Exhibit 10.02
INVESTOR RIGHTS AGREEMENT
INVESTOR RIGHTS AGREEMENT, dated as of January 1, 2005 at 1:00
am Eastern Standard Time, by and between MPOWER HOLDING CORPORATION, a Delaware
corporation (the "Mpower"), MCCC ICG HOLDINGS LLC, a Delaware limited liability
company ("Parent") and ICG Communications, Inc., a Delaware corporation and
wholly owned subsidiary of Parent ("ICG" and together with Parent, the "ICG
Parties").
WHEREAS, pursuant to that certain Asset Purchase Agreement
dated October 22, 2004 (the "Purchase Agreement"), between Mpower, Mpower
Communications Corp., Parent and ICG, ICG is receiving (i) 10,740,030 shares of
Mpower's common stock, par value $.001 per share (the "Common Stock") and (ii)
warrants to acquire 2,000,000 shares of Common Stock at an exercise price equal
to $1.383 (the "Warrants"); and
WHEREAS, pursuant to that certain Subscription Agreement dated
January 1, 2005 (the "Subscription Agreement"), between Mpower and Parent,
Parent is purchasing 1,988,894 shares of Common Stock.
NOW, THEREFORE, in consideration of the premises and the
covenants hereinafter contained and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, and intending to
be legally bound hereby, it is agreed as follows:
1. Definitions. (a) Unless otherwise defined herein, the terms
below shall have the following meanings (such meanings being equally applicable
to both the singular and plural form of the terms defined):
"Affiliate" shall mean, with respect to any specified Person,
any Person that Controls, is Controlled by, or is under common Control with,
such specified Person.
"Agreement" shall mean this Investor Rights Agreement,
including all amendments, modifications and supplements and any exhibits or
schedules to any of the foregoing.
"Beneficial Owner" or "Beneficially Own" has the meaning given
such term in Rule 13d-3 under the Exchange Act; provided that Beneficial
Ownership under Rule 13d-3(d)(1)(i) shall be determined based on whether a
Person has a right to acquire Beneficial Ownership irrespective of whether such
right is exercisable within 60 days of the time of determination.
"Board" means the board of directors of Mpower.
"Business Day" shall mean any day that is not a Saturday, a
Sunday or a day on which commercial banks are required or permitted by law to be
closed in the City of New York in the State of New York.
"Closing Date" has the meaning given to such term in the
Purchase Agreement.
"Control" (including the terms "Controlled by" and "under
common Control with") means the possession, directly, or indirectly through one
or more intermediaries, of the power to direct or cause the direction of the
management and policies of a Person, whether through the ownership of voting
securities, as trustee or executor, by contract or otherwise, including, without
limitation, the ownership, directly or indirectly, of securities having the
power to elect a majority of the board of directors or similar body governing
the affairs of such Person.
"Effective Period" shall mean the period commencing with the
effective date of a Registration Statement and ending upon such time as there
ceases to be any Registrable Securities.
"Encumbrance" shall mean any security interest, pledge,
mortgage, lien, charge, adverse claim of ownership or use, or other encumbrance
of any kind.
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended, and all rules and regulations promulgated thereunder.
"Fair Market Value" shall mean for any applicable measurement
date the closing price of the Common Stock on the American Exchange or, in the
event that trading hours on the American Exchange are extended past 4:00 p.m.
(EST), the last sale price at 4:00 p.m. (EST).
"Fully Diluted Basis" means, with respect to any calculation
of numbers of Common Stock held by Parent, that number of shares of Common Stock
that are required to be included in the denominator to determine Parent's
percentage ownership of Mpower's Common Stock under Rule 13d-3 under the
Exchange Act and with respect to any calculation of any percentage of Common
Stock acquired, held or disposed of by Parent, the percentage of shares of
Common Stock calculated in accordance with Rule 13d-3 under the Exchange Act.
"Group" shall mean a group within the meaning of Section 13d-3
of the Exchange Act.
"Holder" shall mean Parent, ICG, and any transferee of Parent
or ICG to whom Registrable Securities are permitted to be transferred in
accordance with the terms of this Agreement, and, in each case, who continues to
be entitled to the rights of a Holder hereunder.
"NASD" shall mean the National Association of Securities
Dealers, Inc., or any successor entity thereof.
"Parent Director" means such Person as is so designated by
Parent, as such designation may change from time to time in accordance with this
Agreement, to serve as a member of the Board and is elected or appointed to
serve as a member of the Board pursuant to Section 5 hereof.
"Permitted Transferee" means, with respect to a specified
Person, any Affiliate of such Person, provided that such Person is not a
competitor of Mpower, as reasonably determined by the Board. Notwithstanding
anything to the contrary contained herein, Parent and ICG shall be Permitted
Transferees of one another hereunder.
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"Person" shall mean any individual, corporation, partnership,
joint venture, firm, trust, unincorporated organization, government or any
agency or political subdivision thereof or other entity.
"Proceeding" shall mean an action, claim, suit, investigation
or proceeding (including, without limitation, an investigation or partial
proceeding, such as a deposition), whether commenced or threatened.
"Prospectus" shall mean any prospectus filed pursuant to Rule
424 under the Securities Act included in a Registration Statement (including,
without limitation, a prospectus that includes any information previously
omitted from a prospectus filed as part of an effective registration statement
in reliance upon Rule 430A promulgated under the Securities Act), as amended or
supplemented by any prospectus supplement, with respect to the terms of the
offering of any portion of the Registrable Securities covered by such
Registration Statement, and all other amendments and supplements to the
Prospectus, including post-effective amendments, and all material incorporated
by reference or deemed to be incorporated by reference in such Prospectus.
"Registrable Securities" shall mean (a) the shares of Common
Stock issued pursuant to the Purchase Agreement and held by a Holder, (b) the
shares of Common Stock issuable upon the exercise of the Warrants, (c) the
shares of Common Stock issued pursuant to the Subscription Agreement and held by
a Holder and (d) any securities issuable or issued or distributed in respect of
any of the Common Stock identified in clause (a), (b) or (c) by way of stock
dividend or stock split or in connection with a combination of shares,
recapitalization, reorganization, merger, consolidation or otherwise. For
purposes of this Agreement, (i) Registrable Securities shall cease to be
Registrable Securities when a Registration Statement covering such Registrable
Securities has been declared effective under the Securities Act by the SEC and
such Registrable Securities have been disposed of pursuant to such effective
Registration Statement and (ii) the Registrable Securities of a Holder shall not
be deemed to be Registrable Securities at any time when the entire amount of
such Registrable Securities proposed to be sold by such Holder in a single sale
constitutes less than 1% of the then outstanding shares of Common Stock and are
or, in the opinion of counsel satisfactory to Mpower and such Holder, each in
their reasonable judgment, may be, so distributed to the public pursuant to Rule
144 (or any successor provision then in effect) under the Securities Act in any
three-month period or any such Registrable Securities have been sold in a sale
made pursuant to Rule 144 under the Securities Act.
"Sale" shall mean, in respect of any Common Stock, property or
other asset, any sale, assignment, transfer, distribution or other disposition
thereof or of a participation therein, or other conveyance of legal or
beneficial interest therein, or any short position in a security or any other
action or position otherwise reducing risk related to ownership through hedging
or other derivative instruments, whether voluntarily or by operation of law.
"Securities Act" shall mean the Securities Act of 1933, as
amended, and all rules and regulations promulgated thereunder.
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"SEC" shall mean the Securities and Exchange Commission, or
any successor thereto.
(b) The following terms have the meanings set forth in the
Section set forth opposite such term:
Term Section
---- -------
Advice 14(b)
Blackout Period 7
Common Stock Recitals
Initial Restricted Period 2(a)
Indemnified Party 10(d)
Indemnifying Party 10(d)
Losses 6(a)
Mpower Recitals
Offer Price 11
Parent Recitals
Parent Stock 2(a)
Purchase Agreement Recitals
Purchase Offer 11
Registration Statement 6
Sale Notice 11
Warrants Recitals
2. Restrictions on Transferability.
(a) ICG understands and agrees that the shares of Common Stock
acquired pursuant to the Purchase Agreement have not been registered
and are restricted securities under the Securities Act. During the
period ending one year after the Closing Date (the "Initial Restricted
Period"), the ICG Parties may not make or solicit any Sale of, or
create, incur or assume any Encumbrance with respect to, any of the
shares of Common Stock acquired by ICG and its Affiliates pursuant to
the Purchase Agreement or the shares of Common Stock acquired by
Parent pursuant to the Subscription Agreement (collectively, the
"Parent Stock"); provided, however, that the Initial Restriction
Period shall be deemed to end on the date that is six months after the
Closing Date with respect to 25% of the shares of Parent Stock;
provided, further that the ICG Parties may, during the Initial
Restricted Period, make or solicit a Sale to a Permitted Transferee.
(b) After the Initial Restricted Period, each of the ICG
Parties agrees that neither it nor any of its Affiliates will make or
solicit any Sale of, or create, incur or assume any Encumbrance with
respect to, any of the Parent Stock except for a Sale:
(i) to Permitted Transferees;
(ii) in compliance with Rule 144 (not including Rule 144A)
under the Securities Act; or
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(iii) in accordance with and subject to Section 6.
(c) No Sale of Parent Stock to a Permitted Transferee shall be
effective if a purpose or effect of such transfer shall have been to
circumvent the provisions of this Section 2. Each of the ICG Parties
shall remain responsible for the performance of this Agreement by each
Permitted Transferee of such ICG Party to which Parent Stock is
transferred.
(d) Each of the ICG Parties agrees that it will not Sell or
create, incur or assume any Encumbrance with respect to, its interest
in any Permitted Transferee to which it has transferred Parent Stock
unless prior thereto the Parent Stock held by such entity is
transferred to Parent or to one or more Permitted Transferees.
3. Improper Sale or Encumbrance Any attempt not in compliance
with this Agreement to make any Sale of, or create, incur or assume any
Encumbrance with respect to, any shares of Common Stock shall be null and void
and of no force and effect, the purported transferee shall have no rights or
privileges in or with respect to Mpower, and Mpower shall not give any effect in
Mpower's stock records to such attempted Sale or Encumbrance. Furthermore, the
ICG Party engaging or attempting to engage in such Sale or Encumbrance and the
other parties engaging or attempting to engage in such Sale or Encumbrance shall
indemnify and hold harmless Mpower from all losses that Mpower may incur
(including, without limitation, incremental tax liability and lawyers' fees and
expenses) in enforcing the provisions of this Agreement.
4. Restrictive Legends.
(a) Each certificate representing the shares of Parent Stock
shall be stamped or otherwise imprinted with legends in substantially
the following form (in addition to any legends required by agreement
or by applicable state securities laws):
(i) THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT
WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR
DISTRIBUTION THEREOF. SUCH SHARES GENERALLY MAY NOT BE
SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION
OR PURSUANT TO AN APPLICABLE EXEMPTION FROM THE
REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF
SAID ACT.
(ii) THE SHARES REPRESENTED HEREBY ARE SUBJECT TO CERTAIN
RESTRICTIONS UNDER THE TERMS OF THE INVESTOR RIGHTS
AGREEMENT DATED OCTOBER 21, 2004, AS AMENDED FROM TIME
TO TIME, BETWEEN THE ISSUER AND THE HOLDER HEREOF AND
MAY NOT BE OFFERED, SOLD, TRANSFERRED OR OTHERWISE
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DISPOSED OF EXCEPT IN ACCORDANCE WITH THE TERMS OF THAT
AGREEMENT.
(b) Each of the ICG Parties consents to Mpower making a
notation on its records and giving instructions to any transfer agent
of its capital stock in order to implement the restrictions on
transfer established in this Agreement.
(c) If any Parent Stock ceases to be subject to any and all
restrictions on Sale or Encumbrance set forth in Section 2 of this
Agreement or the other provisions set forth in this Agreement, Mpower,
upon the written request of the holder thereof, shall issue to such
holder a new certificate evidencing such Parent Stock without the
first paragraph or without the second paragraph, as applicable, of the
legend required by Section 4 endorsed thereon.
5. Composition of the Board.
(a) As soon as practicable following the Closing Date, Mpower,
through its Board, shall cause to be duly appointed to its Board one
individual designated by Parent, such initial person to be designated
in writing prior to the Closing Date; provided that the individual so
designated, shall be reasonably acceptable to Mpower. Thereafter and
until the first stockholder meeting of Mpower after the date on which
the ICG Parties and their Affiliates, in the aggregate, Beneficially
Own less than 5% of the Common Stock calculated on a Fully Diluted
Basis, at each election of directors at which the term of the Parent
Director will expire, the Board shall recommend for election to the
Board one nominee, and shall use reasonable efforts to solicit proxies
in favor of such nominee consistent with the efforts used to solicit
proxies for the other Board nominees, who will be designated by Parent
and who shall be reasonably acceptable to Mpower.
(b) Each of the ICG Parties hereby agrees that at every
meeting of Mpower's stockholders at which directors are to be elected,
each of the ICG Parties and its Affiliates shall cause all of their
shares of Common Stock to be represented either by proxy or in person
and to be voted in favor of all directors nominated by the Board. If
directors are to be elected by written consent of Mpower's
stockholders, each of the ICG Parties and its Affiliates agree to
execute written consents in favor of the directors nominated by the
Board.
(c) Until the first Board meeting of Mpower after the date on
which the ICG Parties and their Affiliates, in the aggregate,
Beneficially Own less than 5% of the Common Stock calculated on a Fully
Diluted Basis, Parent shall be entitled to designate one individual
(the "Observer") to attend any meetings of the Board; provided,
however, that such person who is not a director appointed to attend
such meetings shall not be entitled to vote on any matters considered
by the Board and shall not be counted with respect to quorum. The Board
shall have the right to exclude the Observer from (i) all or any
portion of a meeting of the Board and (ii) access to any notices
minutes, consents or other materials (the "Materials") provided to the
directors by Mpower in the event Mpower reasonably believes that such
exclusion is reasonably necessary to (A) preserve
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the attorney-client privilege or (B) to protect the confidential
nature of the subject matter of the Board discussion or because of the
competitive nature of such subject matter.
6. Shelf Registration Statement.
(a) Mpower shall prepare and file with the SEC, and thereafter
use its commercially reasonable efforts to have declared effective prior to the
date that is six months after of the date of this Agreement, a "shelf"
Registration Statement (a "Registration Statement") covering the resale of 25%
of the Registrable Securities pursuant to Rule 415 under the Securities Act.
(b) Mpower shall prepare and file with the SEC, and thereafter
use its commercially reasonable efforts to have declared effective prior to the
first anniversary of the date of this Agreement, a Registration Statement
pursuant to Rule 415 under the Securities Act covering the resale of the
remaining 75% of the Registrable Securities not covered by the Registration
Statement set forth in Section 6(a).
(c) Any Registration Statement filed pursuant to this Section
6 shall be on Form S-3, or any successor form (except if Mpower is not then
eligible to register for resale the Registrable Securities on Form S-3, in which
case such Registration Statement shall be on such other form as may be
appropriate under the Securities Act for an offering to be made on a continuous
basis). Mpower shall, subject to the terms of this Agreement, use its
commercially reasonable efforts to keep any Registration Statements continuously
effective from the date that such Registration Statement is declared effective
during the Effective Period to the extent required to permit the disposition (in
accordance with the intended method or methods thereof, as aforesaid) of the
Registrable Securities so registered.
7. Blackout Periods. Notwithstanding anything to the contrary
contained herein, Mpower shall have the right to defer or delay filing any
Registration Statement for a period of not more than 60 days or suspend sales
under any Registration Statement filed hereunder or defer the updating of such
filed Registration Statement and suspend sales thereunder during no more than
two periods aggregating not more than 60 days (each a "Blackout Period"), in
either case in the event that such registration or sale would interfere with any
material transaction then being proposed by Mpower or would otherwise require
disclosure of any material event that Mpower would not otherwise be required to
disclose.
8. Registration Procedures. In connection with using its
commercially reasonable efforts to effect the registration under any
Registration Statement of any Registrable Securities, Mpower shall, as
expeditiously as possible:
(a) not less than five Business Days prior to filing a
Registration Statement or any related Prospectus or any amendments or
supplements thereto (for purposes of this subsection, amendments shall
not be deemed to include any filing that Mpower is required to make
pursuant to the Exchange Act), furnish the representatives of the
Holders referred to in Section 8(m) copies of all documents proposed
to be filed, which documents will be subject to the reasonable review
of Parent's counsel, and will promptly incorporate into such
Registration Statement any information a Holder may reasonably
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determine is necessary to be included therein; provided, however, that
Mpower shall not be required to include any such information if the
information would in the good faith judgment of Mpower violate
applicable law. Mpower shall not file any Registration Statement or
any such Prospectus or any such amendments or supplements thereto to
which the Holders of a majority of the Registrable Securities shall
reasonably object in good faith, provided that Mpower is notified of
such objection in writing no later than three Business Days after the
Holders have been furnished copies of such documents;
(b) (i) prepare and file with the SEC such amendments and
supplements to any Registration Statement and the Prospectus used in
connection therewith as may be necessary to keep such Registration
Statement continuously effective for the Effective Period and to
comply with the provisions of the Securities Act with respect to the
sale or other disposition of all securities covered by such
Registration Statement until the earlier of such time as all of such
securities have been disposed of in a public offering or the
expiration of the Effective Period; (ii) cause the related Prospectus
to be amended or supplemented by any required Prospectus supplement,
and as so supplemented or amended to be filed pursuant to Rule 424;
(iii) respond as promptly as reasonably practicable to any comments
received from the SEC with respect to such Registration Statement or
any amendment thereto and, as promptly as reasonably practicable, upon
request, provide to the Holders true and complete copies of all
correspondence from and to the SEC relating to such Registration
Statement; and (iv) comply in all material respects with the
provisions of the Securities Act and the Exchange Act with respect to
the disposition of all Registrable Securities covered by such
Registration Statement during the applicable period in accordance with
the intended methods of disposition by the Holders thereof set forth
in such Registration Statement as so amended or in such Prospectus as
so supplemented;
(c) furnish to each Holder, without charge, such number of
conformed copies of a Prospectus, including a preliminary Prospectus,
and each amendment and supplement thereto, in conformity with the
requirements of the Securities Act, and such other documents, as such
selling security holders may reasonably request;
(d) use its commercially reasonable efforts to register or
qualify the Registrable Securities covered by any Registration
Statement under such other securities or blue sky laws of such
jurisdictions within the United States and Puerto Rico as each Holder
of such securities shall reasonably request, to keep such registration
or qualification in effect for so long as such Registration Statement
remains in effect, and to take any other action which may be
reasonably necessary to enable such seller to consummate the
disposition in such jurisdictions of the Registrable Securities owned
by such Holder (provided, however, that Mpower shall not be required
in connection therewith or as a condition thereto to qualify to do
business, subject itself to taxation in or to file a general consent
to service of process in any jurisdiction wherein it would not but for
the requirements of this Section 8(d) be obligated to do so; and
provided further that Mpower shall not be required to qualify such
Registrable Securities in any jurisdiction in which the securities
regulatory authority requires that any Holder submit any shares of its
Registrable Securities to the terms, provisions and restrictions of
any escrow, lockup or similar agreement(s) for consent to sell the
Registrable Securities in such jurisdiction unless such
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Holder agrees to do so), and do such other commercially reasonable
acts and things as may be required of it to enable such Holder to
consummate the disposition in such jurisdiction of the Registrable
Securities covered by a Registration Statement;
(e) furnish, at the request of any Holder if the method of
distribution is by means of an underwriting, on the date that the
shares of Registrable Securities are delivered to the underwriters for
sale pursuant to such registration, or if such Registrable Securities
are not being sold through underwriters, on the date that a
Registration Statement with respect to such shares of Registrable
Securities becomes effective, (1) a signed opinion, dated such date,
of the independent legal counsel representing Mpower for the purpose
of such registration, addressed to the underwriters, if any, and if
such Registrable Securities are not being sold through underwriters,
then to the Holders making such request, as to such matters as such
underwriters or the Holders holding a majority of the Registrable
Securities included in such registration, as the case may be, may
reasonably request and as would be customary in such a transaction;
and (2) letters dated such date and the date the offering is priced
from the independent certified public accountants of Mpower, addressed
to the underwriters, if any, and if such Registrable Securities are
not being sold through underwriters, then to the Holders making such
request and, if such accountants refuse to deliver such letters to
such Holders, then to Mpower (i) stating that they are independent
certified public accountants within the meaning of the Securities Act
and that, in the opinion of such accountants, the financial statements
and other financial data of Mpower included in a Registration
Statement or a Prospectus, or any amendment or supplement thereto,
comply as to form in all material respects with the applicable
accounting requirements of the Securities Act and (ii) covering such
other financial matters (including information as to the period ending
not more than five Business Days prior to the date of such letters)
with respect to the registration in respect of which such letter is
being given as such underwriters or the Holders holding a majority of
the Registrable Securities included in such registration, as the case
may be, may reasonably request and as would be customary in such a
transaction;
(f) enter into customary agreements (including if the method
of distribution is by means of an underwriting, an underwriting
agreement in customary form) and take such other actions as are
reasonably required in order to expedite or facilitate the disposition
of such Registrable Securities;
(g) otherwise use its commercially reasonable efforts to
comply with all applicable rules and regulations of the SEC;
(h) use its commercially reasonable efforts to cause all such
Registrable Securities to be listed on each securities exchange or
quotation system on which similar securities issued by Mpower are
listed or traded;
(i) give written notice to the Holders as promptly as
reasonably practicable:
(i) when a Prospectus or any Prospectus supplement or
post-effective amendment to a Registration Statement is
proposed to be filed;
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(ii) when the SEC notifies Mpower whether there will be
a "review" of a Registration Statement and whenever the SEC
comments in writing on such Registration Statement (and
Mpower shall upon request provide true and complete copies
thereof and all written responses thereto to each of the
Holders);
(iii) when a Registration Statement, any Prospectus or
any post-effective amendment or supplement thereto has
become effective;
(iv) of any request by the SEC or any federal or state
governmental authority for amendments or supplements to a
Registration Statement or the Prospectus included therein or
for additional information;
(v) of the issuance by the SEC or any federal or state
governmental authority of any stop order suspending the
effectiveness of a Registration Statement or the initiation
of any proceedings for that purpose;
(vi) of the receipt by Mpower or its legal counsel of
any notification with respect to the suspension of the
qualification of the Common Stock for sale in any
jurisdiction or the initiation or threatening of any
proceeding for such purpose; and
(vii) of the happening of any event that requires
Mpower to make changes in a Registration Statement or the
Prospectus in order to make the statements therein not
misleading (which notice shall be accompanied by an
instruction to suspend the use of a Prospectus until the
requisite changes have been made);
(j) use its commercially reasonable efforts to prevent the
issuance or obtain the withdrawal of (i) any order suspending the
effectiveness of a Registration Statement or (ii) any suspension of
the qualification (or exemption from qualification) of any of the
Registrable Securities for sale in any jurisdiction, at the earliest
practicable time;
(k) furnish to each Holder, without charge, at least one copy
of any Registration Statement and any post-effective amendment
thereto, including financial statements, schedules and all exhibits to
the extent the Holder so requests in writing (including those, if any,
incorporated by reference) promptly after the filing of such documents
with the SEC;
(l) upon the occurrence of any event contemplated by Section
8(i)(vii) above, promptly prepare a post-effective amendment to any
Registration Statement or a supplement to a related Prospectus or file
any other required document so that, as thereafter delivered to the
Holders, such Registration Statement and the Prospectus will not
contain an untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading. If
Mpower notifies the Holders in accordance with Section 8(i)(vii) above
to suspend the use of the Prospectus until the requisite changes to
the Prospectus have been made, then the Holders shall suspend use of
such Prospectus and use their reasonable efforts to return to Mpower
all copies of such Prospectus other than
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permanent file copies then in such Holder's possession; provided
further that Mpower will use commercially reasonable efforts to ensure
that the use of the Prospectus may be resumed as promptly as is
practicable;
(m) make reasonably available for inspection by
representatives of the Holders, any underwriter participating in any
disposition pursuant to a Registration Statement and any attorney,
accountant or other agent retained by such representative or any such
underwriter all relevant financial and other records, pertinent
corporate documents and properties of Mpower and cause Mpower's
officers, directors and employees to supply all relevant information
reasonably requested by such representative or any such underwriter,
attorney, accountant or agent in connection with the registration;
(n) use commercially reasonable efforts to procure the
cooperation of Mpower's transfer agent in settling any offering or
sale of Registrable Securities, including with respect to the transfer
of physical stock certificates into book-entry form in accordance with
any procedures reasonably requested by the Holders or the
underwriters; and
(o) if requested by the Holders, cooperate with the Holders to
facilitate the timely preparation and delivery of certificates
representing Registrable Securities to be delivered to a transferee
pursuant to a Registration Statement, which certificates shall be
free, to the extent permitted by the Purchase Agreement, of all
restrictive legends, and to enable such Registrable Securities to be
in such denominations and registered in such names as any such Holders
may request.
Mpower may require each Holder to furnish to Mpower a
certified statement as to the number of shares of Common Stock Beneficially
Owned by such Holder and, if required by the SEC, the Person that has voting and
dispositive control thereof. It shall be a condition precedent to the obligation
of Mpower to take any action pursuant to this Agreement that the Holders shall
furnish to Mpower such information regarding the Registrable Securities held by
the Holders and the intended method of disposition thereof as Mpower shall
reasonably request and as shall be required in connection with the action taken
by Mpower.
9. Expenses. All expenses incurred in connection with the
registration pursuant to Section 6 of this Agreement, excluding underwriters'
discounts and commissions, but including without limitation all registration,
filing and qualification fees, word processing, duplicating, printers' and
accounting fees (including the expenses of any special audits or "comfort"
letters required by or incident to such performance and compliance), fees of the
NASD or listing fees, messenger and delivery expenses, all fees and expenses of
complying with state securities or blue sky laws, fees and disbursements of
counsel for Mpower, fees and expenses of Mpower and the underwriters relating to
"road show" investor presentations, and fees and expenses of all other Persons
retained by Mpower in connection with the consummation of the transactions
contemplated by this Agreement, shall be paid by Mpower, except that:
(a) all such expenses in connection with any amendment or
supplement to a Registration Statement or Prospectus filed during the
Effective Period because any Holder has not effected the disposition
of the Registrable Securities requested to be registered shall be paid
by such Holder; and
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(b) the Holders shall bear and pay (i) the underwriting
commissions and discounts applicable to Registrable Securities offered
for their account in connection with any registrations, filings and
qualifications made pursuant to this Agreement and (ii) any fees and
expenses incurred in respect of counsel or other advisors to the
Holders.
In addition, Mpower shall be responsible for all of its
internal expenses incurred in connection with the consummation of the
transactions contemplated by this Agreement (including, without limitation, all
salaries and expenses of its officers and employees performing legal or
accounting duties), the expense of any annual audit and the fees and expenses
incurred in connection with the listing of the Registrable Securities on any
securities exchange as required hereunder. In no event shall Mpower be
responsible for any broker or similar commission or, except to the extent
provided for in this Agreement or the Purchase Agreement, any legal fees or
other costs of the Holders.
10. Indemnification and Contribution.
(a) Mpower shall indemnify and hold harmless each Holder, such
Holder's directors and officers, each Person who participates in the offering of
such Registrable Securities, including underwriters (as defined in the
Securities Act), and each Person, if any, who controls such Holder or
participating Person within the meaning of the Securities Act, to the fullest
extent permissible by law against any losses, claims, damages, liabilities and
costs (including, without limitation, reasonable attorney's fees) and expenses
reasonably incurred by them (collectively, "Losses"), to which they may become
subject under the Securities Act or otherwise, insofar as such Losses, as
determined by a court of competent jurisdiction in a final judgment not subject
to review or appeal, arise out of or are based on any untrue or alleged untrue
statement of any material fact contained in any Registration Statement or any
Prospectus on the effective date thereof or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading;
provided, however, that the indemnity agreement contained in this Section 10
shall not apply to amounts paid in settlement of any such Loss if such
settlement is effected without the consent of Mpower, such consent not to be
unreasonably withheld or delayed; provided further that Mpower shall not be
liable to any Holder, such Holder's directors and officers, participating Person
or controlling Person in any such case for any such Loss to the extent that it
arises out of or is based upon (i) an untrue statement or alleged untrue
statement or omission or alleged omission made in connection with any
Registration Statement, Prospectus or amendments or supplements thereto, in
reliance upon and in conformity with written information furnished expressly for
use in connection with such registration by any such Holder, such Holder's
directors and officers, participating Person or controlling Person, (ii) to the
extent that such information relates to such Holder or such Holder's proposed
method of distribution of Registrable Securities and was reviewed and expressly
approved by such Holder for use in a Registration Statement, such Prospectus or
such form of Prospectus or in any amendment or supplement thereto (it being
understood that the Holder has approved Annex A hereto for this purpose) or
(iii) in the case of an occurrence of an event of the type specified in Section
8(i)(iv)-(vii), the use by such Holder of an outdated or defective Prospectus
after Mpower has notified such Holder in writing that the Prospectus is outdated
or defective and prior to the receipt by such holder of the Advice contemplated
in Section 14(b). Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of any such Holder, such
12
Holder's directors and officers, participating Person or controlling Person, and
shall survive the transfer of such securities by such Holder.
(b) Each Holder severally and jointly shall indemnify and hold
harmless Mpower, each of its directors and officers, each Person, if any, who
controls Mpower within the meaning of the Securities Act, and each agent and any
underwriter for Mpower (within the meaning of the Securities Act) to the fullest
extent permissible by law against any Losses to which Mpower or any such
director, officer, controlling Person, agent or underwriter may become subject,
under the Securities Act or otherwise, insofar as such Losses, as determined by
a court of competent jurisdiction in a final judgment not subject to review or
appeal, arise out of or are based upon (i) such Holder's failure to comply with
the prospectus delivery requirements of the Securities Act or (ii) any untrue or
alleged untrue statement of a material fact contained in any Registration
Statement, any Prospectus, or any form of prospectus, or in any amendment or
supplement thereto or in any preliminary prospectus, or arising out of or
relating to any omission or alleged omission of a material fact required to be
stated therein or necessary to make the statements therein not misleading (A) to
the extent, but only to the extent, that such untrue statement or omission is
contained in any information so furnished in writing by such Holder to Mpower
for inclusion in any Registration Statement or such Prospectus or (B) to the
extent that (1) such untrue statements or omissions are based upon the
information regarding such Holder furnished in writing to Mpower by such Holder
for use therein, or to the extent that such information related to such Holder
or Holder's proposed method of distribution of Registrable Securities and was
reviewed and approved in writing by such Holder for use in such Registration
Statement (it being understood that Holder has approved Annex A hereto for this
purpose), such Prospectus or such form of Prospectus or in any amendment or
supplement to or (2) in the case of an occurrence of an event of the type
specified in Section 8(i)(iv)-(vii), the use by such Holder of an outdated or
defective Prospectus after Mpower has notified such Holder in writing that the
Prospectus is outdated or defective and prior to the receipt by such holder of
the Advice contemplated in Section 14(b); provided, however, that the indemnity
agreement contained in this Section 10(b) shall not apply to amounts paid in
settlement of any such Loss if such settlement is effected without the consent
of such Holder, and provided further that the liability of each Holder hereunder
shall be limited to the aggregate net proceeds received by such Holder in
connection with any such registration under the Securities Act.
(c) If the indemnification provided for in this Section 10
from an indemnifying party (the "Indemnifying Party") is unavailable to any
Person entitled to indemnification hereunder (an "Indemnified Party") in respect
of any Losses referred to therein, then the Indemnifying Party, in lieu of
indemnifying such Indemnified Party, shall contribute to the amount paid or
payable by such indemnified party as a result of such Losses in such proportion
as is appropriate to reflect the relative fault of the Indemnifying Party and
Indemnified Party in connection with the actions which resulted in such Losses,
as well as any other relevant equitable considerations. The relative fault of
such Indemnifying Party and Indemnified Parties shall be determined by reference
to, among other things, whether any action in question, including any untrue or
alleged untrue statement of a material fact or omission or alleged omission to
state a material fact, has been made by, or relates to information supplied by,
such Indemnifying Party or Indemnified Parties, and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such action. The amount paid or payable by a party as a result of the Losses
referred to above shall be deemed to include any legal or other fees or expenses
13
reasonably incurred by such party in connection with any investigation or
proceeding. If the allocation provided in this Section 10(c) is not permitted by
applicable law, the parties shall contribute based upon the relevant benefits
received by Mpower from the initial offering of the securities on the one hand
and the net proceeds received by the Holders from the sale of securities on the
other.
The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 10(c) were determined by pro
rata allocation or by any other method of allocation which does not take account
of the equitable considerations referred to in the immediately preceding
paragraph. No Person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any Person who was not guilty of such fraudulent misrepresentation.
(d) Any Indemnified Party agrees to give prompt written notice
to the Indemnifying Party after the receipt by the Indemnified Party of any
written notice of the commencement of any action, suit, proceeding or
investigation or threat thereof made in writing for which the Indemnified Party
intends to claim indemnification or contribution pursuant to this Agreement;
provided that the failure so to notify the Indemnifying Party shall not relieve
the Indemnifying Party of any liability that it may have to the Indemnified
Party hereunder except to the extent that the Indemnifying Party is materially
prejudiced by such failure. If notice of commencement of any such action is
given to the Indemnifying Party as above provided, the Indemnifying Party shall
be entitled to participate in and, to the extent it may wish, to assume the
defense of such action at its own expense, with counsel chosen by it and
reasonably satisfactory to such Indemnified Party. The Indemnified Party shall
have the right to employ separate counsel in any such action and participate in
the defense thereof, but the fees and expenses of such counsel shall be paid by
the Indemnified Party unless (i) the Indemnifying Party agrees to pay the same,
(ii) the Indemnifying Party fails to assume the defense of such action, or (iii)
the named parties to any such action (including any impleaded parties) have been
advised by such counsel that either (A) representation of such Indemnified Party
and the Indemnifying Party by the same counsel would be inappropriate under
applicable standards of professional conduct or (B) there are one or more legal
defenses available to it which are substantially different from or additional to
those available to the Indemnifying Party (in which case, if such Indemnified
Party notifies the Indemnifying Party in writing that it elects to employ
separate counsel at the expense of the Indemnifying Party, the Indemnifying
Party shall not have the right to assume the defense thereof and the reasonable
fees and expenses of one separate counsel shall be at the expense of the
Indemnifying Party). No Indemnifying Party shall be liable for any settlement
entered into without its written consent, which consent shall not be
unreasonably withheld. No Indemnifying Party shall, without the prior written
consent of the Indemnified Party, effect any settlement of any pending
Proceeding in respect of which any Indemnified Party is a party, unless such
settlement includes an unconditional release of such Indemnified Party from all
liability on claims that are the subject matter of such Proceeding.
(e) The agreements contained in this Section 10 shall survive
the transfer of the Registered Securities by any Holder and sale of all the
Registrable Securities pursuant to any Registration Statement and shall remain
in full force and effect, regardless of any investigation made by or on behalf
of any Holder or such director, officer or participating or controlling Person.
14
11. First Right of Purchase. During the period that begins six
months from the Closing Date and ending on the first anniversary of the Closing
Date, prior to a Holder making or soliciting a Sale of any Registrable
Securities other than to a Permitted Transferee, such Holder shall provide
Mpower with written notice (a "Sale Notice") of its intent to make or solicit
such Sale. Upon receipt of a Sale Notice, Mpower shall have 5 business days to
deliver to such Holder a written offer (a "Purchase Offer"), with reasonable
documentation showing all calculations, to purchase such Registrable Securities,
at a price equal to the mean average of the fair market value of such
Registrable Securities sold as a block (the "Offer Price"), as determined by
each of three block traders chosen by Mpower from three brokerage firms of
recognized reputation. In the event that Mpower delivers a Purchase Offer within
5 business days, such Holder may, at its sole discretion within 2 business days,
deliver to Mpower a written notice of acceptance (an "Acceptance Notice") of the
Purchase Offer. Upon the receipt of an Acceptance Notice, Mpower shall have 3
business days to complete the Sale of such Registrable Securities at the Offer
Price. In the event that, (i) within 5 business days from the date of receipt of
the Sale Notice, such Holder has not received a written offer from Mpower to
purchase the Registrable Securities, or (ii) within 3 business days from the
date of receipt of the Acceptance Notice, Mpower has failed to complete the
purchase of such Registrable Securities (unless such failure is a result of the
actions or inactions of the Holder), such Holder shall have the right to make or
solicit a Sale of such Registrable Securities to any other Person, subject to
the terms of this Agreement, within 5 business days. In the event that such
Holder elects, at its sole discretion, not to deliver an Acceptance Notice, the
Holder shall be prohibited from making or soliciting a Sale of such Registrable
Securities prior to the delivery of another Sale Notice and compliance with this
Section 11. Notwithstanding anything else in this Section 11, the Holder,
together with any Permitted Transferees, shall be entitled to provide Mpower
with 5 Sale Notices in the aggregate.
12. Certain Additional Limitations on Registration Rights.
Notwithstanding the other provisions of this Agreement, Mpower shall not be
obligated to register the Registrable Securities of any Holder (i) if such
Holder or any underwriter of such Registrable Securities shall fail to furnish
to Mpower necessary information in respect of the distribution of such
Registrable Securities, or (ii) if such registration involves an underwritten
offering, such Registrable Securities are not included in such underwritten
offering on the same terms and conditions as shall be applicable to the other
securities being sold through underwriters in the registration or such Holder
fails to enter into an underwriting agreement in customary form with the
underwriter or underwriters selected for such underwritten offering.
13. Selection of Managing Underwriters. In the event the
Holders have requested an underwritten offering, the underwriter or underwriters
shall be selected by the Holders of a majority of the shares being so
registered, and shall be approved by Mpower which approval shall not be
unreasonably withheld or delayed, provided (i) that all of the representations
and warranties by, and the other agreements on the part of, Mpower to and for
the benefit of such underwriters shall also be made to and for the benefit of
such Holders of Registrable Securities, (ii) that any or all of the conditions
precedent to the obligations of such underwriters under such underwriting
agreement shall be conditions precedent to the obligations of such Holders of
Registrable Securities, and (iii) that no Holder shall be required to make any
representations or warranties to or agreements with Mpower or the underwriters
other than representations, warranties or agreements regarding such Holder, the
Registrable Securities of such Holder and such Holder's intended method of
distribution and any other representations required by law or
15
reasonably required by the underwriter. Subject to the foregoing, all Holders
proposing to distribute Registrable Securities through such underwritten
offering shall enter into an underwriting agreement in customary form with the
underwriter or underwriters. If any Holder of Registrable Securities disapproves
of the terms of the underwriting, such Holder may elect to withdraw all its
Registrable Securities by written notice to Mpower, the managing underwriter and
the other Holders participating in such registration. The securities so
withdrawn shall also be withdrawn from registration.
14. Miscellaneous.
(a) Specific Performance. The parties hereto agree that
irreparable damage would occur in the event any provision of this Agreement was
not performed in accordance with the terms hereof and that the parties hereto
shall be entitled to specific performance of the terms hereof, in addition to
any other remedy at law or in equity.
(b) Discontinued Disposition. Each Holder agrees by its
acquisition of such Registrable Securities that, upon receipt of a notice from
Mpower of the occurrence of any event of the kind described in Section
8(i)(iv)-(vii), such Holder will forthwith discontinue disposition of such
Registrable Securities under any Registration Statement until such Holder's
receipt of the copies of the supplemented Prospectus and/or amended Registration
Statement or until it is advised in writing (the "Advice") by Mpower that the
use of the applicable Prospectus may be resumed, and, in either case, has
received copies of any additional or supplemental filings that are incorporated
or deemed to be incorporated by reference in such Prospectus or Registration
Statement. Mpower may provide appropriate stop orders to enforce the provisions
of this paragraph.
(c) Amendments and Waivers. (i) Any provision of this
Agreement may be amended or waived if, and only if, such amendment or waiver is
in writing and signed, in the case of an amendment, by Mpower and a majority in
interest of the Holders or, in the case of a waiver, by the party or parties
against whom the waiver is to be effective; provided, however, that waiver by
the Holders shall require the consent of a majority in interest of the Holders;
provided further a waiver or consent to depart from the provisions hereof with
respect to a matter that relates exclusively to the rights of certain Holders
and that does not directly or indirectly affect the rights of other Holders may
be given by Holders of all the Registrable Securities to which such waiver or
consent relates.
(ii) No failure or delay by any party in exercising any right,
power or privilege hereunder (other than a failure or delay beyond a period of
time specified herein) shall operate as a waiver thereof and no single or
partial exercise thereof shall preclude any other or further exercise thereof or
the exercise of any other right, power or privilege. The rights and remedies
herein provided shall be cumulative and not exclusive of any rights or remedies
provided by law.
(d) Notice Generally. All notices, requests, claims, demands
and other communications hereunder shall be in writing and shall be given (and
shall be deemed to have been duly given upon receipt) by delivery in person, by
courier service, by fax or by registered or certified mail (postage prepaid,
return receipt requested) to the respective parties at the following
16
addresses (or at such other address for a party as shall be specified by notice
given in accordance with this Section 14(d):
(i) If to any Holder, at its last known address appearing on
the books of Mpower maintained for such purpose.
(ii) If to Mpower, at
Mpower Holding Corporation
▇▇▇ ▇▇▇▇▇'▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: Chief Executive Officer
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy (which shall not constitute notice to Mpower)
to:
Shearman & Sterling
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
or at such other address as may be substituted by notice given as herein
provided.
(e) Successors and Assigns; Third Party Beneficiaries. This
Agreement shall inure to the benefit of and be binding upon the successors and
permitted assigns of the parties hereto as hereinafter provided. The
registration rights of any Holder with respect to any Registrable Securities
shall be transferred to any Person who is the transferee of such Registrable
Securities. All of the obligations of Mpower hereunder shall survive any such
transfer. Except as provided in Section 14, no Person other than the parties
hereto and their successors and permitted assigns is intended to be a
beneficiary of this Agreement.
(f) Headings. The headings and subheadings in this Agreement
are included for convenience and identification only and are in no way intended
to describe, interpret, define or limit the scope, extent or intent of this
Agreement or any provision hereof.
(g) Governing Law; Jurisdiction. This Agreement shall be
governed by, and construed in accordance with, the laws of the State of New
York.
(i) Any claim, action, suit or proceeding seeking to enforce
any provision of, or based on any matter arising out of or in
connection with, this Agreement or the transactions contemplated
hereby may be heard and determined in any New York state or federal
court sitting in The City of New York, Borough of Manhattan, and each
of the parties hereto hereby consents to the exclusive jurisdiction of
such courts (and of the appropriate appellate courts therefrom in any
such claim, action, suit or proceeding) and irrevocably waives, to the
fullest extent permitted by law, any objection that it may now or
hereafter have to the laying of venue of any such claim, action, suit
or proceeding in
17
any such court or that any such claim, action, suit or proceeding that
is brought in any such court has been brought in an inconvenient
forum.
(ii) Subject to applicable law, process in any such claim,
action, suit or proceeding may be served on any party anywhere in the
world, whether within or without the jurisdiction of any such court.
Without limiting the foregoing and subject to applicable law, each
party agrees that service of process on such party as provided in
Section 14(d) shall be deemed effective service of process on such
party. Nothing herein shall affect the right of any party to serve
legal process in any other manner permitted by law or at equity. WITH
RESPECT TO ANY SUCH CLAIM, ACTION, SUIT OR PROCEEDING IN ANY SUCH
COURT, EACH OF THE PARTIES IRREVOCABLY WAIVES AND RELEASES TO THE
OTHER ITS RIGHT TO A TRIAL BY JURY, AND AGREES THAT IT WILL NOT SEEK A
TRIAL BY JURY IN ANY SUCH PROCEEDING.
(h) Severability. If any term or other provision of this
Agreement is held to be invalid, illegal or incapable of being enforced by any
rule of law, or public policy, all other conditions and provisions of this
Agreement shall nevertheless remain in full force and effect so long as the
economic or legal substance of the transactions is not affected in any manner
materially adverse to any party. Upon a determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in a mutually acceptable
manner in order that the transactions contemplated hereby be consummated as
originally contemplated to the fullest extent possible.
(i) Entire Agreement. This Agreement constitutes the entire
agreement among the parties hereto pertaining to the subject matter hereof and
supersedes all prior agreements and understandings pertaining thereto.
(j) Cumulative Remedies. The rights and remedies provided by
this Agreement are cumulative and the use of any one right or remedy by any
party shall not preclude or waive its right to use any or all other remedies.
Said rights and remedies are given in addition to any other rights the parties
may have by law, statute, ordinance or otherwise.
(k) Counterparts. This Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same agreement
and shall become effective when one or more counterparts have been signed by
each of the parties and delivered to the other parties.
[Signature appears on next page]
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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
MPOWER HOLDING CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Senior Vice President,
General Counsel and
Secretary
MCCC ICG HOLDINGS LLC
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
Title: Vice President and Secretary
ICG COMMUNICATIONS, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
Title: Chief Financial Officer and
Secretary
19
ANNEX A
Plan of Distribution
The Selling Stockholders (the "Selling Stockholders") of the common
stock ("Common Stock") of Mpower Holding Corporation ("Mpower") and any of their
pledgees, assignees and successors-in-interest may, from time to time, sell any
or all of their shares of Common Stock on any stock exchange, market or trading
facility on which the shares are traded or in private transactions. These sales
may be at fixed or negotiated prices. The Selling Stockholders may use any one
or more of the following methods when selling shares:
o ordinary brokerage transactions and transactions in which the
broker-dealer solicits purchasers;
o block trades in which the broker-dealer will attempt to sell the
shares as agent but may position and resell a portion of the
block as principal to facilitate the transaction;
o purchases by a broker-dealer as principal and resale by the
broker-dealer for its account;
o an exchange distribution in accordance with the rules of the
applicable exchange;
o privately negotiated transactions;
o settlement of short sales;
o broker-dealers may agree with the Selling Stockholders to sell a
specified number of such shares at a stipulated price per share;
o a combination of any such methods of sale; and
o any other method permitted pursuant to applicable law.
The Selling Stockholders may also sell shares under Rule 144 under the
Securities Act of 1933, as amended (the "Securities Act"), if available, rather
than under this prospectus.
Broker-dealers engaged by the Selling Stockholders may arrange for
other brokers-dealers to participate in sales. Broker-dealers may receive
commissions or discounts from the Selling Stockholders (or, if any broker-dealer
acts as agent for the purchaser of shares, from the purchaser) in amounts to be
negotiated. The Selling Stockholders do not expect these commissions and
discounts to exceed what is customary in the types of transactions involved.
The Selling Stockholders may from time to time pledge or grant a
security interest in some or all of the shares of Common Stock owned by them
and, if they default in the performance of their secured obligations, the
pledgees or secured parties may offer and sell the shares of Common Stock from
time to time under this prospectus, or under an amendment to this prospectus
under Rule 424(b)(3) or other applicable provision of the Securities Act
amending the
20
list of Selling Stockholders to include the pledgee, transferee or other
successors in interest as Selling Stockholders under this prospectus.
The Selling Stockholders and any broker-dealers or agents that are
involved in selling the shares may be deemed to be "underwriters" within the
meaning of the Securities Act in connection with such sales. In such event, any
commissions received by such broker-dealers or agents and any profit on the
resale of the shares purchased by them may be deemed to be underwriting
commissions or discounts under the Securities Act. The Selling Stockholders have
informed Mpower that they do not have any agreement or understanding, directly
or indirectly, with any person to distribute the Common Stock.
Mpower is required to pay certain fees and expenses incurred by Mpower
incident to the registration of the shares. Mpower has agreed to indemnify the
Selling Stockholders against certain losses, claims, damages and liabilities,
including liabilities under the Securities Act.
21