EXHIBIT 3
REGISTRATION RIGHTS AGREEMENT
This Agreement is entered into as of April 11, 2000 by US LEC Corp., a
Delaware corporation (the "Company"), and the Persons whose names are set
forth on the attached Schedule I (collectively, the "Investors").
A. The Company and the Investors have entered into a Series A
Convertible Preferred Stock Purchase Agreement, dated as of the same date
as this Agreement (the "Purchase Agreement"), pursuant to the terms and
conditions of which (i) the Company is issuing and selling to the
Investors, and the Investors are purchasing from the Company, an aggregate
of up to 200,000 shares of Series A Convertible Preferred Stock and (ii)
the Company is issuing an option (the "Option") to the Investors to
purchase an aggregate of 100,000 shares of convertible preferred stock
pursuant to the terms and conditions of an Option Agreement, dated as of
the same date as this Agreement (the 200,000 shares of Series A Convertible
Preferred Stock, the number of shares of convertible preferred stock (the
"Option Stock") issued to the Investors upon the exercise of the Option,
and any shares of convertible preferred stock issued as preferential
dividends pursuant to the terms of the Series A Convertible Preferred Stock
and Option Stock are collectively referred to herein as the "Preferred
Shares").
B. The parties' execution and delivery of this Agreement is a
condition of their respective obligations to close the Purchase Agreement.
The parties agree as follows:
1. Definitions.
Capitalized terms which are used in this Agreement without being
defined have the same meanings that they are given in the Purchase
Agreement. In addition, the following terms have these meanings:
"Registrable Securities" means (i) any shares of Common Stock issued
or issuable upon conversion of the Preferred Shares and (ii) any shares of
Common Stock issued or issuable (A) as a dividend or distribution in
respect of, or (B), in exchange for or replacement of, or (C) upon
conversion or exercise of any warrant or other security issued or issuable
as a dividend or distribution in respect of or in exchange for or
replacement of, the Preferred Shares and any shares of Common Stock issued
or issuable upon conversion of the Preferred Shares. Any Registrable
Securities shall cease to be Registrable Securities (i) when they have been
distributed to the public pursuant to a offering registered under the
Securities Act or sold to the public through a broker, dealer or market
maker in compliance with Rule 144 under the Securities Act (or any similar
rule then in force) or repurchased by the Company or any Subsidiary or (ii)
if and when they (or, in respect of issuable but not yet issued Registrable
Securities, the underlying Preferred Shares or Common Stock) cease to be
held by an Investor, a Permitted
Transferee (as "Permitted Transferee" is defined in the Corporate
Governance Agreement) or a transferee to whom an Investor or a Permitted
Transferee has transferred Registrable Securities with a value of at least
$50 million.
"Registration Expenses" means all expenses incident to the Company's
performance of or compliance with this Agreement, including all
registration and filing fees, fees and expenses of compliance with
securities or blue sky laws, printing expenses, messenger and delivery
expenses, fees and disbursements of custodians, and fees and disbursements
of counsel for the Company and all independent certified public
accountants, underwriters (excluding discounts, commissions and
underwriters' counsel fees) and other Persons retained by the Company.
"Violation" means any of the following statements, omissions or
violations: (i) any untrue statement or alleged untrue statement of a
material fact contained or incorporated by reference in a registration
statement pursuant to this Agreement, including any related preliminary or
final prospectus, any amendment or supplement, or any document filed under
state securities or "blue sky" laws, (ii) the omission or alleged omission
to state a material fact required to be stated in any such registration
statement, prospectus, amendment, supplement or document or necessary to
make the statements in any such registration statement, prospectus,
amendment, supplement or document not misleading, or (iii) any violation or
alleged violation by the Company of the Securities Act, the Exchange Act,
any state securities law, or any rule or regulation promulgated under the
Securities Act, the Exchange Act or any state securities law.
2. Demand Registrations.
2.1 General. On or at any time after the second anniversary of
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Closing, holders of a majority of the Registrable Securities then
outstanding may request registration under the Securities Act of all or any
portion of their Registrable Securities. All registrations requested
pursuant to this Section 2.1 are referred to in this Agreement as "Demand
Registrations." Holders of Registrable Securities then outstanding shall be
limited to three Demand Registrations and each such Demand Registration
must include an initial request to register Registrable Securities having
an aggregate offering value of at least $20 million. In regard to Demand
Registrations:
(a) Each request for a Demand Registration shall specify the
approximate number of Registrable Securities requested to be
registered. Within 10 Business Days after receipt of any request for a
Demand Registration, the Company shall give written notice of the
requested registration to all other holders of Registrable Securities
and, subject to Section 2.2 below, shall include in the registration
all Registrable Securities with respect to which the Company has
received written requests for inclusion within 15 Business Days after
receipt of the Company's notice.
(b) A Demand Registration shall not be counted as one of the
three permitted Demand Registrations unless (i) it has become
effective and (ii) the
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Persons making the request are able to register and sell at least 75%
of the Registrable Securities included in the registration.
(c) The Company shall pay all Registration Expenses in
connection with any Demand Registration whether or not it is counted
as one of the three permitted Demand Registrations.
(d) Demand Registrations shall be on Form S-2 or Form S-3 or any
similar short-form registration statement, if available. Otherwise
Demand Registrations shall be on Form S-1 or any similar long-form
registration statement.
(e) The Company shall have the right to select the managing
underwriters in connection with an underwritten public offering of
Registrable Securities, subject to the approval of a majority of the
holders of the Registrable Securities included in any Demand
Registration which approval shall not be unreasonably withheld, and
holders of a majority of the Registrable Securities included in any
Demand Registration shall have the right to select a co-managing
underwriter, subject to the Company's approval which shall not be
unreasonably withheld.
(f) The holders of a majority of the Registrable Securities
included in any Demand Registration shall have the right to select the
investment banker(s) and manager(s) to administer an offering of
Registrable Securities that is not an underwritten public offering,
subject to the Company's approval which shall not be unreasonably
withheld.
2.2 Priority on Demand Registrations. The Company will not include in
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any Demand Registrations any securities which are not Registrable
Securities without the prior written consent of the holders of a majority
of the Registrable Securities included in such registration. If a Demand
Registration is an underwritten offering and the managing underwriters
advise the Company in writing that in their opinion the number of
Registrable Securities and, if permitted hereunder, other securities
requested to be included in such offering exceeds the number of Registrable
Securities, and other securities, if any, that can be sold without
adversely affecting the marketability of the offering, the Company shall
include in the registration (i) first, the number of Registrable Securities
requested to be included which in the opinion of the underwriters can be
sold without adversely affecting the marketability of the offering, pro
rata among the respective holders thereof on the basis of the number of
Registrable Securities owned by each such holder, and (ii) second, other
securities requested to be included in such Demand Registration, pro rata
among the holders of such securities on the basis of the number of such
securities owned by each such holder.
2.3 Restrictions on Demand Registrations. The Company shall not be
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obligated to effect more than two Demand Registrations in any 12-month
period. The Company shall not be obligated to effect any Demand
Registration within 180 days after the effective date of a previous Demand
Registration or a previous registration in which
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the holders of Registrable Securities were given piggyback rights pursuant
to Section 3 and, in the case of a previous Demand Registration, were able
to register and sell at least 75% of the Registrable Securities proposed to
be included in such registration or, in the case of a previous Piggyback
Registration, were able to register and sell at least 50% of the
Registrable Securities proposed to be included in such registration. The
Company may postpone for up to 90 days the filing or the effectiveness of a
registration statement for a Demand Registration if a certificate signed by
an executive officer of the Company is promptly furnished to the holders
requesting the Demand Registration stating that the Board of Directors of
the Company has determined that such a Demand Registration would reasonably
be expected to have a material adverse effect on any proposal or plan by
the Company to engage in any acquisition of assets (other than in the
ordinary course of business) or any merger, consolidation, tender offer,
reorganization or similar transaction. In addition, the Company may
postpone for up to 180 days the filing of a registration statement for a
Demand Registration if a certificate signed by an executive officer of the
Company is promptly furnished to the holders requesting the Demand
Registration stating that the Company intends to file a registration
statement for a primary offering of its debt or equity securities within
the next 60 days so long as the Company is at all times proceeding in good
faith to make such registration statement effective. In the event the
filing or the effectiveness of a registration statement is postponed
pursuant to this Section 2.3, the holders of Registrable Securities
initially requesting the Demand Registration shall be entitled to withdraw
their request. If their request is withdrawn, the Demand Registration shall
not count as one of the three permitted Demand Registrations and the
Company will pay all Registration Expenses in connection with such
registration. The Company may delay the filing or suspend the effectiveness
of a Demand Registration pursuant to this Section 2.3 only once in any 12-
month period.
3. Piggyback Registrations.
3.1 Right To Piggyback. After the first anniversary of Closing,
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whenever the Company proposes to register any of its equity securities
under the Securities Act (other than (i) pursuant to a Demand Registration
or (ii) a registration on Form S-4 or Form S-8 or any successor or similar
form) and the registration form to be used may be used for the registration
of Registrable Securities (a "Piggyback Registration"), whether or not for
sale for its own account, the Company shall give prompt written notice to
all holders of Registrable Securities of its intention to effect such a
registration and shall include in the registration all Registrable
Securities with respect to which the Company has received written requests
for inclusion within 15 Business Days after receipt of the Company's
notice. Holders of Registrable Securities shall be entitled to unlimited
Piggyback Registrations for their Registrable Securities.
3.2 Piggyback Expenses. The Registration Expenses of the holders
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of Registrable Securities shall be paid by the Company in all Piggyback
Registrations.
3.3 Priority on Primary Registrations. If a Piggyback Registration is
---------------------------------
an underwritten primary registration on behalf of the Company, and the
managing underwriters advise the Company in writing that in their opinion
the number of securities
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requested to be included in the registration exceeds the number that can be
sold without adversely affecting the marketability of the offering, the
Company shall include in the registration (i) first, the securities that
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the Company proposes to sell, (ii) second, the Registrable Securities
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requested to be included in the registration and any other securities
requested to be included in such registration by the holders thereof who
have been granted rights by the Company to participate in a Piggyback
Registration pari passu with the holders of Registrable Securities pursuant
to Section 10.1, pro rata among the holders of the Registrable Securities
and the holders of such other securities on the basis of the number of the
Registrable Securities and such other securities owned by each holder, and
(iii) third, any other securities requested to be included in the
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registration.
3.4 Priority on Secondary Registrations. If a Piggyback Registration
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is an underwritten secondary registration on behalf of holders of the
Company's securities (other than on behalf of holders of Registrable
Securities that have initiated a Demand Registration pursuant to Section
2), and the managing underwriters advise the Company in writing that in
their opinion the number of securities requested to be included in the
registration exceeds the number that can be sold without adversely
affecting the marketability of the offering, the Company shall include in
the registration (i) first, the securities requested to be included therein
by the holders requesting such registration and the Registrable Securities
requested to be included in the registration, pro rata among the holders
thereof on the basis of the number of such securities and Registrable
Securities owned by each such holder, and (ii) second, any other securities
requested to be included in the registration.
3.5 Other Registrations. If the Company has previously filed a
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registration statement with respect to Registrable Securities pursuant to
Section 2 or pursuant to this Section 3, and if the previous registration
has not been withdrawn or abandoned, the Company shall not file or cause to
be effected any other registration of any of its equity securities or
securities convertible or exchangeable into or exercisable for its equity
securities under the Securities Act (except on Form S-4 or Form S-8 or any
successor or similar forms), whether on its own behalf or at the request of
any holder or holders of its securities, until a period of at least 180
days has elapsed from the effective date of the previous registration or,
if shorter, a period of at least 60 days has elapsed from the date all
securities covered by such registration have been disposed of.
4. Holdback Agreements.
4.1 Holders of Registrable Securities. Each holder of Registrable
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Securities shall not effect any public sale or distribution (including
sales pursuant to Rule 144) of equity securities of the Company, or any
securities convertible into or exchangeable or exercisable for equity
securities of the Company, during the seven days prior to and the 120-day
period beginning on the effective date of any Demand Registration or any
underwritten Piggyback Registration in which Registrable Securities are
included (except as part of such underwritten offering), unless the
underwriters managing the registered public offering otherwise agree.
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4.2 Company. The Company shall not effect any public sale or
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distribution of its equity securities, or any securities convertible into
or exchangeable or exercisable for such securities, during such period
prior to and following the effective date of any underwritten Demand
Registration or any underwritten Piggyback Registration as the Company and
the underwriters managing the offering may agree.
5. Registration Procedures.
Whenever holders of Registrable Securities have requested that any
Registrable Securities be registered pursuant to this Agreement, the
Company shall use its reasonable best efforts to effect the registration
and the sale of such Registrable Securities in accordance with the intended
method of disposition. In this regard, the Company will as expeditiously as
possible:
(a) prepare and file with the Commission a registration statement
with respect to such Registrable Securities and use its reasonable best
efforts to cause the registration statement to become effective;
(b) notify each holder of Registrable Securities of the effectiveness
of each registration statement filed under this Agreement and prepare and
file with the Commission any amendments and supplements to the registration
statement and the prospectus that may be necessary to keep the registration
statement effective for a period of either (i) not less than 120 days
(subject to extension pursuant to Section 8.2), or if such registration
statement relates to an underwritten offering, such longer period as in the
opinion of counsel for the underwriters a prospectus is required by law to
be delivered in connection with sales of Registrable Securities by an
underwriter or dealer or (ii) such shorter period as will terminate when
all of the securities covered by such registration statement have been
disposed of in accordance with the intended methods of disposition by the
seller or sellers thereof set forth in such registration statement (but in
any event not before the expiration of any longer period required under the
Securities Act), and to comply with the provisions of the Securities Act
with respect to the disposition of all securities covered by such
registration statement until such time as all of such securities have been
disposed of in accordance with the intended methods of disposition by the
seller or sellers thereof set forth in such registration statement;
(c) furnish to each seller of Registrable Securities the number of
copies of the registration statement, each amendment and supplement, the
prospectus included in the registration statement (including each
preliminary prospectus) and any other documents that each seller may
reasonably request in order to facilitate the disposition of the seller's
Registrable Securities;
(d) use its best efforts to register or qualify the Registrable
Securities under such other securities or blue sky laws of such
jurisdictions as any seller reasonably requests and do any and all other
acts and things which may be reasonably necessary or advisable to enable
the seller to consummate the disposition in those jurisdictions of the
Registrable Securities owned by the seller (but the Company shall not be
required to (i) qualify generally to do business in any jurisdiction where
it would not otherwise be
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required to qualify but for this subparagraph, (ii) subject itself to
taxation in any such jurisdiction or (iii) consent to general service of
process in any such jurisdiction);
(e) notify each seller of Registrable Securities, at any time when a
prospectus relating to those securities is required to be delivered under
the Securities Act, of the happening of any event as a result of which the
prospectus included in the registration statement contains an untrue
statement of a material fact or omits any fact necessary to make the
statements in the prospectus not misleading; and, at the request of any
seller, the Company shall prepare a supplement or amendment to the
prospectus so that, when delivered to purchasers of the Registrable
Securities, the prospectus, as supplemented or amended, does not contain an
untrue statement of a material fact or omit to state any fact necessary to
make the statements in the prospectus not misleading;
(f) cause all such Registrable Securities to be quoted on the Nasdaq
National Market System and listed on any other exchange on which the
Company's shares of Common Stock are listed;
(g) provide a transfer agent and registrar for all such Registrable
Securities not later than the effective date of the registration statement;
(h) enter into such customary agreements (including underwriting
agreements in customary form) and take all other actions that holders of a
majority of the Registrable Securities being sold or the underwriters, if
any, reasonably request in order to expedite or facilitate the disposition
of the Registrable Securities;
(i) make available for inspection by any seller of Registrable
Securities, any underwriter participating in any disposition pursuant to
the registration statement and any attorney, accountant or other agent
retained by any such seller or underwriter, all financial and other
records, pertinent corporate documents and properties of the Company, and
cause the Company's officers, employees and independent accountants to
supply all information reasonably requested by any such seller,
underwriter, attorney, accountant or agent in connection with the
registration statement;
(j) otherwise use its best efforts to comply with all applicable
rules and regulations of the Commission, and make available to its security
holders, as soon as reasonably practicable, an earnings statement covering
the period of at least twelve months beginning with the first day of the
Company's first full calendar quarter after the effective date of the
registration statement, which earnings statement shall satisfy the
provisions of Section 11(a) of the Securities Act and Rule 158; and
(k) in the event of the issuance of any stop order suspending the
effectiveness of a registration statement, or of any order suspending or
preventing the use of any related prospectus or suspending the
qualification of any securities included in the registration statement for
sale in any jurisdiction, use its reasonable best efforts promptly to
obtain the withdrawal of such order.
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6. Registration Expenses.
6.1 Payment by Company. All Registration Expenses shall be
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borne as provided in this Agreement, except that the Company shall, in
any event, pay its internal expenses (including all salaries and
expenses of its officers and employees performing legal or accounting
duties), the expense of any annual audit or quarterly review and the
expenses and fees for listing the securities to be registered on the
Nasdaq National Market System or any other exchange on which the
Company's shares of Common Stock are listed.
6.2 Fees of Counsel. In connection with each Demand
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Registration and each Piggyback Registration, the Company shall
reimburse the holders of Registrable Securities included in the
registration for the reasonable fees and disbursements of one counsel
chosen by the holders of a majority of the Registrable Securities
included in such registration.
6.3 Payment by Holders. To the extent that Registration
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Expenses are not required to be paid by the Company, each holder of
securities included in any registration under this Agreement shall pay
those Registration Expenses allocable to the registration of such
holder's securities so included, and any Registration Expenses not so
allocable shall be borne by all sellers of securities included in the
registration in proportion to the aggregate selling price of the
securities to be so registered.
7. Indemnification.
7.1 Indemnification by Company. The Company agrees to
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indemnify, to the extent permitted by law, each holder of Registrable
Securities, each Person who controls such holder (within the meaning of
the Securities Act), and their respective partners, shareholders,
trustees, members, officers and directors against all losses, claims,
damages, liabilities and expenses caused by any Violation, except
insofar as the Violation is caused by or contained in any information
furnished in writing to the Company by the holder expressly for use in
a registration statement, prospectus, amendment, supplement or related
document or is caused by the holder's failure to deliver a copy of the
registration statement or prospectus or any amendment or supplements
after the Company has furnished the holder with a sufficient number of
copies. In connection with an underwritten offering, the Company shall
indemnify such underwriters, their officers and directors and each
Person who controls such underwriters (within the meaning of the
Securities Act) to the same extent provided in this Section 7.1 with
respect to the indemnification of holders of Registrable Securities.
7.2 Indemnification by Holder. In connection with any
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registration statement pursuant to which a holder of Registrable
Securities is selling Registrable Securities, the holder shall furnish
to the Company in writing such information and affidavits as the
Company reasonably requests for use in connection with the registration
statement or prospectus and, to the extent permitted by law, shall
indemnify the Company, its directors and any of its officers who signs
such registration statement and each Person who controls the Company
(within the meaning of the Securities Act)
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against any losses, claims, damages, liabilities and expenses resulting
from any Violation to the extent that the Violation is caused by or
contained in any information furnished in writing to the Company by the
holder expressly for use in such registration statement, prospectus,
amendment, supplement or related document. This obligation to indemnify
shall be individual, not joint and several, for each holder and shall
be limited to the net amount of proceeds received by the holder from
the sale of Registrable Securities pursuant to the registration
statement.
7.3 Procedures. Any Person entitled to indemnification under
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this Section 7 shall, promptly after the receipt of notice of the
commencement of any action, investigation, claim or other proceeding
against such indemnified party in respect of which indemnity may be
sought from an indemnifying party under this Section 7, notify the
indemnifying party in writing of the commencement thereof. The omission
of any indemnified party so to notify an indemnifying party of any such
action shall not relieve the indemnifying party from any liability
which it may have to such indemnified party under this Section 7
unless, and only to the extent that, such omission results in the
indemnifying party's forfeiture of substantive rights or defenses or
the indemnifying party is otherwise irrevocably prejudiced in defending
such proceeding. In case any such action, claim or other proceeding
shall be brought against any indemnified party for which
indemnification is claimed pursuant to Section 7.1, and it shall notify
the Company of the commencement thereof, the Company shall be entitled
to assume the defense thereof at its own expense, with counsel
satisfactory to the Company; provided, that any such indemnified party
may, at its own expense, retain separate counsel to participate in such
defense. Notwithstanding the foregoing, in any action, claim or
proceeding in which both the Company, on the one hand, and an
indemnified party, on the other hand, is, or is reasonably likely to
become, a party, such indemnified party shall have the right to employ
separate counsel at the Company's expense and to control its own
defense of such action, claim or proceeding if, (a) the Company has
failed to assume the defense and employ counsel as provided herein, (b)
the Company has agreed in writing to pay such fees and expenses of
separate counsel or (c) in the reasonable opinion of counsel to such
indemnified party, a conflict or likely conflict exists between the
Company, on the one hand, and such indemnified party, on the other
hand, that would make such separate representation advisable, provided,
however, that the Company shall not in any event be required to pay the
fees and expenses of more than one separate counsel (and if deemed
necessary by such separate counsel, appropriate local counsel who shall
report to such separate counsel). The Company agrees that it will not,
without the prior written consent of an indemnified party, settle,
compromise or consent to the entry of any judgment in any pending or
threatened claim, action or proceeding relating to the matters
contemplated hereby (if such indemnified party is a party thereto or
has been actually threatened to be made a party thereto) unless such
settlement, compromise or consent includes an unconditional release of
such indemnified party from all liability arising or that may arise out
of such claim, action or proceeding. The Company shall not be liable
for any settlement of any claim, action or proceeding effected against
an indemnified party without the prior written consent of the Company.
The rights accorded to indemnified parties hereunder shall be in
addition to any rights that any indemnified party may have at common
law, by separate agreement or otherwise.
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7.4 Survival. The indemnification under this Section 7 shall
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remain in full force and effect regardless of any investigation made by
or on behalf of the indemnified party or any officer, director or
controlling Person of the indemnified party and shall survive the
transfer of securities. The Company and each holder subject to Section
7.2 also agree to make such provisions as are reasonably requested by
any indemnified party for contribution to the indemnified party in the
event that the Company's or such holder's indemnification is
unavailable for any reason.
8. Participation in Underwritten Registration.
8.1 Cooperation with Underwriters. No Person may participate
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in any underwritten registration pursuant to this Agreement unless the
Person (i) agrees to sell securities on the basis provided in the
underwriting arrangements and (ii) completes and executes all
questionnaires, powers of attorney, indemnities, underwriting
agreements and other documents required under the terms of the
underwriting arrangements. In any event, however, no holder of
Registrable Securities included in any underwritten registration shall
be required to make any representations or warranties to the Company or
the underwriters (other than representations and warranties regarding
the holder and the holder's intended method of distribution) or to
undertake any indemnification obligations to the Company or the
underwriters except as otherwise provided in Section 7.2.
8.2 Discontinuance of Dispositions. Each Person that is
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participating in any registration hereunder agrees that, upon receipt
of any notice from the Company of the happening of any event of the
kind described in Section 5(e) above, such Person will forthwith
discontinue the disposition of its Registrable Securities pursuant to
the registration statement until such Person receives copies of a
supplemented or amended prospectus as contemplated by such Section
5(e). In the event the Company shall give any such notice, the
applicable time period mentioned in Section 5(b) during which a
registration statement is to remain effective shall be extended by the
number of days during the period from and including the date of the
giving of such notice pursuant to this Section to and including the
date when each seller of a Registrable Security covered by such
registration statement shall have received the copies of the
supplemented or amended prospectus contemplated by Section 5(e).
9. Current Public Information.
The Company will timely file all reports required to be filed
by it under the Securities Act and the Exchange Act and the rules and
regulations adopted by the Commission thereunder, and will take such
further action as any holder or holders of Registrable Securities may
reasonably request, all to the extent required to enable such holders
to sell Registrable Securities pursuant to Rule 144 adopted by the
Commission under the Securities Act (as such rule may be amended from
time to time) or any similar rule or regulation hereafter adopted by
the Commission and pursuant to Form S-3 or any similar short form
registration statement. Upon written request, the Company will deliver
to such holders a written statement as to whether it has complied with
such requirements. In addition, unless the Common Stock is listed for
trading on the New York Stock
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Exchange, the Company will continue to cause its Common Stock and any
Common Stock issuable upon conversion of Purchaser Preferred Stock
(including preferential dividends issued thereon) to be listed for
trading on the Nasdaq National Market System.
10. Miscellaneous.
10.1 No Inconsistent Agreements. The Company shall not enter
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into any agreement with respect to its securities which is inconsistent
with or violates the rights granted to the holders of Registrable
Securities in this Agreement. Without limiting the generality of the
foregoing, until the initial holders of Registrable Securities cease to
hold at least 25% of the Underlying Common Stock, the Company shall not
grant to any Person, other than Affiliates of the Company as of the
date hereof, the right to request the Company to register any equity
securities of the Company, or any securities convertible or
exchangeable into or exercisable for such securities, without the prior
written consent of the holders of a majority of the Registrable
Securities. The Company may grant rights to other Persons to
participate in Piggyback Registrations, however, so long as (i) such
rights are subordinate to the rights of the holders of Registrable
Securities with respect to such Piggyback Registrations as set forth in
Sections 3.3 and 3.4 of this Agreement or (ii) such rights are pari
passu with the rights of the holders of Registrable Securities with
respect to such Piggyback Registration as set forth in Sections 3.3 and
3.4 of this Agreement and have been consented to by the holders of a
majority of the Registrable Securities.
10.2 Notices. All notices, claims, demands and other
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communications ("Notices") under this Agreement shall be in writing and
sent by certified or registered mail, return receipt requested, a
recognized overnight courier service, telecopier or personal delivery,
as follows:
(a) if to the Company, to:
US LEC Corp.
Transamerica Square
▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
with a required copy to:
▇▇▇▇▇ & ▇▇▇ ▇▇▇▇▇, PLLC
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ III
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
11
(b) if to the Investors, in care of:
▇▇▇▇ Capital, Inc.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇. ▇▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
and
▇▇▇▇▇▇ ▇. ▇▇▇ Partners, L.P.
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇/▇▇/ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
with a required copy to:
Ropes & ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
All Notices shall be deemed to have been duly given: when delivered by
hand, if personally delivered; when delivered by courier, if delivered
by commercial overnight courier service; five Business Days after being
deposited in the mail, postage prepaid, if mailed; and when receipt is
acknowledged by the individual to whom the telecopy is sent, if
telecopied. A party may change its address for purposes of this
Agreement by Notice in accordance with this Section 10.2.
10.3 Waiver. The rights and remedies of the Company and
------
holders of Registrable Securities are cumulative and not alternative.
Neither the failure nor any delay by the Company or any holder of
Registrable Securities in exercising any right, power or privilege
under this Agreement shall operate as a waiver of that right, power or
privilege, and no single or partial exercise of any right, power or
privilege shall preclude any other or further exercise of that right,
power or privilege or the exercise of any other right, power or
privilege. All waivers shall be in writing signed by the party to be
charged with the waiver, and no waiver that may be given by a party
shall be applicable except in the specific instance for which it is
given.
10.4 Amendment. This Agreement may not be amended except by a
---------
written agreement signed by the Company and holders of a majority of
the Registrable Securities.
10.5 Severability. If any provision of this Agreement is held
------------
invalid or unenforceable by a court of competent jurisdiction, the
other provisions of this Agreement shall remain in full force and
effect. Any provision of this Agreement which
12
is held invalid or unenforceable only in part shall remain in full
force and effect to the extent not held invalid or unenforceable.
10.6 Captions. The captions of sections of this Agreement
--------
are for convenience only and shall not affect this the construction or
interpretation of this Agreement.
10.7 Construction. All references in this Agreement to
------------
"Section" or "Sections" refer to the corresponding section or sections
of this Agreement. All words used in this Agreement shall be construed
to be of the appropriate gender or number as the context requires.
Unless otherwise expressly provided, the word" including" does not
limit the preceding words or terms.
10.8 Counterparts. This Agreement may be executed in one or
------------
more counterparts, each of which shall be considered an original copy
of this Agreement and all of which, when taken together, shall be
considered to constitute one and the same agreement.
10.9. Entire Agreement. This Agreement supercedes all prior
----------------
agreements between the parties with respect to its subject matter and
constitutes a complete and exclusive statement of the terms of the
agreement between the parties with respect to its subject matter.
10.10 Governing Law. This Agreement shall be governed by the
--------------
Laws of the State of Delaware without regard to conflicts of laws
principles.
10.11 Binding Effect. This Agreement shall apply to, be
--------------
binding in all respects upon and inure to the benefit of the parties
and their respective successors and permitted assigns and transferees.
13
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the date first above written.
US LEC CORP.
By:_________________________________
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Executive Vice President and
Chief Financial Officer
▇▇▇▇ CAPITAL CLEC INVESTORS, L.L.C.
By: ▇▇▇▇ Capital Fund VI, L.P.,
its Administrative Member
By: ▇▇▇▇ Capital Partners VI, L.P.,
its General Partner
By: ▇▇▇▇ Capital Investors VI, Inc.,
its general partner
By: ________________________________
Name:
Title: Managing Director
THOMH. ▇▇▇ EQUITY FUND IV, L.P.
By: THL Equity Advisors IV, LLC,
its general partner
By: _________________________________
Name:
Title:
14
▇▇▇▇▇▇ ▇. ▇▇▇ FOREIGN FUND IV-B, L.P.
By: THL Equity Advisors IV, LLC,
its general partner
By:___________________________________
Name:
Title:
▇▇▇▇▇▇ ▇. ▇▇▇ FOREIGN FUND IV, L.P.
By: THL Equity Advisors IV, LLC,
its general partner
By:___________________________________
Name:
Title:
▇▇▇▇▇▇ INVESTMENT HOLDINGS, LLC
By:___________________________________
Name:
Title:
1997 ▇▇▇▇▇▇ ▇. ▇▇▇ NOMINEE TRUST
By:___________________________________
Trustee
15
▇▇▇▇▇▇ ▇. ▇▇▇ CHARITABLE
INVESTMENT LIMITED PARTNERSHIP
By:
__________________________________
Name:
Title:
_____________________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
THE HARKINS 1995 GIFT TRUST
By:__________________________________
Trustee
_____________________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
_____________________________________
▇. ▇▇▇▇▇▇ ▇▇▇▇
_____________________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
_____________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
_____________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
_____________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
_____________________________________
▇▇▇▇ ▇. ▇▇▇▇▇
16
_____________________________________
▇▇▇▇ ▇. ▇▇▇▇▇▇
_____________________________________
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
_____________________________________
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
_____________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
_____________________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
_____________________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇
_____________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
_____________________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
_____________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
17
▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ 1988 IRREVOCABLE TRUST
By:________________________________
Trustee
____________________________________
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇
____________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ as Custodian for
▇▇▇▇▇ ▇▇▇
____________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ as Custodian for
▇▇▇▇▇▇ ▇▇▇
____________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
____________________________________
▇▇▇▇▇ ▇▇▇▇▇▇
____________________________________
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
____________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
____________________________________
▇. ▇▇▇▇▇▇ Spaht
____________________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
18
____________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
____________________________________
Wm. ▇▇▇▇▇▇▇ ▇▇▇▇▇
____________________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
____________________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
____________________________________
▇▇▇ ▇. ▇▇▇▇▇▇
19
SCHEDULE 1
Purchasers
-----------------------------------------------------------------------------------------------------------------
Number of Shares of Series A Preferred
Name Stock Purchased
---- --------------
-----------------------------------------------------------------------------------------------------------------
▇▇▇▇ Capital CLEC Investors, L.L.C. 100,000.00
-----------------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇ Equity Fund IV, L.P. 83,533.00
-----------------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇ Foreign Fund IV-B, L.P. 8,113.00
-----------------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇ Foreign Fund IV, L.P. 2,859.00
-----------------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇ Investment Holdings, LLC 1,374.00
-----------------------------------------------------------------------------------------------------------------
1997 ▇▇▇▇▇▇ ▇. ▇▇▇ Nominee Trust/1/ 1,099.00
-----------------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇ Charitable Investment Limited Partnership 543.00
-----------------------------------------------------------------------------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 294.00
-----------------------------------------------------------------------------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 245.00
-----------------------------------------------------------------------------------------------------------------
▇. ▇▇▇▇▇▇ ▇▇▇▇ 245.00
-----------------------------------------------------------------------------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ 245.00
-----------------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 245.00
-----------------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 245.00
-----------------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇. 245.00
-----------------------------------------------------------------------------------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇ 102.00
-----------------------------------------------------------------------------------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇ 68.00
-----------------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 54.00
-----------------------------------------------------------------------------------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ 54.00
-----------------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ 1988 Irrevocable Trust 50.00
-----------------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇ 50.00
-----------------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 41.00
-----------------------------------------------------------------------------------------------------------------
The Harkins 1995 Gift Trust 33.00
-----------------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ 29.00
-----------------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ as Custodian for ▇▇▇▇▇ ▇▇▇ 25.00
-----------------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ as Custodian for ▇▇▇▇▇▇ ▇▇▇ 25.00
-----------------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 20.00
-----------------------------------------------------------------------------------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇ 20.00
-----------------------------------------------------------------------------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 20.00
-----------------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 17.00
-----------------------------------------------------------------------------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 15.00
-----------------------------------------------------------------------------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇ 15.00
-----------------------------------------------------------------------------------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ 12.00
-----------------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ 12.00
-----------------------------------------------------------------------------------------------------------------
▇. ▇▇▇▇▇▇ ▇▇▇▇▇ 12.00
-----------------------------------------------------------------------------------------------------------------
_____________________________
/1/ For legal purposes, certificate should be issued to "State Street Bank as
Trustee for 1997 ▇▇▇▇▇▇ ▇. ▇▇▇ Nominee Trust"
20
-----------------------------------------------------------------------------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 12.00
-----------------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ 12.00
-----------------------------------------------------------------------------------------------------------------
Wm. ▇▇▇▇▇▇▇ ▇▇▇▇▇ 12.00
-----------------------------------------------------------------------------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ 2.00
-----------------------------------------------------------------------------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ 2.00
-----------------------------------------------------------------------------------------------------------------
▇▇▇ ▇. ▇▇▇▇▇▇ 1.00
-----------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------