Exhibit 2
EXECUTION COPY
OPTION AGREEMENT
THIS OPTION AGREEMENT (the "OPTION AGREEMENT") is entered into
as of June 22, 1999, by and between AboveNet Communications Inc., a Delaware
corporation (the "COMPANY"), and Metromedia Fiber Network, Inc., a Delaware
corporation (the "GRANTEE").
RECITALS
WHEREAS, the Grantee, Magellan Acquisition, Inc., a Delaware
corporation and a wholly owned subsidiary of the Grantee ("MERGER SUB"), and the
Company are entering into an Agreement and Plan of Merger dated as of the date
hereof (as amended from time to time, the "MERGER AGREEMENT"), which provides
(subject to the conditions set forth therein) for the merger of Merger Sub with
and into the Company with the Company as the surviving corporation (the
"MERGER"); and
WHEREAS, as a condition to the willingness of the Grantee to
enter into the Merger Agreement, the Grantee has required that the Company enter
into, and in order to induce the Grantee to enter into the Merger Agreement, the
Company desires to enter into, this Option Agreement;
NOW, THEREFORE, in consideration of the premises and of the
representations, warranties, covenants and agreements contained in this Option
Agreement, the parties to this Option Agreement, intending to be legally bound,
agree as follows:
1. CERTAIN DEFINITIONS. Capitalized terms used but not
defined in this Option Agreement shall have the meanings ascribed to such terms
in the Merger Agreement.
2. GRANT OF OPTION. Subject to the terms of this Option
Agreement, the Company hereby grants to the Grantee an irrevocable option (the
"OPTION") to purchase, out of the authorized but unissued shares of Company
Common Stock 6,875,560, shares of Company Common Stock (as adjusted as set forth
herein, the "OPTION SHARES") as of the first date, if any, upon which an
Exercise Event (as defined in Section 4(b) of this Option Agreement) occurs, at
a price per Option Share equal to $49.9375 per share (as adjusted as set forth
herein, the "EXERCISE PRICE"). The number of shares of Company Common Stock that
may be received upon exercise of the Option and the Exercise Price are subject
to adjustment as set forth herein.
3. TERM. The Option shall terminate on the earliest of:
(a) the Effective Time of the Merger as contemplated
by the Merger Agreement;
(b) the termination of the Merger Agreement other
than under circumstances which constitute (or upon satisfaction of the
conditions to payment of the Termination Amount set forth in the proviso of
Section 7.5(b) of the Merger Agreement would constitute) an Exercise Event under
this Agreement; or
(c) the occurrence of the date which is twelve (12)
months after termination of the Merger Agreement under circumstances which
constitute, or which, if the conditions to payment of the Termination Amount set
forth in the proviso of Section 7.5(b) of the Merger Agreement were satisfied,
would constitute an Exercise Event under this Agreement (the expiration date of
the Option is referred to herein as the "TERMINATION DATE"); PROVIDED, HOWEVER,
that with respect to clause (c) of this sentence, if the Option cannot be
exercised on such first anniversary by reason of any applicable law, regulation,
order, judgment, decree or other legal impediment, then the Termination Date
shall be extended until the date 10 days after the date on which such impediment
is removed. The rights and obligations set forth in Sections 9 and 10 of this
Option Agreement shall not terminate on the Termination Date, but shall extend
to such time as is provided in those Sections.
4. EXERCISE OF OPTION.
(a) The Grantee may exercise the Option, in whole or
in part, at any time and from time to time on or before the Termination Date
following the occurrence of an Exercise Event. Notwithstanding the occurrence of
the Termination Date, the Grantee shall be entitled to purchase those Option
Shares with respect to which it has exercised the Option in accordance with the
terms hereof prior to the Termination Date.
(b) As used herein, an "EXERCISE EVENT" shall mean
the occurrence of any event as a result of which the Merger Agreement has
terminated and Grantee is entitled to receive the Termination Amount pursuant to
Section 7.5(b) of the Merger Agreement.
(c) In the event the Grantee wishes to exercise the
Option with respect to any Option Shares, the Grantee shall send to the Company
a written notice (the date of which being herein referred to as the "NOTICE
DATE") specifying: (i) the number of Option Shares that the Grantee will
purchase; (ii) the place in New York, New York at which such Option Shares are
to be purchased; and (iii) the date on which such Option Shares are to be
purchased, which shall not be earlier than three business days nor later than 20
business days after the Notice Date. The closing of the purchase of such Option
Shares (the "CLOSING") shall take place at the place specified in such written
notice and on the date specified in such written notice (the "CLOSING DATE");
PROVIDED, HOWEVER, that: (i) if such purchase cannot be consummated by reason of
any applicable law, regulation, order, judgment, decree or other legal
impediment, the Closing Date may be extended by the Grantee to a date not more
than 10 days after the date on which such impediment is removed; and (ii) if
prior notification to or approval of any governmental authority is required (or
if any waiting period must expire or be terminated) in connection with such
purchase, the Grantee shall promptly cause to be filed the required notice or
application for approval and shall expeditiously process the same (and the
Company shall cooperate with the Grantee in the filing of any such notice or
application required to be filed by the Grantee and the obtaining of any such
approval required to be obtained by the Grantee), and the Closing Date may be
extended by the Grantee to a date not more than 10 days after the date on which
any required notification has been made, approval has been obtained or waiting
period has expired or been terminated.
(d) Notwithstanding Section 4(c) of this Option
Agreement, so long as the Company shall have complied in all material respects
with all of its obligations under this Option Agreement, no Closing Date shall
be more than 6 months after the related Notice Date, and, if the Closing Date
shall not have occurred within 6 months after the related Notice Date, the
exercise of the Option effected on the Notice Date shall be deemed to have
expired.
(e) Notwithstanding anything else herein to the
contrary, any exercise of the Option and any purchase of Option Shares shall be
subject to (x) compliance with applicable laws and regulations, which may, among
other things, prohibit the purchase of all or a portion of the Option Shares
without first obtaining or making certain consents, approvals, orders,
notifications or authorizations, and (y) the absence of any preliminary or
permanent injunction or other order by any court of competent jurisdiction
prohibiting or otherwise restraining such exercise or purchase.
5. PAYMENT AND DELIVERY OF CERTIFICATES.
(a) On each Closing Date, the Grantee shall pay to
the Company by wire transfer in immediately available funds to a bank account
designated by the Company an amount equal to the Exercise Price multiplied by
the number of Option Shares to be purchased on such Closing Date.
(b) At each Closing, simultaneously with the delivery
of immediately available funds as provided in Section 5(a) of this Option
Agreement, the Company shall deliver to the Grantee or its designee a
certificate or certificates representing the Option Shares to be purchased at
such Closing, which Option Shares shall be duly authorized, validly issued,
fully paid and nonassessable and free and clear of all liens, security
interests, charges or other encumbrances (collectively, the "ENCUMBRANCES")
other than Encumbrances under applicable law.
(c) Certificates for the Option Shares delivered at
each Closing shall be endorsed with a restrictive legend (in addition to any
legend required under applicable state securities laws) that shall read
substantially as follows:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER EITHER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY
APPLICABLE STATE LAW GOVERNING THE OFFER OR SALE OF SECURITIES. NO
TRANSFER OR OTHER DISPOSITION OF THESE SHARES MAY BE MADE EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND SUCH
OTHER STATE LAWS OR PURSUANT TO EXEMPTIONS FROM REGISTRATION UNDER THE
ACT, SUCH OTHER STATE LAWS AND THE RULES AND REGULATIONS PROMULGATED
THEREUNDER.
IN ADDITION, THE TRANSFER OF THE SHARES REPRESENTED BY THIS CERTIFICATE
IS SUBJECT TO RESTRICTIONS ARISING UNDER THE TERMS OF AN OPTION
AGREEMENT DATED AS OF JUNE 22, 1999. A COPY OF SUCH AGREEMENT WILL BE
PROVIDED TO THE HOLDER HEREOF WITHOUT CHARGE UPON RECEIPT BY THE
COMPANY OF A WRITTEN REQUEST THEREFOR.
A new certificate or certificates evidencing the same number of shares of
Company Common Stock will be issued to the Grantee in lieu of the certificate
bearing the above legend, and such new certificate shall not bear the first
paragraph of such legend, insofar as it applies to the Securities Act, if the
Grantee shall have delivered to the Company a copy of a letter from the Staff of
the SEC, or an opinion of counsel in form and substance reasonably satisfactory
to the Company and its counsel, to the effect that such legend is not required
for purposes of the Securities Act.
6. ADJUSTMENT UPON CHANGES IN CAPITALIZATION, ETC.
(a) In the event of any change in the Company Common
Stock issued and outstanding by reason of a distribution, reclassification stock
dividend, split-up (including a reverse stock split), combination,
recapitalization, exchange of shares or similar transaction, the type and number
of shares or securities subject to the Option, and the Exercise Price therefor,
shall be adjusted appropriately, and proper provision shall be made in the
agreements governing such transaction so that the Grantee shall receive upon
exercise of the Option the same class and number of outstanding shares or other
securities or property that Grantee would have received upon exercise of the
Option if the Option had been exercised immediately prior to such event or the
record date therefor, as applicable. Without limiting the parties' relative
rights and obligations under the Merger Agreement, if any additional shares of
Company Common Stock are issued after the date of this Option Agreement (other
than pursuant to an event described in the first sentence
of this Section 6(a)), the number of shares of Company Common Stock then
remaining subject to the Option shall be adjusted so that, after such issuance
of additional shares, such number of shares then remaining subject to the
Option, together with any shares theretofore issued pursuant to the Option,
equals 19.9% of the number of shares of Company Common Stock then issued and
outstanding.
(b) Without limiting the parties' relative rights and
obligations under the Merger Agreement, if the Company shall enter into an
agreement (i) to consolidate, exchange, shares or merge with any person (as
defined in the Merger Agreement), other than the Grantee or one of the Grantee's
subsidiaries, and, in the case of a merger, shall not be the continuing or
surviving corporation, (ii) to permit any person, other than the Grantee or one
of the Grantee's subsidiaries, to merge into the Company and the Company shall
be the continuing or surviving corporation, but, in connection with such merger,
the then outstanding shares of Company Common Stock shall be changed into or
exchanged for stock or other securities of the Company or any other person or
cash or any other property, or the shares of Company Common Stock outstanding
immediately before such merger shall after such merger represent less than 50%
of the common shares and common share equivalents of the Company outstanding
immediately after the merger, or (iii) to sell, lease or otherwise transfer all
or substantially all of its assets to any Person, other than the Grantee or one
of the Grantee's subsidiaries, then, and in each such case, proper provision
shall be made in the agreement governing such transactions so that the Option
shall, upon the consummation of any such transaction and upon the terms and
conditions set forth herein, become exercisable for the stock, securities, cash
or other property that would have been received by the Grantee upon exercise of
the Option if the Grantee had exercised this Option immediately prior to such
transaction or the record date for determining the stockholders entitled to
participate therein, as appropriate.
(c) The provisions of Sections 7, 9 and 10 of this
Option Agreement shall apply with appropriate adjustments to any securities for
which the Option becomes exercisable pursuant to this Section 6.
7. REPURCHASE OPTIONS.
(a) At any time on or prior to the Termination Date,
at the request of the Grantee made at any time after the first Exercise Event
and ending on the first anniversary thereof (the "PUT PERIOD"), the Company (or
any successor thereto) shall repurchase from the Grantee that portion of the
Option that then remains unexercised. The date on which the Grantee exercises
its rights under this Section 7 is referred to as the "GRANTEE REQUEST DATE."
Such repurchase shall be at an aggregate price (the "REPURCHASE CONSIDERATION")
equal to the excess, if any, of (x) the Applicable Price for each share of
Company Common Stock that remains subject to the Option over (y) the Exercise
Price (subject to adjustment pursuant to Section 6 of this Option Agreement),
multiplied by the number of Option Shares as to which the Option
has not been exercised, except that in no event shall the Company be required to
pay to the Grantee pursuant to this Section 7(a) an amount exceeding the product
of (x) $1.00 and (y) such number of shares of Company Common Stock that remain
subject to the Option.
(b) If the Grantee exercises its rights under this
Section 7, the Company shall, within five business days after the Grantee
Request Date, pay the Repurchase Consideration to the Grantee by wire transfer
in immediately available funds, and the Grantee shall surrender to the Company
the Option.
(c) For purposes of this Option Agreement, the
"APPLICABLE PRICE" means the average closing sales price per share of Company
Common Stock as quoted on NASDAQ/NMS (or if Company Common Stock is not quoted
on NASDAQ/NMS, the average closing sales price per share as quoted on any other
market comprising a part of NASDAQ/NMS or, if the shares of Company Common Stock
are not quoted thereon, on the principal trading market (as defined in
Regulation M under the Exchange Act) on which such shares are traded as reported
by The Wall Street Journal (Northeast edition) or, if not reported thereby, any
other authoritative source) during the 20 trading days preceding the Grantee
Request Date.
(d) Notwithstanding anything else herein to the
contrary, any exercise by the Grantee of its rights under this Section 7 and any
compliance by the Company with its repurchase obligations hereunder shall be
subject to (x) compliance with applicable laws and regulations, which may, among
other things, prohibit such exercise or such repurchase of all or a portion of
the Option without first obtaining or making certain consents, approvals,
orders, notifications or authorizations, and (y) the absence of any preliminary
or permanent injunction or other order by any court of competent jurisdiction
prohibiting or otherwise restraining such exercise or repurchase.
(e) In the event that the Grantee notifies the
Company of its intention to exercise the Option pursuant to Section 4 hereof,
the Company may require the Grantee, upon the delivery to Grantee of written
notice during the period beginning on the Notice Date and ending one day prior
to the applicable Closing Date, to sell to the Company the Option Shares
acquired by the Grantee pursuant to such exercise of the Option at a purchase
price per share for such sale equal to the Exercise Price plus $1.00. The
closing of any repurchase of Option Shares pursuant to this Section 7(e) shall
take place immediately following the consummation of the sale of the Option
Shares to the Grantee on the applicable Closing Date at the time and location
agreed upon for such Closing Date.
8. REPRESENTATIONS AND WARRANTIES.
(a) The Company hereby represents and warrants to the
Grantee that the Company has taken all necessary action to authorize and reserve
for
issuance and subject to applicable law to permit it to issue, and at all times
from the date of this Option Agreement through the Termination Date will have
reserved for issuance upon exercise of the Option, a sufficient number of
authorized shares of Company Common Stock for issuance upon exercise of the
Option, each of which, upon issuance pursuant to this Option Agreement and when
paid for as provided herein, will be validly issued, fully paid and
nonassessable, and shall be delivered free and clear of all Encumbrances other
than Encumbrances under applicable law.
(b) The Grantee hereby represents and warrants to the
Company that the Grantee is acquiring the Option and it will acquire the Option
Shares issuable upon the exercise thereof for its own account and not with a
view to the distribution or resale thereof in any manner not in accordance with
applicable law. Neither the Option nor any of the Option Shares will be offered
sold, pledged, or otherwise transferred except in compliance with, or pursuant
to an exemption from, the registration requirements of the Securities Act, and
in compliance with the terms of this Option Agreement.
9. REGISTRATION RIGHTS.
(a) The Company shall, if requested by the Grantee at
any time and from time to time within two years of the first exercise of the
Option (the "REGISTRATION PERIOD"), as expeditiously as reasonably practicable,
prepare, file and cause to be made effective up to two registration statements
under the Securities Act in order to permit the offering, sale and delivery or
other disposition of any or all shares of Company Common Stock or other
securities, as appropriate, that have been acquired by or are issuable to the
Grantee upon exercise of the Option pursuant to a bona fide firm commitment
underwritten public offering in which the Grantee and the underwriters shall
effect as wide a distribution of such shares as is reasonably practicable and
the Company shall use all reasonable commercial efforts to qualify such shares
or other securities under any applicable state securities or "blue sky" laws
(except that the Company shall not be required to qualify to do business in, or
consent to general service of process in, any jurisdiction by reason of this
provision); PROVIDED, HOWEVER, that any such registration request must relate to
a number of shares of Company Common Stock equal to at least 25% of the total
Option Shares and that any rights to require registration hereunder shall
terminate with respect to any Shares that may be sold pursuant to rule 144(k)
under the Securities Act. Without the Grantee's prior written consent, no other
securities may be included in any such registration. The Company shall use all
reasonable commercial efforts to cause each such registration statement to
become effective, to obtain all consents or waivers of other parties that are
required therefor and to keep such registration effective for such period not in
excess of 120 days from the day such registration statement first becomes
effective as may be as reasonably necessary to effect such sale or other
disposition. The obligations of the Company hereunder to file a registration
statement and to maintain its effectiveness may be suspended for one or more
periods of time not exceeding 90 days in the aggregate if the Board of Directors
of the
Company shall have determined in good faith that the filing of such registration
or the maintenance of its effectiveness would require disclosure of nonpublic
information that would be materially detrimental to the Company, or the Company
is required under the Securities Act to include audited financial statements for
any period in such registration statement and such financial statements are not
yet available for inclusion in such registration statement, or the Company
determines, in its reasonable judgment, that such registration would interfere
in any material respect with any financing, acquisition or other material
transaction involving the Company. For purposes of determining whether two
requests have been made under this Section 9, only requests relating to a
registration statement that has become effective under the Securities Act and
pursuant to which the Grantee has disposed of at least 50% of the shares covered
thereby in the manner contemplated therein shall be counted.
(b) All fees and expenses associated with the
preparation and filing of any such registration statement pursuant to this
Section 9 and any sale covered thereby (including any fees related to blue sky
qualifications and filing fees in respect of the National Association of
Securities Dealers, Inc.) ("REGISTRATION EXPENSES"), shall be for the account of
the Company except for underwriting discounts or commissions or brokers' fees in
respect to shares to be sold by the Grantee and the fees and expenses of
Grantee's counsel; PROVIDED, HOWEVER, that the Company shall not be required to
pay for any Registration Expenses with respect to such registration if the
registration request is subsequently withdrawn at the request of the Grantee
unless the Grantee agrees to forfeit its right to request one registration; AND
PROVIDED FURTHER that, if at the time of such withdrawal the Grantee has learned
of a material adverse change in the results of operations, condition (financial
or other), business or prospects of the Company from that known to the Grantee
at the time of its request and has withdrawn the request with reasonable
promptness following disclosure by the Company of such material adverse change,
then the Grantee shall not be required to pay any of such expenses and shall
retain all remaining rights to request registration.
(c) All of the Grantee's rights under this Section 9
are subject to the condition that the Grantee shall provide all information
reasonably requested by the Company for inclusion in any registration statement
to be filed hereunder. If during the Registration Period the Company shall
propose to register under the Securities Act the offering, sale and delivery or
other disposition of Company Common Stock for cash for its own account or for
the account of any other stockholder of the Company pursuant to a firm
underwriting, it shall, in addition to the Company's other obligations under
this Section 9, allow the Grantee the right to participate in such registration
provided that the Grantee participates in the underwriting; PROVIDED, HOWEVER,
that, if the managing underwriter of such offering advises the Company in
writing that in its opinion the number of shares of Company Common Stock or
other securities, as appropriate, requested to be included in such registration
exceeds the number that can be sold in such offering, the Company shall include
in such registration, to the extent of the number of shares which the Company is
so advised can be sold in (or during the time of) such
offering, FIRST, all securities proposed to be sold by the Company for its own
account, or, in the case of a secondary offering made pursuant to demand
registration rights granted to any person other than the Company, all shares
intended to be included therein by such person; SECOND all securities, if any,
proposed by the Company to be sold for the account of certain holders of shares
of Company Common Stock pursuant to the exercise of their piggyback registration
rights under agreements or other arrangements in effect on the date hereof;
THIRD, all shares or securities requested to be included in such registration by
Grantee under this Agreement; and FOURTH, all securities of the Company to be
sold for the account of any other person. In connection with any offering, sale
and delivery or other disposition of Company Common Stock pursuant to a
registration statement effected pursuant to this Section 9, the Company and the
Grantee shall provide each other and each underwriter of the offering with
customary representations, warranties and covenants, including covenants of
indemnification and contribution.
10. PROFIT LIMITATION. Notwithstanding any provision to
the contrary contained in this Option Agreement or the Merger Agreement, the
Grantee may not exercise its rights pursuant to this Option Agreement or Section
7.5(b) of the Merger Agreement in a manner that would result in a cash payment
to the Grantee of an aggregate amount under this Option Agreement (the "Option
Buyout Amount") and under Section 7.5(b) of the Merger Agreement of more than
the sum of (a) the aggregate Exercise Price paid by the Grantee for any Option
Shares as to which the Option has theretofore been exercised, plus (b)
$50,000,000. To the extent that any amount is paid by the Company to the Grantee
pursuant to this Option Agreement or Section 7.5(b) of the Merger Agreement, the
Termination Amount payable pursuant to Section 7.5(b) of the Merger Agreement or
the Option Buyout Amount shall be reduced appropriately so that the aggregate
amount payable by the Company under this Option Agreement and Section 7.5(b) of
the Merger Agreement (exclusive of Parent Expenses) shall not exceed such sum.
11. LISTING. If at the time of the occurrence of an
Exercise Event the Company Common Stock is (or any other securities subject to
the Option are) then listed on NASDAQ/NMS or on any other market or exchange,
the Company, upon the occurrence of an Exercise Event, shall promptly file an
application to list on NASDAQ/NMS and if not then listed on NASDAQ/NMS on such
other market or exchange the shares of the Company Common Stock or other
securities then subject to the Option, and shall use all reasonable efforts to
cause such listing application to be approved as promptly as practicable.
12. REPLACEMENT OF AGREEMENT. Upon receipt by the
Company of evidence reasonably satisfactory to it of the loss, theft,
destruction or mutilation of this Option Agreement, and (in the case of loss,
theft or destruction) of reasonably satisfactory indemnification, and upon
surrender and cancellation of this Option Agreement, if mutilated, the Company
will execute and deliver a new Option Agreement of like tenor and date.
13. TRANSFERS.
The Option Shares may not be sold, assigned,
transferred or otherwise disposed of except pursuant to (i) Section 7(e) hereof,
(ii) in an underwritten offering pursuant to Section 8 hereof, or (iii) to any
purchaser or transferee who would not, to the knowledge of the Grantee, after
due inquiry, immediately following such sale, assignment, transfer or disposal
beneficially own more than 4.9% of the then-outstanding voting power of the
Company, except that the Grantee shall be permitted to sell any Option Shares if
such sale is made pursuant to a tender or exchange offer that has been approved
or recommended by a majority of the members of the Company's board of directors
(which majority shall include a majority of directors who were directors on the
date hereof).
14. MISCELLANEOUS.
(a) EXTENSION; WAIVER. At any time prior to the
Termination Date, the parties hereto may (i) extend the time for the performance
of any of the obligations or other acts of the other parties hereto, or (ii)
waive compliance with any of the agreements or conditions contained herein. Any
agreement on the part of any party to any such extension or waiver shall be
valid only if set forth in an instrument in writing signed on behalf of such
party. Except as provided in this Option Agreement, no action taken pursuant to
this Option Agreement shall be deemed to constitute a waiver by the party taking
such action of compliance with any covenants or agreements contained in this
Option Agreement. The waiver by any party hereto of a breach of any provision
hereunder shall not operate or be construed as a waiver of any prior or
subsequent breach of the same or any other provision hereunder.
(b) AMENDMENT AND MODIFICATION. Subject to applicable
law, this Option Agreement may be amended, modified and supplemented, or
provisions hereof waived, in writing by the parties hereto in any and all
respects before the Termination Date, by action taken by the respective Boards
of Directors of the Company or the Grantee or by the respective officers
authorized by such Boards of Directors. This Option Agreement may not be amended
except by an instrument in writing signed on behalf of each of the parties
hereto.
(c) FURTHER ACTIONS. Each of the parties hereto
agrees that, subject to its legal obligations, it will use its reasonable
efforts to do all things reasonably necessary to consummate the transactions
contemplated hereby.
(d) NON-EXCLUSIVITY. The rights and remedies of the
Grantee under this Option Agreement are not exclusive of or limited by any other
rights or remedies which it may have, whether at law, in equity, by contract or
otherwise, all of which shall be cumulative (and not alternative). Without
limiting the generality of the foregoing, the rights, remedies, obligations and
liabilities of each of the Grantee and the
Company under this Option Agreement, are in addition to their respective rights,
remedies, obligations and liabilities under common law requirements and under
all applicable statutes, rules and regulations. The covenants and obligations of
the Company set forth in this Option Agreement shall be construed as independent
of any other agreement or arrangement between the Company, on the one hand, and
the Grantee, on the other. The existence of any claim or cause of action by the
Company against the Grantee shall not constitute a defense to the enforcement of
any of such covenants or obligations against the Company.
(e) COUNTERPARTS. This Option Agreement may be
executed in any number of counterparts, each such counterpart being deemed to be
an original instrument, and all such counterparts shall together constitute the
same agreement.
(f) GOVERNING LAW AND VENUE; WAIVER OF JURY TRIAL.
(i) THIS OPTION AGREEMENT SHALL BE DEEMED TO BE
MADE IN AND IN ALL RESPECTS SHALL BE INTERPRETED, CONSTRUED AND GOVERNED BY AND
IN ACCORDANCE WITH THE LAW OF THE STATE OF DELAWARE WITHOUT REGARD TO THE
CONFLICT OF LAW PRINCIPLES. The parties irrevocably submit to the jurisdiction
of the courts of the State of Delaware solely in respect of the interpretation
and enforcement of the provisions of this Option Agreement and of the documents
referred to in this Option Agreement, and in respect of the transactions
contemplated by this Option Agreement and by those documents, and hereby waive,
and agree not to assert, as a defense in any action, suit or proceeding for the
interpretation or enforcement of this Option Agreement or of any such document,
that it is not subject to this Option Agreement or that such action, suit or
proceeding may not be brought or is not maintainable in said courts or that the
venue thereof may not be appropriate or that this Option Agreement or any such
document may not be enforced in or by such courts, and the parties hereto
irrevocably agree that all claims with respect to such action or proceeding
shall be heard and determined in such a court. The parties hereby consent to and
grant any such court jurisdiction over the person of such parties and over the
subject matter of such dispute and agree that mailing of process or other papers
in connection with any such action or proceeding in the manner provided in
Section 14(g) or in such other manner as may be permitted by law, shall be valid
and sufficient service thereof.
(ii) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY
CONTROVERSY WHICH MAY ARISE UNDER THIS OPTION AGREEMENT IS LIKELY TO INVOLVE
COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY
IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL
BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RELATING TO THIS OPTION
AGREEMENT, OR THE TRANSACTIONS CONTEMPLATED BY THIS OPTION AGREEMENT. EACH PARTY
CERTIFIES AND ACKNOWLEDGES THAT (i) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (ii) EACH
SUCH PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (iii)
EACH SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS OPTION AGREEMENT BY, AMONG
OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 14(f).
(g) NOTICES. Any notice, request, instruction or
other document to be given hereunder by any party to the others shall be in
writing and delivered personally, sent by reputable overnight courier, sent by
registered or certified mail, postage prepaid, or by facsimile.
IF TO THE GRANTEE:
Metromedia Fiber Network, Inc.
1 North Lexington Avenue
White Plains, NY 10601
Attention: Howard Finkelstein
Fax: (914) 421-6777
WITH COPIES TO:
Metromedia Company
One Meadowlands Plaza
East Rutherford, NJ 07073-2137
Attention: Arnold L. Wadler, Esq.
Fax: (201) 531-2803
Paul, Weiss, Rifkind, Wharton & Garrison
1285 Avenue of the Americas
New York, New York 10019-6064
Attention: Douglas A. Cifu, Esq.
Fax: (212) 757-3990
IF TO THE COMPANY:
AboveNet Communications Inc.
50 W. San Fernando Street, Suite #1010
San Jose, CA 95113
Attention: Sherman Tuan
Fax: (408) 367-6800
WITH COPIES TO:
Skadden, Arps, Slate, Meagher & Flom LLP
300 South Grand Avenue
Los Angeles, California 90071
Attention: Nicholas P. Saggese, Esq.
Fax: 213-687-7804
or to such other persons or addresses as may be designated in writing by the
party to receive such notice as provided above.
(h) ENTIRE AGREEMENT. This Option Agreement, the
Merger Agreement (including the documents and instruments attached thereto as
exhibits or schedules or delivered in connection therewith other than Exhibit
D), the Confidentiality Agreement and the other documents referred to herein or
delivered pursuant hereto collectively constitute the entire agreement and
supersede all other prior agreements, understandings, representations and
warranties, both written and oral, among the parties, with respect to the
subject matter of this Option Agreement.
(i) NO THIRD PARTY BENEFICIARIES. This Option
Agreement is not intended to confer upon any person other than the parties to
this Option Agreement any rights or remedies under this Option Agreement.
(j) SEVERABILITY. The provisions of this Option
Agreement shall be deemed severable and the invalidity or unenforceability of
any provision shall not affect the validity or enforceability or the other
provisions of this Option Agreement. If any provision of this Option Agreement,
or the application of that provision to any person or any circumstance, is
invalid or unenforceable, (i) a suitable and equitable provision shall be
substituted for that provision in order to carry out, so far as may be valid and
enforceable, the intent and purpose of the invalid or unenforceable provision
and (ii) the remainder of this Option Agreement and the application of the
provision to other persons or circumstances shall not be affect by such
invalidity or unenforceability, nor shall such invalidity or unenforceability
affect the validity or enforceability of the provision, or the application of
that provision, in any other jurisdiction.
(k) INTERPRETATION. The headings in this Option
Agreement are for convenience of reference only, do not constitute part of this
Option Agreement and shall not be deemed to limit or otherwise affect any of the
provisions of this Option Agreement. Where a reference in this Option Agreement
is made to a Section, that reference shall be to a section of this Option
Agreement unless otherwise indicated. Wherever the words "include," "includes"
or "including" are used in this Option Agreement, they shall be deemed to be
followed by the words "without limitation."
(l) ASSIGNMENT. This Option Agreement and the Option
shall not be assignable or delegated in whole or in part by operation of law or
otherwise. Any assignment, transfer or delegation shall be null and void.
(m) SPECIFIC PERFORMANCE. The parties to this Option
Agreement agree that irreparable damage would occur in the event that any of the
provisions of this Option Agreement were nor performed in accordance with their
specific terms or were otherwise reached. It is accordingly agreed that the
parties shall be entitled to an injunction or injunctions to prevent breaches of
this Option Agreement and to enforce specifically the terms and provisions of
this Option Agreement in any court of the United States or any state court in
each case in the State of Delaware, this being in addition to any other remedy
to which they are entitled at law or in equity.
IN WITNESS WHEREOF, the Company and the Grantee have caused
this Option Agreement to be signed by their respective officers thereupon duly
authorized, all as of the day and year first written above.
ABOVENET COMMUNICATIONS INC.
By: /s/ Sherman Tuan
------------------------------------
Name: Sherman Tuan
Title: Chief Executive Officer and Chairman
METROMEDIA FIBER NETWORK, INC.
By: /s/ Howard Finkelstein
------------------------------------
Name: Howard Finkelstein
Title: President