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EXECUTION COPY
EXHIBIT 4.2.1
STATE COMMUNICATIONS, INC.
SECOND AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT
This SECOND AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT (the
"Agreement") is made and entered into this 1st day of February, 2000 by and
among STATE COMMUNICATIONS, INC., a South Carolina corporation (the "Company"),
and each of the other parties listed on Schedule I and Schedule II hereto.
W I T N E S S E T H:
WHEREAS, the Holders (as such term is hereinafter defined) own the
securities of the Company set forth opposite their respective names on Schedule
I; and
WHEREAS, in order to provide for continuity of management of the
Company and to provide for certain agreements with respect to the voting and
transfer of the securities of the Company, the Company and certain stockholders
entered into an Amended and Restated Stockholder's Agreement dated July 29, 1999
(the "Original Agreement"); and
WHEREAS, in connection with the issuance of the Series C Convertible
Preferred Stock by the Company, the parties to the Original Agreement desire to
amend and restate the Original Agreement on the terms and conditions set forth
herein to, among other things, add the holders of the Series C Convertible
Preferred Stock as parties to this Agreement;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the parties agree as follows:
DEFINITIONS
"Articles" means the Articles of Incorporation of the Company, as
amended, filed with the Office of the Secretary of State of South Carolina, on
the date of this Agreement.
"BancAmerica" means BancAmerica Capital Investors SBIC I, L.P.
"Board" means the Board of Directors of the Company.
"Boston" means Boston Millennia Partners Limited Partnership and Boston
Millennia Associates I Partnership.
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"Capital Stock" means the Common Stock and/or the Preferred Stock, as
the case may be, now owned or hereafter acquired.
"Common Stock" means the Common Stock, $.001 par value per share, of
the Company.
"Holders" mean the parties to this Agreement listed on Schedule I
attached hereto (including Permitted Transferees of such Holders).
"Investors" mean the parties to this Agreement identified on Schedule
II hereto (including permitted transferees of such Investors).
"First Union" means First Union Capital Partners, Inc., a Virginia
corporation.
"Founding Stockholder" means each of Shaler P. Houser and Charles L.
Houser.
"Moore" means Moore Global Investments, Ltd. and Remington Investments
Strategies, L.P.
"Newcourt" means Newcourt Commercial Finance Corporation, an affiliate
of The CIT Group, Inc..
"Permitted Transferee" shall mean (1) the Holder's or Investor's
immediate family, including his spouse and natural-born or adopted children
and/or his or their lineal descendants and any trust or custodianship having
that Holder or Investor as the sole trustee or custodian and having that Holder,
Investor and/or his spouse, natural-born or adoptive children, and/or his or
their lineal descendants as its sole beneficiaries; or (2) a personal
representative, trustee, executor or similar fiduciary acting on behalf of that
Holder or Investor following his death or incapacity.
"Preferred Stock" means the Series A Convertible Preferred Stock, the
Series B Convertible Preferred Stock and the Series C Convertible Preferred
Stock of the Company.
"Public Offering" means a bona fide firm commitment underwritten
offering of Common Stock, pursuant to a registration statement filed with and
declared effective by the Securities and Exchange Commission.
"Richland" means Richland Ventures II, L.P., a Delaware limited
partnership.
"Securities" means the Common Stock and the Preferred Stock (and Common
Stock issued or issuable on conversion of the Preferred Stock and upon exercise
of options), whether now owned or hereafter acquired.
"Series A Preferred" means the Series A Convertible Preferred Stock of
the Company.
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"Series B Preferred" means the Series B Convertible Preferred Stock of
the Company.
"Series C Preferred" means the Series C Convertible Preferred Stock of
the Company.
"Toronto" means Toronto Dominion Capital (U.S.A.), Inc.
"Total Vote" means the total number of votes represented by (i) all
outstanding shares of Common Stock, and (ii) all outstanding shares of Preferred
Stock.
ARTICLE I
CORPORATE GOVERNANCE
1.1 Number of Directors; Quorum; Vote. The Bylaws of the Company shall
at all times provide that (i) the Board shall consist of nine members, or such
greater number approved by the unanimous vote of the Board; (ii) a majority of
the total number of directors shall constitute a quorum for the transaction of
business at any meeting of the Board; (iii) except as set forth herein, the vote
of a majority of the directors present and voting at any meeting shall
constitute the action of the Board; and (iv) regular meetings of the Board shall
be held no less frequently than quarterly.
1.2 Board Composition. (a) Subject to the terms of this Agreement:
(i) Richland shall be entitled (A) to nominate one
individual for election to the Board to serve as a
Director until his or her successor is elected and
qualifies, (B) to nominate each such successor, and
(C) to propose the removal from the Board of any
director nominated under the foregoing clause (A) or
(B);
(ii) First Union shall be entitled (A) to nominate one
individual for election to the Board to serve as a
Director until his or her successor is elected and
qualifies, (B) to nominate each such successor, and
(C) to propose the removal from the Board of any
director nominated under the foregoing clause (A) or
(B);
(iii) Moore shall be entitled (A) to nominate one
individual for election to the Board to serve as a
Director until his or her successor is elected and
qualifies, (B) to nominate each such successor, and
(C) to propose the removal from the Board of any
director nominated under the foregoing clause (A) or
(B);
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(iv) Boston shall be entitled (A) to nominate one
individual for election to the Board to serve as a
Director until his or her successor is elected and
qualifies, (B) to nominate each such successor, and
(C) to propose the removal from the Board of any
director nominated under the foregoing clause (A) or
(B).
(b) Each nomination or any proposal to remove from the Board any
director shall be made by delivering to the Company a notice signed by the party
or parties entitled to such nomination or proposal. As promptly as practicable
after delivery of such notice, the Company shall take or cause to be taken such
corporate actions as may be reasonably required to cause the election or removal
proposed in such notice. Such corporate actions may include calling a meeting or
soliciting the written consent of the Board, or calling a meeting or soliciting
the written consent of the shareholders of the Company.
(c) Each Holder and each Investor agrees to vote all of his, her or its
Capital Stock for the election to the Board of all individuals nominated in
accordance with this Section 1.2 and for the removal from the Board of all
directors proposed to be removed in accordance herewith. Each Holder and each
Investor shall cause each director nominated by such shareholder to vote for the
election to the Board of all individuals nominated in accordance with this
Section 1.2.
(d) In the event the size of the Board is increased to a number of
directors greater than nine, the Investors shall have the right to approve any
nominees to fill such additional Board seats.
(e) Moore, Toronto, Newcourt and BancAmerica shall have the right, at
the Company's expense, to have an observer present at all meetings of the Board
of Directors of the Company and any Committees thereof, subject to such
confidentiality or other restrictions as may be imposed by the Board. Such
observers shall be entitled to the same notice of meetings as directors and
shall be entitled to receive all information or correspondence provided to the
directors by the Company.
1.3 Stockholder Meetings: Consents. The Bylaws of the Company shall at
all times provide that stockholders who hold ten percent of the Total Vote shall
have the right to call a meeting of stockholders upon the shortest notice
permitted by law.
1.4 Obligation of Holders. Each Holder shall devote substantially all
of his or her professional efforts to the Company and shall promptly disclose to
the Board (i) any and all investments or other participations in any business
entities which compete or may compete with the Company (other than ownership of
shares that are traded on a national securities exchange or the National
Association of Securities Dealers Automated Quotation System); and (ii) all
transactions or agreements between the Company or any of its subsidiaries and
such Holder or any affiliate of such Holder. Each Founding
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Stockholder acknowledges that the Board will provide all such information to the
Investors.
1.5 Further Assurances. Each Holder and Investor shall vote all of its
Capital Stock, shall execute and deliver such further documents, shall take such
further action, and shall use its best efforts to cause the Board to vote in
such a manner as may be necessary or desirable to carry out the purposes and
intent of this Agreement.
1.6 No Other Voting Arrangements. Each party hereto represents and
warrants to each other party that such party has no knowledge of any written or
oral agreements or arrangements, with respect to the voting of Securities of the
Company, other than as set forth in this Agreement or as set forth in that
certain Investment Agreement by and among the Company, Seruus Telecom Fund, L.P.
("Seruus") and the individuals named therein, dated February 19, 1998. Any other
such agreements or arrangements shall be void as against, and shall not be
recognized or given effect by, the parties hereto. Each party shall promptly
notify each other party upon learning of the existence of any such agreement or
arrangement.
1.7 Compensation Decisions. Notwithstanding anything to the contrary
contained herein, all increases in compensation to the executive officers and
key managers of the Company, including, but not limited to, all increases in
salary, bonus and all future stock option grants to such individuals, shall not
be effective unless approved by not less than 80% of the members of the Board of
Directors.
1.8 Participation in Certain Transactions.
(a) In the event of a Sale of the Company, as hereinafter defined,
which is approved by the holders of a majority of the then outstanding Preferred
Stock (voting as a single class), the Investors shall have the right to require
each Holder to vote all shares of Capital Stock held by him in favor of the Sale
of the Company. For purposes of the foregoing, Sale of the Company shall mean
(i) the purchase of substantially all of the assets of the Company, or (ii) the
sale, transfer or exchange of all or substantially all of the Company's issued
and outstanding Capital Stock, whether by merger, share exchange, consolidation,
sale of all of the outstanding Capital Stock or otherwise.
(b) By execution of this Agreement, each Holder hereby agrees to vote
all shares of Capital Stock held by him in accordance with Section 1.8(a) hereof
and to take such further actions as may be reasonably necessary to effect the
provisions of Section 1.8(a).
1.9 Directed Share Plan. In the event the Company elects to sell shares
of Common Stock in an underwritten public offering pursuant to an effective
registration statement under the Securities Act of 1933, as amended, the Company
shall sell at least 10% of the shares of Common Stock being sold in the offering
(the "Directed Shares") to the Investors at the price at which the shares of
Common Stock are being sold to the public. Each Investor shall be permitted to
acquire a proportion of the Directed Shares equal to the Investor's percentage
ownership of the Common Equivalent Shares. To the
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extent one or more Investors elects not to participate in the purchase of the
Directed Shares, or elects to participate as to some but not all of the Directed
Shares, the right to purchase any remaining Directed Shares shall be allocated
among the participating Investors in proportion to their ownership of Common
Stock Equivalent Shares (as defined in Section 3.2(b)).
1.10 Non-Competes. Richland and First Union hereby agree not to
terminate or approve any amendment to those Non-Disclosure and Non-Competition
Agreements required by Section 4.18 of that certain Stock Purchase Agreement,
dated October 28, 1998, between the Company, First Union and Richland without
the approval of the holders of a majority of the Preferred Stock.
ARTICLE II
STOCK CERTIFICATES
2.1 Stock Certificates. Each of the Holders agrees that the stock
certificate or certificates from time to time representing the respective shares
of Capital Stock shall be registered in the individual name of such Holder and
shall bear, in addition to any other legend required to be placed thereon, a
legend in substantially the following form:
"THIS SECURITY IS SUBJECT TO THE TERMS OF THE SECOND
AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT DATED JANUARY
___, 2000, AND ANY AMENDMENTS THERETO, COPIES OF WHICH ARE ON
FILE AT THE PRINCIPAL OFFICE OF THE COMPANY. ANY ATTEMPTED
SALE, PLEDGE, BEQUEST, TRANSFER, ASSIGNMENT OR ANY OTHER
DISPOSITION OR ENCUMBRANCE OF THIS SECURITY OTHERWISE THAN AS
EXPRESSLY PERMITTED BY SAID AGREEMENT IS INVALID."
ARTICLE III
TRANSFER RIGHTS AND RESTRICTIONS
3.1. General Restriction. No Holder may sell, exchange, give, devise,
pledge, encumber or otherwise dispose of ("Transfer"), either voluntarily or
involuntarily or by operation of law (including a transfer pursuant to equitable
distribution proceedings), any of the Capital Stock, or any rights or interest
related thereto, whether now owned or hereafter acquired, except as permitted by
this Agreement.
3.2. Voluntary Transfer. A Holder may voluntarily transfer Capital
Stock pursuant to and as permitted by this Section 3.2 but not otherwise.
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(a) First Offer Rights. If any Holder shall desire to sell any Capital
Stock held by him or it, such Holder (a "Selling Shareholder") shall first offer
such Capital Stock (the "Offered Stock") to the Investors and then to the
Company in accordance with the provisions hereof.
(b) Notice. The Selling Shareholder shall give written notice to the
Company and each Investor setting forth (i) the terms and conditions upon which
the Selling Shareholder proposes to sell the Offered Stock (the "Offer Terms")
and (ii) to the extent a proposed buyer has been identified, the name of the
proposed buyer. As used herein, the term "Common Stock Equivalent Shares" held
by any person shall be all shares of the Company's Common Stock held by such
person and all shares of Common Stock issuable upon conversion or exchange of
any convertible or exchangeable security held by such person or issuable upon
exercise of any option, warrant or other right held by such person, in each case
whether or not such security, option, warrant or right is by its terms then
convertible, exchangeable or exercisable.
(c) Option to the Investors. The Investors shall have the exclusive
right during the period of twenty (20) days next following receipt of such
notice to elect to purchase any or all of the Offered Stock proposed to be sold
in accordance with the Offer Terms and Section 3.2(f); provided that, as set
forth in Section 3.2(e) below, an election by the Investors to purchase less
than all of the Offered Stock shall not be effective unless the option in
Section 3.2(d) is exercised as to all of the Offered Stock not elected to be
purchased by the Investors under this Section 3.2(c). In the event that more
than one Investor wishes to purchase the Offered Stock to be sold, the right to
purchase shall be allocated among such Investors in proportion to their
ownership of Common Stock Equivalent Shares. To the extent one or more Investors
elect not to participate in the purchase of the Offered Stock to be sold, or
elect to participate as to some but not all of the Offered Stock to which it or
they would otherwise be entitled, the right to purchase any remaining Offered
Stock shall be allocated among the participating Investors in proportion to
their ownership of Common Stock Equivalent Shares. If any Investor does not
timely deliver notice within such twenty (20) day period, it shall be deemed to
have irrevocably waived its right to purchase any or all of the Offered Stock
unless such sale is not consummated within the 180 day period set forth in
Section 3.2(e).
(d) Option to Company. If the Investors do not exercise their right to
purchase all of the Offered Stock proposed to be sold, the Company shall have
the exclusive right during the period of thirty (30) days next following the
twenty (20) day period provided for in subsection 3.2(c) hereof to elect to
purchase all (but not less than all) of the Offered Stock proposed to be sold
and not purchased by the Investors pursuant to subsection 3.2(c) above in
accordance with the Offer Terms and Section 3.2(f). If the Company does not
timely deliver notice within such thirty (30) day period to purchase all of the
balance of the Offered Stock, it shall be deemed to have irrevocably waived its
respective rights to purchase any or all of the Offered Stock unless such sale
is not consummated within the 180 day period set forth in Section 3.2(e).
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(e) Non-Exercise. If there shall be any default in making payment in
full for all of the Offered Stock to be sold as aforesaid, in accordance with
the applicable requirements of this Article III, by either of the Investors or
the Company, or if the Company and/or the Investors do not timely elect to
purchase all of the Offered Stock, then neither the Company nor any Investor may
purchase any of the Offered Stock and the Selling Shareholder may (subject to
the co-sale rights of the other Shareholders in Section 3.3 hereof, if any) sell
the shares of Offered Stock so offered hereunder to any person on terms no more
favorable to such person than the Offer Terms. However, if the Selling
Shareholder does not effect such sale within 180 days after the termination (by
passage of time or default) of the first refusal rights created under subsection
3.2(a) through (d) hereof, the Selling Shareholder may not thereafter transfer
any such shares without again complying with the provisions of this Section 3.2.
(f) Closing. All purchase transactions between and among the parties
hereto (or their assignees) pursuant to this Section 3.2 shall be consummated at
a closing to be held not later than five (5) days after the expiration of the
thirty (30) day option period provided for in subsection 3.2(d) hereof. At the
closing, the purchaser shall deliver to the seller the consideration (cash or
other, as agreed to by the parties to the transfer) against delivery of the
appropriate stock certificate(s) (or voting trust certificate(s)) duly endorsed
for transfer.
3.3. Co-Sale Obligations of Holders.
(a) None of the Holders so long as they are employed by the Company
shall enter into any transaction that would result in the sale or contract or
option for sale by him or it of any Capital Stock now or hereafter owned by him
or it (including, without limitation, any sale to another Holder or a third
party pursuant to the terms of Section 3.2 of this Agreement, but not including
a sale of shares to the Company pursuant to the first offer rights contained in
Section 3.2 of this Agreement) unless prior to such sale or contract or option
for sale and simultaneously with the giving of notice required by Section 3.2(b)
the Selling Shareholder shall give notice to the Investors and Seruus of his
intention to effect such sale or contract or option for sale in order that the
Investors and Seruus may exercise their rights under this Section 3.3 as
hereinafter described. Such notice shall set forth (i) the number of shares to
be sold, contracted to be sold or optioned by the Selling Shareholder; (ii) the
principal terms of the sale, including the price at which the shares are
intended to be sold; (iii) the percentage such number of shares constitutes with
respect to the aggregate number of Common Stock Equivalent Shares then held by
the Selling Shareholder (the "Sale Portion"); and (iv) an offer by the Selling
Shareholder to cause to be included with the shares to be sold by him or it in
the sale, on the same terms and conditions, that number of Common Stock
Equivalent Shares then held by the Investors and Seruus, which number shall be
equal to (x) the Sale Portion of the Common Stock Equivalent Shares then held by
the Investors and Seruus, (y) at the option of each Investor or Seruus, as the
case may be, a lesser number of shares or (z) such number of shares as
determined in subparagraph (c) below.
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(b) Subject to the provisions of Section 3.2 hereof, if neither the
Investors nor Seruus shall have accepted such co-sale offer in writing within a
period of thirty (30) days from the date beginning upon the end of the thirty
(30) day period in Section 3.2(d), the Selling Shareholder shall thereafter be
free for a period of one hundred twenty (120) days to sell up to the number of
shares specified in such notice, at a price no greater than the price set forth
in such notice and on otherwise no more favorable terms to the Selling
Shareholder than as set forth in such notice, without any further obligation to
the Investors or Seruus in connection with such sale under this Section 3.3. In
the event that the Selling Shareholder fails to consummate such sale within such
120-day period, the shares specified in such notice shall continue to be subject
to this Agreement. If any Investor or Seruus fails to timely deliver notice of
its acceptance within such thirty (30) day period, it shall be deemed to have
irrevocably waived such right of co-sale under this Section 3.3.
(c) Subject to the provisions of Section 3.2 hereof, if any Investor or
Seruus shall have accepted such co-sale offer in writing within such thirty (30)
day period set forth in Section 3.3(b) (a "Participating Shareholder"), such
acceptance by such Participating Shareholder shall be irrevocable unless the
Selling Shareholder shall be unable to cause to be included in his or its sale
the number of shares set forth in such Participating Shareholder's written
acceptance, in which case the Selling Shareholder and all of the Participating
Shareholders shall participate in the sale pro rata, with the Selling
Shareholder and each Participating Shareholder selling the number of shares to
be sold in the sale as shall equal the product obtained by multiplying (x) the
total number of shares to be sold in the sale by (y) a fraction, the numerator
of which shall be the number of shares desired to be included in the sale by the
Selling Shareholder or by the Participating Shareholder, as the case may be, and
the denominator of which shall be the total number of shares desired to be sold
in the sale by the Selling Shareholder and the Participating Shareholders. No
Selling Shareholder shall complete any sale of Capital Stock unless all
Participating Shareholders are included in such transaction as contemplated in
this Section 3.3. If any Investor or Seruus exercises its co-sale rights under
this Section 3.3, it shall sell Capital Stock of the same class as that proposed
to be sold by the Selling Shareholder.
(d) Notwithstanding anything to the contrary contained herein, the
provisions of this Section 3.3 shall not apply to any transfer or sale
transaction by the Investors. Any transfer or attempted transfer of Capital
Stock by a Holder in breach or violation of this Section 3.3 shall be void.
3.4. Certain Exclusions. Notwithstanding the foregoing, the provisions
of Section 3.2 and 3.3 shall not apply to any transfer to a Permitted Transferee
or a sale by a Holder in an underwritten public offering under an effective
registration statement under the Securities Act of 1933, as amended (the "Act"),
nor shall any Investor purchasing any Capital Stock pursuant to Section 3.2
hereof be permitted to exercise the right of co-sale under Section 3.3 with
respect to the same transaction. Any Capital Stock transferred to a Permitted
Transferee shall remain subject to this Agreement and the Permitted Transferees,
as a condition to receiving Capital Stock, shall acknowledge the continued
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applicability of this Agreement to such Permitted Transferee's Capital Stock to
the same extent that this Agreement applied to the Holder. All references in
this Agreement to Capital Stock or to the number of shares of Capital Stock held
or owned by any Holder shall be deemed to include Capital Stock owned by any
Permitted Transferee of such Holder, and the Permitted Transferee shall be
treated as the Holder thereof for all purposes.
3.5 Co-Sale Obligations of Investors.
(a) If any Investor (the "Selling Investor") proposes to enter into a
transaction that would result in the sale of Capital Stock (the "Proposed
Sale"), such Investor shall at least 30 days before such sale deliver a notice
(the "Sale Notice") to the other Investors specifying the identity of the
proposed transferee and disclosing in reasonable detail the terms and conditions
of the Proposed Sale. Within 30 days after receipt of the Sale Notice each
Investor may elect to participate in the Proposed Sale by delivering to the
Selling Investor a notice specifying the Capital Stock with respect to which
such Investor exercises its rights under this Section.
(b) If any Investor shall have accepted such co-sale offer in writing
within such 30-day period (a "Participating Investor"), the acceptance by such
Participating Investor shall be irrevocable unless the Selling Investor shall be
unable to cause to be included in his or its sale the number of shares set forth
in such Participating Investor's written acceptance, in which case the Selling
Investor and all of the Participating Investors shall participate in the
Proposed Sale pro rata, with the Selling Investor and each Participating
Investor selling the number of shares to be sold in the Proposed Sale as shall
equal the product obtained by multiplying (x) the total number of shares to be
sold in the Proposed Sale by (y) a fraction, the numerator of which shall be the
number of shares desired to be included in the Proposed Sale by the Selling
Investor or by the Participating Investor, as the case may be, and the
denominator of which shall be the total number of shares desired to be sold in
the Proposed Sale by the Selling Investor and the Participating Investors. No
Selling Investor shall complete any sale of Capital Stock unless all
Participating Investors are included in such transaction as contemplated in this
Section 3.5. If any Investor exercises its co-sale rights under this Section
3.5, it shall sell Capital Stock of the same class as that proposed to be sold
by the Selling Investor. Any transfer or attempted transfer of Capital Stock by
a Holder in breach or violation of this Section 3.5 shall be void.
(c) Notwithstanding the foregoing, the provisions of Section 3.5 shall
not apply to any transfer to (i) a Permitted Transferee or any of its affiliates
or any member, shareholder, partner or affiliate of an Investor; or (ii) a sale
by an Investor in an underwritten public offering under an effective
registration statement under the Securities Act of 1933, as amended (the "Act").
Any Capital Stock transferred to a Permitted Transferee or a member, shareholder
or partner of an Investor shall remain subject to this Agreement and the
transferee, as a condition to receiving Capital Stock, shall acknowledge the
continued applicability of this Agreement to such transferee's Capital Stock to
the same extent that this Agreement applied to the Investor.
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ARTICLE IV
PREEMPTIVE RIGHTS
4.1 Grant of Preemptive Rights. Except as set forth in Section 4.3
hereof, the Company shall not issue or sell any shares of Common Stock, any
rights or options to purchase Common Stock, or any debt or shares convertible
into or exchangeable for Common Stock, whether now or hereafter authorized and
whether unissued or in treasury (collectively, "Preemptive Shares"), unless each
Investor who at such time holds any Preferred Stock or Common Stock issued on
conversion of Preferred Stock (including any permitted transferee of an
Investor) shall first have been given a special right to acquire, at a price no
less favorable than that at which such shares, rights, options or obligations
are to be offered to others, a proportion of the offered shares, rights, options
or obligations as provided in Section 4.2.
4.2 Method of Exercising Preemptive Rights. The Company shall give each
Investor prior written notice of any proposed issuance or sale described in
Section 4.1 and each such Investor shall have 20 days from the giving of such
notice within which to elect to acquire a proportion of the Preemptive Shares
being offered equal to such Investor's percentage ownership of the outstanding
Common Stock (which shall be determined as if all outstanding Preferred Stock
had been converted into Common Stock) immediately preceding such issuance or
sale. Upon expiration of such 20-day period, the Company shall send a notice to
each Investor setting forth which Investors have exercised such preemptive
rights ("Electing Holders") and which have not exercised such rights, and the
number of Preemptive Shares as to which preemptive rights were and were not
exercised. Electing Holders shall then have an additional 20 days in which to
elect to acquire additional Preemptive Shares as to which preemptive rights were
not exercised. In the event that the total number of additional Preemptive
Shares which Electing Holders desire to purchase exceeds the number as to which
preemptive rights were not exercised, then such additional number of Preemptive
Shares shall be allocated among such Electing Holders (i) as nearly as possible
in proportion to each Electing Holder's percentage ownership of outstanding
Common Stock (which shall be determined as if all outstanding Preferred Stock
had been converted into Common Stock), (ii) thereafter, to those Electing
Holders that elected to acquire a greater number of Preemptive Shares than
allocated to such Electing Holders under clause (i) , in proportion to the
number of shares of Common Stock (determined as in clause (i)) held by each such
Electing Holder, and (iii) thereafter, in like manner until all such additional
Preemptive Shares have been allocated; provided, however, in no event shall any
Electing Holder be allocated a greater number of Preemptive Shares than such
Electing Holder has elected to purchase. If any transaction specified by the
Company in any such notice shall not be consummated within six months from the
date of such notice, the Company shall again comply with the provisions of this
Section 4.2 with respect to such transaction, and all Investors shall again have
preemptive rights hereunder with respect thereto, regardless of whether any such
Investor had previously exercised or failed to exercise such rights. Any
purchase of securities pursuant to the exercise of preemptive rights shall be
consummated simultaneously with,
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and shall be conditioned upon, consummation of the transaction proposed by the
Company.
4.3 Exceptions. The restrictions contained in, and preemptive rights
granted to Investors under Sections 4.1 and 4.2 shall not apply to shares issued
or issuable by the Company (i) in connection with a merger or consolidation of
the Company into or with another corporation or a business combination effected
through an exchange of the Company's shares for the securities or substantially
all of the assets of another corporation; (ii) upon conversion of Preferred
Stock; (iii) to an Investor pursuant to this Article IV; (iv) to persons
pursuant to a stock option plan or other employee benefit plans approved by a
majority of the members of the Board of Directors of the Company and by each of
the directors nominated and elected in accordance with Section 1.2 of this
Agreement; or (v) shares issued in a Public Offering.
ARTICLE V
MISCELLANEOUS
5.1 Binding Effect. Subject to the limitations on transfer set forth
herein, this Agreement and all the provisions hereof shall be binding upon and
shall inure to the benefit of the parties hereto and their respective successors
and assigns.
5.2 Amendment. This Agreement may be amended or supplemented, and the
observance of any term hereof or thereof may be waived, with the written consent
of (i) the Company, (ii) each of the Investors, and (iii) holders of a majority
of the Securities held by all Holders and Investors as a group.
5.3 Termination. This Agreement shall terminate and have no further
force or effect upon the earlier of (i) closing of a Qualified Public Offering
(as such term is defined in the Certificate of Designations, Rights and
Preferences of the Series C Preferred), (ii) twenty (20) years from the date
hereof, or (iii) the written consent of (a) the Company, (b) the Investors, and
(c) holders of a majority of the Securities held by all Holders and Investors as
a group.
5.4 Governing Law. The interpretation, validity and performance of the
terms of this Agreement shall be governed by the laws of the State of South
Carolina, regardless of the law that might be applied under principles of
conflicts of law.
5.5 Notices. All communications under this Agreement shall be in
writing and (i) sent by facsimile transmission and by certified or registered
mail, return receipt requested, courier or overnight mail, or (ii) sent by
certified or registered mail, return receipt requested, courier or overnight
mail, (1) if to a Holder as of the date hereof, to such Holder's address set
forth in Schedule I, or at such other address as such Holder may have furnished
to the other parties hereto in writing, (2) if to a Holder who became such after
the date hereof, to it at its facsimile number or address listed in the
securities transfer books of the Company, or at such other address as such
Holder shall have
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13
furnished to the other parties hereto in writing, (3) if to an Investor, to it
at such address as shall be listed in the securities transfer books of the
Company, or at such other address as such Investor shall have furnished to the
Company in writing, and (4) if to the Company, to 200 North Main Street, Suite
303, Greenville, South Carolina 29601, Attention: Hamilton Russell II, Esq., or
at such other address or facsimile number as it shall have furnished to the
other parties hereto in writing. Any written communication so addressed, sent by
facsimile transmission or certified or registered mail, return receipt
requested, courier or overnight mail, shall be deemed to have been given when
sent via facsimile or mailed. All other written communications shall be deemed
to have been given upon receipt thereof.
5.6 Headings. The section and other headings contained in this
Agreement are for reference purposes only and shall not affect the meaning or
interpretation of this Agreement.
5.7 Counterparts. This Agreement may be executed and delivered in two
or more counterparts, each of which shall be deemed to be an original and all of
which together shall be deemed to be one and the same agreement.
5.8 Specific Performance. The parties hereto acknowledge that payment
of monetary damages may not be sufficient to adequately remedy a breach or
prospective breach of the terms and provisions of this Agreement and, therefore,
the parties hereto consent to the application of equitable remedies, including,
without limitation, specific performance, to enforce the terms and provisions of
this Agreement.
[remainder of page intentionally blank]
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14
IN WITNESS WHEREOF, the Company and each of the parties listed on
Schedule I or Schedule II hereto have executed this Stockholders' Agreement as
of the date first above written.
STATE COMMUNICATIONS, INC.
By:
----------------------------------------------
Title:
-------------------------------------------
RICHLAND VENTURES II, L.P.
By: Richland Partners II, Inc., General Partner
By:
----------------------------------------------
Title:
-------------------------------------------
RICHLAND VENTURES III, L.P.
By: Richland Partners III, Inc., General Partner
By:
----------------------------------------------
Title:
-------------------------------------------
FIRST UNION CAPITAL PARTNERS, INC.
By:
----------------------------------------------
Title:
-------------------------------------------
MOORE GLOBAL INVESTMENTS, LTD.
By: Moore Capital Management, Inc., Trading Advisor
By:
----------------------------------------------
Title:
-------------------------------------------
REMINGTON INVESTMENTS STRATEGIES, L.P.
By: Moore Capital Advisors, L.L.C., General Partner
By:
----------------------------------------------
Title:
-------------------------------------------
[SIGNATURES CONTINUED ON NEXT PAGE]
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15
IN WITNESS WHEREOF, the Company and each of the parties listed on
Schedule I or Schedule II hereto have executed this Stockholders' Agreement as
of the date first above written.
BOSTON MILLENNIA PARTNERS LIMITED PARTNERSHIP
By: Glen Partners Limited Partnership,
General Partner
By:
----------------------------------------------
Title:
-------------------------------------------
BOSTON MILLENNIA ASSOCIATES I PARTNERSHIP
By:
----------------------------------------------
Title:
-------------------------------------------
CITIZENS CAPITAL, INC.
By:
----------------------------------------------
Title:
-------------------------------------------
[SIGNATURES CONTINUED ON NEXT PAGE]
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16
IN WITNESS WHEREOF, the Company and each of the parties listed on
Schedule I or Schedule II hereto have executed this Stockholders' Agreement as
of the date first above written.
SOUTHEASTERN TECHNOLOGY FUND
By:
------------------------------------------
By:
------------------------------------------
Title:
---------------------------------------
(SEAL)
---------------------------------------
Shaler P. Houser
(SEAL)
---------------------------------------
Charles L. Houser
(SEAL)
---------------------------------------
Charles S. Houser
(SEAL)
---------------------------------------
Russell W. Powell
(SEAL)
---------------------------------------
Daniel H. Sterling
(SEAL)
---------------------------------------
Judith C. Slaughter
(SEAL)
---------------------------------------
Thomas Houlihan
(SEAL)
---------------------------------------
Clark Mizell
SERUUS TELECOM FUND, L.P.
By: , its General Partner
--------------------
By:
------------------------------------------
Title:
---------------------------------------
[SIGNATURES CONTINUED ON NEXT PAGE]
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17
IN WITNESS WHEREOF, the Company and each of the parties listed on
Schedule I or Schedule II hereto have executed this Stockholders' Agreement as
of the date first above written.
SERUUS VENTURES, LLC.
By:
---------------------------------------
Title:
------------------------------------
(SEAL)
------------------------------------
Hamilton E. Russell III
(SEAL)
------------------------------------
John R. Tyrrell
------------------------------------------
John T. Mills, Sr.
WYCHE BURGESS PROFIT SHARING PLAN FUND II
By:
---------------------------------------
By:
---------------------------------------
Title:
------------------------------------
WILLOU & CO.
By:
---------------------------------------
Title:
------------------------------------
[SIGNATURES CONTINUED ON NEXT PAGE]
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18
IN WITNESS WHEREOF, the Company and each of the parties listed on
Schedule I or Schedule II hereto have executed this Stockholders' Agreement as
of the date first above written.
HOUSER CHARITABLE REMAINDER UNITRUST
By:
---------------------------------------
Title:
------------------------------------
VFO PARTNERS, LTD.
By:
---------------------------------------
By:
---------------------------------------
Title:
------------------------------------
TORONTO DOMINION CAPITAL (U.S.A.), INC.
By:
---------------------------------------
Title:
------------------------------------
NEWCOURT COMMERCIAL FINANCE
CORPORATION, an affiliate of The
CIT Group, Inc.
By:
---------------------------------------
Title:
------------------------------------
[SIGNATURES CONTINUED ON NEXT PAGE]
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19
IN WITNESS WHEREOF, the Company and each of the parties listed on
Schedule I or Schedule II hereto have executed this Stockholders' Agreement as
of the date first above written.
BANCAMERICA CAPITAL INVESTORS SBIC I, L.P.
By: BancAmerica Capital Management SBIC I, LLC,
Its general partner
By: BancAmerica Capital Management I, L.P.,
Its sole member
By: BACM I GP, LLC,
Its general partner
By:
---------------------------------------
Name: Robert H. Sheridan, III
Title: Member
CAPITAL INSIGHTS GROWTH INVESTORS, L.P.
By:
---------------------------------------
Title:
------------------------------------
------------------------------------------
Terry E. Richardson, Jr.
------------------------------------------
David C. Poole
------------------------------------------
William Oberlin
[SIGNATURES CONTINUED ON NEXT PAGE]
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20
IN WITNESS WHEREOF, the Company and each of the parties listed on
Schedule I or Schedule II hereto have executed this Stockholders' Agreement as
of the date first above written.
------------------------------------
Joseph A. Lawrence
[SIGNATURES CONTINUED ON NEXT PAGE]
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21
IN WITNESS WHEREOF, the Company and each of the parties listed on
Schedule I or Schedule II hereto have executed this Stockholders' Agreement as
of the date first above written.
------------------------------------
Larry Bouman
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22
EXECUTION COPY
Schedule I
STOCKHOLDERS
Name Issued Shares Options
---- ------------- -------
Shaler P. Houser 1,904,000 800,000
17 Crescent Avenue
Greenville, South Carolina 29601
Charles L. Houser 1,800,000 200,000
35 Rockwood Drive
Greenville, South Carolina 29605
Charles S. Houser 1,255,114 100,000
11866 Magnolia Street
Magnolia Springs, Alabama 36555
Russell W. Powell 904,000 600,000
610 Crescent Avenue
Greenville, South Carolina 29601
Daniel H. Sterling 300,000 300,000
101 Longview Terrace
Greenville, South Carolina 29605
Judith C. Slaughter 100,000 300,000
530 Spalding Farms Road
Greenville, South Carolina 29615
Seruus Ventures, LLC 200,000 0
200 North Main Street, Suite 301
Greenville, South Carolina 29601
Seruus Telecom Fund, L.P. 861,110 0
200 North Main Street, Suite 301
Greenville, South Carolina 29601
Hamilton E. Russell 26,000 80,000
11 North Brookwood Drive
Greenville, South Carolina 29605
Clark Mizell 0 190,000
2031 Harris Grove Church Road
Gray Court, South Carolina 29645
Thomas Houlihan 40,000 180,000
200 North Main Street, Suite 303
Greenville, South Carolina 29601
-------------------------------
TOTAL 7,390,224 2,750,000
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23
EXECUTION COPY
Schedule II
INVESTORS
Name Series A Convertible Series B Convertible Series C Convertible
---- Preferred Stock Preferred Stock Preferred Stock
-------------------- -------------------- --------------------
Richland Ventures II, L.P. 2,083,334 666,666 588,235
3100 West End Avenue
Suite 400
Nashville, TN 37203-1304
(615) 383-8030
Fax: (615) 269-0463
Richland Ventures III, L.P. 0 2,666,667 1,035,295
3100 West End Avenue
Suite 400
Nashville, TN 37203-1304
(615) 383-8030
Fax: (615) 269-0463
First Union Capital Partners, Inc. 2,083,334 1,466,667 1,176,471
One First Union Center
301 South College Street
Floor 5
Charlotte, NC 28288-0732
(704) 374-4948
Fax: (704) 374-6711
Moore Global Investments, Ltd. 0 2,666,667 1,035,295
c/o Citco Fund Services
(Bahamas), Ltd.
Bahamas Financial Center
Charlotte & Shirley Street
P.O. Box CB 13136
Nassau, Bahamas
Remington Investments Strategies, 0 2,666,667 1,035,295
L.P.
1251 Avenue of the Americas
New York, NY 10025
(212) 782-7033
Fax: (212) 575-6832
Southeastern Technology Fund 0 533,333 117,647
7910 South Memorial Parkway,
Suite F
Huntsville, AL 35802
(256) 883-8711
Fax: (256) 883-8558
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Name Series A Convertible Series B Convertible Series C Convertible
---- Preferred Stock Preferred Stock Preferred Stock
-------------------- -------------------- --------------------
Boston Millennia Partners Limited 0 1,844,257 1,279,080
Partnership
30 Rowes Wharf, Suite 330
Boston, MA 02110
(617) 428-5150
Fax: (617) 528-5160
Boston Millennia Associates I 0 22,410 15,038
Partnership
30 Rowes Wharf, Suite 330
Boston, MA 02110
(617) 428-5150
Fax: (617) 428-5160
Citizens Capital, Inc. 0 400,000 352,941
30 Rowes Wharf, Suite 330
Boston, MA 02110
(617) 428-5150
Fax: (617) 428-5160
John R. Tyrrell 0 20,000 0
c/o Richland Ventures
200 31st Avenue North, Suite 200
Nashville, Tennessee 37205
Charles S. Houser 41,667 166,666 0
101 River Route
11866 Magnolia Street
Magnolia Springs, AL 36555
Houser Charitable Trust 41,667 66,666 0
c/o Cornerstone Management
Attn: Bryan Taylor
7076 Peachtree Industrial Blvd.
Suite 100
Norcross, GA 30071
John T. Mills, Sr. 0 100,000 0
504 Hidden Hills Drive
Greenville, SC 29602
Willou & Co. 416,670 266,666 0
c/o Frank Maybank
P.O. Box 10856 FS
Greenville, SC 29602
VFO Partners, Ltd. 45,000 0 0
C/O James McKissick
13 Thornwood Lane
Greenville, SC 29605
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25
Name Series A Convertible Series B Convertible Series C Convertible
---- Preferred Stock Preferred Stock Preferred Stock
-------------------- -------------------- --------------------
Wyche Burgess Profit Sharing Plan 0 33,333 0
Fund II
c/o Cary Hall
P.O. Box 728
Greenville, SC 29603
Toronto Dominion Capital 0 0 2,352,941
(U.S.A.), Inc.
Newcourt Commercial Finance 0 0 1,176,471
Corporation, an affiliate of the
CIT Group, Inc.
BancAmerica Capital Investors 0 0 1,176,471
SBIC I, L.P.
Capital Insights Growth 0 66,666 0
Investors, L.P.
888 S. Pleasantburg Drive
Suite 2-D
Post Office Box 27162
Greenville, SC 29616-2162
Terry E. Richardson, Jr. 0 266,666 0
Ness, Motley, Loadholt,
Richardson & Poole
1730 Jackson Street
Barnwell, SC 29812
David C. Poole 0 266,666 0
Post Office Box 2107
Greenville, SC 29602
Joseph A. Lawrence 0 53,333 0
1121 Bellview Road
McLean, VA 22102
William Oberlin 0 26,667 70,588
257 Chestnut Circle
Bloomfield Hills, MI 48304
Larry Bouman 0 0 100,000
C/o
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