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Exhibit 4.8
AMENDED AND RESTATED
SECURITYHOLDERS' AGREEMENT
THIS AMENDED AND RESTATED SECURITYHOLDERS' AGREEMENT is made as of
________, 1999, by and among MGC Communications, Inc., a Nevada corporation (the
"Company"), the Institutional Investors (as defined herein), and each of the
securityholders from time to time a party hereto (the "Securityholders") (as
amended from time to time, this "Agreement").
WHEREAS, the parties hereto are parties to that certain
Securityholders' Agreement dated as of April 5, 1999 (the "Original Agreement");
and
WHEREAS, Providence Equity Partners III L.P. ("PEP"), Providence
Equity Operating Partners III L.P. ("PEOP"), JK&B Capital III L.P. ("JK&B"),
Wind Point Partners III, L.P. and Wind Point Executive Advisor Partners III,
L.P., and the Company are parties to that certain Securities Purchase Agreement
dated April 5, 1999 (the "Original Purchase Agreement"); and
WHEREAS, PEP, PEOP, JK&B, JK&B Capital, L.P. ("JK&BCLP"), JK&B
Capital II, L.P. ("Capital II") and JK&B Capital III QIP, L.P. ("QIP") are
concurrently herewith purchasing shares of the Company's Series C Convertible
Preferred Stock, $.001 par value (the "Series C Preferred"), pursuant to a
Securities Purchase Agreement dated _____, 1999 (the "Securities Purchase
Agreement"); and
WHEREAS, the execution and delivery of this Agreement is a condition
to the purchase of the Series C Preferred by PEP, PEOP, JK&B, JK&BCLP, Capital
II and QIP pursuant to the Securities Purchase Agreement; and
WHEREAS, capitalized terms used herein but not otherwise defined
herein have the meaning given such terms in the Original Purchase Agreement; and
WHEREAS, the parties hereto desire to amend and restate in its
entirety the Original Agreement;
NOW THEREFORE, in consideration of the mutual covenants contained
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties to this Agreement, intending to be
legally bound, hereby agree as follows:
Section 1. Certain Definitions.
"Board" means the Company's Board of Directors.
"Institutional Investors" means those Persons holding Investor
Shares.
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"Investor Designees" means those member(s) of the Board or Sub Board
that have been designated by the Required Investor Approval.
"Investor Shares" means the "Purchased Securities" as defined in the
Original Purchase Agreement and the "Purchased Securities" as defined in the
Securities Purchase Agreement.
"Original Agreement" has the meaning given such term in the
recitals.
"Original Purchase Agreement" has the meaning given such term in the
recitals.
"Preferred Shares" means shares of Series B Preferred and Series C
Preferred.
"Required Board Approval" means the majority vote or written consent
of a majority of the directors of the Board or the Sub Board, as applicable,
including the approval of the Investor Designee, or, if there is more than one
Investor Designee, that Investor Designee that has been designated in writing by
the Required Investor Approval as the person whose approval is necessary for
purposes of this definition.
"Required Investor Approval" means, at any time, the affirmative
vote of the holders of more than fifty percent (50%) of the outstanding Investor
Shares held of record by the Institutional Investors at such time.
"Securities Purchase Agreement" has the meaning given such term in
the recitals.
"Series B Preferred" means the Company's Series B Convertible
Preferred Stock, $.001 par value per share.
"Series C Preferred" has the meaning given such term in the
recitals.
"Subject Securities" has the meaning given to such term in Section 2
hereof.
Section 2. Board Composition.
(a) From and after the date hereof, and until the provisions
of this Section 2 cease to be effective, each Securityholder and Institutional
Investor shall vote all of its Common Stock, Investor Shares and other voting
securities of the Company over which such holder has voting control ("Subject
Securities") and shall take all other necessary or desirable actions within its
control (in its capacity as a securityholder or stockholder and, subject to any
fiduciary obligation owed by such Securityholder or Institutional Investor to
the Company, in its capacity as a director, member of a board committee or
officer of the Company or otherwise, and including, without limitation,
attendance at meetings in person or by proxy for purposes of obtaining a quorum
and execution of written consents in lieu of meetings), and the Company shall
take all necessary or desirable actions within its control (including, without
limitation, calling special Board and stockholder meetings), so that the
following shall occur:
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(i) subject to the limitations contained in Section
2(a)(vi), there shall be elected to the Board such
number of representatives designated by Required
Investor Approval as are necessary to result in the
percentage representation by Investor Designees on the
Board equaling at least the Institutional Investors'
percentage ownership of outstanding Common Stock of the
Company arising out of their record ownership of (x)
Preferred Shares (assuming the conversion of all
outstanding shares of Series B Preferred and Series C
Preferred) and (y) shares of Common Stock that have been
issued on conversion of shares of Series B Preferred and
Series C Preferred; provided, subject to the limitations
contained in Section 2(a)(vi), in no event shall the
initial number of Investor Designees to the Board be
less than two (2);
(ii) the governing body of each of the Company's Subsidiaries
(each a "Sub Board") shall have at least one Investor
Designee;
(iii) any committees of the Board or a Sub Board (to the
extent not yet created) shall be created only upon
Required Board Approval and each committee shall have at
least one Investor Designee;
(iv) the removal from the Board or a Sub Board or any
committee thereof without cause of any Investor Designee
shall be conditional on the Required Investor Approval;
(v) in the event that any Investor Designee ceases to serve
as a member of the Board or a Sub Board or any committee
thereof during his term of office, the resulting vacancy
on the Board or the Sub Board, and on each committee
thereof, shall be filled by an Investor Designee;
(vi) notwithstanding the provisions of Section 2(a)(i), the
number of Investor Designees on the Board shall not
exceed the whole number obtained by multiplying (A) the
Institutional Investors' percentage ownership of
outstanding Common Stock of the Company arising out of
their record ownership of (x) Preferred Shares (assuming
the conversion of all outstanding Series B Preferred and
Series C Preferred) and (y) shares of Common Stock that
have been issued on conversion of shares of Series B
Preferred and Series C Preferred by (B) the total number
of directors on the Board (it being understood that for
purposes of determining the whole number, any decimal
beginning with 0-4 shall be rounded down to the nearest
whole number and any decimal beginning with 5-9 shall be
rounded up to the nearest whole number); and
(vii) in no event shall the number of directors on the Board
be less than seven (7).
(b) The Company shall pay the reasonable out-of-pocket
expenses incurred by each director in connection with attending (i) the meetings
of the Board, any Sub Board and any
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committee thereof and (ii) any other meetings at the request of any Company or
any of its Subsidiaries. So long as any Investor Designee serves on the Board or
a Sub Board and for six years thereafter, the Company shall maintain directors
and officers indemnity insurance coverage as currently in place or as otherwise
approved by the Required Investor Approval, and the constituent documents of the
Company and each of its Subsidiaries, as appropriate, shall provide for
indemnification and exculpation of directors to the fullest extent permitted
under applicable law.
(c) If any party or parties fail(s) (but is otherwise entitled) to
designate a representative to fill a directorship pursuant to the terms of this
Section 2, the election of an individual to such directorship shall be
accomplished in accordance with the Company's or the applicable Subsidiary's
constituent documents and applicable law; provided that the parties shall take
all necessary actions to remove such individual if the party or parties which
failed (and are otherwise entitled) to designate such director so directs.
Section 3. Approval of Transaction. In the event a meeting of the
Company's stockholders is required under the General Corporation Law of the
State of Nevada or otherwise, including under the regulations of the Nasdaq
Stock Market (the "Nasdaq Rules"), for the approval of any aspect of the
transactions contemplated by the Securities Purchase Agreement, including the
issuance of shares of Series C Preferred (the "Stockholder Approval"), (i) the
Company shall promptly take all action necessary to convene a meeting of its
stockholders in accordance with the Nevada General Corporation Law and the
Company's Articles of Incorporation and By-laws, and shall provide to its
stockholders all proxy materials required by the Nasdaq Rules and the
regulations under the Securities Exchange Act of 1934, as amended, in order to
obtain the Stockholder Approval and (ii) each Securityholder shall promptly take
all necessary or desirable action within such Securityholder's control
(including, without limitation, attendance at stockholders' meetings in person
or by proxy for the purposes of obtaining a quorum and the execution of written
consents in lieu of meetings) to ensure that (i) all voting securities of the
Company (including the Common Stock) over which such Securityholder has control
shall be voted in favor of the Stockholder Approval and (ii) that any transferee
of any voting securities of the Company now held by such Securityholder (other
than a transferee who acquires such voting securities pursuant to public sale in
the Nasdaq Stock Market by such Securityholder, including sales made in
accordance with Rule 144 of the Securities Act) shall be obligated to vote in
favor of the Stockholder Approval.
Section 4. Amendment and Waiver. Except as otherwise provided herein, no
modification, amendment or waiver of any provision of this Agreement shall be
effective against the Company or any of the Institutional Investors unless such
modification, amendment or waiver is approved in writing by the Company and the
Required Investor Approval, and upon receipt of such written approval, such
modification, amendment or waiver shall be binding upon all parties to this
Agreement. The failure of any party to enforce any of the provisions of this
Agreement shall in no way be construed as a waiver of such provisions and shall
not affect the right of such party thereafter to enforce each and every
provision of this Agreement in accordance with its terms.
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Section 5. Representations and Warranties of the Securityholders. Each
Securityholder represents and warrants to each Institutional Investor (as to
itself but not as to any other party) upon becoming a party hereto as follows:
(a) Authorization; No Breach. The execution, delivery and
performance by such Securityholder of this Agreement has been duly authorized by
or on behalf of such Securityholder. This Agreement constitutes a valid and
binding obligation of such Securityholder, enforceable in accordance with its
terms. The execution and delivery by such Securityholder of this Agreement, and
the fulfillment of and compliance with the terms hereof by such Securityholder,
do not and will not (a) conflict with or result in a breach of the terms,
conditions or provisions of, (b) result in a violation of, or (c) require any
consent that has not been obtained or made of, from, with or to, any Person
pursuant to, the constituent documents of such Securityholder, or any material
agreement, instrument or other documents, or any applicable material requirement
of law to which such Securityholder or any Affiliate is bound or to which any of
such Persons or its assets is subject.
(b) Record Owner; Proxy. Such Securityholder (i) is the record
owner of the number of Subject Securities set forth opposite its name on
Schedule A attached to this Agreement and (ii) is not a party to any proxy,
voting trust or other agreement which is inconsistent with, conflicts with or
violates any provision of this Agreement. No Securityholder shall grant any
proxy or become party to any voting trust or other agreement which is
inconsistent with, conflicts with or violates any provision of this Agreement.
Section 6. Representations and Warranties of the Company. The Company
represents and warrants to each Institutional Investor as follows:
(a) Authorization; No Breach. The execution, delivery and
performance of this Agreement has been duly authorized by or on behalf of the
Company. This Agreement constitutes a legal, valid and binding obligation of the
Company, enforceable in accordance with its terms. The execution and delivery by
the Company of this Agreement, and the fulfillment of and compliance with the
terms hereof by the Company, does not and will not (a) conflict with or result
in a breach of the terms, conditions or provisions of, (b) result in a violation
of, or, (c) require any consent that has not been obtained or made of, from,
with or to, any Person pursuant to, the constituent documents of the Company or
any or its Subsidiaries, or any agreement, instrument or other document, or any
applicable material requirement of law to which the Company or any of its
Subsidiaries or any of its Affiliates is bound or to which any of such Persons
or its assets is subject.
Section 7. Severability. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability shall not affect
the validity, legality or enforceability of any other provision of this
Agreement in such jurisdiction or affect the validity, legality or
enforceability of any provision in any other jurisdiction, but this Agreement
shall be reformed, construed and enforced in such jurisdiction as if such
invalid, illegal
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or unenforceable provision had not been contained herein.
Section 8. Successors and Assigns. Except as otherwise provided herein,
this Agreement shall bind and inure to the benefit of and be enforceable by the
Company and the Institutional Investors and their respective successors and
assigns; provided that (i) a Person acquiring Investor Shares in a public market
transaction including a sale by an Institutional Investor of Investor Shares in
the Nasdaq Stock Market shall not be considered a successor or assignee of the
selling Institutional Investor as a result thereof, (ii) the Institutional
Investors shall give prompt written notice to the Company of the name and
address of their respective successors and assigns and (iii) the Company may not
assign any of its obligations under this Agreement without the Required Investor
Approval. This Agreement shall be binding upon the Securityholders and
Institutional Investors so long as they hold Subject Securities.
Section 9. Counterparts; Fax Signatures. This Agreement may be executed in
multiple counterparts, each of which shall be an original and all of which taken
together shall constitute one and the same agreement. Signatures sent by
telecopy shall be deemed to constitute original signatures.
Section 10. Remedies. Each party to this Agreement shall be entitled to
enforce its rights under this Agreement specifically, to recover damages by
reason of any breach of any provision of this Agreement and to exercise all
other rights existing in its favor. The parties hereto agree and acknowledge
that money damages would not be an adequate remedy for any breach of the
provisions of the Agreement and that the Company or any Institutional Investor
may in its sole discretion apply to any court of law or equity or competent
jurisdiction for specific performance and/or injunctive relief (without posting
a bond or other security) in order to enforce or prevent any violation of the
provisions of this Agreement.
Section 11. Notices. Any notice provided for in this Agreement shall be in
writing and shall be either personally delivered, or mailed first class mail
(postage prepaid) or sent by reputable overnight courier service (charges
prepaid) or sent by telecopy to the Company at the address set forth below and
to any other recipient at the address indicated on the Schedule attached hereto
or at such address or to the attention of such other Person as the recipient
party has specified by prior written notice to the sending party. Notices shall
be deemed to have been given hereunder when delivered personally, when delivery
is confirmed by telecopy, three days after deposit in the U.S. mail and one day
after deposit with a reputable overnight courier service.
MGC Communications, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Section 12. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Rhode Island, without
giving effect to any choice of law
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or conflict of law rules or provisions (whether of the State of Rhode Island or
any other jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of Rhode Island; provided that the General
Corporation Law of the State of Nevada shall govern all issues concerning the
voting of the Subject Securities.
Section 13. Descriptive Headings; Interpretation. The descriptive headings
of this Agreement are inserted for convenience only and do not constitute a
substantive part of this Agreement. Reference to any agreement, document or
instrument means such agreement, document or instrument as amended or otherwise
modified from time to time in accordance with the terms thereof and, if
applicable, hereof. The words "hereof", "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement. Unless otherwise
specified herein, the term "or" has the inclusive meaning represented by the
term "and/or" and the term "including" is not limiting. All references as to
"Sections", "Subsections", "Articles", "Schedules" and "Exhibits" shall be to
Section, Subsections, Articles, Schedules and Exhibits, respectively, of this
Agreement unless otherwise specifically provided.
Section 14. No Strict Construction. The parties hereto have participated
jointly in the negotiation and drafting of this Agreement. In the event an
ambiguity or question of intent or interpretation arises, this Agreement shall
be construed as if drafted jointly by the parties hereto, and no presumption or
burden of proof shall arise favoring or disfavoring any party by virtue of the
authorship of any of the provisions of this Agreement.
Section 15. No Third Party Beneficiaries. This Agreement is not intended
to confer any rights or remedies upon any Person other than the parties hereto
and their successors and permitted assigns.
Section 16. Complete Agreement. This Agreement embodies the complete
agreement and understanding among the parties and supersedes and preempts any
prior understandings, agreements or representations by or among the parties,
written or oral, which may have related to the subject matter hereof in any way.
Section 17. Termination. This Agreement shall terminate upon the earlier
to occur of (i) seven (7) years from the date hereof or (ii) the date upon which
(A) less than one-third (1/3) of both (x) the number of shares of Series B
Preferred initially issued remains outstanding and (y) the number of shares of
Series C Preferred initially issued remains outstanding and (B) the number of
Investor Shares outstanding represents less than five percent (5%) of the
outstanding Common Stock, assuming conversion of all outstanding shares of
Series B Preferred and Series C Preferred.
[THE REMAINDER OF THIS PAGE IS LEFT BLANK INTENTIONALLY.]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
day and year first above written.
MGC COMMUNICATIONS, INC.
By:
----------------------------------
Name:
-------------------------------
Title:
--------------------------------
PROVIDENCE EQUITY PARTNERS III L.P.
By: Providence Equity Partners III LLC,
its general partner
By:
---------------------------------
Managing Director
PROVIDENCE EQUITY OPERATING PARTNERS III L.P.
By: Providence Equity Partners III LLC,
its general partner
By:
----------------------------------
Name:
-------------------------------
Title:
--------------------------------
J K & B CAPITAL III L.P.
By: JK&B Capital, LLC, its general partner
By:
----------------------------------
Name:
-------------------------------
Title:
--------------------------------
[SIGNATURE PAGE TO SECURITYHOLDERS' AGREEMENT]
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WIND POINT PARTNERS III, L.P.
By:
Name:
Title:
WIND POINT EXECUTIVE ADVISOR
PARTNERS III, L.P.
By:
Name:
Title:
By:
Name:
Title:
By:
Name:
Title:
By:
Name:
Title:
By:
Name:
Title:
[SIGNATURE PAGE TO SECURITYHOLDERS' AGREEMENT]
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By:
Name:
Title:
By:
Name:
Title:
By:
Name:
Title:
[SIGNATURE PAGE TO SECURITYHOLDERS' AGREEMENT]
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JK&B CAPITAL, L.P.
By: , its general partner
By:
-----------------------------
Name:
Title:
JK&B CAPITAL II, L.P.
By: , its general partner
By:
-----------------------------
Name:
Title:
JK&B CAPITAL III QIP, L.P.
By: , its general partner
By:
-----------------------------
Name:
Title:
[SIGNATURE PAGE TO SECURITYHOLDERS' AGREEMENT]
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SCHEDULE A TO SECURITYHOLDERS' AGREEMENT
TOTAL NUMBER OF SHARES OF
COMMON STOCK OR PREFERRED
STOCKHOLDER DETAIL SHARES OWNED
----------- ------ ------------
COMMON PREFERRED
------ ---------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Direct ownership - 22,500 3,190,546 -0-
Various trusts (1) - 1,478,146
▇▇▇▇▇▇▇▇▇ Family Investments, LP -
1,650,000
▇▇▇▇▇▇▇▇▇ Corp. - 39,900
[▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇] [736,500] -0-
▇▇▇▇▇▇▇ ▇▇▇▇▇ Direct ownership - 790,500 892,500 -0-
▇▇▇▇▇ Family Investments, LP - 60,000
▇▇▇▇▇ Corp. - 42,000
555,556 Series B
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ JK&B Capital and affiliates (2) - 968,143 1,145,371 357,143 Series C
Boston Capital Ventures III, L.P. -
171,428
Direct ownership - 5,800
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ Strategic Investment
Partners Limited - 342,856 [694,512] -0-
S-C Phoenix Holdings, LLC - 214,285
Winston Partners II LDC - 85,714
Winston Partners II LLC - 42,857
Direct Ownership - 8,800
Wind Point Executive
Advisor Partners III, L.P. [ ] 5,043 Series B
Wind Point Partners III, L.P.
(▇▇▇ ▇▇▇▇▇▇▇▇) [685,714] 550,513 Series B
▇▇▇▇▇▇ ▇./▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 889,500 -0-
Hayden & ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Revocable Trust 140,369 -0-
Hayden ▇▇▇▇▇▇▇ ▇▇▇ 4,000 -0-
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇ 6,500 -0-
Circle F Ventures, LLC 664,400 -0-
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▇▇▇▇▇ ▇▇▇▇▇ 470,500 -0-
▇▇▇▇ ▇▇▇▇▇▇▇ 64,000 -0-
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TOTAL NUMBER OF
SHARES OF COMMON
STOCK OR PREFERRED
STOCKHOLDER DETAIL SHARES OWNED
----------- ------ ------------
COMMON PREFERRED
------ ---------
▇▇▇▇ ▇▇▇▇▇ 13,620 -0-
Providence Equity Partners III 4,080,320 Series B
L.P. -0- 886,259 Series C
Providence Equity Operating
Partners III L.P. -0- 30,792 Series B
6,598 Series C
TOTAL: [ ]
TOTAL OUTSTANDING: [ ]
PERCENTAGE: [ ]
(1) ▇▇▇▇▇▇▇▇▇ Stock Trust dated 4/2/94
▇▇▇▇▇▇▇▇▇ Trust dated 10/20/92
(2) JK&B Capital, L.P.
JK&B Capital II, L.P.
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