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Exhibit 10.4
EXECUTION COPY
AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT
AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT, dated as of
October 1, 2001 (this "AGREEMENT"), by and among Metromedia Fiber Network, Inc.,
a Delaware corporation (the "COMPANY"), Verizon Investments Inc., a Delaware
corporation formerly known as Bell Atlantic Investments, Inc. (the "PURCHASER"),
and the stockholders of the Company listed on SCHEDULE I hereto (each a
"STOCKHOLDER" and collectively, with all other Persons who, in connection with a
Transfer (as hereinafter defined) of Company Equity Interests (as hereinafter
defined) by a Stockholder, are required to become a party to this Agreement, the
"STOCKHOLDERS").
W I T N E S S E T H:
WHEREAS, the Company, the Purchaser and certain of the
Stockholders are parties to a Stockholders Agreement dated as of March 6, 2000
(the "ORIGINAL AGREEMENT");
WHEREAS, each of the parties hereto (other than the Company)
owns or holds, as of the date hereof, (i) shares of the Company's Class A Common
Stock (as hereinafter defined), (ii) shares of the Company's Class B Common
Stock (as hereinafter defined), (iii) the Company's 6.15% Notes (as hereinafter
defined), (iv) the Company's 8.5% Affiliate Notes (as hereinafter defined), (v)
the Company's 8.5% Purchaser Notes (as hereinafter defined), or (vi) Company
Convertible Securities (as hereinafter defined) (in addition to any Class B
Common Stock, 6.15% Notes, 8.5% Affiliate Notes or 8.5% Purchaser Notes owned by
such party), all as set forth on SCHEDULE II hereto; and
WHEREAS, the Company, the Purchaser and the Stockholders party
to the Original Agreement desire to amend and restate the Original Agreement in
its entirety as hereinafter provided;
NOW, THEREFORE, in consideration of the foregoing and the
mutual covenants and agreements contained herein, and intending to be legally
bound hereby, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 CERTAIN DEFINITIONS. As used in this
Agreement:
(a) The term "6.15 % NOTES" shall mean the Company's Series
A and Series B 6.15% Convertible Subordinated Notes due 2010, issued pursuant
to the 6.15% Notes Indenture.
(b) The term "6.15 % NOTES INDENTURE" shall have the
meaning given to such term in Section 2.3 hereof.
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(c) The term "8.5% AFFILIATE NOTES" shall mean the
Company's 8.5% Senior Secured Convertible Notes due 2011, issued pursuant to
that certain Note Purchase Agreement, dated as of the date hereof, by and
among the Company and the purchasers identified on Schedule I thereto, as
such notes or agreement may be amended, supplemented or modified from time to
time.
(d) The term "8.5% PURCHASER NOTES" shall mean the
Company's 8.5% Senior Convertible Notes due 2011, issued pursuant to the 8.5%
Purchaser Notes Indenture.
(e) The term "8.5% PURCHASER NOTES INDENTURE" shall have
the meaning given to such term in Section 2.3 hereof.
(f) The term "1999 PURCHASE AGREEMENT" shall mean that
certain Securities Purchase Agreement, dated as of October 7, 1999, by and
between the Company and the Purchaser, as the same may be supplemented,
amended or modified from time to time.
(g) The term "ACCEPTANCE NOTICE" shall have the meaning
given to such term in Section 3.3(c) hereof.
(h) The term "ADDITIONAL COMPANY INTERESTS" shall have the
meaning given to such term in Section 3.1. hereof
(i) The term "AFFILIATE" shall have the meaning given to
such term in Rule 12b-2 under the Exchange Act.
(j) The term "AGREEMENT" shall the meaning given to such
term in the introductory paragraph hereof.
(k) The term "ASSOCIATE", as used to indicate a
relationship with any Person, shall mean (i) any trust or other estate in
which such Person has a substantial beneficial interest or as to which such
Person serves as trustee or in a similar fiduciary capacity, (ii) any lineal
ancestor, lineal descendant, sibling or spouse of such Person, or any other
Person who has the same home as such Person, and (iii) any Person who is an
Associate of any of the Persons identified in (i) or (ii).
(l) The terms "BENEFICIAL OWNERSHIP", "BENEFICIAL OWNER",
and "BENEFICIALLY OWNED" shall have the meanings given to such terms in
Section 13(d)(3) of the Exchange Act and the rules and regulations
promulgated thereunder, and, for purposes of determining Beneficial Ownership
hereunder, any Company Convertible Securities shall be deemed immediately
convertible, exercisable or exchangeable, irrespective of whether or not the
same are, at the time of determination, then convertible, exercisable,
exchangeable or in-the-money.
(m) The term "BOARD OF DIRECTORS" shall mean the Company's
Board of Directors, as the same shall be constituted from time to time.
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(n) The term "CLASS A COMMON STOCK" shall mean the
Company's Class A Common Stock, par value $.01 per share.
(o) The term "CLASS B COMMON STOCK" shall mean the
Company's Class B Common Stock, par value $.01 per share.
(p) The term "COMMON STOCK" shall mean, collectively, the
shares of Class A Common Stock and the shares of Class B Common Stock
determined as a single class assuming that all outstanding shares of Class B
Common Stock had been converted into shares of Class A Common Stock on the
determination date.
(q) The term "COMPANY" shall mean Metromedia Fiber Network,
Inc., a Delaware corporation, and any successor thereto.
(r) The term "COMPANY CONVERTIBLE SECURITIES" shall mean
any option, warrant or other right (including, without limitation, through
derivative transactions, contracts or arrangements) to acquire any Security
of the Company or any Security that is convertible into, or exercisable or
exchangeable for, any Security of the Company, irrespective of whether or not
any of the foregoing is currently convertible, exercisable, exchangeable or
in-the-money.
(s) The term "COMPANY EQUITY INTERESTS" shall mean,
individually or collectively, Class A Common Stock, and Class B Common Stock,
6.15% Notes, 8.5% Affiliate Notes, 8.5% Purchaser Notes and any other Company
Convertible Security.
(t) The term "EXCHANGE ACT" shall mean the Securities
Exchange Act of 1934, as amended or any successor act thereto, and the rules
and regulations promulgated thereunder from time to time.
(u) The term "FORM 13F FILER" shall mean any Person
required under Section 13(f) of the Exchange Act to file a Form 13F or that
would be a Person that would satisfy the requirements under Rule
13d-1(b)(1)(i) and (ii)(A-F, H or I) under the Exchange Act with respect to
the acquisition of securities of the Company, including as a result of a
Transfer of Company Equity Interests from any Stockholder that is permitted
hereunder.
(v) The term "GOVERNMENTAL ENTITY" shall mean any nation or
government, any state, local or other political subdivision thereof, any
court, arbitrator, official, agency, department or other Person exercising
executive, legislative, judicial, regulatory or administrative functions of
or pertaining to government, or any federal, state or local governmental or
regulatory agency, authority, commission or instrumentality.
(w) The term "GROUP" shall have the meaning given to such
term in Section 13(d)(3) of the Exchange Act and the rules, regulations and
publicly available interpretations of the Securities and Exchange Commission
promulgated with respect to such section.
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(x) The term "LIENS" shall have the meaning given to such
term in Section 2.2(a)(iv) hereof.
(y) The term "OPTION PERIOD" shall have the meaning given
to such term in Section 2.2(a)(ii) hereof.
(z) The term "ORIGINAL AGREEMENT" shall have the meaning
given to such term in the recitals hereof.
(aa) The term "PERSON" shall mean any individual, sole
proprietorship, partnership, limited liability company, joint venture, trust,
unincorporated organization, association, corporation, institution, public
benefit corporation, entity or government (whether foreign, federal, state,
county, city, municipal or otherwise, including any instrumentality,
division, agency, body or department thereof).
(bb) The term "PUBLIC RESALE" shall mean, any one or more
of the following transactions: a Transfer of Company Equity Interests
pursuant to (A) a bona fide secondary offering registered under the
Securities Act, (B) a purchase agreement with a placement agent or group of
placement agents covering any of the Company Equity Interests that
contemplates the immediate resale of securities by such placement agent
pursuant to the resale exemption provided by Rule 144A promulgated under the
Securities Act solely to Qualified Institutional Buyers (as defined in the
Securities Act) and other permitted purchasers under Rule 144A or to
"off-shore purchasers" in a Transfer permitted by Regulation S promulgated
under the Securities Act, or (C) bona fide "brokers transactions" as
permitted by or as otherwise permitted by the exemption from registration of
the resale of the Company Equity Interests under the Securities Act provided
by Rule 144 promulgated thereunder; PROVIDED that in the case of each of
clauses (A) through (C), no Person or Group other than a Form 13F Filer, to
the transferring Stockholder's knowledge (and the transferring Stockholder
shall require any underwriter or placement agent for such Transfer to agree
to use its reasonable efforts to so ensure), would Beneficially Own in excess
of 5% of the Common Stock then issued and outstanding immediately after
giving effect to such Transfer, and any Transfer also complies with the
provisions of Section 2.1, 2.2 and 3.2 hereof.
(cc) The term "PURCHASER" shall have the meaning given to
such term in the introductory paragraph hereof.
(dd) The term "READILY MARKETABLE SECURITIES" shall mean
equity securities of a Person, which securities are registered under the
Exchange Act and are traded on the New York Stock Exchange, the American
Stock Exchange, The Nasdaq National Market or any successor or equivalent
securities exchange.
(ee) The term "RELEVANT SECURITY" shall have the meaning
given to such term in Section 2.2(a) hereof.
(ff) The term "SECURITIES ACT" shall mean the Securities
Act of 1933, as amended or any successor act thereto, and the rules and
regulations promulgated thereunder from time to time.
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(gg) The term "SECURITY" shall have the meaning given to
such term in Section 2(a) of the Securities Act and the rules, regulations
and publicly available interpretations of the Securities and Exchange
Commission promulgated with respect to such section.
(hh) The term "STOCKHOLDER" shall have the meaning given to
such term in the introductory paragraph hereof; IT BEING AGREED AND
UNDERSTOOD that the Purchaser shall not be deemed a "Stockholder" for any
purpose hereunder.
(ii) The term "SITESMITH/SPAGNOLO NOTE" shall have the
meaning given to such term in Section 2.1(b) hereof.
(jj) The term "TAG-ALONG NOTICE" shall have the meaning
given to such term in Section 3.3(b) hereof.
(kk) The term "TAG-ALONG RIGHT" shall have the meaning
given to such term in Section 3.2(a) hereof.
(ll) The term "TAG-ALONG TRANSFER" shall have the meaning
given to such term in Section 3.2(a) hereof.
(mm) The term "THIRD PARTY CLOSING DATE" shall have the
meaning given to such term in Section 2.2(a) hereof.
(nn) The term "THIRD PARTY TRANSFER" shall have the meaning
given to such term in Section 2.2(a) hereof.
(oo) The term "THIRD PARTY TRANSFEREE" shall have the
meaning given to such term in Section 2.2(a) hereof.
(pp) The term "TRANSFER" (including, with correlative
meaning, "Transferred") shall mean any direct or indirect offer, sale,
transfer, assignment, exchange, grant of an option or right to purchase,
hedge, short sale, pledge, hypothecation, creation of an encumbrance, or
other disposition of any kind (including by operation of law or testamentary
or intestate succession), or any derivative transaction that has the effect
of changing the economic benefits or rights of ownership.
(qq) The term "TRANSFER NOTICE" shall have the meaning
given to such term in Section 2.2(a) hereof.
(rr) The term "TRANSFER PRICE" shall have the meaning given
to such term in Section 2.2(a) hereof.
(ss) The "TRANSFER RESTRICTED PERIOD" shall have the
meaning given to such term in Section 2.1(a) hereof.
(tt) The term "TRANSFER SECURITIES" shall have the meaning
given to such term in Section 2.2(a) hereof.
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(uu) The term "TRANSFERRING STOCKHOLDER" shall have the
meaning given to such term in Section 2.2(a) hereof.
Section 1.2 OTHER REFERENCES. As used herein (including any
schedule hereto), any references to specified numbers (but not percentages)
of Class A Common Stock, Class B Common Stock or Common Stock, or to
specified numbers of shares of or shares underlying or issuable upon
conversion, exercise or exchange of, any Company Convertible Security
referred to herein (including any schedule hereto), shall be deemed to be
references to such number of Class A Common Stock, Class B Common Stock,
Common Stock or shares as may be adjusted in the event of any change in the
capital stock of the Company by reason of stock dividends, split-ups, reverse
split-ups, mergers, recapitalizations, subdivisions, conversions, exchanges
of shares or the like, or as a result of any adjustment pursuant to any
instrument, contract or agreement relating or applicable to or governing any
Company Convertible Security, occurring after the date of this Agreement.
ARTICLE II
COVENANTS OF STOCKHOLDERS, THE COMPANY AND MC
Section 2.1 TRANSFER RESTRICTIONS.
(a) Each Stockholder agrees that, for a period of 18 months
from the date hereof (such period, the "TRANSFER RESTRICTED PERIOD"), it
shall not, directly or indirectly, Transfer any Company Equity Interests
Beneficially Owned by such Stockholder; PROVIDED, HOWEVER, that any
Stockholder may (i) Transfer any of its Company Equity Interests to any
Associate or Affiliate of such Stockholder, if any and only if, such
transferee first agrees, pursuant to a written agreement satisfactory to the
Purchaser, to take such Company Equity Interests subject to the terms of this
Agreement and to become party to and be deemed a "Stockholder" under this
Agreement, and be subject to and bound by all the terms of this Agreement to
the same extent and in the same manner as the transferring Stockholder, or
(ii) subject to Sections 2.2 and 3.2 hereof, Transfer, whether in one or a
series of Transfers within the Transfer Restricted Period (other than
Transfers to an Associate or an Affiliate of such Person, which would be
subject to clause (i) of this proviso), Company Equity Interests
representing, individually or in the aggregate with all other Transfers by
such Stockholder within the Transfer Restricted Period, less than 10% of the
"Total Common Stock" held by such Stockholder set forth opposite such
Stockholder's name on SCHEDULE IIA hereto (as adjusted from time to time in
accordance with the footnote on such schedule); IT BEING AGREED AND
UNDERSTOOD that, if any of the Company Equity Interests that are to be
Transferred are Company Convertible Securities, the foregoing determination
shall be made on an as-converted basis, assuming any such Company Convertible
Securities have been, or, as part of such Transfer, will be, converted,
exercised or exchanged.
(b) Notwithstanding anything to the contrary contained
herein, without having to comply with the provisions of Section 2.1, 2.2 or
3.2 hereof, Mark Spagnolo may Transfer any Company Equity Interests owned by
him, if and only if, the proceeds
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from any such Transfer are used solely and exclusively to repay up to, and
not in excess of, $2.2 million of the indebtedness owed by him under that
certain promissory note, dated July 11. 2000, issued by him in favor of
SiteSmith Communications, Inc. (the "SITESMITH/SPAGNOLO NOTE"; PROVIDED,
HOWEVER, that any such Transfer by Mr. Spagnolo shall be subject to and
conditioned upon the Purchaser being provided reasonably satisfactory
evidence that the proceeds from any such Transfer will be applied as provided
in this Section 2.1(b).
Section 2.2 RIGHT OF FIRST REFUSAL.
(a) Except as expressly permitted under Section 3.5 hereof,
if any Stockholder proposes to, directly or indirectly, Transfer all or any
of its Company Equity Interests (any such Stockholder, a "TRANSFERRING
STOCKHOLDER"; and any such interest, a "RELEVANT SECURITY") to any Person
(such Person, a "THIRD PARTY TRANSFEREE", and any such proposed Transfer, a
"THIRD PARTY TRANSFER"), the Transferring Stockholder shall send a written
notice (a "TRANSFER NOTICE") to the Purchaser (with a copy to the Company),
which Transfer Notice shall state (A) the type, number and/or principal
amount of Relevant Securities proposed to be transferred to the Third-Party
Transferee (the "TRANSFER SECURITIES"), (B) the proposed purchase price per
Relevant Security to be paid by the Third Party Transferee (the "TRANSFER
PRICE"), (C) the name of the Third Party Transferee, and (D) the proposed
closing date for the Third Party Transfer (the "THIRD PARTY CLOSING DATE"),
which Third Party Closing Date shall not be sooner than 20 days from the date
a Transfer Notice is received (as determined under Section 5.6 hereof) by the
Purchaser. The Transfer Notice shall also state any other material terms and
conditions of the Third Party Transfer and shall include copies of the
contemplated definitive agreements (to the extent available and, if not
available, drafts thereof that are the most recent versions thereof) for the
Third Party Transfer and all writings between the Third Party Transferee and
the Transferring Stockholder that would be reasonably necessary for the
Purchaser to establish the terms and conditions of the Third Party Transfer.
(i) The Transfer Notice shall not be effective
unless and until all of the following conditions are met: (A) the
Transfer Notice is accompanied by a certificate of the Transferring
Stockholder to the Purchaser stating that the Third Party Transfer,
if it is not a Public Resale, has been approved by the board of
directors (or the equivalent if the Third Party Transferee is not a
corporation) of the Third Party Transferee (if required by such
Third Party Transferee and solely to the Transferring Stockholder's
knowledge based on representations and warranties of the Third Party
Transferee), that the Stockholder has made the Third Party
Transferee aware of the rights of the Purchaser contained in this
Section 2.2(a), and that, subject to Section 2.2(b) hereof, unless
such Third Party Transfer, if consummated, would constitute a Public
Resale, the Third Party Transferee will be obligated to become a
party to this Agreement and agree in writing to be bound by the
terms and conditions hereof to the same extent and in the same
manner as the Transferring Stockholder; (B) the Transfer Price shall
be payable in cash, cash equivalents or Readily Marketable
Securities; and (C) the Third Party Transferee shall have furnished
evidence satisfactory to the Purchaser
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in its reasonable judgment as to the financial ability or resources of
such Third Party Transferee to consummate the proposed purchase.
(ii) For a period of 20 days after the receipt
(as determined under Section 5.6 hereof) of the Transfer Notice
pursuant to Section 2.2(a)(i) (the "OPTION PERIOD"): (A) the
Purchaser or its designees shall have the right to purchase all of
the Transfer Securities at a purchase price equal to the Transfer
Price and upon the terms and conditions of the Third Party Transfer;
or (B) if the Purchaser and its designees do not elect to purchase
all of the Transfer Securities pursuant to clause (A) of this
Section 2.2(a)(ii), the Transferring Stockholder shall have the
right to sell, to the Third Party Transferee upon the terms and
conditions set forth in the Third Party Transfer, that number of
Relevant Securities specified in the Transfer Notice.
(iii) The option of the Purchaser or its designees
under Section 2.2(a)(ii)(A) shall be exercisable by delivering
written notice of the exercise thereof, which shall be irrevocable,
prior to the expiration of the Option Period, to the Transferring
Stockholder (with a copy to the Company). Such notice shall state
that the Purchaser or its designees desires to purchase the Transfer
Securities pursuant to Section 2.2(a)(ii)(A). The failure of the
Purchaser to deliver such written notice prior to the expiration of
the Option Period to the Transferring Stockholder shall be deemed to
be a waiver of its rights under Section 2.2(a)(ii)(A). The tender of
such notice shall constitute agreement by the Purchaser to purchase
from the Transferring Stockholder the Transfer Securities at the
Transfer Price and on the terms and conditions set forth in the
Transfer Notice.
(iv) The closing of the purchase of Transfer
Securities subscribed to by the Purchaser or its designees under
Section 2.2(a)(ii)(A) shall be held at the principal office of the
Purchaser at 10:00 a.m., local time, on the Third Party Closing Date
or at such other time and place as the parties to the transaction
may agree; PROVIDED that the Third Party Closing Date shall be
extended to a later date not to exceed 60 days after such Third
Party Closing Date if the Transfer has not been consummated by the
Third Party Closing Date as a result solely of a failure to obtain a
required consent or approval of any Governmental Entity and the
parties are using reasonable commercial efforts to obtain such
required consent or approval; PROVIDED, FURTHER, that such 60-day
period shall be extended until such required regulatory consents or
approvals are obtained if the delay in obtaining such required
regulatory consents and approvals is solely as a result of the
failure of the Company to cooperate in a commercially reasonable
manner with the Transferring Stockholder or the Purchaser in
obtaining the required regulatory consents and approvals for such
Transfer. The Company shall take such actions as the Purchaser
reasonably requests, at the Company's sole cost and expense, to
finalize the Transfer of the Transfer Securities to the Purchaser,
including, without limitation, cooperating with the Purchaser in
seeking to obtain and obtaining all authorizations, consents, orders
and approvals of any Governmental Entity that may be necessary to
allow the Purchaser to purchase the
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Transfer Securities. At such closing, the Transferring Stockholder
shall deliver to the Purchaser or its designees certificates
representing the Transfer Securities, duly endorsed with a signature
guarantee for transfer and accompanied by all requisite transfer
taxes, if any, and such Transfer Securities shall be free and clear
of any liens, claims, options, charges, encumbrances or rights
("LIENS") (other than those arising hereunder), and the Transferring
Stockholder shall so represent and warrant, and shall further
represent and warrant that it is the beneficial and record owner of
such Transfer Securities. The Purchaser or its designees shall, at
such closing, deliver to the Transferring Stockholder payment in
full in immediately available funds for the Transfer Securities
purchased by it. At such closing, all of the parties to the
transaction shall execute such additional documents as are otherwise
necessary or appropriate.
(v) Unless the Purchaser or its designees elect
to purchase all of the Transfer Securities pursuant to Section
2.2(a)(ii)(A), the Transferring Stockholder may sell such portions
of its Company Equity Interests as can be sold under Section
2.2(a)(ii)(B) to the Third Party Transferee on the terms and
conditions of the Third Party Transfer; PROVIDED, HOWEVER, that such
sale is bona fide and made prior to or on the Third Party Closing
Date or such later date not to exceed 60 days after such Third Party
Closing Date as the Transferring Stockholder and the Third Party
Transferee may agree if the Transfer has not been consummated by the
Third Party Closing Date as a result solely of a failure to obtain
consent or approval of any Governmental Entity (including the
Securities and Exchange Commission in the case of Public Resale) and
the parties are using reasonable commercial efforts to obtain such
consent or approval; PROVIDED, FURTHER, that such 60-day period
shall be extended until the required regulatory consents or
approvals are obtained if the delay in obtaining such required
regulatory consents and approvals is solely a result of the failure
of the Company to cooperate in a commercially reasonable manner with
the Transferring Stockholder in obtaining such required regulatory
consents and approvals. If such sale is not consummated prior to or
on the Third Party Closing Date for any reason, except as the same
may be extended as provided above, then the restrictions provided
for in this Section 2.2(a) shall again become effective, and no
Transfer of such Transfer Securities may be made thereafter by the
Transferring Stockholder without again offering the same to the
Purchaser in accordance with this Section 2.2(a). The Company shall
take such actions as the Transferring Stockholder reasonably
requests, at the Transferring Stockholder's sole cost and expense,
to facilitate the Transfer of the Transfer Securities to the Third
Party Transferee pursuant to the Third Party Transfer.
(b) It shall be a condition to any Third Party Transfer
made pursuant to Section 2.2(a)(v), that, unless such Third Party Transfer
would constitute a Public Resale or unless the Third Party Transferee would,
after giving effect to the Third Party Transfer, Beneficially Own less than
1% of the Common Stock then outstanding, the Third Party Transferee be
obligated to become a party to this Agreement and agree, pursuant to a
written agreement satisfactory to the Purchaser, to become a party to, and be
deemed a "Stockholder" under, this Agreement and be subject to and bound by
the
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terms and conditions hereof to the same extent and in the same manner as the
Transferring Stockholder; PROVIDED, HOWEVER, if such Third Party Transfer
would constitute a Public Resale and any direct or indirect Third Party
Transferee and its Affiliates and Associates would, to the Transferring
Stockholder's knowledge (which would include any knowledge obtained from any
underwriter or placement agent for Third Party Transfer after requiring any
such underwriter or placement agent to agree to use its reasonable best
efforts to obtain such knowledge and communicate the same to the Transferring
Stockholder), Beneficially Own in excess of 5% of the Common Stock then
issued and outstanding immediately after giving effect to such Third Party
Transfer, such direct or indirect Third Party Transferee and its Affiliates
and Associates will be obligated to become a party to this Agreement and
agree, pursuant to a written agreement satisfactory to the Purchaser, to
become a party to, and be deemed a "Stockholder" under, this Agreement and be
subject to and bound by the terms and conditions hereof to the same extent
and in the same manner as the Transferring Stockholder.
Section 2.3 PURCHASER LIQUIDATING TRUST. In the event (i)
the Company elects to redeem any of the outstanding 6.15% Notes or 8.5%
Purchaser Notes pursuant to the provisions of Section 3.07 of the Indenture,
dated as of the date hereof (as the same may be amended, supplemented or
modified from time to time, the "6.15% NOTES INDENTURE"), between the Company
and U.S. Bank Trust National Association, as trustee, relating to the 6.15%
Notes, or Section 3.07 of the Indenture, dated as of the date hereof (as the
same may be amended, supplemented or modified from time to time, the "8.5%
PURCHASER NOTES INDENTURE"), between the Company and Wilmington Trust
Company, as trustee, relating to the 8.5% Purchaser Notes, respectively,
prior to the occurrence of the Regulatory Relief Date (as defined in the
6.15% Notes Indenture), or (ii) the Regulatory Relief Date has occurred and
the Purchaser desires to convert any of the outstanding 6.15% Notes or 8.5%
Purchaser Notes but it may not so convert such 6.15% Notes or 8.5% Purchaser
Notes due to the provisions of Section 4.01 of the 6.15% Notes Indenture or
Section 4.01 of the 8.5% Purchaser Notes Indenture, as applicable and in
either case, related to the Franchise Agreements (as defined in the 6.15%
Notes Indenture) and, as a result, the Purchaser would Beneficially Own in
excess of 10% of the shares of then issued and outstanding Common Stock, then
the Purchaser may (x) irrevocably Transfer such 6.15% Notes or 8.5% Purchaser
Notes or such shares of Common Stock to a liquidating trust so that after
giving effect to such Transfer, it no longer Beneficially Owns or owns of
record following such Transfer (though the Purchaser shall remain entitled to
the net proceeds of such liquidating trust) such 6.15% Notes or 8.5%
Purchaser Notes, or, it Beneficially Owns less than 10% of the then issued
and outstanding shares of Common Stock, (y) cause such trust to
simultaneously, or at such other time as provided in the trust agreement or
similar governing documents for such trust, convert all such 6.15% Notes or
8.5% Purchaser Notes into shares of Class A Common Stock in accordance with
Article 4 of the 6.15% Notes Indenture or Article 4 of the 8.5% Purchaser
Notes Indenture, as applicable, and/or (z) cause such trust to Transfer such
6.15% Notes or 8.5% Purchaser Notes, shares of Class A Common Stock obtained
upon conversion of such 6.15% Notes or 8.5% Purchaser Notes or shares of
Class A Common Stock Transferred to such trust in a Public Resale and
distribute the proceeds of such Transfer to the Purchaser, all as provided in
the trust agreement or similar governing documents for such trust. The
Company shall take such actions as the Purchaser
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reasonably requests, at the Purchaser's sole cost and expense, to facilitate
the Transfer of the 6.15% Notes or 8.5% Purchaser Notes or shares of Class A
Common Stock to the liquidating trust pursuant to this Section 2.3. Nothing
set forth herein shall be deemed to amend or modify the provisions of Article
4 of the 6.15% Notes Indenture or Article 4 of the 8.5% Purchaser Notes
Indenture.
ARTICLE III
ADDITIONAL PROVISIONS
Section 3.1 ADDITIONAL SHARES. If, after the date hereof,
any Stockholder acquires Beneficial Ownership of any additional Company
Equity Interests or any newly issued shares of capital stock of the Company
(any such interests shall be referred to herein as "ADDITIONAL COMPANY
INTERESTS"), including, without limitation, upon exercise or conversion of
any derivative security or through any stock dividend or stock split, the
provisions of this Agreement applicable to the Company Equity Interests owned
by such Stockholder shall be applicable to such Additional Company Interests,
as if such Additional Company Interests had been outstanding as of the date
hereof. The provisions of the immediately preceding sentence shall be
effective with respect to Additional Company Interests without action by any
Person immediately upon the acquisition by such Stockholder of record or
Beneficial Ownership of such Additional Company Interests.
Section 3.2 TAG-ALONG RIGHTS.
(a) In addition to, and in no way in limitation of, the
provisions of Section 2.2(a) hereof, but except as expressly permitted by
Section 3.5 hereof, in the event that any Transferring Stockholder proposes
to, directly or indirectly, Transfer any Company Equity Interests to a Third
Party Transferee, the Transferring Stockholder shall have the obligation, and
the Purchaser shall have the right (the "TAG-ALONG RIGHT"), to require the
Third Party Transferee to purchase (the "TAG-ALONG TRANSFER") from the
Purchaser or any of its Affiliates a number of shares of Class A Common Stock
up to or equal to the product (rounded up to the nearest integer) of (i) the
quotient determined by dividing (x) the number of shares of the Class A
Common Stock held by the Purchaser and its Affiliates by (y) the aggregate
number of shares of Common Stock owned by the Transferring Stockholder(s) and
the Purchaser and its Affiliates plus the aggregate number of shares of Class
A Common Stock owned by any holder thereof who has similar "tag-along" rights
and elects to exercise (and then to the extent, but only to the extent, such
holder exercises) such rights in connection with the Tag-Along Transfer
(calculated with respect to the Purchaser to include any shares of Class A
Common Stock that may be received upon conversion of outstanding 6.15% Notes
and 8.5% Purchaser Notes, only if such 6.15% Notes and 8.5% Purchaser Notes
may then be immediately converted in accordance with their terms prior to or
upon such Transfer and the Purchaser irrevocably notifies the Company that it
intends to convert 6.15% Notes and 8.5% Purchaser Notes prior to or
concurrently with the Tag-Along Transfer and Transfer the shares of Class A
Common Stock into which they convert to the Third Party Transferee as part of
the exercise of its Tag-Along Right and it subsequently converts such 6.15%
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Notes and 8.5% Purchaser Notes, in which case only such shares of Class A
Common Stock obtained upon conversion of 6.15% Notes and 8.5% Purchaser Notes
prior to or concurrently with the Tag-Along Transfer shall be included for
purposes of calculating the number of shares owned by the Purchaser and its
Affiliates; and calculated to include any shares of Common Stock that may be
received upon conversion, exercise or exchange of any Company Convertible
Securities that are among the Company Equity Interests proposed to be
Transferred by the Transferring Stockholder or any other holder participating in
such Tag-Along Transfer); and (ii) the number of shares of the Common Stock
proposed to be Transferred in the contemplated Transfer (calculated to include
any shares of Common Stock that may be received upon conversion, exercise or
exchange of any Company Convertible Securities that are among the Company Equity
Interests proposed to be Transferred by the Transferring Stockholder), and at
the same price per share and upon the same terms and conditions offered to the
Transferring Stockholder(s). The Company Equity Interests to be Transferred by
the Transferring Stockholders in such Tag-Along Transfer shall be reduced by the
number of shares of Common Stock that the Purchaser elects to require the
Third Party Transferee to purchase in such Tag-Along Transfer pursuant to the
Purchaser's right contained in the preceding sentence.
By way of example only, if a Transferring Stockholder intends
to sell 1,000 shares of Common Stock to a third party, and at such time such
Stockholder owns 75,000 shares of Class A Common Stock, the Purchaser owns
20,000 shares of Class A Common Stock, the other stockholders of the Company who
have similar "tag-along" rights have elected not to participate in such
Tag-Along Transfer, and the Purchaser has notified the Company that it intends
to convert 8.5% Purchaser Notes to obtain an additional 5,000 shares of Class A
Common Stock (although it has 6.15% Notes and 8.5% Purchaser Notes convertible
into more shares of Class A Common Stock) and sell such shares in connection
with the exercise of its Tag-Along Right, then the Purchaser, if it gives
irrevocable notice of such conversion and intention to sell, shall be entitled
to Transfer 250 shares of Class A Common Stock exercising its Tag-Along Right in
such sale (calculated by solving for: (25,000) (25,000 + 75,000)) x 1,000) and
the Transferring Stockholder shall be entitled to Transfer the remaining 750
shares of Class A Common Stock in such tag-along sale.
(b) The Transferring Stockholder(s) shall give written
notice (the "TAG-ALONG NOTICE") to the Purchaser of each proposed Transfer
giving rise to the Tag-Along Right, which Tag-Along Notice shall state (i)
the maximum Company Equity Interests proposed to be Transferred, (ii) the
proposed purchase price per Company Equity Interest, (iii) the name of the
Third Party Transferee, and (iv) the proposed closing date for the Transfer,
which date shall be no sooner than 20 days from the date the Tag-Along Notice
is received (as determined under Section 5.6 hereof) by the Purchaser. The
Tag-Along Notice shall also state any other material terms and conditions of
the proposed Transfer, and shall include copies of the contemplated
definitive agreements for the offer (to the extent available and, if not
available, drafts thereof that are the most recent versions thereof) and all
writings between the Transferring Stockholder(s) and the transferee necessary
to establish the terms and conditions of the offer. The Tag-Along Notice
shall not be effective unless and until (A) the Tag-Along Notice shall be
accompanied with a certificate of the Transferring Stockholder(s) to the
Purchaser stating
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that the offer has been approved by the board of directors (or the equivalent
if the offeror is not a corporation) of the offeror (if required by such
offeror and solely to the Transferring Stockholder's knowledge based on
representations and warranties of the offeror), and that such Transferring
Stockholder(s) have made the offeror aware of the rights of the Purchaser
contained in, and that any Transfer by the Transferring Stockholders is
subject to this, Section 3.2, (B) the consideration to be received by the
Purchaser in the Tag-Along Transfer consists entirely of cash and/or
securities of a Person, which securities are registered under the Exchange
Act and are traded on the New York Stock Exchange, the American Stock
Exchange, The Nasdaq National Market or any successor or equivalent
securities exchange, and (C) the offeror shall furnish evidence satisfactory
to the Purchaser in its reasonable judgment as to the financial ability or
resources of such offeror to consummate the proposed purchase if it is a cash
offer. Assuming all of the provisions of this Section 3.2(b) and Section
2.2(a)(i) are satisfied and specific reference is made to such sections, the
Tag-Along Notice and the Transfer Notice may take the form of one notice.
(c) The Tag-Along Right provided by this Section 3.2 must
be exercised by the Purchaser within the 20-day period following the receipt
(as determined under Section 5.6 hereof) of the Tag-Along Notice by delivery
prior to the end of such 20-day period of a written notice (the "ACCEPTANCE
NOTICE") to the Transferring Stockholder(s) stating the Purchaser's desire to
exercise its Tag-Along Right under this Section 3.2 and specifying the number
of shares of Class A Common Stock it desires to sell. The tender of the
Acceptance Notice by the Purchaser shall constitute agreement by the
Purchaser to sell in connection with the Tag-Along Transfer the amount of
securities specified and at the price specified in the Acceptance Notice and
otherwise on the terms and conditions set forth in the notice provided by the
Transferring Stockholder to the Purchaser. Failure to deliver the Acceptance
Notice within 30 days after delivery of the Tag-Along Notice shall be deemed
a determination by the Purchaser not to exercise its Tag-Along Right and a
waiver of such right. If the sale contemplated by the Tag-Along Notice is not
consummated on the same terms and conditions as those contained in the
Tag-Along Notice for any reason, then the restrictions provided for herein
shall again become effective, and the Transferring Stockholders may not
Transfer any Company Equity Interests without complying with the provisions
of this Section 3.2.
(d) The closing of the purchase by the Third Party
Transferee of the shares of Class A Common Stock owned by the Purchaser shall
be held (i) at the principal office of the Company on the same day as the
closing of the sale from the Transferring Stockholder(s) to the Third Party
Transferee, or (ii) at such other time and place as the parties to the
applicable transaction may agree; PROVIDED that the date of such closing
shall be extended to a later date not to exceed 60 days after such date of
such closing if such closing has not been consummated by such date of closing
as a result solely of a failure to obtain a required consent or approval of
any Governmental Entity and the parties are using reasonable commercial
efforts to obtain such required consent or approval; PROVIDED, FURTHER, that
such closing shall be extended until such required regulatory consents and
approvals are obtained if the delay in obtaining such required regulatory
consents and approvals is a result of the failure of the Company to cooperate
in a commercially reasonable manner with the Purchaser in obtaining such
required
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consents and approvals. At such closing, the Transferring Stockholder(s) and
the Purchaser shall each deliver certificates or other instruments
representing the Company Equity Interests being Transferred, duly
authenticated for transfer and accompanied by all requisite transfer taxes,
if any, and such Company Equity Interests shall be free and clear of any
Liens other than those arising hereunder. The Purchaser shall further
represent and warrant that it Beneficially Owns such Common Equity Interests,
that it or its designee is the record holder of such Common Equity Interests
and that the delivery of such Common Equity Interests shall convey good and
marketable title to such Common Equity Interests. At such closing, the Third
Party Transferee shall deliver payment in full in immediately available funds
for the Common Equity Interests purchased by such Third Party Transferee.
(e) From the date hereof until this Agreement is no longer
in effect, no Stockholder (to the extent this Section 3.2(e) is applicable to
any such Stockholder) will amend, modify or supplement in any manner or grant
any consent under the letter, dated the date of the 1999 Purchase Agreement,
among the Stockholders party thereto and Stephen Garafalo without the
Purchaser's prior consent, which will not be unreasonably withheld, delayed
or conditioned.
Section 3.3 DIRECTORS. Each Stockholder agrees that in the
event the Purchaser elects to select one or two nominees to the Board of
Directors pursuant to Section 5.2 of the 1999 Purchase Agreement, and so
notifies the Stockholders each year at least 30 days prior to the election
held to elect directors, the Stockholders shall either (i) take all action to
nominate and cause the election of one such person as a Class B Director (as
defined in the Company's Amended Certificate of Incorporation as in effect on
the date hereof) for as long as such Stockholders are entitled to nominate
and vote as a separate class for the election of Class B Directors to the
Board of Directors, or (ii) if he or it does not own any shares of Class B
Common Stock, vote his or its shares of Class A Common Stock in favor of any
Purchaser nominee to the Board of Directors nominated pursuant to the 1999
Purchase Agreement.
Section 3.4 RULE 144. The Company covenants that it shall
file any reports required to be filed by it under the Exchange Act; and that
it shall take such further action as may be reasonably necessary (including
providing any information necessary to comply with Rule 144 under the
Securities Act), all to the extent required from time to time to enable the
Purchaser and its Affiliates to Transfer shares of Class A Common Stock
(including the shares of Class A Common Stock underlying the 6.15% Notes or
8.5% Purchaser Notes) without registration under the Securities Act within
the limitation of the exemptions provided by (a) Rule 144 under the
Securities Act, as such rules may be amended from time to time, or (b) any
similar rules or regulations hereafter adopted by the Securities and Exchange
Commission. The Company shall, upon the request of the Purchaser and its
Affiliates, deliver to such Purchaser and its Affiliates a written statement
as to whether it has complied with such requirements.
Section 3.5 ASSOCIATE TRANSFER EXCEPTION. Notwithstanding
anything to the contrary contained herein, the provisions of Sections 2.2 and
3.2 shall not apply to any Transfer of Company Equity Interests by a
Stockholder to any Affiliate or Associate
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of such Stockholder or any foundation or other not-for-profit organization
established by a Stockholder if such Transfer constitutes a bona fide gift;
PROVIDED, HOWEVER, as a condition to any such Transfer, such transferee shall
have first agreed, pursuant to a written agreement satisfactory to the
Purchaser, to take such Company Equity Interests subject to the terms of this
Agreement and to become a party to, and be deemed a "Stockholder" under, this
Agreement and be subject to and bound by all of the terms and conditions of
this Agreement to the same extent and in the same manner as the transferring
Stockholder.
Section 3.6 LEGENDS.
(a) Each certificate, note or instrument representing
Company Equity Interests now or hereafter held by Stockholder shall be
stamped with a legend substantially in the following form (in addition to any
other legends required under applicable law or deemed appropriate or
necessary by the Company):
"The securities represented by this
[certificate/note/instrument] are subject to restrictions on
transfer, including any sale, pledge or other hypothecation,
set forth in a stockholders agreement among Metromedia Fiber
Networks, Inc. ("MFN"), Verizon Investments Inc. and certain
other stockholders of the Company, a copy of which agreement
may be obtained at no cost by written request made by the
holder of record of this certificate to the secretary of MFN
at MFN's principal executive offices."
(b) Each Stockholder agrees to deliver, within ten (10) days
of the date of this Agreement or of the date of first becoming a Stockholder
hereunder, to the Company, as applicable, all certificates, notes or other
instruments representing Company Equity Interests for the purposes of
affixing the legend provided for in Section 3.6(a) above thereto, and the
Company agree to affix or cause to be affixed) such legend thereto promptly
(but in no event later than five (5) days) after receipt of such
certificates, notes or instruments.
(c) Upon the Purchaser's delivery to the Company of any
certificate representing shares of Class A Common Stock purchased by the
Purchaser from the Company pursuant to the 1999 Purchase Agreement, the
Company shall reissue or cause to be reissued promptly (but in any event
within five (5) days of receipt of such certificate) a replacement
certificate that does not contain the second legend specified in Section
2.3(b) or Section 2.3A(b) of the 1999 Purchase Agreement.
Section 3.7 SPECIAL CONVERSION PROVISIONS. Notwithstanding
the first proviso to Section 4.01 of each of the 6.15% Notes Indenture and
the 8.5% Purchaser Notes Indenture, if the Purchaser or any permitted
transferee desires to convert any of the 6.15% Notes or 8.5% Purchaser Notes
and as a result it would become an "affiliate" for purposes of and under
either of the Franchise Agreements (as defined in the 6.15% Notes Indenture),
the Company shall consent to any such conversion and instruct the trustee
under the 6.15% Notes Indenture and/or the 8.5% Purchaser Notes Indenture, as
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applicable, to cause such conversion accordingly if, in connection with a
demand for conversion, the Purchaser or any such permitted transferee
provides a satisfactory indemnification to the Company and its subsidiaries
against any additional expenses, fees, taxes or other amounts that would be
payable by the Company or any of its subsidiaries to any Governmental Entity
as a result of the fact that the Purchaser or any such permitted transferee
would be deemed an "affiliate", in the reasonable opinion of the Company
after consultation with outside counsel, for purposes of any of the Franchise
Agreements solely as a result of such conversion.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section 4.1 REPRESENTATIONS AND WARRANTIES OF THE
STOCKHOLDERS. Each Stockholder represents and warrants, severally but not
jointly as to itself, to each other and to each of the Company and the
Purchaser as follows:
(a) OWNERSHIP OF COMPANY EQUITY INTERESTS. Such Stockholder
is the record and Beneficial Owner of the Company Equity Interests set forth
opposite such Stockholder's name on SCHEDULE II hereto free and clear of all
Liens (except for those created hereunder, and under the Original Agreement,
the Warrant Agreement, dated as of the date hereof, in favor of Citicorp USA,
Inc. and the SiteSmith/ Spagnolo Note (in the case of Mark Spagnolo only)),
and there are no options, warrants or other rights, agreements, arrangements
or commitments of any character or nature whatsoever to which such
Stockholder or any of its Affiliates or Associates is a party relating to the
holding, pledge, disposition, acquisition or voting of any such Company
Equity Interests, and there are no voting trusts or voting agreements with
respect to such Company Equity Interests. The Company Equity Interests set
forth opposite such Stockholder's name on SCHEDULE II, as applicable,
constitute all of the Company Equity Interests Beneficially Owned or owned of
record by such Stockholder and any of its Affiliates or Associates, and
neither such Stockholder nor any of its Affiliates or Associates has any
options, warrants or other rights (including, without limitation, through
derivative transactions) to acquire any additional Company Equity Interests
(or, in either case, any Security exercisable or exchangeable for, or
convertible into, any such interests). Except for another Stockholder
otherwise set forth on SCHEDULE II hereto, no Associate of such Stockholder
owns any Company Equity Interests.
(b) AUTHORITY TO EXECUTE AND PERFORM AGREEMENTS. Such
Stockholder has the full legal capacity, right and power and all authority
required to enter into, execute and deliver this Agreement and to perform and
comply with fully such Stockholder's obligations hereunder. The execution and
delivery of this Agreement by such Stockholder have been duly authorized by
all requisite organizational action, if applicable, on the part of such
Stockholder. This Agreement has been duly executed and delivered by, and
constitutes the legal, valid and binding obligation of, such Stockholder
enforceable against such Stockholder in accordance with its terms, except (A)
as the enforceability may be limited by bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium or similar laws now or
hereafter in effect generally affecting
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creditors' rights or by general principles of equity, regardless of whether
such enforceability is considered in a proceeding in equity or at law, and
(B) the remedy of specific performance and injunctive relief hereunder may be
subject to equitable defenses and to the discretion of the court before which
any proceeding therefor may be brought.
(c) NO CONFLICTS; CONSENTS.
(i) The execution and delivery by such
Stockholder of this Agreement do not, and the consummation of the
transactions contemplated hereby and the compliance with the
provisions hereof applicable to it will not, conflict with or result
in any violation of or default (with or without notice or lapse of
time, or both) under (A) any contract, agreement or other binding
arrangement to which such Stockholder is a party, (B) any charter,
by-laws, trust agreement, partnership agreement or any other
organizational document of such Stockholder, if applicable, or (C)
law, statute, rule or regulation, or any judgment, order, writ,
injunction or decree of any Governmental Entity applicable to such
Stockholder.
(ii) Except for amendments to Statements of
Beneficial Ownership on Schedule 13D or Schedule 13G under the
Exchange Act, and for the filing of Form 4s under the Exchange Act,
no consents, approvals or authorizations of, or notices or filings
with, any Person or Governmental Entity are required to be obtained
or made by such Stockholder in connection with the execution and
delivery by such Stockholder of this Agreement, and the consummation
of the transactions contemplated hereby and the compliance with the
provisions hereof applicable to such Stockholder.
Section 4.2 REPRESENTATIONS AND WARRANTIES OF THE
PURCHASER. The Purchaser represents and warrants to each of the other parties
hereto as follows:
(a) The Purchaser has the full legal right and power and
all authority required to enter into, execute and deliver this Agreement and
to perform and comply with fully the Purchaser's obligations hereunder. The
execution and delivery of this Agreement by the Purchaser have been duly
authorized by all requisite corporate action on the part of the Purchaser.
This Agreement has been duly executed and delivered by, and constitutes the
legal, valid and binding obligation of, the Purchaser enforceable against the
Purchaser in accordance with its terms, except (A) as the enforceability may
be limited by bankruptcy, insolvency, reorganization, fraudulent conveyance,
moratorium or similar laws now or hereafter in effect generally affecting
creditors' rights or by general principles of equity, regardless of whether
such enforceability is considered in a proceeding in equity or at law, and
(B) the remedy of specific performance and injunctive relief hereunder may be
subject to equitable defenses and to the discretion of the court before which
any proceeding therefor may be brought.
(b) NO CONFLICTS; CONSENTS.
(i) The execution and delivery by the Purchaser
of this Agreement do not, and the consummation of the transactions
contemplated hereby
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and the compliance with the provisions hereof applicable to
it will not, conflict with or result in any violation of or default
(with or without notice or lapse of time, or both) under (A) any
contract, agreement or other binding arrangement to which the
Purchaser is a party or the Purchaser's certificate of incorporation
or by-laws, or (B) any law, statute, rule or regulation, or
judgment, order, writ, injunction or decree of any Governmental
Entity applicable to the Purchaser.
(ii) Except for an amendment to its Statement
of Beneficial Ownership on Schedule 13D under the Exchange Act, no
consents, approvals or authorizations of, or notices or filings
with, any Person or Governmental Entity are required to be obtained
or made by the Purchaser in connection with the execution and
delivery by the Purchaser of this Agreement, and the consummation of
the transactions contemplated hereby and the compliance with the
provisions hereof applicable to the Purchaser.
Section 4.3 REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to each of the other parties hereto as
follows:
(a) The Company has the full legal right and power and all
authority required to enter into, execute and deliver this Agreement and to
perform and comply with fully its respective obligations hereunder. The
execution and delivery of this Agreement by the Company have been duly
authorized by all requisite corporate action on the part of the Company. This
Agreement has been duly executed and delivered by, and constitutes the legal,
valid and binding obligation of, the Company enforceable against it in
accordance with its terms, except (A) as the enforceability may be limited by
bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium or
similar laws now or hereafter in effect generally affecting creditors' rights
or by general principles of equity, regardless of whether such enforceability
is considered in a proceeding in equity or at law, and (B) the remedy of
specific performance and injunctive relief hereunder may be subject to
equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought.
(b) NO CONFLICTS; CONSENTS.
(i) The execution and delivery by the Company
of this Agreement do not, and the consummation of the transactions
contemplated hereby and the compliance with the provisions hereof
applicable to the Company will not, conflict with or result in any
violation of or default (with or without notice or lapse of time, or
both) under (A) any contract, agreement or other binding arrangement
to which the Company is a party, (B) the certificate of
incorporation or by-laws of the Company, or (C) any law, statute,
rule or regulation, or judgment, order, writ, injunction or decree
of any Governmental Entity applicable to the Company.
(ii) Except for the filing of a Report on Form
8-K under the Exchange Act, no consents, approvals or authorizations
of, or notices or filings with, any Person or Governmental Entity
are required to be obtained or made by
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the Company in connection with the execution and delivery by the
Company of this Agreement, and the consummation of the transactions
contemplated hereby and the compliance with the provisions applicable
to the Company.
ARTICLE V
MISCELLANEOUS
Section 5.1 ENFORCEMENT; SPECIFIC PERFORMANCE.
(a) The Company agrees not to effect any Transfer of
Company Equity Interests by any Stockholder until it and the Purchaser have
received satisfactory evidence that all of the terms and provisions hereunder
applicable to such Transfer have been complied with, and in any case of a
violation of this Agreement by any such attempted Transfer without compliance
with the terms and provisions hereof, such Transfer shall be invalid and of
no force or effect; and the Purchaser, the Company shall have the right to
compel the Stockholder, and, in the case of the Purchaser, to compel the
Company to compel the Stockholder, who is attempting to effect such Transfer,
and/or the purported transferee, to effect such Transfer in accordance with
the applicable provisions of this Agreement.
(b) Each of the parties hereto acknowledges and agrees that
any agreement made by, or obligation of, it hereunder shall be for the
benefit of each of the parties hereto. 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
shall be entitled to specific performance of the terms hereof, in addition to
any other remedy at law or in equity. It is accordingly agreed that the
parties shall be entitled to an injunction or injunctions to prevent or cure
breaches of the provisions of this Agreement and to enforce specifically the
terms and provisions of this Agreement.
Section 5.2 ENTIRE AGREEMENT. This Agreement and other
agreements expressly referred to herein constitute the entire agreement among
the Company, the Stockholders and the Purchaser with respect to the express
subject matter hereof and supersedes all prior agreements (including, but not
limited to, the Original Agreement) and understandings, both written and
oral, among the Company, the Stockholders and the Purchaser with respect to
the express subject matter hereof.
Section 5.3 AMENDMENT. This Agreement may not be amended
except by an instrument in writing signed by the Company, the Purchaser and
each Stockholder that would be adversely affected by such amendment.
Section 5.4 TERM. Except as otherwise expressly provided
herein, this Agreement shall terminate on the earliest to occur of (i) the
90th consecutive day on which the Purchaser or one of its Affiliates does not
Beneficially Own shares of Class A Common Stock equal to 2% or more of the
issued and outstanding shares of Class A Common Stock as of the date hereof,
or (ii) the tenth anniversary of the date hereof.
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Section 5.5 SEVERABILITY. If any term or other provision of
this Agreement is invalid, illegal or incapable of being enforced by any rule
or 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 this Agreement is not affected in any manner
materially adverse to any party. Upon such determination that any term or
other provision is invalid, illegal or incapable of being enforced, the
parties hereby shall negotiate in good faith to modify this Agreement so as
to effect the original intent of the parties as closely as possible to the
fullest extent permitted by applicable law in a mutually acceptable manner in
order that the terms of this Agreement remain as originally contemplated.
Section 5.6 NOTICES. All notices and other communications
given or made pursuant hereto shall be in writing and shall be deemed to have
been duly given or made and shall be effective (a) upon receipt if delivered
personally, (b) upon receipt of a transmission confirmation if sent by
facsimile (with a confirming copy sent by overnight courier), and (c) on the
next business day if sent by Federal Express, United Parcel Service, Express
Mail or other reputable overnight courier to the parties at the following
addresses (or at such other address for a party as shall be specified by
notice):
If to Company:
Robert Sakota, Esq.
Metromedia Fiber Network, Inc.
c/o Metromedia Company
One Meadowlands Plaza
East Rutherford, New Jersey 07073-2137
Telecopy Number: (201) 531-2803
with a copy to:
Paul, Weiss, Rifkind, Wharton & Garrison
1285 Avenue of the Americas
New York, New York 10019-6064
Attn: Douglas A. Cifu, Esq.
Telecopy Number: (212) 757-3990
If to the Purchaser:
Verizon Investments Inc.
3900 Washington Street, 2nd Floor
Wilmington, DE 19802
Attn: President
Telecopy Number: (302) 761-4228
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with copies to:
Verizon Communications Inc.
1095 Avenue of the Americas
New York, New York 10036
Attn: Associate General Counsel - Strategic Transactions
Telecopy Number: (212) 764-2739
and
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10153
Attn: Frederick S. Green, Esq.
Telecopy Number: (212) 310-8007
If to any Stockholder, at such Stockholder's address on the
books and records of the Company from time to time (which
address shall be made available to the Purchaser if
requested to give notice hereunder), with a copy:
c/o Metromedia Company
One Meadowlands Plaza
East Rutherford, NJ 07073-2137
Attn: General Counsel
Telecopy Number: (201) 531-2803
Section 5.7 GOVERNING LAW. The corporate law of the State of
Delaware shall govern all issues concerning the relative rights of the Company
and its stockholders and the duties and responsibilities of the Company's
directors to the Company and its stockholders. All other questions concerning
the construction, validity and interpretation of this Agreement shall be
governed by and construed in accordance with the laws of the State of New York
applicable to agreements made and to be performed entirely within such state,
without giving effect to any choice of law or conflict of law provisions.
Section 5.8 SUCCESSORS AND ASSIGNS. This Agreement shall be
binding upon and inure to the benefit of the parties and their successors and
legal representatives; PROVIDED, HOWEVER, that, unless otherwise required under
this Agreement, this Agreement shall not be binding upon any permitted
transferee of Company Equity Interests. No party to this Agreement shall be
permitted to assign this Agreement; PROVIDED, that, the Purchaser may assign its
rights under this Agreement to any Affiliate that agrees in writing to be bound
by the terms of this Agreement.
Section 5.9 INTERPRETATION. For the purposes of this
Agreement, (i) terms defined in the singular shall be held to include the plural
and VICE VERSA and words of one gender shall be held to include the other gender
as the context requires, and (ii) the
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terms "hereof", "herein", "hereunder" and "herewith" and words of similar import
shall, unless otherwise stated, be construed to refer to this Agreement as a
whole (including the schedules hereto) and not to any particular provision of
this Agreement.
Section 5.10 COUNTERPARTS. This Agreement may be executed in
one or more counterparts, each of which shall be an original and all of which,
when taken together, shall constitute one and the same instrument.
Section 5.11 EFFECT ON ORIGINAL AGREEMENT. This Agreement
shall supersede and supplant the Original Agreement in all respects.
[SIGNATURES APPEAR ON THE FOLLOWING PAGE.]
22
<Page>
IN WITNESS WHEREOF, each of the parties hereto have caused
this Agreement to be duly executed on the date hereof .
METROMEDIA FIBER NETWORK, INC.
By: /s/ Nick Tanzi
---------------------------------
Name: Nick Tanzi
Title: President & CEO
VERIZON INVESTMENTS, INC.
By: /s/ Phil Seskin
---------------------------------
Name: Phil Seskin
Title: Senior Vice-President
METROMEDIA COMPANY
By: /s/ Metromedia Company
---------------------------------
Name:
Title:
/s/ John W. Kluge
---------------------------------
John W. Kluge
/s/ Stuart Subotnick
---------------------------------
Stuart Subotnick
/s/ Stephen A. Garofalo
---------------------------------
Stephen A. Garofalo
/s/ Nicholas M. Tanzi
---------------------------------
Nicholas M. Tanzi
/s/ Mark Spagnolo
---------------------------------
Mark Spagnolo
23
<Page>
JOHN W. KLUGE, CHASE MANHATTAN BANK AND STUART
SUBOTNICK, TRUSTEES UNDER TRUST AGREEMENT
BETWEEN JOHN W. KLUGE AS GRANTOR AND
JOHN W. KLUGE AND MANUFACTURERS HANOVER TRUST
COMPANY AS TRUSTEES DATED MAY 30, 1984, AS
AMENDED AND RESTATED
By: /s/ Stuart Subotnick
---------------------------------
Name: Stuart Subotnick
Title: Trustee
JOSEPH BRAD KLUGE 2000 TRUST
By: /s/ Stuart Subotnick
---------------------------------
Name: Stuart Subotnick
Title: Trustee
SAMANTHA KLUGE 2000 TRUST
By: /s/ Stuart Subotnick
---------------------------------
Name: Stuart Subotnick
Title: Trustee
JOHN KLUGE JR. 2000 TRUST
By: /s/ Stuart Subotnick
---------------------------------
Name: Stuart Subotnick
Title: Trustee
SUBOTNICK FAMILY TRUST, ANITA H. SUBOTNICK
TRUSTEE UNDER TRUST AGREEMENT, DATED
NOVEMBER 5, 1998
By:/s/ Anita Subotnick
---------------------------------
Name: Anita Subotnick
Title: Trustee
24
<Page>
BRYAN SUBOTNICK TRUST, ANITA SUBOTNICK TRUSTEE
UNDER TRUST AGREEMENT, DATED OCTOBER 29, 1999
FBO BRYAN SUBOTNICK
By:/s/ Anita Subotnick
---------------------------------
Name: Anita Subotnick
Title: Trustee
PAULA SUBOTNICK TRUST, ANITA SUBOTNICK TRUSTEE
UNDER TRUST AGREEMENT, DATED OCTOBER 29, 1999
FBO PAULA BLOCK
By /s/ Anita Subotnick
---------------------------------
Name: Anita Subotnick
Title: Trustee
25
<Page>
GAROFALO FOUNDATION, INC.
By /s/ Stephen A. Garofalo
---------------------------------
Name: Stephen A. Garofalo
Title:
STEPHEN A. GAROFALO ANNUITY TRUST No.1
By /s/ Stephen A. Garofalo
---------------------------------
Name: Stephen A. Garofalo
Title:
STEPHEN A. GAROFALO ANNUITY TRUST No. 2
By /s/ Stephen A. Garofalo
---------------------------------
Name:
Title:
SPAGNOLO EXTENDED FAMILY TRUST,
KAREN C. CATHEY TRUSTEE UNDER TRUST AGREEMENT,
DATED JULY 11, 2000
By /s/ Karen C. Cathey
---------------------------------
Name: Karen C. Cathey
Title: Trustee
SPAGNOLO 2000 TRUST, KAREN C. CATHEY TRUSTEE
UNDER TRUST AGREEMENT. DATED JULY 11, 2000
By /s/ Karen C. Cathey
---------------------------------
Name: Karen C. Cathey
Title: Trustee
26
<Page>
SCHEDULE I
STOCKHOLDERS
Metromedia Company
John W. Kluge
Stuart Subotnick
Stephen A. Garofalo
Nicholas M. Tanzi
Mark Spagnolo
John W. Kluge, Chase Manhattan Bank and Stuart Subotnick, Trustees under Trust
Agreement between John W. Kluge, as Grantor, and John W. Kluge and Manufacturers
Hanover Trust Company, as Trustees, dated May 30, 1984, as Amended and Restated
("Kluge Trust I")
Joseph Brad Kluge 2000 Trust, Samantha Kluge 2000 Trust and John Kluge Jr. 2000
Trust (collectively, the "Kluge Trusts II")
Subotnick Family Trust, Anita H. Subotnick Trustee under Trust Agreement, dated
November 5, 1998 ("Subotnick Family Trust")
Anita Subotnick Trustee under Trust Agreement, dated October 29, 1999 FBO Bryan
Subotnick ("Bryan Subotnick Trust")
Anita Subotnick Trustee under Trust Agreement, dated October 29, 1999 FBO Paula
Block ("Paula Block Trust")
Garofalo Foundation, Inc.
Stephen A. Garofalo Annuity Trust No. 1 ("Garofalo Trust No. 1")
Stephen A. Garafalo Annuity Trust No. 2 ("Garofalo Trust No. 2")
Spagnolo Extended Family Trust, Karen C. Cathey Trustee under Trust Agreement,
dated July 11, 2000 ("Spagnolo Family Trust")
Spagnolo 2000 Trust, Karen C. Cathey Trustee under Trust Agreement, dated July
11, 2000 ("Spagnolo 2000 Trust")
<Page>
SCHEDULE II
COMPANY EQUITY INTERESTS
<Table>
<Caption>
Class A Common Stock Class B Common Stock 6.15% Notes
------------------------- ------------------------ ------------------------
Number of
Directly Beneficially Directly Beneficially Principal Underlying
Stockholder Owned Owned Owned Owned Amount Shares*
------------------------------------------------------------------------------------------------------------
Metromedia Company --- --- 62,924,096 --- --- ---
John W. Kluge --- 3,177,100(1) ---- 62,924,096(2) --- ---
Stuart Subotnick ---- 4,683,500(3) 4,454,448 63,084,096(4) --- ---
Stephen A. Garofalo 82,334,846 6,259,000(5) ---- --- --- ---
<Caption>
8.5% Purchaser Notes 8.5% Affiliate Notes
------------------------ --------------------------
Number of Number of
Principal Underlying Principal Underlying
Stockholder Amount Shares** Amount Shares**
---------------------------------------------------------------------------------------------
Metromedia Company --- --- --- ---
John W. Kluge --- --- --- ---
Stuart Subotnick --- --- --- ---
Stephen A. Garofalo $5,000,000 9,280,742 --- ---
</Table>
-----------------
* Number of underlying shares of Class A Common Stock, irrespective of whether
or not the 6.15% Notes are presently convertible or in-the-money.
** Number of underlying shares of Class A Common Stock, irrespective of whether
or not the 8.5% Purchaser Notes or 8.5% Affiliate Notes, as applicable, are
presently convertible or in-the-money.
(1)Includes options to purchase 700,000 shares of the Company's Class A common
stock at an exercise price of $28.5625 per share owned by the Kluge Trust.
(2)Represents shares held by Metromedia Company.
(3)Includes presently exercisable options to purchase 2,733,500 and 700,000
shares of the Company's Class A Common Stock at an exercise prices of $0.12313
and $28.5625 per share, respectively. Also includes 1,250,000 shares held by
three trusts for which Mr. Subotnick serves as Trustee.
(4)Includes 62,924,096 shares owned by Metromedia Company and shares owned by
the Subotnick Family Trust, the Paula Subotnick Trust and the Bryan Subotnick
Trust.
SI-1
<Page>
<Table>
<Caption>
Class A Common Stock Class B Common Stock 6.15% Notes
------------------------ ------------------------ ----------------------
Number of
Directly Beneficially Directly Beneficially Principal Underlying
Stockholder Owned Owned Owned Owned Amount Shares*
------------------------------------------------------------------------------------------------------------
Nicholas M. Tanzi 300,000 598,360(6) --- --- --- ---
Mark Spagnolo 86,508 2,328,761(7) --- ---- --- ---
Kluge Trust I 3,177,100 --- --- 62,924,0968 --- ---
Kluge Trust II 1,250,000 --- --- --- --- ---
Subotnick Family --- --- 140,000 --- --- ---
Trust
Bryan Subotnick Trust --- --- 10,000 --- --- ---
Paula Block Trust. --- --- 10,000 --- --- ---
Garofalo Foundation, 813,378 ---- ---- --- --- ---
Inc.
Garofalo Trust No. 1 --- 4,761,489 --- --- --- ---
<Caption>
8.5% Purchaser Notes 8.5% Affiliate Notes
---------------------------- -----------------------------
Number of Number of
Principal Underlying Principal Underlying
Stockholder Amount Shares** Amount Shares**
----------------------------------------------------------------------------------------
Nicholas M. Tanzi --- --- --- ---
Mark Spagnolo --- --- --- ---
Kluge Trust I $150,000,000 278,422,273 --- ---
Kluge Trust II --- --- --- ---
Subotnick Family --- --- --- ---
Trust
Bryan Subotnick Trust --- --- --- ---
Paula Block Trust. --- --- --- ---
Garofalo Foundation, --- --- --- ---
Inc.
Garofalo Trust No. 1 --- --- --- ---
</Table>
--------------------
(5)Includes presently exercisable options to purchase 1,233,962, 4,761,489 and
263,549 shares of the Company's Class A Common Stock owned by Mr. Garofalo, the
Garofalo Trust No. 1 and the Garafalo Trust No. 2, respectively, having an
exercise price of $0.12313 per share.
(6)Includes presently exercisable options to purchase 273,360, 75,000 and
250,000 shares of the Company's Class A Common Stock at exercise prices of
$2,625, $13.1875 and $19.875 per share, respectively.
(7)Includes shares owned by the Spagnolo Extended Family Trust and the Spagnolo
2000 Trust. Also includes presently exercisable options to purchase 2,131,873
shares of the Company's Class A Common Stock at an exercise price of $1.3056 per
share.
(8)Represents shares held by Metromedia Company.
SI-2
<Page>
<Table>
<Caption>
----------------------------------------------------------------------------------------------------------------------------
Class A Common Stock Class B Common Stock 6.15% Notes
----------------------------------------------------------------------------------------------------------------------------
Directly Beneficially Directly Beneficially Principal Number of
Stockholder Owned Owned Owned Owned Amount Underlying Shares*
----------------------------------------------------------------------------------------------------------------------------
Garofalo Trust No. 2 --- 263,549 --- --- --- ---
----------------------------------------------------------------------------------------------------------------------------
Spagnolo Family Trust 28,952 --- --- --- --- ---
----------------------------------------------------------------------------------------------------------------------------
Spagnolo 2000 Trust 81,428 --- --- --- --- ---
----------------------------------------------------------------------------------------------------------------------------
Verizon Investments Inc. 51,116,218 --- --- --- $975,281,000 194,624,373
----------------------------------------------------------------------------------------------------------------------------
<Caption>
-------------------------------------------------------------------------------------------------------
8.5% Purchaser Notes 8.5% Affiliate Notes
-------------------------------------------------------------------------------------------------------
Principal Number of Principal Number of
Stockholder Amount Underlying Shares** Amount Underlying Shares**
-------------------------------------------------------------------------------------------------------
Garofalo Trust No. 2 --- --- --- ---
-------------------------------------------------------------------------------------------------------
Spagnolo Family Trust --- --- --- ---
-------------------------------------------------------------------------------------------------------
Spagnolo 2000 Trust --- --- --- ---
-------------------------------------------------------------------------------------------------------
Verizon Investments Inc. $50,000,000 92,807,425 --- ---
-------------------------------------------------------------------------------------------------------
</Table>
<Page>
SCHEDULE II (cont'd)
<Table>
<Caption>
--------------------------------------------------------------------------------------
Other Company Convertible Securities*
--------------------------------------------------------------------------------------
Stockholder Type and Amount of Security Number of Underlying Shares**
--------------------------------------------------------------------------------------
Metromedia Company None N/A
--------------------------------------------------------------------------------------
John W. Kluge None N/A
--------------------------------------------------------------------------------------
Stuart Subotnick Options to Purchase Class 3,433,500
A Common Stock
--------------------------------------------------------------------------------------
Stephen A. Garofalo Options to Purchase Class 1,758,962
A Common Stock
--------------------------------------------------------------------------------------
Nicholas M. Tanzi Options to Purchase Class 1,873,360
A Common Stock
--------------------------------------------------------------------------------------
Mark Spagnolo Options to Purchase Class 2,631,873
A Common Stock
--------------------------------------------------------------------------------------
Kluge Trust I Options to Purchase Class 700,000
A Common Stock
--------------------------------------------------------------------------------------
Kluge Trust I Warrants to Purchase Class 33,911,406
A Common Stock
--------------------------------------------------------------------------------------
Kluge Trust II None N/A
--------------------------------------------------------------------------------------
Subotnick Family None N/A
Trust
--------------------------------------------------------------------------------------
Bryan Subotnick Trust None N/A
--------------------------------------------------------------------------------------
Paula Block Trust None None
--------------------------------------------------------------------------------------
Garofalo Foundation, None N/A
Inc.
--------------------------------------------------------------------------------------
Garofalo Trust No. 1 Options to Purchase Class 4,761,489
A Common Stock
--------------------------------------------------------------------------------------
</Table>
<Page>
<Table>
<Caption>
--------------------------------------------------------------------------------------
Other Company Convertible Securities*
--------------------------------------------------------------------------------------
Stockholder Type and Amount of Security Number of Underlying Shares**
--------------------------------------------------------------------------------------
Garofalo Trust No. 2 Options to Purchase Class 263,549
A Common Stock
--------------------------------------------------------------------------------------
Spagnolo Family Trust None N/A
--------------------------------------------------------------------------------------
Spagnolo 2000 Trust None N/A
--------------------------------------------------------------------------------------
Verizon Investments None N/A
Inc.
--------------------------------------------------------------------------------------
</Table>
* Other than Class B Common Stock, 6.15% Notes, 8.5% Purchaser Notes or 8.5%
Affiliate Notes.
** Assumes conversion, exercise or exchange of the applicable Company
Convertible Security (exclusive of Class B Common Stock, 6.15% Notes, the 8.5%
Purchaser Notes and the 8.5% Affiliate Notes), irrespective of whether or not
the same is presently convertible, exercisable, exchangeable or in-the-money.
<Page>
SCHEDULE IIA
TOTAL COMMON STOCK
<Table>
<Caption>
--------------------------------------------------------
Stockholder Total Common Stock*
--------------------------------------------------------
Metromedia Company 62,924,096
--------------------------------------------------------
John W. Kluge ----
--------------------------------------------------------
Stuart Subotnick 4,454,448
--------------------------------------------------------
Stephen A. Garofalo 82,334,846
--------------------------------------------------------
Nicholas M. Tanzi 300,000
--------------------------------------------------------
Mark Spagnolo 86,505
--------------------------------------------------------
Kluge Trust I 3,177,100
--------------------------------------------------------
Kluge Trust II 1,250,000
--------------------------------------------------------
Subotnick Family Trust 140,000
--------------------------------------------------------
</Table>
----------------
* Shares of Total Common Stock held by a Stockholder include shares of Class A
Common Stock and Class B Common Stock held directly by such Stockholder, but
does not include any shares of Class A Common Stock underlying any Company
Convertible Securities. To the extent any Company Convertible Securities are
converted into, or exchanged for, shares of Class A Common Stock, including, but
not limited to, as part of a Transfer of such Company Convertible Securities,
the "Total Common Stock" held by such Stockholder shall be appropriately
increased.
<Page>
<Table>
<Caption>
--------------------------------------------------------
Stockholder Total Common Stock*
--------------------------------------------------------
--------------------------------------------------------
Bryan Subotnick Trust 10,000
--------------------------------------------------------
Paula Block Trust 10,000
--------------------------------------------------------
Garofalo Foundation, Inc. 813,378
--------------------------------------------------------
Garofalo Trust No. 1 ---
--------------------------------------------------------
Garofalo Trust No. 2 ---
--------------------------------------------------------
Spagnolo Family Trust 28,952
--------------------------------------------------------
Spagnolo 2000 Trust 81,428
--------------------------------------------------------
</Table>