EXECUTIVE SECURITIES AGREEMENT
(LACEY)
THIS EXECUTIVE SECURITIES AGREEMENT (this "AGREEMENT") is made as of
December 2, 1998, by and between CompleTel LLC, a Delaware limited liability
company (the "COMPANY"), and ▇▇▇▇▇ ▇▇▇▇▇ ("EXECUTIVE"). Capitalized terms used
but not otherwise defined herein have the meanings ascribed to such terms in
Section 8 hereof.
This Agreement contemplates a transaction in which, pursuant to the
terms and subject to the conditions set forth herein, Executive will purchase
Common Units of the Company. All of such Executive Securities are subject to
time vesting as set forth herein. In addition to time vesting, a portion of
such Executive Securities are also subject to performance vesting pursuant to
the terms of the Performance Vesting Agreement. All of the Executive Securities
held by Executive or his transferees are subject to certain restrictions on
transfer and, upon Executive's ceasing to be employed by the Company or its
Subsidiaries, certain repurchase options, each as set forth herein. In
addition, the Executive Securities are subject to certain voting agreements and
other provisions set forth herein and in the Securityholders Agreement. The
Company's subsidiary CableTel Management, Inc. ("CTM") intends as soon as
reasonably possible to enter into an Employment Agreement with Executive as its
Chief Financial Officer (the "EMPLOYMENT AGREEMENT").
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:
1. PURCHASE OF EXECUTIVE SECURITIES.
(a) PURCHASE. The Company agrees to issue and sell to Executive and
Executive agrees to purchase from the Company, upon execution of this Agreement
and payment of the purchase price, 1000 Common Units (of which 700 shall not,
and 300 shall, be subject to performance vesting under the terms of the
Performance Vesting Agreement), each having the rights and preferences set forth
with respect thereto in the LLC Agreement. The aggregate purchase price for the
Executive Securities is $1,000, which amount shall be paid to the Company, in
U.S. Dollars, by cashier's or certified check, or by wire transfer.
(b) REPRESENTATIONS AND WARRANTIES OF EXECUTIVE. In connection with
the purchase and issuance of the Executive Securities hereunder, Executive
represents and warrants to the Company that:
(i) The Executive Securities to be acquired by Executive
pursuant to this Agreement shall be acquired for Executive's own account and not
with a view to, or intention of, distribution thereof in violation of the
Securities Act or any applicable state securities laws, and the Executive
Securities shall not be disposed of in contravention of the Securities Act or
any applicable state securities laws.
(ii) Executive is sophisticated in financial matters and is
able to evaluate the risks and benefits of the investment in the Executive
Securities.
(iii) Executive is able to bear the economic risk of his
investment in the Executive Securities for an indefinite period of time and is
aware that transfer of the Executive Securities may not be possible because (A)
such transfer is subject to contractual restrictions on transfer set forth
herein, in the Securityholders Agreement, and in the Performance Vesting
Agreement, and (B) the Executive Securities have not been registered under the
Securities Act or any applicable state securities laws and, therefore, cannot be
sold unless subsequently registered under the Securities Act and such applicable
state securities laws or an exemption from such registration is available.
(iv) Executive has had an opportunity to ask questions and
receive answers concerning the terms and conditions of the offering of the
Executive Securities issued hereunder and has had full access to such other
information concerning the Company as he has requested.
(v) This Agreement, the LLC Agreement, the Securityholders
Agreement, the Registration Agreement, the Performance Vesting Agreement, the
Joinder Agreement, and the other agreements contemplated thereby of even date
therewith constitute the legal, valid and binding obligations of Executive,
enforceable in accordance with their terms, and the execution, delivery and
performance of such agreements by Executive and Executive's employment by the
Company and its Subsidiaries do not and shall not conflict with, violate or
cause a breach of any agreement, contract or instrument to which Executive is a
party or by which he is bound or any judgment, order or decree to which
Executive is subject.
(c) ACKNOWLEDGMENT BY EXECUTIVE. As an inducement to the Company to
enter into this Agreement, and as a condition thereto, Executive acknowledges
and agrees that this Agreement and the purchase of the Executive Securities
hereunder are not a condition to his employment by the Company or any Subsidiary
and that none of the execution and delivery of this Agreement, the issuance of
the Executive Securities to Executive, or Executive's status as a holder of
Executive Securities, shall:
(i) entitle Executive to remain employed by the Company or
its Subsidiaries or affect the right of the Company or its Subsidiaries to
terminate Executive's employment at any time and for any reason as permitted by
the Employment Agreement; or
(ii) impose upon the Company any duty or obligation to
disclose to Executive, or create in Executive any right to be advised of, any
material information regarding the Company and its Subsidiaries at any time
prior to, upon or in connection with the repurchase of any Executive Securities
upon the termination of Executive's employment by the Company or its
Subsidiaries or as otherwise provided hereunder.
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2. TIME VESTING OF EXECUTIVE SECURITIES.
(a) TIME VESTING SCHEDULE. Except as otherwise provided herein, an
amount of Un-Time-Vested Securities (as defined below) shall time vest on
December 31, 1998, on each of the first three anniversaries of such date, and on
the fourth anniversary of the date hereof, such that the Executive Securities
shall be time vested on each such date in accordance with the following
schedule:
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Cumulative Percentage of
Date Executive Securities
------ Time Vested on Such Date
----------------------------
--------------------------------------------------------------------------------
December 31, 1998 4.17%
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December 31, 1999 29.17%
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December 31, 2000 54.17%
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December 31, 2001 79.17%
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Fourth anniversary of the date hereof 100%
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Notwithstanding the foregoing sentence, the above time vesting schedule shall
cease and no Un-Time-Vested Securities (as defined below) shall time vest after
the date on which Executive's employment with the Company or its Subsidiaries
terminates voluntarily, involuntarily, with or without cause, for any reason or
for no reason. Executive Securities which have become time vested pursuant to
this Section 2 are referred to herein as "TIME-VESTED SECURITIES," and all other
Executive Securities are referred to herein as "UN-TIME-VESTED SECURITIES."
(b) 100% ACCELERATION UPON A QUALIFIED SALE OF THE COMPANY. All
Un-Time-Vested Securities shall become Time-Vested Securities in connection with
the consummation of a Qualified Sale of the Company, so long as Executive is
employed by the Company or any of its Subsidiaries on the date of such sale.
For purposes hereof, a "QUALIFIED SALE OF THE COMPANY" means a Sale of the
Company in which the consideration paid in such sale for at least 50% of the
Company's outstanding equity securities or of the Company's consolidated assets
consists of cash and/or publicly traded equity securities (E.G., 66.7% of the
consideration for such Sale of the Company would have to consist of cash and/or
publicly traded equity securities if only 75% of the Company's outstanding
equity securities were sold in such transaction).
(c) 100% ACCELERATION UPON A SALE OF THE COMPANY (OTHER THAN A
QUALIFIED SALE OF THE COMPANY) WITH NO CONTINUING COMPARABLE TIME VESTING
ARRANGEMENT. In the event of a Sale of the Company (other than a Qualified Sale
of the Company), the above vesting schedule will not accelerate as a result of
such Sale of the Company; PROVIDED that if the surviving or acquiring Person(s)
in such Sale of the Company fails or declines either to (i) continue after such
Sale of the Company to allow Executive to hold his Un-Time-Vested Securities
subject to the time vesting and repurchase provisions hereof, or (ii) grant to
Executive the number of securities in the surviving or acquiring Person(s) that
Executive would have received in such Sale of the Company in exchange
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for Executive's Un-Time-Vested Securities if such securities had instead been
Time-Vested Securities, subject to ongoing time vesting and repurchase
arrangements substantially comparable to those set forth herein (as such
comparability is determined in good faith by the Board), then all Un-Time-Vested
Securities shall become Time-Vested Securities in connection with the
consummation of such Sale of the Company, so long as Executive is employed by
the Company or any of its Subsidiaries on the date of such sale.
(d) ONE-YEAR ACCELERATION UPON A QUALIFIED PUBLIC OFFERING. Upon the
consummation of a Qualified Public Offering, and so long as Executive is
employed by the Company or any of its Subsidiaries on the closing date of such
offering, there will time vest the amount of Un-Time-Vested Securities which
were scheduled to time vest within the 365 days following such closing date (and
the remaining Un-Time-Vested Securities, if any, shall continue to time vest in
accordance with paragraph (a) above, such that the time vesting schedule set
forth in paragraph (a) above shall have been effectively accelerated by one
year).
(e) TIME VESTING AND PERFORMANCE VESTING.
(i) INDEPENDENCE OF TIME AND PERFORMANCE VESTING. The
Company and Executive acknowledge that the Executive Securities constituting
Performance Vesting Securities are subject, in addition to time vesting under
this Section 2, to performance vesting as set forth in the Performance Vesting
Agreement. The time vesting provisions of this Section 2 operate independently
of the performance vesting provisions under the Performance Vesting Agreement.
As such, (A) the terms "Time-Vested Securities" and "Un-Time-Vested Securities"
as used herein refer only to whether particular Executive Securities have time
vested in accordance with the terms of this Section 2 and do not indicate
whether such Executive Securities that constitute Performance Vesting Securities
have or have not also performance vested under the Performance Vesting
Agreement, and (B) the terms "Performance-Vested Securities" and
"Un-Performance-Vested Securities" (each defined below) as used herein refer
only to whether particular Performance Vesting Securities have performance
vested in accordance with the terms of the Performance Vesting Agreement and do
not indicate whether such Performance Vesting Securities have or have not also
time vested under this Section 2.
(ii) APPLICATION OF TIME VESTING. Whenever Un-Time-Vested
Securities time vest pursuant to the terms of this Section 2, the Un-Time-Vested
Securities that are not Performance Vesting Securities, on the one hand, and the
Un-Time-Vested Securities that are Performance Vesting Securities, on the other
hand, will each time vest on a pro rata basis based on the number of each such
type of securities then outstanding. Of such Un-Time-Vested Securities
constituting Performance Vesting Securities which are to vest, the
Un-Time-Vested Securities that are Performance-Vested Securities shall be time
vested prior to any Un-Time-Vested Securities that are Un-Performance-Vested
Securities being time vested.
(iii) APPLICATION OF PERFORMANCE VESTING. Whenever
Un-Performance-Vested Securities performance vest pursuant to the terms of the
Performance Vesting Agreement, the Un-Performance-Vested Securities that are
Time-Vested Securities shall be performance vested
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prior to any Un-Performance-Vested Securities that are Un-Time-Vested Securities
being performance vested.
3. REPURCHASE OPTIONS
(a) REPURCHASE OPTION UPON CESSATION OF EMPLOYMENT. If Executive
ceases voluntarily or involuntarily, with or without cause, to be employed by
the Company or its Subsidiaries for any reason or for no reason (such cessation
of employment, a "REPURCHASE EVENT"), the Company (by action of the Board) may
elect to purchase all or any portion of the Executive Securities then in
existence (whether held by Executive or one or more of Executive's transferees)
by delivering a Repurchase Notice to the holder or holders of the Executive
Securities at any time within 30 days after the Repurchase Event.
(b) ASSIGNMENT OF COMPANY'S REPURCHASE RIGHTS. Upon any Repurchase
Event, the Company (by action of the Board) shall have the right to assign all
or any portion of its repurchase rights hereunder to one or more management or
other key employees (each a "KEY EMPLOYEE") of the Company or any of its
Subsidiaries; PROVIDED that the Company may not assign its rights under Section
3(f) below to pay all or part of the Repurchase Price (as defined below) for
Executive Securities repurchased hereunder by (i) offsetting debts owed by
Executive to the Company or (ii) issuing Class A Senior Units or a promissory
note. If the Company assigns any of its repurchase rights to such a Key
Employee, and such Key Employee fails to exercise such assigned repurchase
rights, the Company shall once again have the right to exercise (or assign) such
rights.
(c) REPURCHASE PRICE. The repurchase price (the "REPURCHASE PRICE")
for any Time-Vested Securities to be repurchased hereunder shall be the Fair
Market Value (as determined below) of such securities on the date of the
Repurchase Event giving rise to such repurchase. The Repurchase Price of any
Un-Time-Vested Securities to be repurchased hereunder shall be the Original Cost
of such securities (with securities having a lower Original Cost being subject
to repurchase prior to securities with a higher Original Cost).
(d) REPURCHASE NOTICE. Each "REPURCHASE NOTICE" delivered hereunder
shall set forth the amount, type, and class of Executive Securities (including,
if applicable, the amount of Un-Time-Vested Securities and/or Time-Vested
Securities) to be acquired from each such holder and the aggregate consideration
to be paid for such Executive Securities. The Executive Securities to be
repurchased pursuant to any Repurchase Notice shall first be satisfied to the
extent possible from the Executive Securities held by Executive at the time of
delivery of such Repurchase Notice. If the amount of Executive Securities then
held by Executive is less than the total amount of Executive Securities that
have been elected to be purchased pursuant to such Repurchase Notice, the
electing party or parties shall purchase the remaining securities elected to be
purchased from the other holder(s) of Executive Securities, pro rata according
to the amount of Executive Securities held of record by each such other holder
at the time of delivery of such Repurchase Notice. The amount of Un-Time-Vested
Securities and Time-Vested Securities repurchased hereunder shall be deemed to
be allocated among Executive and the other holders of repurchased Executive
Securities (if any) pro rata according to the amount of Executive Securities to
be purchased from such persons.
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(e) FAIR MARKET VALUE OF REPURCHASED EXECUTIVE SECURITIES.
(i) The "FAIR MARKET VALUE" of Time-Vested Securities subject
to repurchase hereunder (the "VALUED SECURITIES") shall be determined in
accordance with this paragraph (e).
(ii) A majority interest of the Company and/or any assignees
of the Company's repurchase rights ("majority" determined based on the amount of
Valued Securities to be purchased by each), on the one hand, and the holders of
a majority of the Valued Securities to be repurchased, on the other hand, shall
attempt in good faith to agree on the Fair Market Value of the Valued Securities
to be repurchased. Any agreement reached by such Persons 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 Repurchase Event 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 primary 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. If the Fair Market Value of any Valued Securities on the date
that is 180 days after the date of the Repurchase Event (the "SIX-MONTH
ANNIVERSARY DATE") (determined as described in the immediately preceding
sentence with respect to such Six-Month Anniversary Date, rather than with
respect to the date of the Repurchase Event) is greater than the Fair Market
Value of such Valued Securities determined as described in the immediately
preceding sentence with respect to the date of the Repurchase Event, then the
"Fair Market Value" of such publicly traded Valued Securities shall be the Fair
Market Value determined as of the Six-Month Anniversary Date.
(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) A majority interest of the Company and/or any
assignees of the Company's repurchase rights ("majority" determined based on the
amount of Valued Securities to be purchased by each), on the one hand, and the
holders of a majority of the Valued Securities to be repurchased, 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 if
the Valued Securities include any Un-Performance-Vested Securities, experienced
in valuing contingent or derivative assets), and the two investment
bankers/appraisers so selected shall together select a third investment
banker/appraiser similarly qualified.
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(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 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 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) that is not an Un-Performance-Vested 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 Repurchase Event (determined on a fully diluted,
as-if-converted basis, but excluding all Un-Performance-Vested Securities);
2) the fair market value of any
Un-Performance-Vested Securities shall reflect (x) the expected market value of
such securities at such future time as such securities are expected to become
performance vested under the terms of the Performance Vesting Agreement,
appropriately discounted to its present value as of the relevant valuation date
based upon the amount of time from the relevant valuation date until the date on
which such Un-Performance-Vested Securities are expected to performance vest (if
at all), and (y) the magnitude of the risk that such securities may never become
performance vested under the terms of the Performance Vesting Agreement; and
3) 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 (structured
to produce the highest for such securities) 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 Company
and/or the Company's assignees, and to each of the holders of the Valued
Securities to be repurchased.
(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 purchase
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Executive Securities hereunder may at any time within five days after receiving
written notice of such determination rescind its prior exercise of such Person's
repurchase option by giving written notice of such revocation to the holder or
holders of the Executive Securities to be repurchased, and upon such revocation
the revoking party will be treated as if it had never exercised such repurchase
option (it being understood that such revoking party may not then exercise such
repurchase option again with respect to the same Repurchase Event).
(D) A majority interest of the Company and/or any
assignees of the Company's repurchase rights ("majority" determined based on the
amount of Valued Securities to be purchased by each), on the one hand, and the
holders of a majority of the Valued Securities to be repurchased, on the other
hand, will each pay the costs of their own chosen appraiser and 50% of the costs
of the third appraiser.
(f) CLOSING OF EACH REPURCHASE. Within 10 days after the Repurchase
Price for the Executive Securities to be repurchased at any repurchase hereunder
has been determined, the Company shall send a notice to each holder of Executive
Securities setting forth the consideration to be paid for such securities and
the time and place for the closing of the transaction, which date shall not be
more than 30 days nor less than five days after the delivery of such notice. At
each such closing, the holders of Executive Securities shall deliver all
certificates (if any exist) evidencing the Executive Securities to be
repurchased at such closing to the purchaser or purchasers thereof, and such
purchaser or purchasers shall pay for the Executive Securities to be purchased
at such closing by delivery of a check or wire transfer of immediately available
funds in the aggregate amount of the Repurchase Price for such Executive
Securities; PROVIDED that if the Company is to purchase any Executive Securities
from Executive at such closing, the Company may elect (by action of the Board)
to pay all or any portion of the Repurchase Price for such Executive Securities
by setting off against such Repurchase Price any bona fide debts owed
(regardless of whether then due and payable) by Executive to the Company or any
of its Subsidiaries; AND PROVIDED FURTHER that if the Company is to purchase any
Executive Securities at such closing, the Company may elect (by action of the
Board) to pay all or any portion of the Repurchase Price for such Executive
Securities as follows:
(i) in accordance with the LLC Agreement, by issuing in
exchange for such Executive Securities an equal number of Class A Senior Units,
and each such Class A Senior Unit issued in connection with such repurchase
shall be deemed as of the date of such repurchase to have capital contributions
to the Company made with respect to such Class A Senior Unit equal to the
Repurchase Price for the Executive Securities in exchange for which such Class A
Senior Unit was issued; or
(ii) if the Company has prior to the date of such repurchase
converted into a corporation or other corporate form, in the form of a
promissory note, which promissory note shall be subordinated to all of the
Company's senior debt obligations either then or thereafter incurred, shall earn
simple annual interest at a rate of 8% per annum, shall have all principal and
accrued interest due and payable upon maturity, and shall mature upon the
earliest to occur of the Company's initial Public Offering (if such initial
Public Offering has not occurred prior to the issuance of such promissory note),
a Sale of the Company, or the fourth anniversary of the issuance of such
promissory note.
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The purchasers of Executive Securities hereunder shall be entitled to
receive customary representations and warranties from the sellers, including
representations and warranties regarding good title to such securities, free and
clear of any liens or encumbrances.
(g) GENERAL LOOK-BACK RIGHTS. If (i) upon any Repurchase Event by
reason of Executive's death, Disability, or a termination by the Company without
Cause (such a Repurchase Event, a "Type I Repurchase Event"), the Company
repurchases any Valued Securities pursuant to the terms of this Section 3, (ii)
a Sale of the Company or the Company's initial Public Offering is consummated
within the 1-year period commencing on the date of such Type I Repurchase Event,
and (iii) the value of the Company's equity implied by the sale price of such
Sale of the Company, or the pre-money valuation of the Company's equity (I.E.,
the value of the Company's equity prior to giving effect to such initial Public
Offering) implied by such initial Public Offering, (as applicable, the "IMPLIED
VALUATION") is greater than the value of the Company's equity actually utilized
to determine the Fair Market Value of such repurchased Valued Securities
pursuant to Section 3(e), then the Company shall in connection with such Sale of
the Company or initial Public Offering pay to each Person from whom such Valued
Securities were repurchased the difference of (x) the Fair Market Value of such
Valued Securities purchased by the Company from such Person that would have been
calculated pursuant to Section 3(e) had the Implied Valuation been used as the
Company's equity value, MINUS (y) the Repurchase Price actually paid for such
Valued Securities purchased by the Company from such Person. The Company shall
have the right to pay such amounts in the same manner or form specified in
Section 3(f) as the Company may pay the Repurchase Price for any Executive
Securities at the closing of any repurchase hereunder.
(h) RESTRICTIONS. Notwithstanding anything to the contrary contained
in this Agreement, all repurchases of Executive Securities by the Company shall
be subject to applicable restrictions contained in the Delaware General
Corporation Law, the Delaware Limited Liability Company Act and in the Company's
and its Subsidiaries' debt and equity financing agreements. If any such
restrictions prohibit the repurchase of Executive Securities hereunder which the
Company is otherwise entitled to make, the time periods provided in this
paragraph 3 shall be suspended, and the Company may make such repurchases as
soon as it is permitted to do so under such restrictions, unless by such time
such repurchase option has terminated pursuant to paragraph (i) below.
(i) TERMINATION OF REPURCHASE OPTIONS. The repurchase provisions
under this paragraph 3 (and the rights and obligations created thereby) shall
cease to apply to all Time-Vested Securities upon the consummation of a
Qualified Sale of the Company or a Qualified Public Offering (it being
understood that (i) such provisions, rights, and obligations shall continue to
apply to all Un-Time-Vested Securities until such time as they become
Time-Vested Securities in accordance with the terms hereof, and (ii) the
forfeiture provisions of the Performance Vesting Agreement shall continue to
apply to all Un-Performance-Vested Securities until such time as they become
Performance-Vested Securities in accordance with the terms of the Performance
Vesting Agreement).
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4. RESTRICTIONS ON TRANSFER.
(a) OPINION OF VALID TRANSFER. In addition to any other restrictions
on transfer imposed by this Agreement, the Securityholders Agreement, the
Performance Vesting Agreement, or the LLC Agreement, no holder of Executive
Securities may sell, transfer or dispose of any Executive Securities (except
pursuant to an effective registration statement under the Securities Act)
without first delivering to the Company an opinion of counsel (reasonably
acceptable in form and substance to the Company) that neither registration nor
qualification under the Securities Act or applicable state securities laws is
required in connection with such transfer.
(b) RESTRICTIVE LEGEND. The certificates representing Executive
Securities shall bear a legend in substantially the following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ORIGINALLY ISSUED
ON DECEMBER 2, 1998, HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "ACT"), OR THE SECURITIES LAWS OF ANY STATE,
AND SUCH SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF
AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR AN EXEMPTION FROM
REGISTRATION THEREUNDER.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE ALSO SUBJECT TO
ADDITIONAL RESTRICTIONS ON TRANSFER, VESTING PROVISIONS, AND
REPURCHASE OPTIONS SET FORTH IN AN EXECUTIVE SECURITIES AGREEMENT
BETWEEN THE ISSUER OF SUCH SECURITIES (THE "ISSUER") AND THE INITIAL
HOLDER OF SUCH SECURITIES. A COPY OF SUCH AGREEMENT MAY BE OBTAINED
BY THE HOLDER HEREOF AT THE ISSUER'S PRINCIPAL PLACE OF BUSINESS
WITHOUT CHARGE."
The legend set forth above shall be removed from the certificates evidencing any
securities which cease to be Executive Securities.
(c) RETENTION OF EXECUTIVE SECURITIES.
(i) Executive shall not sell, transfer, assign, pledge or
otherwise dispose of (whether with or without consideration and whether
voluntarily or involuntarily or by operation of law) any interest in any
Executive Securities (a "TRANSFER"), except (x) with respect to
Un-Performance-Vested Securities, pursuant to the repurchase provisions of
Section 3 hereof or the forfeiture provisions of the Performance Vesting
Agreement (each, an "EXEMPT TRANSFER"), or (y) with respect to all other
Executive Securities, pursuant to (A) the repurchase provisions of Section 3
hereof, (B) the "Participation Rights" provisions set forth in the
Securityholders Agreement, or (C) a Sale of the Company (each of (A) through
(C), an "EXEMPT TRANSFER").
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(ii) The restrictions contained in this paragraph (c) shall
not apply with respect to transfers of Executive Securities (other than
Un-Performance-Vested Securities) (A) pursuant to applicable laws of descent and
distribution or (B) among Executive's Family Group; PROVIDED that the
restrictions contained in this paragraph shall continue to be applicable to the
Executive Securities after any such Transfer, the transferees of such Executive
Securities shall have agreed in writing to be bound by the provisions of this
Agreement with respect to the Executive Securities so transferred, and (prior to
the death of Executive) each such transferee of Executive Securities shall have
entered into proxies and other agreements satisfactory to the holders of a
majority of the Purchaser Securities pursuant to which Executive shall have the
sole right to vote such Executive Securities for all purposes (subject to any
applicable voting agreements set forth herein or in the Securityholders
Agreement). For purposes of this Agreement, "FAMILY GROUP" means Executive's
spouse, siblings and descendants (whether natural or adopted) and any of such
descendants' spouses, any trust which at the time of such Transfer and at all
times thereafter is and remains solely for the benefit of Executive and/or
Executive's spouse, siblings, and/or descendants and/or such descendants'
spouses, and any family partnership the partners of which consist solely of
Executive, such spouse, such siblings, such descendants, such descendants'
spouses, and/or such trusts.
(iii) The restrictions on the transfer of Executive Securities
set forth in this paragraph (c) shall continue with respect to each Executive
Security following any Transfer thereof (other than an Exempt Transfer);
PROVIDED that upon the consummation of a Qualified Public Offering, the
restrictions set forth in this paragraph (c) shall thereafter cease to apply to
all Fully Vested Securities, it being understood that such restrictions shall
continue to apply to all other Executive Securities until such time as they
become Fully Vested Securities.
5. CONFIDENTIALITY.
(a) NONDISCLOSURE AND NONUSE OF CONFIDENTIAL INFORMATION. Executive
shall not disclose or use at any time, either during his employment with the
Company or its Subsidiaries or thereafter, any Confidential Information (as
defined below) of which Executive is or becomes aware, whether or not such
information is developed by him, except to the extent that such disclosure or
use is directly related to and required by Executive's performance of duties
assigned to Executive by the Company or its Subsidiaries. Executive shall take
all appropriate steps to safeguard Confidential Information and to protect it
against disclosure, misuse, espionage, loss and theft. As used in this
Agreement, the term "CONFIDENTIAL INFORMATION" means information that is not
generally known to the public and that is used, developed or obtained by the
Company or its Subsidiaries in connection with their business, including but not
limited to (i) products or services, (ii) fees, costs and pricing structures,
(iii) designs, (iv) analysis, (v) drawings, photographs and reports,
(vi) computer software, including operating systems, applications and program
listings, (vii) flow charts, manuals and documentation, (viii) data bases,
(ix) accounting and business methods, (x) inventions, devices, new developments,
methods and processes, whether patentable or unpatentable and whether or not
reduced to practice, (xi) customer and client information (including customer or
client lists), (xii) copyrightable works, (xiv) all technology and trade
secrets, (xv) business plans and financial models, and (xvi) all similar and
related information in whatever form. Confidential Information shall not
include any information that has been published in a form generally available to
the public
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prior to the date Executive proposes to disclose or use such information.
Information shall not be deemed to have been published merely because individual
portions of the information have been separately published, but only if all
material features constituting such information have been published in
combination.
(b) THE COMPANY'S OWNERSHIP OF INTELLECTUAL PROPERTY.
(i) ACKNOWLEDGMENT OF COMPANY OWNERSHIP. If Executive
as part of his activities on behalf of the Company or its Subsidiaries
generates, authors or contributes to any invention, design, new development,
device, product, method or process (whether or not patentable or reduced to
practice or constituting Confidential Information), any copyrightable work
(whether or not constituting Confidential Information) or any other form of
Confidential Information relating directly or indirectly to the Company's and
its Subsidiaries' business as now or hereafter conducted (collectively,
"INTELLECTUAL PROPERTY"), Executive acknowledges that such Intellectual Property
is the exclusive property of the Company and hereby assigns all right, title and
interest in and to such Intellectual Property to the Company. Any copyrightable
work prepared in whole or in part by Executive will be deemed "a work made for
hire" under Section 201(b) of the 1976 Copyright Act, and the Company shall own
all of the rights comprised by the copyright therein. Executive shall promptly
and fully disclose all Intellectual Property to the Company and shall cooperate
with the Company to protect the Company's interests in and rights to such
Intellectual Property (including, without limitation, providing reasonable
assistance in securing patent protection and copyright registrations and
executing all documents as reasonably requested by the Company, whether such
requests occur prior to or after termination of Executive's employment by the
Company).
(ii) EXECUTIVE INVENTION. Executive understands that
paragraph (b)(i) of this Section regarding the Company's ownership of
Intellectual Property does not apply to any invention for which no equipment,
supplies, facilities or trade secret information of the Company were used and
which was developed entirely on Executive's own time, unless (i) the invention
relates to the business of the Company or any of its Subsidiaries or to their
actual or demonstrably anticipated research or development or (ii) the invention
results from any work performed by Executive for the Company or any of its
Subsidiaries.
(c) DELIVERY OF MATERIALS UPON TERMINATION OF EMPLOYMENT. As
requested by the Company from time to time and upon the termination of
Executive's employment with the Company and its Subsidiaries for any reason,
Executive shall promptly deliver to the Company all copies and embodiments, in
whatever form, of all Confidential Information and Intellectual Property in
Executive's possession or within his control (including, but not limited to,
written records, notes, photographs, manuals, notebooks, documentation, program
listings, flow charts, magnetic media, disks, diskettes, tapes and all other
materials containing or constituting any Confidential Information or
Intellectual Property) irrespective of the location or form of such material
and, if requested by the Company, shall provide the Company with written
confirmation that all such materials have been delivered to the Company.
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6. NONCOMPETITION.
(a) COVENANTS. During the term of this Agreement and for a period of
twenty-four (24) months after termination of this Agreement (the "Noncompetition
Period"), Executive shall not, directly or indirectly, as an officer, director,
employee, consultant, owner, shareholder, adviser, joint venturer, or otherwise,
compete with the Company or any Subsidiary in any geographical market in which
the Company or any Subsidiary conducts business (or any geographical market with
respect to which the Company proposes in good faith to conduct business, as
evidenced by an approved business plan or a Board resolution authorizing the
Company to use its resources to investigate or otherwise pursue an opportunity
in such market) (the "Protected Region"): (i) in construction and operation of
competitive local exchange telecommunications systems; or (ii) in any other line
of business in which the Company was engaged at any time during the term of this
Agreement; or (iii) in any other line of business into which the Company during
the term of Executive's employment, formed an intention to enter during the term
of Executive's obligation not to compete, and which the Company's Board has
disclosed to Executive in writing within ten (10) days following the termination
of this Agreement. This covenant shall not preclude Executive from owning less
than two percent (2%) of the securities of any competitor of the Company if such
securities are publicly traded on a nationally recognized stock exchange or
over-the-counter market.
(b) ACKNOWLEDGMENTS. Executive acknowledges that the foregoing
geographic restriction on competition is fair and reasonable in its duration,
geographical area and scope, given the geographic scope of the Company's
business operations and the nature of Executive's position with the Company.
Executive also acknowledges that while employed by the Company Executive will
have access to information that would be valuable or useful to the Company's
competitors, and therefore acknowledges that the foregoing restrictions on
Executive's future employment and business activities are fair and reasonable.
Executive acknowledges and is prepared for the possibility that Executive's
standard of living may be reduced during the Noncompetition Period, and assumes
and accepts any risk associated with that possibility.
(c) JUDICIAL MODIFICATION. If the final judgment of a court of
competent jurisdiction declares that any term or provision of this Section is
invalid or unenforceable, the parties agree that the court making the
determination of invalidity or unenforceability shall have the power to reduce
the scope, duration, or geographic area of the term or provision, to delete
specific words or phrases, or to replace any invalid or unenforceable term or
provision with a term or provision that is valid and enforceable and that comes
closest to expressing the intention of the invalid or unenforceable term or
provision, and this Agreement shall be enforceable as so modified after the
expiration of the time within which the judgment or decision may be appealed.
7. NONSOLICITATION. During the term of this Agreement and for a
period of twenty four (24) months after termination of this Agreement, Executive
shall not without the Company's prior written consent, directly or indirectly:
(a) cause or attempt to cause any employee, agent or contractor of
the Company or any Company affiliate, to terminate his or her employment, agency
or contractor relationship with Company or any Company affiliate; interfere or
attempt to interfere with the relationship between
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the Company and any employee, contractor or agent of the Company; hire or
attempt to hire any employee, agent or contractor of the Company or any Company
affiliate; or conduct business of any kind with any Company contractor.
(b) solicit business from or conduct business with any customer or
client served by the Company; or interfere or attempt to interfere with any
transaction, agreement or business relationship in which the Company or any
affiliate was involved.
8. DEFINITIONS.
"AGREEMENT" has the meaning set forth in the preamble.
"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.
"CAUSE" means (A) any act by Executive, where in respect of such act
Executive is ultimately convicted or enters a plea of guilty or NOLO CONTENDERE
to a felony (or crime of similar gravity under the laws of another
jurisdiction), (B) Executive's willful misconduct, gross negligence,
perpetration of or participation in a fraud, in each case where such acts are
materially injurious to the Company or any of its Subsidiaries or any affiliate
thereof, (C) Executive's breach in any material respect of the provisions of
Section 5 (Confidentiality), Section 6 (Noncompetition) or Section 7
(Nonsolicitation) or (D) Executive's nonperformance including without
limitation, failure to perform his duties as directed by the Company or failure
to achieve specific performance objectives established by the Company.
"CLASS A SENIOR UNITS" means the Class A Senior Units of the Company,
having the rights and preferences set forth in the LLC Agreement.
"CLASS B SENIOR UNITS" means the Class B Senior Units of the Company,
having the rights and preferences set forth in the LLC Agreement.
"CLASS C SENIOR UNITS" means the Class C Senior Units of the Company,
having the rights and preferences set forth in the LLC Agreement.
"COMMON UNITS" means the Common Units of the Company, having the
rights and preferences set forth in the LLC Agreement.
"COMPANY" has the meaning set forth in the preamble.
"CONFIDENTIAL INFORMATION" has the meaning set forth in Section 5(a).
"DISABILITY" means any illness, accident, injury, physical or mental
incapacity or other disability, where such condition has rendered, or is
expected to render (as determined in the good faith judgment of the Board),
Executive unable or unfit to perform effectively the duties and
-14-
obligations of his employment or to participate effectively and actively in the
management of the Company for a period of at least 90 days.
"EQUITY PURCHASE AGREEMENT" means the equity purchase agreement dated
May 18, 1998, by and among the Company and certain investors, as amended from
time to time in accordance with the terms thereof.
"EXECUTIVE" has the meaning set forth in the preamble.
"EXECUTIVE SECURITIES" means (i) the Common Units issued to Executive
hereunder 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, or upon
conversion or exercise of any of the foregoing; PROVIDED that Executive
Securities shall not include any Senior Units. As to any particular securities
constituting Executive 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 pursuant to the provisions hereof or forfeited pursuant to the
provisions of the Performance Vesting Agreement. "Executive Securities" refers
only to Executive Securities under this Agreement and does not in any way refer
to any securities referred to as Executive Securities under any other executive
securities agreement between the Company and a Key Employee of the Company or
its Subsidiaries.
"EXEMPT TRANSFER" has the meaning set forth in Section 4(c)(i).
"FAIR MARKET VALUE" has the meaning set forth in Section 3(e).
"FAMILY GROUP" has the meaning set forth in Section 4(c)(ii).
"FULLY VESTED SECURITIES" means Executive Securities which both (i)
are Time-Vested Securities and (ii) are not Un-Performance-Vested Securities.
"IMPLIED VALUATION" has the meaning set forth in Section 3(g).
"INTELLECTUAL PROPERTY" has the meaning set forth in Section 5(b)(i).
"JOINDER AGREEMENT" means the joinder and rights agreement of even
date herewith entered into by and between the Company and the Executive,
pursuant to which Executive shall become a party to the LLC Agreement, the
Securityholders Agreement, the Registration Agreement and the Performance
Vesting Agreement as if he were an original signatory to each such agreement.
"KEY EMPLOYEE" has the meaning set forth in Section 3(b).
-15-
"LLC AGREEMENT" means the limited liability company agreement
governing the affairs of the Company, as amended from time to time in accordance
with its terms.
"NONCOMPETITION PERIOD" has the meaning set forth in Section 6(a).
"NONSOLICITATION PERIOD" has the meaning set forth in Section 7.
"ORIGINAL COST," as to any particular securities, shall mean the
initial price paid to the Company upon issuance of such securities (as such
price is equitably adjusted for any securities splits, securities dividends,
securities combinations, conversions, recapitalizations or reorganizations).
"PERFORMANCE-VESTED SECURITIES" means Performance Vesting Securities
that have performance vested pursuant to the terms of the Performance Vesting
Agreement.
"PERFORMANCE VESTING AGREEMENT" means that certain performance vesting
agreement dated May 18, 1998, by and among the Company, certain Key Employees
(including Executive), and the Investors party thereto, as amended from time to
time in accordance with its terms.
"PERFORMANCE VESTING SECURITIES" means (i) the Common Units specified
in the Performance Vesting Agreement as subject to performance vesting
thereunder (regardless of whether such Common Units have or have not performance
vested pursuant to the terms thereof), and (ii) any securities issued directly
or indirectly with respect to any Performance Vesting 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, or upon conversion or exercise of any of the foregoing;
PROVIDED that Performance Vesting Securities shall not include any Senior Units.
As to any particular securities constituting Performance Vesting Securities,
such securities shall cease to be Performance Vesting 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
pursuant to the provisions hereof or forfeited pursuant to the provisions of the
Performance Vesting Agreement.
"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 in the LLC Agreement.
"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
-16-
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 a successor form adopted by the
Securities and Exchange Commission) or otherwise.
"PURCHASER SECURITIES" means (i) the Preferred Units issued pursuant
to the Equity Purchase Agreement, (ii) any Common Units issued upon conversion
of the Preferred Units referenced in clause (i), and (iii) any securities issued
directly or indirectly with respect to any Purchaser 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, or upon conversion or exercise of any of the foregoing
securities; 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 forfeited pursuant to the provisions 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 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 to the Company under
the Equity Purchase Agreement (including the initial purchase price and all
subsequent contributions made in respect of the Preferred Units under the
terms of the Equity Purchase Agreement) made on or prior to the date of
such Public Offering with respect to all Purchaser Securities then
outstanding, 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.
"QUALIFIED SALE OF THE COMPANY" has the meaning set forth in Section
2(b).
"REPURCHASE EVENT" has the meaning set forth in Section 3(a).
"REPURCHASE NOTICE" has the meaning set forth in Section 3(d).
-17-
"REPURCHASE PRICE" has the meaning set forth in Section 3(c).
"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).
"SECURITIES ACT" means the Securities Act of 1933, as amended, or any
similar federal law then in force.
"SECURITYHOLDERS AGREEMENT" means the securityholders agreement dated
May 18, 1998 entered into by and among the Company and certain of its
securityholders, as amended from time to time in accordance with its terms.
"SENIOR UNITS" means the Company's Class A Senior Units, Class B
Senior Units, and Class C Senior Units.
"SIX-MONTH ANNIVERSARY DATE" has the meaning set forth in Section
3(e)(iii).
"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.
"TIME-VESTED SECURITIES" has the meaning set forth in Section 2(a).
"TRANSFER" has the meaning set forth in Section 4(c)(i).
"TYPE I REPURCHASE EVENT" has the meaning set forth in Section 3(g).
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"UN-PERFORMANCE-VESTED SECURITIES" means Performance Vesting
Securities that have not yet performance vested pursuant to the provisions of
the Performance Vesting Agreement.
"UN-TIME-VESTED SECURITIES" has the meaning set forth in Section 2(a).
"VALUED SECURITIES" has the meaning set forth in Section 3(e)(i).
9. MISCELLANEOUS PROVISIONS.
(a) TRANSFERS IN VIOLATION OF AGREEMENT. Any Transfer or attempted
Transfer of any Executive Securities in violation of any provision of this
Agreement shall be void, and the Company shall not record such purported
Transfer on its books or treat any purported transferee of such Executive
Securities as the owner of such securities for any purpose.
(b) 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 invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability shall not affect
any other provision or any other jurisdiction, but this Agreement shall be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.
(c) COMPLETE AGREEMENT. This Agreement, those documents expressly
referred to herein and related documents among the parties of even date herewith
and therewith embody the complete agreement and understanding among the parties
hereto and supersede and preempt any prior understandings, agreements or
representations by or among the parties, written or oral, which may have related
to the subject matter hereof in any way.
(d) COUNTERPARTS. This Agreement may be executed in separate
counterparts, none of which need contain the signature of more than one party
hereto but each of which shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement.
(e) SUCCESSORS AND ASSIGNS. Except as otherwise provided herein,
this Agreement shall bind the parties hereto and their respective successors and
assigns and shall inure to the benefit of and be enforceable by the parties
hereto and their respective successors and assigns, whether so expressed or not.
(f) CHOICE OF LAW. ALL ISSUES AND QUESTIONS CONCERNING THE
CONSTRUCTION, VALIDITY, ENFORCEMENT AND INTERPRETATION OF THIS AGREEMENT 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 STATUTES,
RULES, PROVISIONS, OR DECISIONAL LAW (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, WITHOUT GIVING EFFECT TO ANY CHOICE
OF LAW OR CONFLICT OF LAW STATUTES,
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RULES, PROVISIONS, OR DECISIONAL LAW (WHETHER OF THE STATE OF DELAWARE OR ANY
OTHER JURISDICTION), SHALL CONTROL THE INTERPRETATION AND CONSTRUCTION OF THIS
AGREEMENT, EVEN THOUGH UNDER THAT JURISDICTION'S CHOICE OF LAW OR CONFLICT OF
LAW ANALYSIS, THE SUBSTANTIVE LAW OF SOME OTHER JURISDICTION WOULD ORDINARILY
AND OTHERWISE APPLY.
(g) JURISDICTION; SERVICE OF PROCESS. ANY ACTIONS OR PROCEEDINGS,
WHETHER AT LAW OR IN EQUITY, SEEKING TO ENFORCE OR TO ENJOIN THE ENFORCEMENT OF
ANY PROVISION OF THIS AGREEMENT, OR BASED ON ANY RIGHT ARISING OUT OF THIS
AGREEMENT SHALL BE BROUGHT, TRIED AND LITIGATED AGAINST ANY OF THE PARTIES IN
THE COURTS OF THE STATE OF COLORADO, OR, IF IT HAS OR CAN ACQUIRE JURISDICTION,
IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO, AND EACH OF
THE PARTIES HEREBY CONSENTS TO THE JURISDICTION OF SUCH COURTS (AND OF THE
APPROPRIATE APPELLATE COURTS) IN ANY SUCH ACTION OR PROCEEDING AND WAIVES ANY
AND ALL POSSIBLE OBJECTIONS TO VENUE LAID THEREIN, INCLUDING WITHOUT LIMITATION
FORUM NON CONVENIENS. PROCESS IN ANY ACTION OR PROCEEDING REFERRED TO IN THE
PRECEDING SENTENCE MAY BE SERVED ON ANY PARTY ANYWHERE IN THE WORLD BY PREPAID
FEDERAL EXPRESS, DHL OR OTHER INTERNATIONAL AIR COURIER TO THE EXECUTIVE AT THE
LAST KNOWN ADDRESS PROVIDED TO THE COMPANY IN WRITING, TO THE COMPANY AT THE
ADDRESS SET FORTH IN SECTION 9(m) HEREIN OR SUCH OTHER ADDRESS PROVIDED TO
EXECUTIVE IN WRITING, AND TO THE LAST KNOWN ADDRESS OF ALL OTHER ADDRESSEES.
(h) REMEDIES. Each of the parties to this Agreement (including any
Key Employee to which the Company assigns any of its repurchase rights under
Section 3 hereof, as third-party beneficiaries) shall be entitled to enforce its
rights under this Agreement specifically, to recover damages and costs
(including reasonable attorney's fees) caused by any breach of any provision of
this Agreement and to exercise all other rights existing in its favor. The
parties hereto agree and acknowledge that money damages would not be an adequate
remedy for any breach of the provisions of this Agreement and that any party may
in its sole discretion, subject to the limitations set forth in Section 9(g)
hereof, apply to any court of law or equity of competent jurisdiction (without
posting any bond or deposit) for specific performance and/or other injunctive
relief in order to enforce or prevent any violations of the provisions of this
Agreement.
(i) AMENDMENT, MODIFICATION, OR WAIVER. The provisions of this
Agreement may be amended, modified, or waived only with the prior written
consent of the Company and the Executive.
(j) THIRD-PARTY BENEFICIARIES. The parties hereto acknowledge and
agree that certain provisions of this Agreement are intended for the benefit of
any Key Employee to which the Company assigns any of its repurchase rights under
Section 3 hereof, that such Persons are third-party beneficiaries of this
Agreement, and that the provisions of this Agreement shall be enforceable by
such Persons as provided herein.
(k) 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 or the jurisdiction of the Company's principal office,
the time period shall be extended automatically to the business day immediately
following such Saturday, Sunday or holiday.
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(l) 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.
(m) NOTICES. Subject to the requirements regarding service of
process set forth in Section 9(g) above, 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 THE COMPANY:
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Chief Executive Officer
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
WITH A COPY (WHICH SHALL NOT CONSTITUTE NOTICE) TO:
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
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AND WITH A COPY (WHICH SHALL NOT CONSTITUTE NOTICE) TO:
Holme ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: W. ▇▇▇▇ ▇▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
To Executive: at the address set forth in the Company's records
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.
(n) 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.
* * * * *
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IN WITNESS WHEREOF, the parties hereto have executed this Executive
Securities Agreement on the date first written above.
COMPLETEL LLC
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇, Chief Executive Officer
EXECUTIVE
/s/ ▇▇▇▇▇ ▇▇▇▇▇
---------------------------------------------
▇▇▇▇▇ ▇▇▇▇▇
(Signature Page for Executive Securities Agreement)