenced in (i), (ii) and (iii) above.
1.10 "Liquidation" shall mean any liquidation, dissolution, or winding up
of an entity, and shall also include a sale, lease, or other disposition of all
or substantially all of the assets of such entity.
1.11 "Management Holders" means R. ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇.,
▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇ and such other persons as may be
designated hereunder from time to time by the Board of Directors of the Company
as Management Holders.
1.12 "Permitted Transferee" shall mean (i) with respect to a Founding
Stockholder who is an individual, a member of such Founding Stockholder's
immediate family, a trust established for the benefit of the Founding
Stockholder or members of such Founding Stockholder's immediate family, or a
transferee of such Founding Stockholder by will or the laws of intestate
succession, (ii) with respect to an Investor, any other person, entity or
investment fund controlling, controlled by or under common control with the
Investor and any partner of an Investor which is a partnership or any member of
an Investor which is a limited liability company, in a transfer upon liquidation
or partial liquidation or pro rata in-kind distribution, and (iii) the Company
with respect to a redemption under Section 3 of the Certificate of Incorporation
of the Company.
1.13 "Public Sale" shall mean any sale of Common Stock to the public
pursuant to an offering registered under the Securities Act or to the public
through a broker dealer or market maker pursuant to the provisions of Rule 144
(other than the provisions of Rule 144(k)).
1.14 "Qualified Holder" shall mean any Investor that holds 5% or more of
the outstanding shares of Common Stock, determined on a Fully Diluted Basis.
1.15 "Qualified Public Offering" shall mean a public offering of the Common
Stock of the Company in which (i) the per share price to the public is at least
$38.00 per share (as adjusted for stock splits, recapitalization, and the like),
(ii) the gross cash proceeds to the Company (before underwriting discounts,
commissions and fees) are at least $50,000,000, and (iii) the Company uses a
nationally recognized underwriter.
1.16 "Registrable Securities" shall mean the Investor Stock and Founding
Stock; provided, however, that Registrable Securities shall not include any
shares of Investor
Stock or Founding Stock that have previously been registered and sold under the
Securities Act or that have otherwise been sold to the public in an open-market
transaction under Rule 144. For purposes of this Agreement, a person will be
deemed to be a holder of Registrable Securities whenever such person has the
right to acquire such Registrable Securities (upon conversion or exercise in
connection with a transfer of securities or otherwise, but disregarding any
restrictions or limitations upon the exercise of such right), whether or not
such acquisition has actually been effected).
1.17 The terms "registers," "registered" and "registration" shall refer to
a registration effected by preparing and filing a registration statement in
compliance with the Securities Act and the declaration or ordering of the
effectiveness of such registration statement by the Commission.
1.18 "Registration Expenses" shall mean all expenses incurred in effecting
any registration pursuant to this Agreement, including without limitation all
registration, qualification and filing fees, printing expenses, escrow fees,
fees and disbursements of counsel for the Company, blue sky fees and expenses,
expenses of any regular or special audits incident to or required by any such
registration, and the reasonable fees and expenses of one counsel for the
selling holders of Registrable Securities, but excluding Selling Expenses.
1.19 "REIT Investors" means, upon their purchase of shares of Series C
Preferred Stock and their execution of this Agreement, Boston Properties, Inc.,
Cornerstone Properties Limited Partnership, and Shorenstein Company, L.P., or
their respective affiliates.
1.20 "Reserved Employee Stock" means up to 2,000,000 shares of Common Stock
issued or issuable to employees, directors or consultants of the Company and its
Subsidiaries as determined by the Company's Board of Directors with vesting and
buy-back restrictions approved by the Board of Directors.
1.21 "Rule 144" shall mean Rule 144 as promulgated by the Commission under
the Securities Act, as such Rule may be amended from time to time, or any
similar successor rule that may be promulgated by the Commission.
1.22 "Securities Act" shall mean the Securities Act of 1933 (or any similar
successor federal statute), as amended, and the rules and regulations
thereunder, all as the same shall be in effect from time to time.
1.23 "Selling Expenses" shall mean all underwriting discounts and selling
commissions applicable to the sale of Registrable Securities.
1.24 "Senior Preferred" shall mean the Series A Preferred Stock, the Series
B Preferred Stock, the Series B-1 Preferred Stock, the Series C Preferred Stock,
and the Series C-1 Preferred Stock.
1.25 "Series A Preferred Stock" shall mean the Company's Series A Preferred
Stock, $.001 par value per share.
1.26 "Series B Preferred Stock" shall mean the Company's Series B Preferred
Stock, $.001 par value per share.
1.27 "Series B-1 Preferred Stock" shall mean the Company's Series B-1
Preferred Stock, $.001 par value per share.
1.28 "Series C Preferred Stock" shall mean the Company's Series C Preferred
Stock, $.001 par value per share.
1.29 "Series C-1 Preferred Stock" shall mean the Company's Series C-1
Preferred Stock, $.001 par value per share.
1.30 "Subsidiary" means any corporation of which the shares of outstanding
capital stock possessing the voting power (under ordinary circumstances) to
elect a majority of the board of directors are, at the time as of which any
determination is being made, owned by the Company either directly or indirectly
through Subsidiaries.
ARTICLE II
REGISTRATION RIGHTS
2.1 Demand Registrations.
(a) Request for Registration. At any time or times after the
effective date of the first registration statement filed by the Company under
the Securities Act, each group of Initiating Holders (as described in clauses
(i) through (ix) of Section 1.8, except as otherwise provided herein, may
require that the Company effect one registration under the Securities Act
utilizing a registration on Form S-1 or any similar form (a "Long Form
Registration") and as many times as requested by the Initiating Holders
utilizing a Form S-3 or any similar form, if available (a "Short-Form
Registration") (each a "Demand Registration"). In the case of Transwestern, its
demand registration rights shall be limited to Short-Form Registrations. Upon
receipt of written notice of such demand, the Company will promptly give written
notice of the proposed registration to all other holders of Registrable
Securities and will include in such registration all Registrable Securities
specified in such demand, together with all Registrable Securities of any other
holder of Registrable Securities joining in such demand as are specified in a
written request received by the Company within twenty (20) days after delivery
of the Company's notice.
(b) Deferral of Demand Registration. The Company shall file a
registration statement with respect to each Demand Registration requested
pursuant to Section 2.1(a) as soon as practicable after receipt of the demand of
the Initiating Holders but in any event within sixty (60) days (unless the
demand of the Initiating Holders is received 60 days or less prior to the
Company's fiscal year end or 30 days or less after the Company's fiscal year, in
which case within 90 days of the Company's fiscal year end); provided, however,
that if in the good faith judgment of the Board of Directors of the Company,
such registration would be seriously detrimental to the Company in that such
registration would interfere with a proposed primary registration of securities
by the Company or any other material corporate transaction and the Board of
Directors concludes, as a result, that it is advisable to defer the filing of
such
registration statement at such time (as evidenced by an appropriate resolution
of the Board), then the Company shall have the right to defer such filing for
the period during which such registration would be seriously detrimental;
provided, however, that (i) the Company may not defer the filing for a period of
more than one hundred eighty (180) days after receipt of any demand of the
Initiating Holders, (ii) the Company shall not exercise its right to defer a
Demand Registration more than once, and (iii) if the Company undertakes a
primary registration following an exercise of its deferral right, the holders of
Registrable Securities shall have "piggyback" rights under Section 2.2 hereof
with respect to not less than one-third (1/3) of the number of shares of Common
Stock to be sold in such offering.
(c) Underwriting. If the Initiating Holders intend to distribute the
Registrable Securities covered by a Demand Registration by means of an
underwriting, they shall so advise the Company as a part of their demand made
pursuant to Section 2.1 and the Company shall include such information in its
written notice to holders of Registrable Securities. The Initiating Holders
shall have the right to select the managing underwriter(s) of recognized
national reputation for an underwritten Demand Registration, subject to the
approval of the Company's Board of Directors (which will not be unreasonably
withheld or delayed). The right of any holder of the Registrable Securities to
participate in an underwritten Demand Registration shall be conditioned upon
such holder's participation in such underwriting in accordance with the terms
and conditions thereof, and the Company and such holders will enter into an
underwriting agreement in customary form.
(d) Priorities. The holders of Registrable Securities will have
absolute priority over any other securities included in a Demand Registration.
If other securities are included in any Demand Registration that is not an
underwritten offering, all Registrable Securities included in such offering
shall be sold prior to the sale of any of such other securities. If other
securities are included in any Demand Registration that is an underwritten
offering, and the managing underwriter for such offering advises the Company
that in its opinion the amount of securities to be included exceeds the amount
of securities which can be sold in such offering without adversely affecting the
marketability thereof, the Company will include in such registration all
Registrable Securities requested to be included therein prior to the inclusion
of any other securities. If the number of Registrable Securities requested to be
included in such registration exceeds the amount of securities which in the
opinion of such underwriter can be sold without adversely affecting the
marketability of such offering, such Registrable Securities shall be included
pro rata among the holders thereof based on the percentage of the outstanding
Registrable Securities held by each such Stockholder, or as otherwise agreed
among such Stockholders. Without the consent of the holders of a majority in
interest of the Registrable Securities included in a registration, no securities
other than Registrable Securities shall be covered by such registration if the
inclusion of such other securities would result in a reduction of the number of
Registrable Securities covered by such registration or included in any
underwriting or if, in the opinion of the managing underwriter, the inclusion of
such other securities would materially adversely impact the marketing of such
offering.
(e) Frequency; Duration. The Company shall not be required to effect
a Demand Registration pursuant to this Section 2.1 (i) if it has previously
effected a Demand Registration during the previous six (6) months or (ii) except
with respect to a Short-Form Registration, after the fifth (5th) anniversary of
the effective date of the Company's initial public
offering. A Demand Registration shall not be deemed to have been effected for
purposes of this Section 2.1(e) if the applicable registration statement has not
been declared effective and kept effective until the earlier of one hundred
eight (180) days or until the holders of Registrable Securities included therein
have completed the distribution described in the registration statement relating
thereto.
2.2 Piggyback Registrations.
(a) Request for Inclusion. If the Company shall determine to register
any of its securities for its own account or for the account of other security
holders of the Company on any registration form (other than Form S-4 or S-8)
which permits the inclusion of Registrable Securities (a "Piggyback
Registration"), the Company will promptly give each holder of Registrable
Securities written notice thereof and, subject to Section 2.2(c), shall include
in such registration all the Registrable Securities requested to be included
therein pursuant to the written requests of holders of Registrable Securities
received within twenty (20) days after delivery of the Company's notice.
(b) Underwriting. If the Piggyback Registration relates to an
underwritten public offering, the Company shall so advise the holders of
Registrable Securities as a part of the written notice given pursuant to Section
2.2(a). In such event, the right of any holder of Registrable Securities to
participate in such registration shall be conditioned upon such holder's
participation in such underwriting in accordance with the terms and conditions
thereof. All holders of Registrable Securities proposing to distribute their
securities through such underwriting shall (together with the Company) enter
into an underwriting agreement in customary form with the representative of the
underwriter or underwriters selected by the Company and approved by the
Investors holding at least 25% of the then-outstanding Registrable Securities
(excluding any outstanding Reserved Employee Stock), which approval will not be
unreasonably withheld or delayed.
(c) Priorities. If such proposed Piggyback Registration is an
underwritten offering and the managing underwriter for such offering advises the
Company that the securities requested to be included therein exceeds the amount
of securities that can be sold in such offering, except as provided in Section
2.1(b), any securities to be sold by the Company in such offering shall have
priority over any Registrable Securities, and the number of shares to be
included by a holder of Registrable Securities in such registration shall be
reduced pro rata on the basis of the percentage of the outstanding Registrable
Securities held by such Stockholder and all other holders exercising similar
registration rights, or as otherwise agreed among such holders. Without the
consent of the holders of a majority in interest of the Registrable Securities
included in a registration, and except for securities to be sold by the Company,
no securities other than Registrable Securities shall be covered by such
registration if the inclusion of such other securities would result in a
reduction of the number of Registrable Securities covered by such registration
or included in any underwriting or if, in the opinion of the managing
underwriter, the inclusion of such other securities would materially adversely
impact the marketing of such offering.
2.3 Expenses of Registration.
All Registration Expenses incurred in connection with the Demand
Registrations and Piggyback Registrations shall be borne by the Company. All
Selling Expenses relating to Registrable Securities included in any Demand
Registration or Piggyback Registration shall be borne by the holders of such
securities pro rata on the basis of the number of shares sold by them.
2.4 Registration Procedures.
In the case of each registration effected by the Company pursuant to this
Article II, the Company will keep each holder of Registrable Securities advised
in writing as to the initiation of such registration and as to the completion
thereof. At its expense, the Company will:
(a) use its best efforts to cause such registration to be declared
effective by the Commission and, in the case of a Demand Registration, keep such
registration effective for a period of one hundred eighty (180) days or until
the holders of Registrable Securities included therein have completed the
distribution described in the registration statement relating thereto, whichever
first occurs;
(b) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in connection
with such registration statement (including post-effective amendments) as may be
necessary to comply with the provisions of the Securities Act with respect to
the disposition of all securities covered by such registration statement;
(c) use its best efforts to obtain appropriate qualifications of the
securities covered by such registration under state securities or "blue sky"
laws in such jurisdictions as may be requested by the holders of Registrable
Securities to the extent such qualification is required; provided, however, that
the Company shall not be required to file a general consent to service of
process in any jurisdiction in which it is not otherwise subject to service in
order to obtain any such qualification;
(d) furnish such number of prospectuses and other documents incident
thereto, including any amendment of or supplement to the prospectus, as a holder
of Registrable Securities from time to time may reasonably request;
(e) notify each holder of Registrable Securities covered by such
registration statement, at any time when a prospectus relating thereto is
required to be delivered under the Securities Act, of the happening of any event
as a result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading or incomplete in the light of the
circumstances then existing, and at the request of any such holder, prepare and
furnish to such holder a reasonable number of copies of a supplement to or an
amendment of such prospectus as may be necessary so that, as thereafter
delivered to the purchasers of such shares, such prospectus shall not include an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to
make the statements therein not misleading or incomplete in the light of the
circumstances then existing;
(f) cause all Registrable Securities covered by such registration to
be listed on each securities exchange or inter-dealer quotation system on which
similar securities issued by the Company are then listed;
(g) provide a transfer agent and registrar for all Registrable
Securities covered by such registration and a CUSIP number for all such
Registrable Securities, in each case not later than the effective date of such
registration;
(h) otherwise comply with all applicable rules and regulations of the
Commission, and make available to its security holders, as soon as reasonably
practicable and in any event within sixteen (16) months after the effective date
of the registration statement, an earning statement covering a period of at
least twelve months, but not more than 18 months, beginning with the first month
after the effective date of the registration statement, which earning statement
shall satisfy the provisions of Section 11(a) of the Securities Act; and
(i) in connection with any underwritten Demand Registration, the
Company will enter into an underwriting agreement reasonably satisfactory to the
Initiating Holders containing customary underwriting provisions, including
indemnification and contribution provisions.
(j) furnish, at the request of any holder requesting registration of
Registrable Securities pursuant to this Agreement, to the extent practicable,
(i) on the date that such Registrable Securities are delivered to the
underwriters for sale in connection with a registration pursuant to this
Agreement, if such securities are being sold through underwriters, or, if such
securities are not being sold through underwriters, on the date that the
registration statement with respect to such securities becomes effective, an
opinion, dated such date, of the counsel representing the Company for the
purposes of such registration, in form and substance as is customarily given to
underwriters in an underwritten public offering, addressed to the underwriters,
if any, and to the holders requesting registration of Registrable Securities and
(ii) on the date that the registration statement with respect to such securities
becomes effective, a "comfort" letter dated such date, from the independent
certified public accountants of the Company, in form and substance as is
customarily given by independent certified public accountants to underwriters in
an underwritten public offering, addressed to the underwriters, if any, and to
the holders requesting registration of Registrable Securities, and, if such
securities are being sold through underwriters, a reaffirmation of such letter
on the date that such Registrable Securities are delivered to the underwriters
for sale.
2.5 Indemnification.
(a) The Company will indemnify each holder of Registrable Securities,
each of such holder's officers, directors, partners, agents, employees and
representatives, any underwriter for such holder, and each person controlling
such holder or underwriter within the meaning of the Securities Act or Exchange
Act, with respect to each registration, qualification or compliance effected
pursuant to this Article II, against all expenses, claims, losses, damages and
liabilities (or actions, proceedings or settlements in respect thereof) arising
out of or based on any untrue statement (or alleged untrue statement) of a
material fact contained in any prospectus, offering circular or other document
(including any related registration statement, notification or the like)
incident to any such registration, qualification or compliance, or based on any
omission (or alleged omission) to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, or
any violation or alleged violation by the Company of the Securities Act,
Exchange Act or stock securities law or any rule or regulation under any of the
foregoing applicable to the Company and relating to action or inaction required
of the Company in connection with any such registration, qualification or
compliance, and will reimburse each such indemnified person for any legal and
any other expenses reasonably incurred in connection with investigating and
defending or settling any such claim, loss, damage, liability or action;
provided, however, that the Company will not be liable in any such case to the
extent that any such claims, loss, damage, liability or expense arises out of or
is based on any untrue statement or omission based upon written information
furnished to the Company by such holder of Registrable Securities and stated to
be specifically for use therein. It is agreed that the indemnity agreement
contained in this Section 2.5(a) shall not apply to amounts paid in settlement
of any such loss, claim, damage, liability or action if such settlement is
effected without the consent of the Company (which consent has not been
unreasonably withheld).
(b) Each holder of Registrable Securities included in any
registration effected pursuant to this Article II shall indemnify the Company,
each of its directors, officers, agents, employees and representatives, each
underwriter, and each person who controls the Company within the meaning of the
Securities Act or Exchange Act, each other such holder of Registrable Securities
and each of their officers, directors and partners, and each person controlling
such holders or underwriters, against all claims, losses, damages and
liabilities (or actions in respect thereof) arising out of or based on any
untrue statement (or alleged untrue statement) of a material fact contained in
any such registration statement, prospectus, offering circular or other
document, or any omission (or alleged omission) to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, and will reimburse such indemnified persons for any legal or any
other expenses reasonably incurred in connection with investigating or defending
any such claim, loss, damage, liability or action, in each case to the extent,
but only to the extent, that such untrue statement (or alleged untrue statement)
or omission (or alleged omission) is made in such registration statement,
prospectus, offering circular or other document in reliance upon and in strict
conformity with written information furnished to the Company by such holder of
Registrable Securities; provided, however, that (x) no holder of Registrable
Securities shall be liable hereunder for any amounts in excess of the net
proceeds received by such holder pursuant to such registration, and (y) the
obligations of such holder of Registrable Securities hereunder shall not apply
to amounts paid in settlement of any such claims, losses, damages or liabilities
(or actions in respect thereof) if such settlement is effected without the
consent of such holder (which consent has not been unreasonably withheld).
(c) Each party entitled to indemnification under this Section 2.5
(the "Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom, provided that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or any litigation resulting
therefrom, shall be approved by the Indemnified Party (whose approval shall not
unreasonably be withheld), and the Indemnified Party may participate in such
defense at such party's expense, and provided further that the failure of any
Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations under this Section 2.5 to the extent such
failure is not materially prejudicial. No Indemnifying Party in the defense of
any such claim or litigation shall, except with the consent of each Indemnified
Party, consent to entry of any judgment or enter into any settlement which does
not include an unconditional release of such Indemnified Party from all
liability in respect to such claim or litigation. Each Indemnified Party shall
furnish such information regarding itself or the claim in question as an
Indemnifying Party may reasonably request in writing and as shall be reasonably
required in connection with defense of such claim and litigation resulting
therefrom.
(d) The obligations of the Company and holders under this Section 2.5
shall survive the completion of any offering of Registrable Securities in a
registration statement under this Agreement, and otherwise.
(e) Any indemnity agreements contained herein shall be in addition to
any other rights to indemnification or contribution which any Indemnified Party
may have pursuant to law or contract and shall remain operative and in full
force and effect regardless of any investigation made or omitted by or on behalf
of any Indemnified Party.
(f) If the indemnification provided for in this Section 2.5 is held
by a court of competent jurisdiction to be unavailable to an Indemnified Party
with respect to any loss, liability, claim, damage or expense referred to
therein, then the Indemnifying Party, in lieu of indemnifying such Indemnified
Party hereunder, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such loss, liability, claim, damage or expense
in such proportion as is appropriate to reflect the relative fault of the
Indemnifying Party on the one hand and of the Indemnified Party on the other in
connection with the statements or omissions which resulted in such loss,
liability, claim, damage or expense as well as any other relevant equitable
considerations. The relative fault of the Indemnifying Party and of the
Indemnified Party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission to state a material fact relates to information supplied by the
Indemnifying Party or by the Indemnified Party and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
Notwithstanding anything to the contrary in this Section 2.5(f), no holder of
Registrable Securities shall be required, pursuant to this Section 2.5(f), to
contribute any amount in excess of the net proceeds received by such holder from
the sale of securities in the offering to which such contribution obligation
relates.
(g) No Investor participating in an underwriting shall be required to
make any representations, warranties or indemnities except (i) as they relate to
such Investor's ownership of shares and authority to enter into the underwriting
agreement, (ii) to such Investor's intended method of distribution, (iii) as may
be specifically required by the provisions of the applicable registration form,
and (iv) as may be required by such Investor having a relationship or
affiliation with the Company other than as an Investor pursuant hereto.
2.6 Other Obligations.
With a view to making available the benefits of certain rules and
regulations of the Commission which may facilitate the registration of
Registrable Securities or permit the sale of Registrable Securities to the
public without registration, the Company agrees to:
(a) after its initial registration under the Securities Act, exercise
best efforts to cause the Company to be eligible to utilize Form S-3 (or any
similar form) for the registration of Registrable Securities;
(b) at such time as any Registrable Securities are eligible for
transfer under Rule 144(k), upon the request of the holder of such Registrable
Securities, remove any restrictive legend from the certificates evidencing such
securities at no cost to such holder;
(c) make and keep available public information as defined in Rule 144
under the Securities Act at all times from and after ninety (90) days following
its initial registration under the Securities Act;
(d) file with the Commission in a timely manner all reports and other
documents required of the Company under the Securities Act and the Exchange Act
at any time after it has become subject to such reporting requirements; and
(e) furnish any holder of Registrable Securities upon request a
written statement by the Company as to its compliance with the reporting
requirements of Rule 144 (at any time from and after ninety (90) days following
the effective date of the first registration statement filed by the Company for
an offering of its securities to the general public), and of the Securities Act
and the Exchange Act (at any time after it has become subject to such reporting
requirements), a copy of the most recent annual or quarterly report of the
Company, and such other reports and documents as a holder of Registrable
Securities may reasonably request in availing itself of any rule or regulation
of the Commission (including Rule 144A) allowing a holder of Registrable
Securities to sell any such securities without registration.
2.7 Certain Information.
If any registration statement or comparable statement under the Securities
Act refers to an Investor or any of its affiliates, by name or otherwise, as the
holder of any securities of the Company, then, unless counsel to the Company
advises the Company that the Securities Act requires that such reference be
included in any such statement, each such holder shall have the right to require
the deletion of such reference to itself and its affiliates upon five (5)
business days' prior written notice to the Company.
2.8 Termination of Registration Rights.
The right of any holder of Registrable Securities to request inclusion of
Registrable Securities in any registration pursuant to this Article II shall
terminate when (i) all Registrable Securities beneficially owned by such holder
of Registrable Securities may immediately be sold under Rule 144 (without giving
effect to paragraph (k) of such rule), and (ii) the Company's Common Stock is
listed on a national securities exchange or traded in the Nasdaq Stock Market;
provided, however, that the provisions of this Section 2.8 shall not apply to
"piggy-back" registration rights of any holder of Registrable Securities
representing more than one percent (1%) of the Company's then-outstanding Common
Stock.
ARTICLE III
RESTRICTIONS ON TRANSFER
3.1 Transfer of Shares of Common Stock.
No Stockholder shall sell, transfer, assign, pledge or otherwise dispose of
(a "Transfer") any Common Stock except pursuant to the provisions of this
Article III or pursuant to a Public Sale. Each Stockholder that owns Investor
Stock agrees not to consummate any Transfer (other than a Public Sale) until 30
days after the later of the delivery to the other Stockholders of such
Stockholder's Offer Notice, unless the parties with rights under this Article
III waive such rights prior to the expiration of such 30-day period (the
"Election Period").
3.2 Rights of First Refusal - Founding Stock.
If at any time a Founding Stockholder (the "Selling Founding Stockholder")
receives a bona fide offer from any person (a "Third Party") to purchase shares
of Founding Stock held by the Selling Founding Stockholder (a "Third-Party
Offer") which the Selling Founding Stockholder wishes to accept, the Selling
Founding Stockholder shall cause such Third-Party Offer to be reduced to writing
and shall notify the Company and the other Stockholders (collectively, the
"NonSelling Stockholders") of the Selling Founding Stockholder's desire to
accept the Third-Party Offer. The Selling Founding Stockholder's notice (the
"Sale Notice") shall contain an irrevocable offer to sell such Common Stock to
the Company and/or the NonSelling Stockholders at a purchase price equal to the
price contained in, and on the same terms and conditions of, the Third-Party
Offer and shall be accompanied by a true copy of the Third-Party Offer (which
shall identify the offeror). At any time within 10 business days after the date
of receipt by the Company of the Sale Notice, the Company shall have the right
(subject to the Certificate of Incorporation of the Company) to purchase the
Common Stock covered by the Third-Party Offer at the same price and on the same
terms and conditions as the Third-Party Offer; provided, however, the Company
may pay cash to the Selling Founding Stockholder equal in amount to the fair
market value of any non-cash consideration offered by the Third Party in the
Third-Party Offer. If at the end of such 10-business day period the Company has
not elected to purchase all Common Stock covered by such Third-Party Notice, the
Selling Founding Stockholder shall provide the Sale Notice to the NonSelling
Stockholders along with a statement as to the number of shares to be purchased
by the Company (if any). Within 10 business days after receipt by the NonSelling
Stockholders of such Sale Notice, each NonSelling Stockholder, by providing
notice to the Founding Stockholder, shall have the right to purchase that
portion of the shares equal to the NonSelling Stockholder's Pro Rata Number of
Shares (as defined below) at the same price and on the same terms and
conditions as the Third-Party Offer; provided, however, the Non-Selling
Stockholder may pay cash to the Selling Founding Stockholder equal in amount to
the fair market value of any non-cash consideration offered by the Third Party
in the Third-Party offer. In the event any NonSelling Stockholder does not
exercise its right to purchase its respective Pro Rata Number of Shares, the
other NonSelling Stockholders shall have
the right to purchase such shares, and the purchase of such shares shall be
allocated among the participating NonSelling Stockholders pro rata in proportion
to the aggregate amount of Investor Stock and Founding Stock held by such
NonSelling Stockholders, or in such other proportions as the participating
NonSelling Stockholders may agree upon. To the extent the Company and the
NonSelling Stockholders have not notified the Selling Founding Stockholder in
writing of a desire to purchase all of the Common Stock as set forth herein, the
Selling Founding Stockholder may within 60 days thereafter sell all of the
Founding Stock covered by the Third-Party Offer to the Third Party on the terms
set forth in the original Third-Party Offer; provided, however, that if the
Selling Founding Stockholder has been notified in writing by any Investor that
the sale of such stock is reasonably deemed to be part of a "Related
Transaction," as defined below, the Selling Founding Stockholder may only sell
the Founding Stock covered by such Third-Party Offer which the Company and the
NonSelling Stockholders have not offered to purchase. Any Founding Stock covered
by the Third Party Offer that is not so transferred during such 60-day period
shall again be subject to this Section 3.2. The Company may assign its rights to
purchase Founding Stock pursuant to this Section 3.2 to one or more third
parties subject only to compliance with applicable securities laws, provided
that the Company shall offer to assign such rights to the NonSelling
Stockholders pro rata prior to offering such rights to other persons. For
purposes of this Section 3.2 (i) such NonSelling Stockholder's Pro Rata Number
of Shares shall be equal to that number of shares of Common Stock derived by
multiplying the total number of shares to be purchased by the Third Party as set
forth in the Sale Notice (less the number of shares purchased by the Company) by
a fraction, the numerator of which is the total number of shares of Investor
Stock and Founding Stock beneficially owned by such NonSelling Stockholder, as
the case may be, and the denominator of which is the total number of shares of
Investor Stock and Founding Stock beneficially owned by all NonSelling
Stockholders and (ii) Related Transaction shall mean a joint transaction
involving the sale of Founding Stock held by two or more Founding Stockholders.
3.3 Right of First Offer - Investor Stock.
At least 30 days prior to making any Transfer of any shares of Investor
Stock, including, but not limited to Senior Preferred Stock, (other than a
Public Sale), the Investor or Founding Stockholder intending to consummate such
Transfer (the "Offeror") shall deliver a written notice (the "Offer Notice") to
the other Stockholders (the "Offerees"). The Offer Notice shall disclose in
reasonable detail the proposed number and class of shares of Investor Stock to
be transferred and the proposed terms and conditions of the Transfer. The
Offerees may elect to purchase all (or a portion) of their Pro Rata Share (as
defined below) of the shares of Investor Stock specified in the Offer Notice at
the price and on the terms specified therein by delivering written notice of
such election to the Offeror as soon as practical but in any event within 20
days after the delivery of the Offer Notice. Any shares of Investor Stock not
elected to be purchased by the end of such 20-day period shall be reoffered for
the 10-day period prior to the expiration of the Election Period by the Offeror
on a pro rata basis to the Offerees who have elected to purchase their Pro Rata
Share. If any Offeree has elected to purchase shares of Investor Stock from the
Offeror, the transfer of such shares shall be consummated as soon as practicable
after the delivery of the election notices, but in any event within 15 days
after the expiration of the Election Period. To the extent that the Offerees
have not elected to purchase all of the shares of Investor Stock being offered,
the Offeror may, within 90 days after the expiration of the Election Period and
subject to the provisions of Section 3.4 below, transfer such shares of Investor
Stock to one or more third
parties at a price no less than the price per share specified in the Offer
Notice and on terms no more favorable to the transferees than offered to the
Investors in the Offer Notice. The purchase price specified in the Offer Notice
shall be payable solely in cash at the closing of the transaction or in
installments over time as agreed on by the parties. For purposes of this Section
3.3, each Offeree's "Pro Rata Share" shall be based upon such Offeree's
proportionate ownership of all outstanding shares of Investor Stock and Founding
Stock held by the Offerees.
3.4 Participation Rights.
(a) If the Offerees have not elected to purchase all of the Investor
Stock specified in the Offer Notice pursuant to Section 3.3 above, each Offeree
may elect to participate in the contemplated transfer by delivering written
notice to the Offeror 15 business days after receipt by the Offeree of the Offer
Notice. If any Offeree has elected to participate in such sale, the Offeror and
the electing Offerees will be entitled to sell in the contemplated sale, at the
same price and on the same terms, a number of the same class or classes of
shares as are to be sold by the Offeror equal to the product of (i) the quotient
determined by dividing the percentage of the Company's Common Stock (on a Fully
Diluted Basis) held by such person, by the aggregate percentage of the Company's
Common Stock (on a Fully Diluted Basis) owned by the Offeror and all electing
Offerees and (ii) the number of shares of Common Stock to be sold in the
contemplated sale (on a Fully Diluted Basis).
For example, if the Offer Notice contemplated a sale of 100 shares of
Common Stock, and if the Offeror was at such time the owner of 30% of the
Company's Common Stock (on a Fully Diluted Basis) and if one Offeree
elected to participate and that Offeree owned 20% of the Company's Common
Stock (on a Fully Diluted Basis), the Offeror would be entitled to sell 60
shares ([30% / 50%] x 100 shares) and the electing Offeree would be
entitled to sell 40 shares ([20% / 50%] x 100 shares).
(b) The Offeror will use its best efforts to obtain the agreement of
the prospective transferee(s) to the participation of the Offerees in the
contemplated transfer and will not transfer any Investor Stock to the
prospective transferee(s) if such transferee(s) refuses to allow the
participation of the Offerees.
(c) Notwithstanding anything to the contrary contained herein, an
Offeree shall only have the right to sell the same class of shares as are to be
sold by the Offeror (as specified in the Offer Notice).
3.5 Exempt Transactions.
The restrictions set forth in this Article III shall not apply to transfers
of Founding Stock or Investor Stock to a Permitted Transferee; provided,
however, that such Permitted Transferee shall agree in writing to be bound by
such restrictions in connection with subsequent transfers. In addition, the
restrictions set forth in Sections 3.2, 3.3 and 3.4 shall not apply to Transfers
in connection with the Liquidation of the assets of the Offeror or to Transfers
by Management Holders after being terminated by the Company without Cause.
3.6 Management Holder Put Rights.
(a) Notwithstanding any provision to the contrary contained in this
Agreement, in the event of the death or Disability of a Management Holder, the
Management Holder, and the Permitted Transferees of such Management Holder
(collectively, the "Selling Shareholders"), shall have the right to sell to the
Company (subject to the provisions of the Certificate of Incorporation of the
Company) any or all of the Reserved Employee Stock owned by such Selling
Shareholders (the "Put Shares"). Each Selling Shareholder desiring to sell his
or her Put Shares must, within 90 days of the date of the determination of the
Management Holder's Disability or, in the event of the death of a Management
Holder, within 90 days following the qualification of the executor or personal
representative of the estate of the deceased Management Holder, notify the
Company in writing of the number of Put Shares that each Selling Shareholder
desires to sell to the Company. Within 60 days of receiving any such notice from
any Selling Shareholder, the Company shall notify the Selling Shareholder of its
initial determination of the Fair Market Value per share of the Put Shares, and
shall, within 60 days thereafter (or within 60 days of the final determination
of the Fair Market Value per share pursuant to the appraisal procedures
described in Section 3.6(c) below), pay to the Selling Shareholder cash (or
other immediately available funds) equal to the Fair Market Value per share for
each Put Share owned and transferred to the Company by the Selling Shareholder.
At closing, each Selling Shareholder shall deliver to the Company his or her Put
Shares, duly endorsed for transfer in blank, free and clear of any liens or
encumbrances.
(b) As used in this Section 3.6, the term "Disability" means the
earlier of (i) the disability or incapacity of the Management Holder causing the
Management Holder to be unable to work in the same or similar capacity for a
period of 365 consecutive days and (ii) the date upon which the Management
Holder is deemed disabled under Section 22(e)(3) of the Internal Revenue Code of
1986, as amended.
(c) As used in this Section 3.6, the term "Fair Market Value" means
the Company's fair market value per share of the Company, without discount for a
minority interest or lack of marketability, but taking into account the relative
rights and preferences of the various classes of stock of the Company
outstanding as of the date of determination. The Company's Board of Directors
shall make an initial determination of the Fair Market Value per share
reasonably and in good faith as of the date of the Management Holder's death or
Disability. If a Selling Shareholder does not agree with the Fair Market Value
per share as determined by the Board of Directors, the Selling Shareholder must,
within 15 days of receiving the Board of Directors' initial determination of the
Fair Market Value per share, request the Company in writing to engage a
qualified, independent appraiser (the "Appraiser") experienced in appraising
companies similar to the Company, to determine the Fair Market Value per share.
The Company shall make available all information reasonably necessary to allow
the Appraiser to perform the appraisal and shall instruct the Appraiser to use
commercially reasonable efforts to complete the appraisal within thirty (30)
days and to provide the Company and the Selling Shareholder(s) instituting the
appraisal procedures a written determination of the Fair Market Value per share.
The Fair Market Value per share determined by the Appraiser will, absent fraud,
be final and binding upon all parties to the particular transaction, free of
challenge or review in any court. All costs associated with such an appraisal
will be borne equally by the Company and the Selling Shareholder, unless the
Fair Market Value per share determined by the Appraiser is 15% or more
greater than or 15% or more less than the Fair Market Value per share determined
by the Board of Directors, in which case the losing party, as determined by the
Appraiser, shall bear the entire expense of the appraisal.
3.7 Distribution of Proceeds in Connection with Liquidation Event
(a) The Stockholders covenant that if (i) the authorized holders
under the Company's Certificate of Designation declare a Deemed Liquidation
Event to be a Liquidation Event and (ii) the aggregate proceeds distributable or
payable to the Stockholders holding Senior Preferred in connection with such
Liquidation Event are less than combined Series C and C-1 Liquidation
Preference, Series B and B-1 Liquidation Preference and Series A Liquidation
Preference, then the Stockholders shall share in such proceeds ratably in
compliance with the principles set forth in Section 3 of the Certificate of
Designation for the Senior Preferred.
(b) Capitalized terms used in this Section 3.7 and not otherwise
defined in this Agreement shall have the meanings set forth in the Company's
Certificate of Incorporation, as amended from time to time.
ARTICLE IV
SUBSEQUENT OFFERINGS
4.1 Right of First Refusal.
Except for issuances (i) of Reserved Employee Stock or shares of Common
Stock issued upon conversion of Senior Preferred, (ii) to Sellers in connection
with the acquisition of all or substantially all of the stock or assets of an
Entity that is not an Affiliate of the Company, or pursuant to or in connection
with customer licensing arrangements approved by the Board of Directors, (iii)
pursuant to a public offering registered under the Securities Act, or (iv) in
connection with any stock split, stock dividend or recapitalization, (a)
Centennial, Centennial V, and their respective transferees, as a group, shall
have a right of first refusal to purchase up to their Pro Rata Share of all
Equity Securities, (b) Alta, Alta-Comm, and their respective transferees, as a
group, shall have a right of first refusal to purchase up to their Pro Rata
Share of all Equity Securities, (c) Building Communications and its respective
transferees, as a group, shall have a right of first refusal to purchase up to
their Pro Rata Share of all Equity Securities, (d) Tenant Communications and its
respective transferees, as a group, shall have a right of first refusal to
purchase up to their Pro Rata Share of all Equity Securities, (e) the New
Investors, and their respective transferees, as a group (and on a pro rata basis
within such group), shall have a right of first refusal to purchase up to their
Pro Rata Share of all Equity Securities, (f) upon their purchase of shares of
Series C Preferred Stock, the REIT Investors, as a group (and on a pro rata
basis within such group) shall have a right of first refusal to purchase up to
their Pro Rata Share of all Equity Securities, and (g) the Founding Stockholders
and any of their Permitted Transferees, as a group (and on a pro rata basis
within such group), shall have a right of first refusal to purchase up to their
Pro Rata Share of all Equity Securities.
For purposes of this Section 4.1, (i) "Equity Securities" means any
unissued stock of any class or any additional shares of any class which is
offered for sale or to be issued by reason of
any increase of the authorized capital stock of the Company of any class, or
bonds, certificates of indebtedness, debentures or other securities convertible
into stock of any class or containing any such features or issued in connection
with any equity securities, whether said unissued stock shall be issued for
cash, property, or any other lawful consideration, and (ii) "Pro Rata Share"
shall be based upon a Stockholder's proportionate ownership of all outstanding
shares of Investor Stock and Founding Stock, excluding for purposes of such
calculation any shares issued or issuable upon the exercise of any warrants if
the offering of Equity Securities under this Section 4.1 is at a price per share
equal to or in excess of the initial Series C-1 Conversion Price (as adjusted
for splits, subdivsions, etc.) in the Company's Certificate of Incorporation.
In the event any Stockholder does not exercise its right to purchase or
subscribe for the respective number of shares to which it has a right of first
refusal as set forth above, the other Stockholders shall have the right to
purchase such shares, and the purchase of such shares shall be allocated among
the participating Stockholders pro rata in proportion to the aggregate amount of
Investor Stock and Founding Stock held by such Stockholders, or in such other
proportions as the participating Stockholders may agree upon.
4.2 Notice of Election.
If the Company proposes to issue any Equity Securities (other than the
permitted issuances described in Sections 4.1 (i) - (iv), it shall give each
Stockholder written notice of its intention, describing the Equity Securities,
the price and the terms and conditions upon which the Company proposes to issue
the same. Each Stockholder shall have fifteen (15) business days from the
giving of such notice to agree to purchase its shares of the Equity Securities
for the price and upon the terms and conditions specified in the notice by
giving written notice to the Company and stating therein the quantity of Equity
Securities to be purchased. Notwithstanding the foregoing, the Company shall
not be required to offer or sell such Equity Securities to any Stockholder who
would cause the Company to be in violation of applicable federal securities laws
by virtue of such offer or sale.
4.3 Participation.
If not all of the Stockholders elect to purchase their share of the Equity
Securities, then the Company shall promptly notify in writing the Stockholders
who do so elect and shall offer such Stockholders the right to acquire such
unsubscribed shares. The Stockholders shall have five (5) business days after
receipt of such notice to notify the Company of their election to purchase all
or a portion thereof of the unsubscribed shares. If the Stockholders fail to
exercise in full their respective rights of first refusal, the Company shall
have ninety (90) days thereafter to sell the equity Securities in respect of
which the Stockholder's rights were not exercised, at a price and upon general
terms and conditions materially no more favorable to the purchasers thereof than
specified in the Company's notice to the Stockholders pursuant to Section 4.2
hereof. If the Company has not sold such Equity Securities within (90) days of
the notice provided pursuant to Section 4.2, the Company shall not thereafter
issue or sell any Equity Securities, without first offering such securities to
the Stockholders in the manner provided in this Article IV.
ARTICLE V
COVENANTS OF THE COMPANY
The Company hereby covenants and agrees, so long as any Registrable
Securities are outstanding, as follows:
5.1 Basic Financial Information.
The Company will furnish the following reports to each holder of
Registrable Securities:
(a) As soon as practicable after the end of each fiscal year of the
Company, and in any event within ninety (90) days thereafter, a consolidated
balance sheet of the Company and its Subsidiaries, if any, as of the end of such
fiscal year, and consolidated statements of income and cash flow of the Company
and its Subsidiaries, if any, for such year, prepared in accordance with
generally accepted accounting principles consistently applied and setting forth
in each case in comparative form the figures for the previous fiscal year, all
in reasonable detail and certified by independent public accountants selected by
the Company in accordance with the provisions of Section 5.7.
(b) As soon as practicable after the end of each quarterly accounting
period in each fiscal year of the Company, and in any event within forty-five
(45) days thereafter, a consolidated balance sheet of the Company and its
Subsidiaries, if any, as of the end of each such quarterly period, and
consolidated statements of income and cash flow of the Company and its
Subsidiaries, if any, for such period and for the current fiscal year to date,
prepared in accordance with generally accepted accounting principles
consistently applied and setting forth in comparative form the figures for the
corresponding periods of the previous fiscal year, subject to changes resulting
from normal year-end audit adjustments, all in reasonable detail and certified
by the Chief Financial Officer of the Company (or the Chief Executive Officer or
President if no Chief Financial Officer is in place), except that such
statements need not contain the notes required by generally accepted accounting
principles for year-end financial statements.
(c) As soon as practicable after the end of each monthly accounting
period and in any event within thirty (30) days thereafter, a consolidated
balance sheet of the Company and its Subsidiaries, if any, as of the end of such
month and consolidated statements of income and of cash flow of the Company and
its Subsidiaries, if any, for each month and for the current fiscal year of the
Company to date, all subject to normal year-end audit adjustments, prepared in
accordance with generally accepted accounting principles consistently applied
and certified by the Chief Financial Officer of the Company (or the Chief
Executive Officer or President if no Chief Financial Officer is in place),
except that such statements need not contain the notes required by generally
accepted accounting principles for year-end financial statements.
5.2 Additional Information Rights.
(a) The Company will permit each Qualified Holder and/or its
representatives to visit and inspect any of the properties of the Company,
including its books of account and other records (and make copies thereof and
take extracts therefrom), and to discuss its affairs,
finances and accounts with the Company's officers and its independent public
accountants, all at such reasonable times and as often as any such person may
reasonably request.
(b) The Company will deliver the reports described below in this
Section 5.2(b) to each Qualified Holder:
(i) Annually (but in any event at least thirty (30) days prior
to the commencement of each fiscal year of the Company) the
financial plan of the Company, in such manner and form as
approved by the Board of Directors of the Company, which
financial plan shall include an operating budget for such
fiscal year and an updated five-year strategic plan for the
Company.
(ii) Concurrently with delivery thereof, copies of all reports
and other written material submitted to the Board of
Directors.
(iii) Concurrently with delivery thereof, copies of any reports
or communications delivered to the financial community,
including all press releases.
(c) The Company will provide each Qualified Holder with such other
information relating to the Company as such Qualified Holder may reasonably
request.
(d) Each Qualified Holder hereby agrees to hold in confidence and
trust and not to misuse or disclose any confidential information provided
pursuant to this Section 5.2 except (a) no Qualified Holder shall be prohibited
from using any such information for the purpose of generating and delivering
portfolio valuation information to its investors, and (b) as may be required by
applicable law, rules or regulations. The following information shall not be
considered "confidential information" for purposes of this Section 5.2: (a)
information which was lawfully known to a Qualified Holder prior to its receipt
by the Company, (b) information which was publicly available at the time of
disclosure or later becomes publicly available through no action of a Qualified
Holder in violation of this Section 5.2(d), or (c) information disclosed to a
Qualified Holder by a third party having no obligation of confidentiality with
respect to such information.
5.3 Prompt Payment of Taxes, Etc.
The Company will promptly pay and discharge, or cause to be paid and
discharged, when due and payable, all lawful taxes, assessments and governmental
charges or levies imposed upon the income, profits, property or business of the
Company or any subsidiary; provided, however, that any such tax, assessment,
charge or levy need not be paid if the validity thereof shall currently be
contested in good faith by appropriate proceedings and if the Company shall have
set aside on its books adequate reserves with respect thereto; and provided,
further, that the Company will pay all such taxes, assessments, charges or
levies forthwith upon the commencement of proceedings to foreclose any lien
which may have attached as security therefor. The Company will promptly pay or
cause to be paid when due, in conformance with customary trade terms, all other
obligations incident to the operations of the Company.
5.4 Maintenance of Properties and Leases.
The Company will keep its properties and those of its Subsidiaries, if any,
in good repair, working order and condition, reasonable wear and tear excepted,
and from time to time make all needful and proper repairs, renewals,
replacements, additions and improvements thereto; and the Company and its
Subsidiaries, if any, will at all times comply with each material provision of
all leases to which any of them is a party or under which any of them occupies
property if the breach of such provision might have a material and adverse
effect on the condition, financial or otherwise, or operations of the Company.
5.5 Insurance.
The Company will keep its assets and those of its Subsidiaries, if any,
which are of an insurable character insured by financially sound and reputable
insurers against loss or damage by fire, explosion and other risks customarily
insured against by companies in the Company's line of business, and the Company
will maintain, with financially sound and reputable insurers, insurance against
other hazards and risks and liability to persons and property to the extent and
in the manner customary for companies in similar businesses similarly situated.
5.6 Accounts and Records.
The Company will keep true records and books of account in which full, true
and correct entries will be made of all dealings or transactions in relation to
its business and affairs in accordance with generally accepted accounting
principles applied on a consistent basis.
5.7 Independent Accountants.
The Company will retain a "Big Five" national accounting firm as its
independent public accountants who shall certify the Company's financial
statements at the end of each fiscal year. In the event the services of the
independent public accountants so selected are terminated, the Company will
promptly thereafter notify the holders of Investor Stock and will request the
firm of independent public accountants whose services are terminated to deliver
to the Investors a letter from such firm setting forth the reasons for the
termination of their services. In the event of such termination, the Company
will promptly thereafter engage another "Big Five" national accounting firm as
its independent public accountants. In its notice to the holders of Investor
Stock the Company shall state whether the change of accounts was recommended or
approved by the Board of Directors of the Company or any committee thereof.
5.8 Compliance with Laws.
The Company and all its Subsidiaries shall duly observe and conform in all
material respects to all applicable laws and valid requirements of governmental
authorities relating to the conduct of their businesses or to their properties
or assets.
5.9 Maintenance of Corporate Existence, Etc.
The Company shall maintain in full force and effect its corporate
existence, rights and franchises and all licenses and other rights in or to use
patents, processes, licenses, trademarks,
trade names or copyrights owned or possessed by it or any subsidiary and deemed
by the Company to be necessary to the conduct of their business.
5.10 Limitation of Liability.
The Company will use its reasonable efforts to limit the liability, to the
fullest extent permissible under the laws of the State of Delaware, of any
person representing a Purchaser as a director of the Company, in his or her
capacity as such.
ARTICLE VI
CORPORATE GOVERNANCE
6.1 Board of Directors.
(a) Each Stockholder agrees to vote all securities of the Company
over which such Stockholder has voting control and to take all other necessary
or desirable actions within its control (whether as a stockholder, director or
officer of the Company or otherwise, and including without limitation attendance
at meetings in person or by proxy for purposes of obtaining a quorum and
execution of written consents in lieu of meetings), and the Company shall take
all necessary and desirable actions within its control (including, without
limitation, calling special board and stockholder meetings), so that:
(i) the Company shall have a Board of Directors comprised of no
more than nine (9) members;
(ii) the following persons shall be elected to the Board of
Directors:
(A) two (2) management representatives designated by the
holders of a majority of the outstanding Founding
Stock (the "Management Directors");
(B) five (5) representatives designated by the Investors,
one (1) of whom shall be designated by Centennial, one
(1) of whom shall be designated by Alta, one (1) of
whom shall be designated by Tenant Communications, one
(1) of whom shall be designated by Nassau, and one (1)
of whom shall be designated by Grammercy (collectively
the "Investor Directors"). In the event, however, that
any such Investor (together with its affiliates) holds
less than 2.5% of the Common Stock of the Company (on
a Fully Diluted Basis) such Investor shall not have
the right to designate a representative, and the
Investors holding a majority of the outstanding
Investor Stock shall appoint the disqualified
Investor's representative.
(C) upon their purchase of Series C Preferred Stock and
execution of this Agreement, one (1) representative
designated by the REIT Investors, voting together as
a group based on their respective ownership
interests, calculated on a Fully Diluted Basis; and
(D) one (1) outside representative designated jointly by
(i) the Investors described in Section
6.1(a)(ii)(B), voting together as a class based on
their respective ownership interests, calculated on
a Fully Diluted Basis, and (ii) the Management
Holders, voting together as a class based on their
respective ownership interests, calculated on a
Fully Diluted Basis.
(iii) in the event that any director for any reason ceases to
serve as a member of the Board during his term of office,
the resulting vacancy on the Board shall be filled by a
majority vote of the Stockholders entitled to elect such
director as provided in this Section 6.1; and
(iv) if the Stockholders fail to designate a representative to
fill a directorship pursuant to the terms of this Section
6.1, the election of such director shall be accomplished
in accordance with the Company's certificate of
incorporation and bylaws and applicable law.
(b) To the extent that any provision of the Company's certificate of
incorporation or bylaws is inconsistent with the provisions of this Agreement,
the Stockholders agree to take all actions necessary to effect such amendments
to the certificate of incorporation or bylaws as may be necessary and
appropriate to give full effect to the provisions of this Agreement.
6.2 Meetings of the Board.
The Board of Directors will meet at least four times each calendar year in
accordance with an agreed-upon schedule. If practicable, one such meeting will
be held at the same time and place that a national trade conference, if any, is
held for the Company's industry. Each Qualified Holder shall have the right to
designate a representative to be present at all meetings of the Board of
Directors. Subject to the availability of ISDN, the Company shall maintain video
teleconferencing which is compatible with Centennial's video teleconferencing
system to facilitate board, committee and other meetings with the Investors.
6.3 Committees.
The Board of Directors will establish audit, nominating and compensation
committees and shall delegate to such committees those duties and powers as are
customarily performed by committees of such type. The audit committee and the
compensation committee shall not include any of the Management Directors. One
(1) of the Investor Directors shall be a member of the nominating committee.
6.4 Reimbursement of Expenses.
The reasonable travel expenses of each Investor Director (or observer as
provided in Section 6.5) incurred in attending or observing Board or committee
meetings shall be reimbursed by the Company.
6.5 Observation Rights.
The Company shall give to any Investor identified in Section 6.1(a)(ii) who
ceases to have a representative on the Board of Directors (the "Observer
Holders") notice of each meeting of the Board of Directors of the Company and of
each committee thereof at the same time and in the same manner as notice is
given to the directors of the Company. One (1) designee of each Observer Holder
shall be entitled to attend in person, as an observer, all meetings held in
person and to listen to telephone meetings of the Board of Directors of the
Company and of each committee thereof solely for the purpose of allowing such
Observer Holder to have current information with respect to the affairs of the
Company. The Company shall provide to the Observer Holders in connection with
each meeting copies of all notices, minutes, consents, and all other materials
or information that it provides to the directors of the Company with respect to
such meeting, at the same time such materials and information are given to the
directors of the Company (except that materials and information provided to
directors of the Company at meetings at which a designee of such Observer Holder
is not present shall be provided to such party promptly after the meeting). If
the Board of Directors of the Company or any committee thereof proposes to take
any action by written consent in lieu of a meeting, the Company shall give
written notice thereof to the Observer Holder concurrently with the delivery of
pertinent information to the directors, describing in reasonable detail the
nature and substance of such action.
ARTICLE VII
MISCELLANEOUS
7.1 Governing Law.
This Agreement shall be governed in all respects by the laws of the State
of Georgia as such laws are applied to agreements between Georgia residents
entered into and performed entirely in Georgia, except that the General
Corporation Law of the State of Delaware shall govern as to matters of corporate
law.
7.2 Successors and Assigns.
Except as otherwise expressly provided herein, the provisions hereof shall
inure to the benefit of, and be binding upon, the successors, assigns, heirs,
executors and administrators of the parties hereto.
7.3 Entire Agreement: Amendment and Waiver.
This Agreement and the Series C and Series C-1 Purchase Agreement supersede
any other agreement, whether written or oral, that may have been made or entered
into by the parties
hereto relating to the matters contemplated hereby and constitute the full and
entire understanding and agreement between the parties with regard to the
subjects hereof. In particular, the execution of this Agreement shall terminate
all prior stockholders agreements and registration rights agreements, or any
similar agreement to the foregoing, among any Investor and the Company. Neither
this Agreement nor any term hereof may be amended, waived, discharged or
terminated except by a written instrument signed by the Company and the holders
of at least seventy-seven percent (77%) of the outstanding Investor Stock
(excluding for such purpose the holders of Series B-1 Preferred Stock and the
Series C-1 Preferred Stock) and any such amendment, waiver, discharge or
termination shall be binding on all the Stockholders; provided that any such
amendment or modification which adversely affects the rights under this
Agreement of one or more Stockholders in a manner different from any other
Stockholder shall require the consent of each Stockholder adversely affected by
such amendment or modification.
7.4 Notices, Etc.
All notices and other communications required or permitted hereunder shall
be in writing and shall be deemed effectively given: (i) upon personal delivery
to the party to be notified, (ii) when sent by confirmed telex or facsimile if
sent during normal business hours of the recipient, if not, then on the next
business day, (iii) five (5) days after having been sent by certified mail,
return receipt requested, postage prepaid, or (iv) one (1) day after deposit
with a nationally recognized overnight courier, special next day delivery, with
verification of receipt. All communications shall be sent to the Company at
Fifteen ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: R.
▇▇▇▇▇▇▇ ▇▇▇▇▇, with a courtesy copy to Powell, Goldstein, ▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP,
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇, ▇▇., and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇., and to a Stockholder at the address
reflected in the Company's stock ledger or at such other address as such
Stockholder shall have furnished to the Company in writing.
7.5 Delays or Omissions.
No delay or omission to exercise any right, power or remedy accruing to any
Stockholder under this Agreement shall impair any such right, power or remedy of
such Stockholder nor shall it be construed to be a waiver of any such breach or
default, or an acquiescence therein, or of or in any similar breach or default
thereafter occurring; nor shall any waiver of any single breach or default be
deemed a waiver of any other breach or default theretofore or thereafter
occurring. Any waiver, permit, consent or approval of any kind or character on
the part of any Stockholder of any breach or default under this Agreement or any
waiver on the part of any Stockholder of any provisions or conditions of this
Agreement must be made in writing and shall be effective only to the extent
specifically set forth in such writing. All remedies, either under this
Agreement or by law or otherwise afforded to any Stockholder, shall be
cumulative and not alternative.
7.6 Severability.
Unless otherwise expressly provided herein, a Stockholder's rights
hereunder are several rights, not rights jointly held with any of the other
Stockholders. In case any provision of the
Agreement shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
7.7 Counterparts.
This Agreement may be executed in any number of counterparts, each of which
shall be an original, but all of which together shall constitute one instrument.
7.8 Termination.
The provisions of Article III, Article IV, Article V and Article VI shall
terminate upon consummation of a Qualified Public Offering.
7.9 Specific Enforcement.
Any holder of Investor Stock shall be entitled to specific enforcement of
its rights under this Agreement. The parties acknowledge that money damages
would be an inadequate remedy for a breach of this Agreement and consent to an
action for specific performance or other injunctive relief in the event of any
such breach without the posting of any bond or providing any additional
security.
IN WITNESS WHEREOF, the parties hereto have executed this First Amendment
to the Third Amended and Restated Stockholders Agreement effective as of the day
and year first above written.
Company
CYPRESS COMMUNICATIONS, INC.
By: /s/ R. ▇▇▇▇▇▇▇ ▇▇▇▇▇
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Title: Chief Executive Officer
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INVESTORS:
CENTENNIAL FUND V, L.P.
By: Centennial Holdings V, L.P., General Partner
By:/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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General Partner
CENTENNIAL ENTREPRENEURS FUND V, L.P.
By: Centennial Holdings V, L.P., General Partner
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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General Partner
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ALTA COMMUNICATIONS VI, L.P.
By: Alta Communications VI Management Partners, L.P.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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General Partner
ALTA-COMM S BY S, LLC
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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Member
BUILDING COMMUNICATIONS, LLC
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
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Name: ▇▇▇▇ ▇▇▇▇▇▇▇
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Its: SVP
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TENANT COMMUNICATIONS, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
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Name: ▇▇▇▇ ▇▇▇▇▇▇▇
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Its: SVP
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INVESTOR COMMUNICATIONS, LLC,
By: Building Communications LLC, its Manager
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
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Name: ▇▇▇▇ ▇▇▇▇▇▇▇
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Its: SVP
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[signatures continued from previous page]
NAS PARTNERS L.L.C.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Title: Member
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NASSAU CAPITAL PARTNERS III, L.P.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Title: Member
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TRANSWESTERN COMMERCIAL SERVICES, L.L.C.
By: /s/ Transwestern Commercial Services, L.L.C.
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Name:
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Title:
_______________________________________________
GRAMERCY CYPRESS LLC
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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Title: Managing Director
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▇▇▇▇▇▇ CYCOM INVESTMENT L.L.C.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Title: Manager
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AEW PARTNERS III, L.P.
By: AEW Partners III, L.L.C., its General Partner
By: AEW Partners III, Inc., its managing member
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇
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Title: Vice President
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AEW CAPITAL MANAGEMENT, L.P.
By: AEW Capital Management, Inc., Its General
Partner
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇
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Title: Director
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FOUNDING STOCKHOLDERS:
/s/ R. ▇▇▇▇▇▇▇ ▇▇▇▇▇
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R. ▇▇▇▇▇▇▇ ▇▇▇▇▇
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇.
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▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇.
/s/ ▇▇▇▇▇▇▇ Moh
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▇▇▇▇▇▇▇ Moh
ITC Service Company
By: /s/ Dabsey ▇▇▇▇
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Name: Dabsey ▇▇▇▇
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Its: VP-Controller
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/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇▇ ▇. ▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
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/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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